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.
appeal from the Bankruptcy Court turns on the nature of
appellants' claims. While appellants frame their case as
one for successor liability based on Title VII claims against
the purchaser in a bankruptcy sale, they seek payment of
settlement amounts agreed to with the debtor after the sale.
Finding no error in the Bankruptcy Court's determination
that its order approving the sale forecloses successor
liability for these settlement amounts, this court affirms
the Bankruptcy Court's decision.
Applicable legal standard
court has jurisdiction over appeals from “final
judgements, orders, and decrees” of the Bankruptcy
Court under 28 U.S.C. § 158(a)(1). See also LR 77.4.
When hearing an appeal from the Bankruptcy Court, this court
applies the same standards of review governing appeals of
civil cases to the appellate courts. See Groman v. Watman
(In re Watman), 301 F.3d 3, 7 (1st Cir. 2002). As such,
this court reviews the Bankruptcy Court's “findings
of fact for clear error and conclusions of law de
novo.” Old Republic Nat'l Title Ins. Co. v.
Levasseur (In re Levasseur), 737 F.3d 814, 817 (1st Cir.
2013). This court reviews the Bankruptcy Court's
“order granting a motion to dismiss for failure to
state a claim de novo.” In re Montreal,
Maine & Atlantic Railway, Ltd., 888 F.3d 1, 7
(1st Cir. 2018).
Nichole T. Wilkins and Beverly L. Mulcahey were previously
employed by Fred Fuller Oil & Propane Co., Inc.
(“FFOP”). They sued FFOP and its president, Fred J.
Fuller, for discrimination, a hostile work environment,
assault, and retaliation under both Title VII of the Civil
Rights Act of 1964 and RSA 354-A. On the eve of trial, FFOP
filed for bankruptcy protection, which stayed the
appellants' suit. Appellants' counsel filed an
appearance in the bankruptcy.
afterward, FFOP moved for an order authorizing the private
sale of all or substantially all of its assets to appellee
Rymes Heating Oils, Inc. In response, appellants' counsel
contacted counsel for FFOP and Rymes, threatening to move to
attach real estate holdings that would be transferred in the
sale. Appellants' counsel did not follow
through on this threat and did not file any objection to the
proposed sale. She appeared at the hearing where the
Bankruptcy Court considered objections to the
motion. The Bankruptcy Court approved the sale in
an order (“Sale Order”) providing that, with
certain irrelevant exceptions:
[T]he sale of the purchased Assets pursuant to the Asset
Purchase Agreement is and shall be free and clear of all . .
. “Liens”  and all debts, liabilities,
objections, commitments, responsibilities, claims (as that
term is defined in the Bankruptcy Code) including, but not
limited to, all product liability claims, claims arising
under contracts, licenses, or other agreements . . .
counterclaims, defenses and offsets of any kind or nature,
arising prior to closing or relating in any way to any acts
of [FFOP] prior to Closing, however arising (the foregoing
collectively refer to as “Claims”), with Liens or
Claims to attach to proceeds of sale, pursuant to section
363(f) of the Bankruptcy Code. All persons holding Liens or
Claims of any kind against [FFOP] or the Purchased Assets . .
. are hereby forever barred, estopped, restrained and
permanently enjoined from asserting such Liens or Claims
against the Buyer, its successors or assigns . . . . The
Buyer is not a successor to [FFOP] or its estate by reason of
any theory of law or equity and the Buyer shall not assume or
in any way be responsible for any liability, obligation,
commitment or responsibility of [FFOP] and/or estate, or any
debts, liabilities, responsibilities or commitments in any
way relating to the Purchased Assets or the [FFOP]'s use
of the Purchased Assets prior to the Closing, except as
otherwise expressly provided in the Asset Purchase
Neither the purchase of the Purchased Assets by [Rymes] nor
the subsequent operation by [Rymes] of any business
previously operated by [FFOP] shall cause [Rymes] to be
deemed a successor in any respect to [FFOP]'s business
within the meaning of any law, rule or regulation, including
but not limited to any revenue, pension, ERISA, tax, labor or
environmental law, rule or regulation or under any products
liability law with respect to [FFOP]'s
than a year later, appellants reached a settlement agreement
with FFOP. This settlement, which was approved by the
Bankruptcy Court, allowed appellants certain unsecured claims
against the bankruptcy estate, totaling $3, 761,
263. But these claims would be paid only in
conjunction with other unsecured claims, and the joint motion
in support of the settlement noted that for the subordinated
claims making up more than $2.5 million of the total,
“it is unlikely that any dividend will be paid on those
claims in [FFOP]'s judgment.”
hoped that adversary proceedings against Fred J. Fuller, his
family, and other associates would recover assets sufficient
to substantially pay off the settlement. But these
efforts proved fruitless and appellants determined that
“FFOP has an inability to pay the amount of
then brought this suit against Rymes in Merrimack County
Superior Court alleging that Rymes is liable for the
settlement agreement under a theory of successor liability.
Appellees removed it to this court and moved to refer the
case to the Bankruptcy Court. This court granted that motion,
finding that “[l]iability for the [appellants]'
Title VII claims against FFOP and the amount of damages owed
them has been resolved through the [appellants]' and
FFOP's settlement of those claims. . . . [T]he only claim
at issue here is whether the Rymes companies may be held to
account for the settlement as FFOP's alleged
successor.” Wilkins v. Rymes Heating Oils,
Inc., 17-cv-744-JL, 2018 WL 1187412 at *3 (D.N.H. Mar.
7, 2018). Whether Rymes may be held liable as successors to
FFOP depends on the Sale Order, 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),
'” a bankruptcy court has jurisdiction to resolve
the matter. Id. at 3 (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).
Bankruptcy Court, after a hearing, granted appellee's
motion to dismiss the complaint. It found that “the
Sale Order . . . unambiguously bars the prosecution of these
claims against” Rymes, and so did not reach the merits
of the successor liability question.
raise three issues. They argue: (1) that the Bankruptcy Court
erred in dismissing their claim solely on the basis of the
Sale Order; (2) that the Bankruptcy Court erred by not
weighing the competing interests of the federal schemes for
bankruptcy and remediation of federal employment law
violations; and (3) that assuming that successor liability is
not barred by the sale order, the issue must be remanded to
an Article III court rather than the Bankruptcy Court.
Because the court affirms the Bankruptcy Court on the first
two issues, it does not reach the third.
Dismissal on the basis of the sale order
do not contest that the Sales Order purports to block
assertions of successor liability against Rymes. Instead,
their argument mixes two issues - whether a bankruptcy court
has the power to issue a sales order that blocks successor
liability claims of the type they bring, and whether a
bankruptcy court ...