United States District Court, D. New Jersey
In re East Orange General Hospital, Inc., et al., Debtors.
Ivy Holdings, Inc.; Ivy Intermediate Holdings, Inc.; Prospect Medical Holdings, Inc.; Prospect New Jersey, Inc.; Prospect Eogh, Inc.; Defendants. Roseann Denunzio, Plaintiff,
MCNULTY, UNITED STATES DISTRICT JUDGE.
an appeal from orders of Judge Vincent F. Papalia of the U.S.
Bankruptcy Court for the District of New Jersey. The debtor,
a hospital, was sold free and clear in bankruptcy after due
notice to creditors, including the plaintiff, who then
remained silent but now seeks to assert her claims against
the purchaser. Three orders are relevant:
(1) Order dated January 21, 2016, authorizing, inter
alia, sale of all the debtor's assets free and clear
of liens, claims, and encumbrances. ("Sale Order",
Bankruptcy EOF no. 330);
(2) Order dated November 23, 2016, granting the motion of
Prospect to enforce the Sale Order and ordering Ms.
DeNunzio to dismiss, without prejudice, her pending lawsuit
against Prospect in the Superior Court of New Jersey, Law
Division, Essex County. ("Sale Enforcement Order".
Bankruptcy ECF No. 867); and
(3) Order dated February 21, 2017, denying Ms. Denunzio's
motion for reconsideration of the Sale Enforcement Order and
denying the parties' applications for sanctions.
("Reconsideration Order", Bankruptcy ECF No. 912,
copy at ECF No. 1-1).
Denunzio appeals from the second and third orders. For the
reasons stated herein, the appeal is denied, and the Sale
Enforcement Order and the Reconsideration Order are affirmed.
facts, which are not substantially in dispute, are as
On May 28, 2014, East Orange General Hospital, Inc. and Essex
Valley Healthcare, Inc. (collectively, "Debtors")
entered into an asset purchase agreement with Prospect EOGH,
Inc ("original APA"). (Bankruptcy ECF No. 57 at ¶
See also (Bankruptcy ECF No. 330-1 at 1) (referring
to the May 28, 2014 Asset Purchase Agreement as the
year later, on August 19, 2015, Ms. Denunzio, Appellant here,
was terminated from her employment with Debtor East Orange
Hospital. (Compl. ¶ 6). She had been working as a
laboratory aide and department administrative assistant in
the Hospital's Pathology Department since March 1968.
[Id. at ¶¶ 4-6).
next month, "[o]n September 16, 2015, the Debtors
received approval of a Certificate of Need from the New
Jersey Department of Health for the sale of the
Hospital's assets to Prospect [EOGH, Inc.], subject to
certain conditions." (Bankruptcy ECF No. 57 at ¶
10). See also (Compl. ¶ 30). Then, on October
7, 2015, the proposed sale was approved by New Jersey Acting
Attorney General John J. Hoffman pursuant to the Community
Health Care Assets Protection Act. (Bankruptcy ECF No. 57 at
¶ 10). The proposed sale was also approved by the
Superior Court of New Jersey on October 28, 2015.
(Id.) The original APA did not close, however.
[Id. at ¶ 11).
three months after Ms. Denunzio's termination from the
Hospital, on November 10, 2015, East Orange General Hospital
filed for relief under Chapter 11 of the Bankruptcy Code.
(ECF No. 1 of Bankruptcy Case No. 15-31232). On that same
date, Essex Valley Healthcare, which is the parent company of
East Orange General Hospital, also filed for relief under
Chapter 11. (ECF No. 1 of Bankruptcy Case No. 15-31233). On
November 13, 2015, Judge Papalia ordered the Chapter 11 cases
of East Orange General Hospital and Essex Valley Healthcare
to be "consolidated for procedural purposes only and
jointly administered under lead Case No. 15-31232." (ECF
No. 22 of Bankruptcy Case No. 15-31232, ¶ 2); (ECF No. 4
of Bankruptcy Case No. 15-31233, ¶ 2). Judge Papalia
also issued an Order authorizing Debtors to retain and
appoint Prime Clerk LLC ("Prime Clerk") as the
claims and noticing agent for the Debtors. (Bankruptcy ECF
November 20, 2015, the Debtors as sellers and Prospect EOGH,
Inc. as buyer entered into an Amended and Restated Asset
Purchase Agreement ("APA"). (Bankruptcy ECF No. 57-2,
Exh. B). See (Bankruptcy ECF No. 57 at ¶ 11).
See also (Compl. ¶ 31). On that same date, the
Debtors filed a Motion for the entry of orders "(i)
approving (a) bidding procedures, including bid protections
for the stalking horse bidder, (b) form and manner of sale
notices, and (c) sale hearing date, and (ii) authorizing and
approving (a) the sale of substantially all of the
Debtors' assets free and clear of liens, claims, and
encumbrances and (b) assumption and assignment of certain
executory contracts and unexpired leases." ("Sale
Motion"). (Bankruptcy ECF No. 57).
November 25, 2015, Prime Clerk served Ms. Denunzio and her
counsel via First Class Mail with a copy of die Notice of
Commencement of Chapter 11 Bankruptcy Cases and the Meeting
of Creditors ("Notice of Commencement") (Bankruptcy
ECF No. 83). See Affidavit of Service, Exh. B (Bankruptcy ECF
No. 89 at 43) (listing "Roseann Denunzio" and
"Roseann Denunzio v. EOGH, et al.").
December 9, 2015, East Orange General Hospital filed a list
of all creditors. (Bankruptcy ECF No. 124). The list
included Ms. Denunzio and her counsel. [Id. at 33)
(listing "Roseann Denunzio" and "Roseann
Denunzio v. EOGH, et al.").
days later, on December 15, 2015, the Bankruptcy Court
entered an Order approving die bidding procedures and form
and manner of notices, and setting a sale hearing date
("Bidding Procedures Order"). (Bankruptcy ECF No.
next day, on December 16, 2015, East Orange Hospital filed
its Schedules of Assets and Liabilities (Bankruptcy ECF No.
175), and Statement of Financial Affairs (Bankruptcy ECF No.
176). The Hospital's "Schedule
F-Creditors Holding Unsecured Nonpriority Claims" form
listed "Roseann Denunzio v. EOGH, et al." as a
contingent, unliquidated, and disputed "litigation
claim." [Id. at 29). The "Amount of
Claim" was described as "unknown."
December 18, 2015, Prime Clerk served Ms. Denunzio, through
her counsel, via first class mail with a copy of the Notice
of Sale of Certain Assets at Auction ("Sale
Notice"). (Bankruptcy ECF No. 208, Exh. A). See
Affidavit of Service (Bankruptcy ECF No. 208 at 47) (listing
"Roseann Denunzio v. EOGH, et al."). The
Sale Notice informed Ms. Denunzio's counsel of the
sale-related hearing to be held on January 20, 2016 and the
January 6, 2016 deadline for objections. (Bankruptcy ECF No.
208, Exh. A at 4-6). A copy of the Bidding Procedures Order
and the Bidding Procedures was attached to the Notice.
[Id. at 1 n.2, 7-21).
January 19, 2016, the Bankruptcy Court issued an Order
establishing, inter alia, deadlines to file proofs of claim
"(as defined in section 101(5) of the Bankruptcy Code),
including but not limited to all claims of setoff or
recoupment and claims arising under section 503(b)(9) of the
Bankruptcy Code, against the Debtors that arose on or prior
to the Petition Date." (Bankruptcy ECF No. 313 at 2-3).
The deadline for all creditors (except governmental units)
was set for February 26, 2016 at 5:00 p.m. (Id. at
hearing on January 20, 2016, the Bankruptcy Court entered its
Order authorizing the Debtors to (a) sell substantially all
of their assets free and clear of liens, claims, and
encumbrances, and (b) assume and assign certain executory
contracts and unexpired leases ("Sale Order",
Bankruptcy ECF No. 330). See also Bankruptcy ECF No. 337
(copy of the transcript of the Sale Hearing). The Sale Order,
filed on January 21, 2016, included a copy of the APA, as
amended, as Exhibit A. (Bankruptcy ECF Nos. 330-1 to -8). See
also (Sale Order ¶ 31) (providing that the Sale,
including, but not limited to, the terms and conditions of
the APA and other agreements and transfers, "are hereby
authorized and approved in all respects.").
particular, the Sale Order addressed successor liability.
Paragraph 13 of the Order provided as follows:
The Successful Bidder is not a mere continuation of the
Debtors, there is not substantial continuity between the
Successful Bidder and the Debtors, and there is no continuity
of enterprise and no common identity between the Debtors and
the Successful Bidder. The Successful Bidder is not holding
itself out to the public as a continuation of any Debtor. The
Successful Bidder is not a successor to any Debtor or any
Debtor's estate by reason of any theory of law or equity,
and the Sale does not amount to a consolidation, merger, or
de facto merger of Buyer and the Debtors.
[Id. at ¶ 13). Moreover, in accordance with
Section 363(f) of the Bankruptcy Code, paragraph 33 of the
Order provided that all claims and interests, known or
unknown, would be extinguished by the sale:
[U]pon the Closing Date and pursuant to and except as
otherwise set forth in the Agreement, the Assets shall be
transferred to Buyer free and clear of all Encumbrances,
Claims, interests, and liens. . . liabilities related to the
Internal Revenue Code, or any other liability relating to
Debtors or any of the Debtors' predecessors or
Affiliates, whether known or unknown, choate or inchoate,
filed or untiled, scheduled or unscheduled, noticed or
unnoticed, recorded or unrecorded, perfected or unperfected,
allowed or disallowed, contingent or non-contingent,
liquidated or unliquidated, matured or unmatured, material or
nonmaterial, direct or indirect, disputed or undisputed,
whether arising prior to or subsequent to the commencement of
these chapter 11 cases, and whether imposed by agreement,
understanding, law, equity or otherwise, including claims
otherwise arising under doctrines of successor liability
(other than Assumed Liabilities and Permitted Liens)
(collectively, the "Claims and Interests"), with
all such Claims and Interests to attach to the cash proceeds
of the Sale in the order of their priority, with the same
validity, force, and effect that they now have as against the
Purchased Assets, subject to any claims and defenses the
Debtors may possess with respect thereto.
[Id. at ¶ 33).
Sale Order also permanently enjoined all entities from
seeking to enforce successor liability claims against
Prospect. It provided that:
all entities, including all . . . litigation claimants,
employees and former employees, and trade or other creditors
holding Claims and Interests against the Debtors of the
Purchased Assets arising under or out of, in connection with,
or in any way relating to, the Assets or the transfer of the
Assets to Buyer, hereby are forever barred, estopped, and
permanently enjoined from asserting any Claims and Interests
relating to the Assets or the transfer of the Assets against
Buyer and its Affiliates, successors, designees, assigns, or
property or the Assets including, without limitation taking
any of the following actions with respect to or based on any
Interest or Claim relating to the Assets or the transfer of
die Assets (other than Assumed Liabilities): (a) commencing
or continuing in any manner any action or other proceeding
against Buyer, its Affiliates, successors or assigns, assets
or properties . . .
[Id. ¶ 38). Accordingly, the Order also
provided, in part, that it is "binding in all
respects" upon "all creditors" and "all
holders of any Interests or Claims (whether known or unknown)
against any Debtor, [and] any holders of Claims and Interests
against or on all or any portion of the Purchased
Assets." [Id. at ¶ 58).
under the APA, which was incorporated in the Sale Order,
Prospect assumed only the "Assumed Liabilities" and
not the "Excluded Liabilities." See
(Bankruptcy ECF No. 330-1 at Sections 2.3, 2.4; see also Sale
Order, Bankruptcy ECF No. 330 ¶ 41) (stating "[t]he
Successful Bidder is assuming the Assumed Liabilities, as set
forth in the Agreement, and is not assuming any obligations
other than the Assumed Liabilities."). The
"Excluded Liabilities" were specified as follows:
Notwithstanding anything herein to the contrary, Buyer is
assuming only the Assumed Liabilities and is not assuming and
shall not become liable for the payment or performance of any
other Liability of Sellers (collectively, the 'Excluded
Liabilities'). The Excluded Liabilities are and shall
remain Liabilities of the Sellers. Without limiting the
generality of the foregoing, the term 'Excluded
Liabilities' includes any Liability of Sellers:
(x) arising in connection with the employment by the Sellers,
or the termination of any employment by the Sellers, of any
Persons, whether as full-time employees, part-time employees,
consultants or temporary workers, and including Liabilities
for compensation, Claims for workers' compensation or
OSHA, or Claims or other grievances by Employees asserting
wrongful termination, breach of contract, tort, or other
violation of Law by Sellers or any of their Affiliates
arising from any facts, events or circumstances arising on or
prior to the Closing Date.
ECF No. 330-1 at Section 2.4(x)).
same day, Prime Clerk served Denunzio, through counsel, via
first class mail, with a copy of the "Order (i)
Establishing Procedures for Compliance by the Official
Committee of Unsecured Creditors for East Orange General
Hospital, Inc., and (ii) Authorizing the Retention of Prime
Clerk as Information Agent for the Official Committee of
Unsecured Creditors Effective as of November 23, 2015,"
(Bankruptcy ECF No. 300). See also Affidavit of Service
(Bankruptcy ECF No. 356, Exh. A at 21) (listing "Roseann
Denunzio v. EOGH, et al.").
next day, on January 22, 2016, Prime Clerk served DeNunzio
and her counsel via first class mail with a copy of the
Notice of Deadline for Filing Proofs of Claim Against the
Debtors ("Bar Date Notice") and a proof of claim
form. See Affidavit of Service (Bankruptcy ECF No. 364 at 68)
(listing "Roseann Denunzio" and "Roseann
Denunzio v. EOGH, et al."). Ms. Denunzio did not file
a proof of claim by the specified deadline, February 26, 2016
at 5:00 p.m., or indeed ever. (Bankruptcy ECF No. 313 at
2-3). See also (Bankruptcy ECF No. 850-1, Hager Cert, at
¶ 5) (acknowledging that Ms. Denunzio did not make a
claim in the Bankruptcy Court); (Appellant Br. at 3)
("[t]here is no dispute that Plaintiff Denunzio never
filed a proof of claim.").
closing date of the sale was March 1, 2016. (Bankruptcy ECF
No. 836 at ¶ 7).
three months after the sale closed (and nine months after
being terminated from the Hospital), on June 9, 2016, Ms.
Denunzio filed a one-count lawsuit against die purchaser,
Prospect, in the Superior Court of New Jersey, Law Division,
Essex County. That state court complaint alleged age
discrimination, in violation of the New Jersey Law Against
Discrimination ("NJLAD"), N.J. Stat. Ann. §
10:5-1, et seq. (Compl., Bankruptcy ECF No. 836-3). Ms.
Denunzio's state court complaint sought back pay, front
pay, emotional distress compensatory damages, aggravation of
preexisting condition damages, punitive damages, interest,
"monetary gross up to compensate for any negative tax
consequences," attorneys' fees, and legal costs.
Id. At 8.
Complaint alleged that the successor Prospect entities,
jointly and severally, were her employer and were subject to
successor liability under the NJLAD. [Id. at ¶
14). It further alleged that those entities were not
"mere successors" to the Hospital "because
they were sufficiently connected to the culpable conduct that
terminated [Ms. Denunzio] in violation] of her rights under
the LAD." [Id. at ¶ 15). According to Ms.
Denunzio, as of August 2015, Mr. Krouse, the individual who
terminated her employment on the 19th of that
month, was an upper manager employed by Prospect.
[Id. at ¶ 17).
Denunzio's NJLAD Complaint alleged that on January 28,
2014, Prospect Medical Holdings, Inc. issued a Letter of
Intent regarding its purchase of the Hospital's assets
and liabilities. [Id. at ¶ 26). By that date,
and thereafter, Prospect allegedly exercised control and/or
direction over the Hospital's operations and employees in
preparation for purchasing its assets. [Id. at
¶¶ 26-27). Ms. Denunzio further alleged that a few
months later, on May 1, 2014, Prospect Medical Holdings, Inc.
submitted a Certificate of Need application to the New Jersey
Department of Health for the transfer of ownership of the
Hospital from Essex Valley Healthcare and its subsidiary East
Orange General Hospital to Prospect EOGH, Inc. [Id.
at ¶ 28). That application was approved on September 16,
2015. [Id. at¶ 30). According to Ms. Denunzio,
the Certificate "evidenced" Prospect's
"continuation of and identity with" the Hospital.
[Id. at Section B., p. 4). Moreover, the Complaint
alleges, the November 20, 2015 APA incorporated the New
Jersey Department of Health's Certificate approval.
[Id. at ¶32).
Bankruptcy Court, on June 28, 2016, the debtors filed a joint
plan of liquidation (Bankruptcy ECF No. 690), and
accompanying disclosure statement (Bankruptcy ECF No.
691). The plan includes the proposed
classification and treatment of claims for all purposes,
including voting, confirmation, and distribution. (Bankruptcy
ECF No. 690 at 16-20). It also includes an injunction
provision, exculpation provision, and release provisions,
including a provision entitled "Release by Holders of
Claims and Equity Interests." [Id. at 32-36).
As for the disclosure statement, it includes a $13, 000, 000
estimated recovery amount for general unsecured claims, and a
39.4% estimated percentage recovery. (Bankruptcy ECF No. 691
at 11). The recovery amount "excludes contingent and
unliquidated litigation claims totaling approximately $9,
600, 000, many of which are covered by insurance."
[Id. at n.5).
13, 2016, after holding a hearing, the Bankruptcy Court filed
an Order conditionally approving the disclosure statement for
solicitation purposes only ("Conditional Approval
Order"). (Bankruptcy ECF No. 715).
next day, July 14, 2016, Prime Clerk served Ms. DeNunzio and
her counsel via first class mail with a copy of the Notice of
(a) Conditional Approval of Disclosure Statement, (b)
Combined Hearing on Final Approval of Disclosure Statement
and Confirmation of the Plan, and (c) Procedures and Deadline
for Voting on the Plan, among other plan-related documents
(the "Plan Confirmation Hearing
Notice"). See Affidavit of Service (Bankruptcy ECF
No. 730, Exh. C at 63) (listing "Roseann Denunzio"
and "Roseann Denunzio v. EOGH, et al.").
days later, on July 25, 2016, counsel for Prospect sent a
cease-and-desist letter to Ms. Denunzio's counsel.
(Bankruptcy ECF No. 836-4). Relying on New Jersey Court Rule
1:4-8, Prospect stated that the letter constituted notice and
demand that Ms. Denunzio voluntarily dismiss the State Court
action against Prospect with prejudice. (Id. at 1,
5). According to Prospect, Ms. Denunzio's claim was
barred by the Bankruptcy Court's Sale Order.
(Id. at 1). A copy of the Sale Order was attached to
the letter. See (id.)
next month, on August 23, 2016, the Bankruptcy Court
conducted a hearing to consider whether the disclosure
statement should be approved and whether the plan should be
confirmed ("Confirmation Hearing"). (Bankruptcy ECF
No. 794 at 5). Two days later, on August 25, 2016, the Court
issued an Order approving the disclosure statement and
confirming the joint plan of liquidation ("Confirmation
Order"). (Bankruptcy ECF No. 794).
August 29, 2016, in New Jersey State Court, Prospect moved to
dismiss the State Court action on die grounds that Ms.
Denunzio's claims failed as a matter of law under New
Jersey Court Rule 4:6-2(e). See (Bankruptcy ECF Nos. 836
¶ 21, 850-1 at 25-41).
September 9, 2016, Prime Clerk served Ms. DeNunzio and her
counsel via first class mail with a copy of the Notice of (I)
Entry of Confirmation Order and (II) Effective Date
("Notice of Effective Date") (Bankruptcy ECF No.
803). See Affidavit of Service (Bankruptcy ECF No. 807 at 29,
79) (listing "Roseann Denunzio" and
"Roseann Denunzio v. EOGH, et al.").
that month, on September 30, 2016, the Superior Court
Presiding Judge, Dennis F. Carey, III, denied Prospect's
motion to dismiss. (Bankruptcy ECF No. 850-1 at 19-20). About
two weeks later, on October 14, 2016, Prospect filed a second
motion to dismiss, arguing lack of subject matter
jurisdiction or in the alternative requesting a stay pending
a ruling by the Bankruptcy Court on Prospect's action to
enforce the Bankruptcy Court's Sale Order. (Bankruptcy
ECF No. 836-5). Prospect asserted that it intended to file
that application with the Bankruptcy Court within the next
few weeks. [Id. at 9).
that motion was pending before the New Jersey Superior Court,
on October 26, 2016, Prospect filed a motion ("Motion to
Enforce the Sale Order") in Bankruptcy Court requesting
that die Court 1) enforce its Sale Order by granting
injunctive relief barring Ms. Denunzio from pursuing the
State Court action, and 2) direct Ms. Denunzio to dismiss her
State Court action. (Bankruptcy ECF No. 836). It also
requested that the Court assess attorney's fees as a
sanction for Ms. Denunzio's willful violation of the Sale
November 4, 2016, Judge Carey denied the second motion to
dismiss, in its entirety. (Bankruptcy ECF No. 850-1 at
November 15, 2016, in Bankruptcy Court, Ms. Denunzio filed
her opposition to Prospect's motion. (Bankruptcy ECF No.
850). She argued that Prospect's motion should be denied
because her State Court action was not within die Bankruptcy
Court's jurisdiction. [Id. at 3-5). Ms. Denunzio
also maintained that Prospect's motion for sanctions
should be denied, and requested leave to file a motion for
the award of attorney's fees. [Id. at 6). On die
next day, November 16, 2016, Prospect filed its reply brief.
(Bankruptcy ECF No. 851).
November 22, 2016, Bankruptcy Judge Papalia heard oral
argument on Prospect's motion and issued an oral ruling
granting it. (Transcript of Nov. 22, 2016 Hearing, Bankruptcy
ECF No. 874). The next day, on November 23, 2016, Judge
Papalia issued an Order granting Prospect's Motion to
enforce the Sale Order and denying the parties'
applications for sanctions ("Sale Enforcement
Order," Bankruptcy ECF No. 867). He found that
"(t]he claims and causes of action asserted against die
Prospect Entities in die State Court Action constitute
Excluded Liabilities (as defined in die Sale Order), that
were not assumed by the Prospect Entities under the Asset
Purchase Agreement and were therefore enjoined and barred
against the Prospect Entities by the Sale Order."
(Id. at ¶ 4).
Sale Enforcement Order also barred Ms. Denunzio from
continuing to prosecute the state court NJLAD action:
7. DeNunzio shall cease and desist from (i) prosecuting the
State Court Action and (ii) from asserting any additional
claims against the Prospect Entities or any of their
affiliates that relate to, arise from, or concern the subject
matter of the State Court Action.
8. DeNunzio shall immediately dismiss the action entitled
Roseann DeNunzio vs. Ivy Holdings. Inc.; Ivy
Intermediate Holdings, Inc.; Prospect Medical Holdings, Inc.;
Prospect New Jersey, Inc.; Prospect EOGH, Inc.; ABC
Corporations) 1-5; and John and/or Jane Doe(s) 1-5, Docket
No. ESX-L-4013-16 pending in the Superior Court of New
Jersey, Law Division, Essex County (the "State Court
Action"), without prejudice.
[Id. at ¶¶ 7-8).
days later, on December 2, 2016, pursuant to Federal Rule of
Bankruptcy Procedure 9024, Ms. Denunzio filed a motion for
reconsideration, requesting that Bankruptcy Judge Papalia
vacate the Sale Enforcement Order and remand the State Court
action to the New Jersey Superior Court pursuant to the
mandatory abstention doctrine contained in 28 U.S.C. §
1334(c)(2) ("Motion for Reconsideration").
(Bankruptcy ECF No. 871). Prospect filed its opposition on
December 21, 2016. (Bankruptcy ECF No. 885), and Ms. Denunzio
filed her reply on January 3, 2017. (Bankruptcy ECF No. 889).
Papalia held a hearing on Ms. Denunzio's reconsideration
motion on February 7, 2017 and issued an oral ruling denying
that motion. (See Transcript of Feb. 7, 2017 Hearing,
Bankruptcy ECF No. 920). Two weeks later, on February 21,
2017, the Judge issued an Order denying Ms. Denunzio's
motion for reconsideration "for the reasons set forth in
the record" ("Reconsideration Order,"
Bankruptcy ECF No. 912).
March 8, 2017, Ms. Denunzio filed a Notice of Appeal to this
Court. (ECF No. 1). Pursuant to Rule 8003(a)(3)(B) of the
Federal Rules of Bankruptcy Procedure, she attached a copy of
the Reconsideration Order. (ECF No. 1-1). Ms. Denunzio now
asks this Court to reverse and vacate both the Bankruptcy
Court's Sale Enforcement Order and Reconsideration Order.
(Appellant Br. at 39). She also seeks to have her NJLAD case
"remanded" to the New Jersey Superior Court.
Standard of Review
District Court has jurisdiction to hear appeals of final
judgments and orders of the Bankruptcy Court pursuant to 28
U.S.C. § 158(a)(1). In general, a district court reviews
"'the bankruptcy court's legal determinations de
novo, its factual findings for clear error and its exercise
of discretion for abuse thereof.'" In re
American Pad & Paper Co., 478 F.3d 546, 551 (3d Cir.
2007) (quoting In re United Healthcare Sys., Inc.,
396 F.3d 247, 249 (3d Cir. 2005) (quotation and citation
omitted)). A district court must separately analyze mixed
findings of fact and conclusions of law, and appropriately
apply the applicable standards-clearly erroneous or de
novo-to each component. Meridian Bank v. Alten, 958
F.2d 1226, 1229 (3d Cir. 1992) (citing In re Sharon Steel
Corp., 871 F.2d 1217, 1222 (3d Cir. 1989) and
Universal Minerals, Inc. v. C.A. Hughes & Co.,
669 F.2d 98, 102-03 (3d Cir. 1981)).
Scope of Appeal
contends that only the Reconsideration Order is properly on
appeal. Ms. Denunzio maintains that both the
Sale Enforcement Order and the Reconsideration Order are on
appeal. I agree with Ms. Denunzio that, despite the lack of
clarity in her notice of appeal, this appeal should be
construed to encompass both orders, which are intertwined.
Bankruptcy Rule 8003(a)(1), "[a]n appeal from a
judgment, order, or decree of a bankruptcy court to a
district court or BAP under 28 U.S.C. § 158(a)(1) or
(a)(2) may be taken only by filing a notice of appeal with
the bankruptcy clerk within the time allowed by Rule
8002." Fed.R.Bankr.P. 8003(a)(1). The Notice of Appeal
must "be accompanied by the judgment, order, or decree,
or the part of it, being appealed." Fed.R.Bankr.P.
Denunzio's Notice of Appeal explicitly states that the
February 21, 2017 Reconsideration Order is the subject of the
appeal. (ECF No. 1; Bankruptcy ECF No. 916). As required by
Rule 8OO3(a)(3)(B), it attaches a copy of the Reconsideration
Order. In her briefing to this Court, however, Ms. Denunzio
seeks to reverse and vacate both the Sale Enforcement Order
and the Reconsideration Order. (Appellant Br. 17-20, 33, 39).
assert that because Ms. Denunzio's Notice of Appeal
attaches only the Reconsideration Order, the scope of the
appeal does not include the underlying Sale Enforcement
Order. (Appellees Br. at 2-3) (citing
Browder v. Director of Dep't of Corrections, 434
U.S. 257, 263 n.7 (1978) ("an appeal from denial of Rule
60(b) relief does not bring up the underlying judgment for
review"); Erie v. Cty. of Crawford, 161
Fed.Appx. 227, 228; Wells Fargo Bank v. Alexander (In re
Alexander), 05-2467 (MLC), 2006 U.S. Dist. LEXIS 16564,
at *21 (D.N.J. Mar. 22, 2006)). Therefore, according to
Prospect, "the sole issue on review is whether the
Bankruptcy Court abused [its] discretion" to grant
reconsideration. [Id. at 3) (citing Alexander, 2006
U.S. Dist. LEXIS 16564, at *21; Page v. Schweiker,
786 F.2d 150, 152 (3d Cir. 1986)).
Federal Rule of Bankruptcy Procedure 8003(a)(3) is nearly
identical to Federal Rule of Appellate Procedure 3(c)(1), I
take case law interpreting the latter as a guide. See 10
Collier on Bankruptcy ¶ 8003.06 (16th ed.). Notices of
appeal filed under Federal Rule of Appellate Procedure 3 are
construed liberally. Witasick v. Minnesota Mut Life Ins.
Co., 803 F.3d 184, 190 (3d Cir. 2015) (citing Smith
v. Barry, 502 U.S. 244 (1992)).
The purpose 'of a notice of appeal, of course, is to
notify the court of appeals and the opposing party that an
appeal is being taken.' Courts employ a commonsense,
purposive approach to determine whether a notice of appeal
complies with the rules. Thus, the Supreme Court has said
that 'imperfections in noticing an appeal should not be
fatal where no genuine doubt exists about who is appealing,
from what judgment, to which appellate court.'
Gov't of Virgin Islands v. Mills, 634 F.3d 746,
751-52 (3d Cir. 2011) (internal citations omitted).
the Third Circuit has held that it "can exercise
jurisdiction over orders not specified in the Notice of
Appeal if: (1) there is a connection between the specified
and unspecified orders; (2) the intention to appeal the
unspecified order is apparent; and (3) the opposing party is
not prejudiced and has a full opportunity to brief the
issues." Sulima v. Tobyhanna Army Depot, 602
F.3d 177, 184 (3d Cir. 2010) (internal quotation marks and
Matute v. Procoast Nav. Ltd, for example, the plaintiff filed
a Notice of Appeal in which he designated the order denying a
motion for reconsideration and did not designate the
underlying dismissal order. 928 F.2d 627, 629 (3d Cir. 1991).
The Court nevertheless considered the appeal as relating to
[I]n the absence of a showing of prejudice by (defendant], it
appears that [plaintiff]'s mistake in failing to state
specifically that he was appealing from the underlying
dismissal should be viewed as harmless error and not a
jurisdictional bar to his appeal. Indeed, [plaintiff] did
mention the Order of Dismissal in his notice of appeal; the
intent to appeal from that Order, thus, can be inferred
fairly from the notice.
Id. at 629-30 (emphasis in original).
Matute and construing Ms. Denunzio's Notice of Appeal
liberally, 1 find that the three-part Sulima standard is
satisfied. First, there is undoubtedly a connection between
the Reconsideration Order and the underlying Sale Enforcement
Order; Ms. Denunzio's reconsideration motion was a
request that the Court reverse the Sale Enforcement
Order's bar to her state NJLAD lawsuit. It is frankly
difficult to consider one without considering the other.
Second, because review of the Reconsideration Order is
intertwined with the Sale Enforcement Order, I infer that Ms.
Denunzio intended her appeal to include the underlying Sale
Enforcement Order. Ms. Denunzio's other filings also
indicate an intention to appeal from that Order. Third, and
finally, there is no prejudice to Prospect. Ms.
Denunzio's counsel inquired about appeal deadlines and
gave every indication that he intended to appeal the Sale
Enforcement Order (Transcript of Nov. 22, 2016 Hearing,
Bankruptcy ECF No. 874 at 61:5-: 19). Prospect had a full
opportunity to, and did, address the Sale Enforcement Order
in its appellate brief. (See Appellees Br. at 22-28).
therefore conclude that this appeal encompasses both the
Bankruptcy Court's Sale Enforcement Order and its Order
denying Ms. Denunzio's Motion for
Reconsideration. I will now address the merits of this
Bankruptcy Court Jurisdiction
Denunzio argues that the Bankruptcy Court had no jurisdiction
over the State Court action, and therefore lacked the power
to order Ms. Denunzio to dismiss it without
prejudice. (Appellant Br. 16-30). She also argues
[id. at 31-38) that by (in effect) entering a ruling in the
State Court action, die Bankruptcy Court violated the
mandatory abstention doctrine. See 28 U.S.C. §
1334(c)(2). I consider those arguments in turn.
Denunzio's jurisdictional arguments depend on 28 U.S.C.
§ 1334, which vests bankruptcy jurisdiction in the
district courts, and 28 U.S.C. § 157, which governs core
and non-core proceedings within die bankruptcy courts. I
first (i, ii) survey those two provisions
and case law interpreting them, and then
(iii) apply them to the facts. Finally (iv),
I consider the applicability of Celotex Corp. v.
Edwards, 514 U.S. 300 (1995), to the jurisdictional
28 U.S.C. § 1334
1334 of title 28 of the United States Code "describes
the jurisdictional boundaries of a district court over
bankruptcy cases and proceedings but, by itself, does not
vest any authority in the bankruptcy courts." In re
Seven Fields Dev. Corp.,505 F.3d 237, 253 (3d Cir.
2007). Under that Section, District Courts have
"original and exclusive jurisdiction of all cases under
title 11." 28 U.S.C. § 1334(a). The District Courts
also have "original but not exclusive jurisdiction of
all civil proceedings arising under title 11, or arising in
or related to cases under title 11." Id. §
1334(b). (emphasis added). The District Court "in which
a case under title 11 is commenced or is pending" has
exclusive jurisdiction "of all the property, wherever
located, of the debtor as of the commencement of such case,
and of property of the estate," and "over all