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Quincy Medical Center v. Gupta

United States District Court, D. Massachusetts

January 5, 2015

QUINCY MEDICAL CENTER, A STEWARD FAMILY HOSPITAL, INC
v.
APURV GUPTA, M.D., and VICTOR MUNGER No. 12-40131-RWZ

MEMORANDUM OF DECISION

RYA W. ZOBEL, District Judge.

This appeal arises out of the bankruptcy of Quincy Medical Center, Inc., QMC ED Physicians, Inc., and Quincy Physician Corporation ("Debtors"). Quincy Medical Center, a Steward Family Hospital, Inc. ("Steward")-which is a separate legal entity from the Debtors-appeals the bankruptcy court's post-confirmation judgments allowing two other non-debtors' claims against it. Because the bankruptcy court lacked subject matter jurisdiction to enter those judgments, they are VACATED and the case is remanded with instructions to dismiss Munger's and Gupta's claims against Steward.

I. Background[1]

Appellees, Victor Munger and Apurv Gupta, were executives at Quincy Medical Center, a hospital in Quincy, Massachusetts. QMC I at 1. For most of the time they worked there, [2] the hospital was operated by Quincy Medical Center, Inc., QMC ED Physicians, Inc., and Quincy Physicians Corp., which were the Debtors in the bankruptcy case underlying this appeal. Id. at 2.

On July 1, 2011, Debtors filed for bankruptcy in the United States Bankruptcy Court for the District of Massachusetts. See id. at 1. That same day, Debtors filed a motion (the "Sale Motion") asking the bankruptcy court to approve, among other things, an asset purchase agreement ("APA") with Steward. Docket #5. The APA effectuated the sale of substantially all of Debtors' operating assets to Steward. QMC I at 2.

The APA included provisions about the continued employment of Debtors' employees. Section 9.1 of the APA provides that "[n]ot later than ten (10) Business Days prior to the Closing, Purchaser shall offer employment by Purchaser to each of the Employees who remain employed by Seller as of a recent date, ... such employment to commence immediately following the Closing." Docket #5 at 99. Section 9.2 then purports to require the Purchaser to pay each such employee "base wage and salary levels provided to such Employees immediately prior to the Closing" for three months after the Closing, id., and Section 5.14 says that "upon Purchaser's termination of the employment or engagement of any employees or consultants of Seller at or following the Closing, Purchaser shall be liable to any such persons for severance or retention pay." Id. at 75. The APA also includes several provisions governing its construction, including one that purports to require that amendments or modifications be in writing and one that disavows any third-party beneficiaries. APA § 13.4, id. at 110-11 (amendment or modification); APA § 13.8, id. at 112 (no third-party beneficiaries).

On September 26, 2012, the bankruptcy court issued an order approving the Sale Motion, Docket #5-2 (the "Sale Order"), and the sale closed on October 1, 2011. QMC II at 2. On October 7, 2011, Debtors filed a proposed Chapter 11 plan of reorganization (the "Plan"). Docket #20-2. The bankruptcy court confirmed the Plan in an order signed on November 22, 2011 (the "Confirmation Order"). Docket #20-1. Both the Sale Order and the Plan contain provisions that purport to retain jurisdiction in the bankruptcy court over disputes arising under them. The Sale Order provides that:

T. It is necessary and appropriate, in order to ensure the validity of the sale of the assets to Steward and to ensure compliance with the Order, for this Court to retain jurisdiction to: (a) interpret and enforce the provisions of the APA, the Assigned Agreements, the Sale Motion and this Order;... (c) resolve any disputes arising under or relating to the APA, the Assigned Agreements, the Sale Motion, and this Order;....
37. This Court retains jurisdiction to: (a) Interpret, implement and enforce the terms and provisions of this Order, the APA, the Assigned Agreements;... (c) Resolve any disputes arising under or relating to the APA, the Assigned Agreements, the Sale Motion, or this Order;....

Docket #5-2 at 15, 29. Similarly, the Plan says that:

Notwithstanding the entry of the Confirmation Order and the occurrence of the Effective Date, on and after the Effective Date, the Bankruptcy Court shall, to the maximum extent permitted by applicable law, retain exclusive jurisdiction over all matters arising out of, or related to, the Chapter 11 Cases and the Plan, pursuant to sections 105(a) and 1142 of the Bankruptcy Code, including jurisdiction to:...
15. Enter and enforce any order for the sale of property pursuant to sections 363, 1123, or 1146(a) of the Bankruptcy Code;....
29. Enforce all orders previously entered by the Bankruptcy Court;....

Docket #20-2 at 39-41. The Confirmation Order incorporates the retention of jurisdiction provisions from the ...


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