United States District Court, D. New Hampshire
Nichole T. Wilkins and Estate of Beverly L. Mulcahey
Rymes Heating Oils, Inc. and Rymes Energy Holdings, LLC
N. Laplante United States District Judge
this court retains the plaintiffs' action or refers it to
the Bankruptcy Court turns on whether that court has
jurisdiction to resolve the plaintiffs' successor
liability claims. In this case, it does.
Nichole T. Wilkins and Beverly L. Mulcahey,  sued Fred Fuller
Oil & Propane Co., Inc. (“FFOP”) and its
president, Fred J. Fuller, for discrimination, a hostile work
environment, assault, and retaliation arising from events
that occurred during the plaintiffs' employment with
FFOP. On the eve of trial, FFOP filed for
bankruptcy protection. Two weeks later, defendant Rymes Heating
Oils, Inc. purchased FFOP's assets in a sale approved by
the Bankruptcy Court (Deasy, B.J.). Though plaintiffs'
counsel was present at the hearing held in connection with
the sale, they lodged no objection to the sale itself. The
plaintiffs settled their claims against FFOP after the
sale. Upon discovering that FFOP may be unable
to pay the $3.7 million settlement (which was also approved
by the Bankruptcy Court), they now seek to recover their
damages from the Rymes defendants under a theory of successor
reasons discussed infra, this court has jurisdiction over the
plaintiffs' claims pursuant to 28 U.S.C. § 1334
(bankruptcy). Rymes moves this court to refer this
action to the Bankruptcy Court for this District. In doing
so, it invokes both the Bankruptcy Court's statutory
authority as well as its retention in the Sale Order of
jurisdiction to interpret the terms and provisions of that
order, which appears to provide that Rymes purchased
FFOP's assets free and clear of claims such as the
plaintiffs'. The plaintiffs object on the grounds that,
under the standard set by the First Circuit Court of Appeals
in Gupta v. Quincy Med. Center, 858 F.3d 657 (1st Cir. 2017),
the Bankruptcy Court lacks jurisdiction to adjudicate this
dispute because it arises under Title VII. Concluding that
the Bankruptcy Court has jurisdiction to determine whether
Rymes acquired FFOP's assets free and clear of the
plaintiffs' claims, because that dispute “arises
in” or “arises under” the Bankruptcy Code,
the court grants Rymes's motion to refer the case to that
of the bankruptcy courts, like that of other federal courts,
is grounded in, and limited by, statute.” Gupta, 858
F.3d at 661 (quoting Celotex Corp. v. Edwards, 514 U.S. 300,
307 (1995)). District courts have jurisdiction over
“any or all cases under title 11, ” 28 U.S.C.
§ 1334(a), and “proceedings arising under title
11, or arising in or related to cases under title 11, ”
Id. § 1334(b). See also Gupta, 858 F.3d at 661.
In turn, district courts may, as this District has, see LR
77.4(a), refer to the bankruptcy courts of the district
“any or all cases under title 11 and any or all
proceedings arising under title 11 or arising in or related
to a case under title 11, ” 28 U.S.C. § 157(a).
Under this statutory regime, therefore, “in order for
[Rymes's] claims to fall within 28 U.S.C. §
1334's statutory grant of jurisdiction, the claims must
‘arise under, ' ‘arise in, ' or
‘relate to' a case under title 11.” Gupta,
858 F.3d at 662.
‘aris[e] under title 11' when the Bankruptcy Code
itself creates the cause of action.” Id.
“Arising in” proceedings are defined
“generally as ‘those that are not based on any
right expressly created by title 11, but nevertheless, would
have no existence outside of the bankruptcy, '”
such as “administrative matters, orders to turn over
property of the estate, and determinations of the validity,
extent, or priority of liens.” Id. at 662-63
(quoting Middlesex Power Equip. & Marine, Inc. v. Town of
Tyngsborough, Mass. (In re Middlesex Power Equip. &
Marine, Inc.), 292 F.3d 61, 68 (1st Cir. 2002)). “By
contrast, ‘related to' proceedings are those
‘which potentially have some effect on the bankruptcy
estate, such as altering debtor's rights, liabilities,
options, or freedom of action, or otherwise have an impact
upon the handling and administration of the bankrupt
estate.'” Id. at 663 (quoting In re
Middlesex Power Equip. & Marine, 292 F.3d at 68).
argues that it purchased FFOP's assets free and clear of
any claims against FFOP, including the plaintiffs'
claims, under several of the Sale Order's provisions,
rendering interpretation of those provisions integral to
resolution of the plaintiffs' successor liability claims.
As it points out, through the Sale Order, the Bankruptcy
Court retained jurisdiction during the pendency of the
bankruptcy action to, among other things, “[i]nterpret,
implement and enforce the terms and provisions of” the
agreement, “[r]esolve any disputes arising under or
relating to” the agreement, and “[a]djudicate any
disputes concerning (asserted) pre-Closing Liens or Claims
on, and the proceeds of the sale of, the Assets . . .
.” The Bankruptcy Court, however, “may
not ‘retain' jurisdiction it never had -- i.e.,
over matters that do not fall within § 1334's
statutory grant.” Gupta, 858 F.3d at 664. Thus, for the
Bankruptcy Court's retention of jurisdiction in the Sale
Order to operate, the underlying claim must satisfy the
jurisdictional criteria -- that is, it must “arise
under, ” “arise in, ” or “relate
to” a case under Title 11. Id.
underlying claim here does so. It is not, as the plaintiffs
propose, a claim “in the nature of personal injury or
tort claims, ” arising under Title VII. Liability for
the plaintiffs' Title VII claims against FFOP and the
amount of damages owed them has been resolved through the
plaintiffs' and FFOP's settlement of those claims. In
light of that settlement, the only claim at issue here is
whether Rymes may be held to account for the settlement as
FFOP's alleged successor. And the First Circuit Court of
Appeals has unequivocally determined that when “[t]he
underlying dispute . . . involves a subsequent
purchaser's interpretation of a sale order ‘free
and clear of liens' under 11 U.S.C. § 363(b), an
order that can only be issued by a bankruptcy court, . . . it
is one that arises in a case under title 11 or perhaps arises
under title 11.” In re Middlesex Power Equip. &
Marine, 292 F.3d at 68. It reaffirmed that conclusion in
Gupta, describing its holding in In re Middlesex Power Equip.
& Marine as, “inter alia, that a bankruptcy court
had ‘arising under' or ‘arising in'
jurisdiction to decide the scope of a sale order provision
authorizing certain assets to be sold ‘free and clear
of liens.'” 858 F.3d at 665.
plaintiffs' claims turn on whether the defendants may be
held liable as FFOP's successors. That, in turn, depends
on the terms of the Sale Order. The Bankruptcy Court has
jurisdiction to interpret those terms and determine whether
the defendants may be held so liable. The court therefore
GRANTS the defendants' motion to refer.
 Mulcahey is represented in this action
by her estate as administered by her husband, Raymond
Mulcahey. Compl. (doc. no. 1-1) ¶ 3.
 Compl. (doc. no. 1-1) ¶¶
8-13. Specifically, the plaintiffs sued Fuller in his
individual capacity and joined as intervenors the Equal
Employment Opportunity Commission's action against FFOP.