# EDDYSTONE RAIL COMPANY, LLC v. BRIDGER LOGISTICS, LLC

> District Court, E.D. Pennsylvania · March 12, 2020

URL: https://www.frixlaw.com/law-library/cases/10398576

## Case

- **Court:** District Court, E.D. Pennsylvania
- **Decided:** March 12, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10398576

## How later opinions describe it (automated extraction)

- holding that “standing is a jurisdictional matter”
- recognizing a fiduciary duty owed directly to creditors of an insolvent corporation by the corporation’s primary stockholders and officers where, at the officers’ direction, the corporation first paid the debts of the officers rather than the creditors
- holding that “standing is a jurisdictional matter”
- applying the Rule 12(b)(6) standard to a motion to dismiss for lack of statutory standing originally filed under Rule 12(b)(1)

## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

EDDYSTONE RAIL COMPANY, LLC, CIVIL ACTION
Plaintiff,

v.

BRIDGER LOGISTICS, LLC, NO. 17-495
JULIO RIOS,
JEREMY GAMBOA,
FERRELLGAS PARTNERS, L.P.,
FERRELLGAS, L.P.,
BRIDGER ADMINISTRATIVE
SERVICES II, LLC,
BRIDGER MARINE, LLC,
BRIDGER RAIL SHIPPING, LLC,
BRIDGER REAL PROPERTY, LLC,
BRIDGER STORAGE, LLC,
BRIDGER SWAN RANCH, LLC,
BRIDGER TERMINALS, LLC,
BRIDGER TRANSPORTATION, LLC,
BRIDGER ENERGY, LLC,
BRIDGER LEASING, LLC,
BRIDGER LAKE, LLC,
J.J. LIBERTY, LLC, and
J.J. ADDISON PARTNER, LLC,
Defendants.

DuBois, J. March 10, 2020

M E M O R A N D U M

I. INTRODUCTION
This action arises out of a contractual dispute between plaintiff Eddystone Rail Company
(“Eddystone”) and non-party Bridger Transfer Services (“BTS”) involving the construction of an
oil transloading facility. Plaintiff’s central allegation is that the owners and controlling persons
of BTS used the company as a sham entity to defraud plaintiff out of more than $140 million it is
allegedly owed under the construction contract with BTS. Presently before the Court is
Defendants Julio Rios and Jeremy Gamboa’s Motion to Dismiss Pursuant to Rule 12(b)(1) for
Lack of Standing. For the reasons that follow, the Court denies the motion.
II. BACKGROUND
The background of this case is set forth in detail in the Court’s Memorandum and Order
dated July 19, 2017 (Document No. 59). This Memorandum recites only the facts and
procedural history relevant to the motion presently before the Court.

On February 13, 2013, plaintiff Eddystone and non-party BTS, an oil logistics company,
entered into a Rail Facilities Services Agreement (“RSA”). First Am. Compl. ¶ 36. Under the
terms of the RSA, plaintiff agreed to build a $170 million facility to transload crude oil from
railcars to barges on the Delaware River and grant BTS access to the facility. Id. ¶¶ 3, 6, 37–39.
In exchange, BTS agreed that it would use the facility to transload a minimum volume of crude
oil—and make deficiency payments for each barrel by which it fell short—for five years. Id.
¶ 37. Plaintiff alleges that defendants used their access to the Eddystone facility to secure a
separate business opportunity: a contract to deliver North Dakota crude oil to a refinery operated
by Monroe Energy LLC (“Monroe”) in Trainer, Pennsylvania. Id. ¶ 39. Plaintiff completed

construction of the transloading facility in April 2014 and transloaded every trainload of crude
oil that BTS delivered through January 2016. Id. ¶ 74.
Defendants in this case are the parent companies, affiliates, and former managers of BTS:
BTS’s parent company, Bridger Logistics, LLC; certain Bridger Logistics subsidiaries
(“additional entity defendants”);1 Ferrellgas Partners, LP and Ferrellgas, LP (together,
“Ferrellgas” and, with Bridger Logistics and the additional entity defendants, the “BL/FG
defendants”); and two Bridger Logistics executives, Julio Rios and Jeremy Gamboa (“Rios and

1 The additional entity defendants are Bridger Administrative Services, II, LLC; Bridger Marine, LLC; Bridger Rail
Shipping, LLC; Bridger Real Property, LLC; Bridger Storage, LLC; Bridger Swan Ranch, LLC; Bridger Terminals,
LLC; Bridger Transportation, LLC; Bridger Leasing, LLC; Bridger Energy, LLC; Bridger Lake, LLC; J.J. Liberty,
LLC; and J.J. Addison Partners, LLC.
Gamboa” or “individual defendants”).
Plaintiff claims that global changes in the oil market in late 2014 rendered delivery of
North Dakota crude to Trainer unprofitable for Monroe and BTS, and that, as a result, defendants
began to pursue ways to withdraw from the RSA. Id. ¶¶ 7–8. Specifically, plaintiff asserts that
after the RSA became increasingly unprofitable, defendants stripped BTS of its assets in an

effort to render themselves judgment-proof for BTS’s eventual breach of the RSA. Id. ¶ 8. In
their capacity as Bridger Logistics executives, Rios and Gamboa allegedly executed some of
these transactions. Id. ¶ 50.
Plaintiff filed its Complaint on February 2, 2017 (Document No. 1) and First Amended
Complaint on September 7, 2018 (Document No. 182). In the First Amended Complaint,
plaintiff asserts four claims against defendants: alter-ego liability against Ferrellgas, Bridger
Logistics, Bridger Rail Shipping, and Rios and Gamboa (Count I); intentional fraudulent transfer
in violation of 12 Pa. Cons. Stat. § 5104(a) against all defendants (Count II); constructive
fraudulent transfer in violation of 12 Pa. Cons. Stat. § 5105 against all defendants (Count III);

and breach of fiduciary duties of care and loyalty to creditors against Ferrellgas, Bridger
Logistics, and Rios and Gamboa (Count IV). With respect to the fiduciary duty claim, plaintiff
specifically alleges, inter alia, that once BTS entered the “zone of insolvency,” defendants
“improperly caused BTS to transfer its assets . . . knowing that such transfer was for inadequate
consideration . . . and would harm BTS’ creditors, or they negligently failed to determine the
circumstances surrounding the transfer.” First Am. Compl. ¶ 101. On December 4, 2018, Rios
and Gamboa filed their Answer to Plaintiff’s First Amended Complaint (Document No. 278).
Prior to filing the pending motion, Rios and Gamboa filed two motions to dismiss for,
inter alia, failure to state a claim in this action (Document Nos. 34 and 207, filed March 16, 2017
and October 5, 2018), both of which were denied. Most recently, on September 27, 2019, the
United States Court of Appeals for the Third Circuit denied a mandamus petition filed by all
defendants in which they challenged the subject-matter jurisdiction of the Court and an order
addressing a discovery dispute between the parties. See In re: Bridger Logistics LLC, et al, No.
19-2678 (3d Cir. 2019).

Defendants Rios and Gamboa filed the pending motion to dismiss pursuant to Federal
Rule of Civil Procedure 12(b)(1) on October 25, 2019 (Document No. 343). Shortly thereafter,
on November 6, 2019, this case was reassigned from the calendar of Judge Robert F. Kelly to
this Court. The motion is fully briefed and ripe for decision.
III. LEGAL STANDARD
A motion to dismiss for lack of Article III standing is properly brought under Federal
Rule of Civil Procedure 12(b)(1) because such standing is necessary for a court’s subject-matter
jurisdiction. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992); Ballentine v. United
States, 486 F.3d 806, 810 (3d Cir. 2007) (holding that “standing is a jurisdictional matter”).

Article III standing requires that the plaintiff “(1) suffered an injury in fact, (2) that is fairly
traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a
favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016).
Plaintiff in this case has asserted a direct claim for breach of fiduciary duty against Rios
and Gamboa. First Am. Compl. ¶¶ 99–103. In response, Rios and Gamboa contend that plaintiff
lacks “standing” on two grounds: because (1) Pennsylvania corporate law prohibits direct
fiduciary duty claims by creditors and requires that such breach of fiduciary duty claims be
asserted derivatively, see 15 Pa. Cons. Stat. § 1717; and (2) even if such direct claims were
permissible, plaintiff failed to allege that it suffered “a direct, personal, and independent injury.”
Individual Defs.’ Mot. Dismiss 2.
Federal courts distinguish between a plaintiff’s Article III standing and so-called
“statutory standing.”2 See Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S. Ct.
1377, 1378 n.4 (2014). While Article III standing involves the Court’s constitutional authority to
decide a case, statutory standing “goes to whether [the legislature] has accorded a particular

plaintiff the right to sue under a statute” and “does not limit the power of the court to adjudicate
the case.” Leyse v. Bank of Am. Nat’l Ass’n, 804 F.3d 316, 320 (3d Cir. 2015). See also
Lexmark Int’l, 134 S. Ct. at 1378 n.4 (“[T]he absence of a valid . . . cause of action does not
implicate subject-matter jurisdiction, i.e., the court’s statutory or constitutional power to
adjudicate the case.”) (internal citation and quotation marks omitted). As a result, the Third
Circuit has held that a “dismissal for lack of statutory standing is effectively the same as a
dismissal for failure to state a claim,” and such an argument should be asserted under Rule
12(b)(6). Baldwin v. Univ. of Pittsburgh Med. Ctr., 636 F.3d 69, 73–74 (3d Cir. 2011). In this
case, the issue of whether a plaintiff properly asserts a fiduciary duty claim derivatively or

directly raises a question of statutory standing. The Court therefore determines that Rios and
Gamboa’s motion to dismiss for lack of standing was improperly filed under Rule 12(b)(1); it
should have been filed under Rule 12(b)(6). Accordingly, the motion is construed as a motion to
dismiss for failure to state a claim under Rule 12(b)(6). See Leyse, 804 F.3d at 320 (applying the
Rule 12(b)(6) standard to a motion to dismiss for lack of statutory standing originally filed under
Rule 12(b)(1)).

2 In Lexmark, the Supreme Court held that the label “statutory standing” is “misleading” and a “misnomer” because
it does not actually raise a standing issue. 134 S. Ct. at 1386, 1387, n.4. In light of this decision, the Third Circuit
and other courts have “retreated from this characterization.” Leyse v. Bank of Am. Nat’l Ass’n, 804 F.3d 316, 320
n.3; see, e.g., Am. Psychiatric Ass’n v. Anthem Health Plans, Inc., 821 F.3d 352, 359 (2d Cir. 2016). The Court will
nevertheless use the phrase “statutory standing” because its use and meaning are the focus of the parties’ legal
arguments.
“The purpose of a Rule 12(b)(6) motion to dismiss is to test the legal sufficiency of the
complaint.” Nelson v. Temple Univ., 920 F. Supp. 633, 634 n.2 (E.D. Pa. 1996). To survive a
motion to dismiss, plaintiff must allege “sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility

when the plaintiff pleads factual content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Id. at 678. In assessing the plausibility
of the plaintiff’s claims, a district court first identifies those allegations that constitute nothing
more than mere “legal conclusions” or “naked assertion[s].” Twombly, 550 U.S. at 557, 564.
Such conclusory allegations are “not entitled to the assumption of truth.” Iqbal, 556 U.S. at 679.
The Court then assesses “the ‘nub’ of the plaintiff[’s] complaint—the well-pleaded,
nonconclusory factual allegation[s]”—to determine whether it states a plausible claim for relief.
Id. at 680. “In deciding a Rule 12(b)(6) motion, a court must consider only the complaint,
exhibits attached to the complaint, matters of public record, as well as undisputedly authentic

documents if the complainant’s claims are based upon these documents.” Mayer v. Belichick,
605 F.3d 223, 230 (3d Cir. 2010).
IV. DISCUSSION
As discussed supra, defendants Rios and Gamboa argue that Eddystone lacks statutory
standing to assert a direct fiduciary duty claim against Rios and Gamboa. Specifically, the
individual defendants’ central argument is that Pennsylvania law requires that plaintiff, a
creditor, bring this claim derivatively on behalf of non-party BTS. Construing the pending
motion as filed under Rule 12(b)(6), the Court rejects this argument and denies the motion.
The Court notes that this basic argument has already been raised—and rejected—on a
previous occasion. In their motion to dismiss the original Complaint (Document No. 35, filed
March 16, 2017), the BL/FG defendants argued, inter alia, that (1) Louisiana law governed the
fiduciary duty claim; (2) plaintiff failed to state a claim because the only “appropriate vehicle for
an LLC to recover from a fiduciary that allegedly breached its duties would be a derivative
action”; and (3) plaintiff lacked statutory standing to assert a derivative claim. BL/FG Defs.’

Mot. Dismiss 33–34. Rios and Gamboa also filed a motion to dismiss under Rules 12(b)(2) and
12(b)(6) (Document No. 34), in which they incorporated these arguments by reference. In its
Memorandum dated July 19, 2017, the Court denied the motions, rejecting the “standing”
argument and holding that the Complaint “clearly and adequately alleges claims against each
Defendant . . . for Breach of Fiduciary Duties of Care and Loyalty to Creditors.” July 19, 2017
Ct. Mem. 12. After plaintiff filed its First Amended Complaint, Rios and Gamboa filed a second
motion to dismiss the fiduciary duty claim under Rule 12(b)(6) (Document No. 207), arguing
again that plaintiff failed to state a claim under Louisiana law. The Court ruled that
Pennsylvania law governed the fiduciary duty claim and denied the motion on that basis. See

November 20, 2018 Ct. Order (Document No. 275).
Consistent with Judge Kelly’s July 19, 2017 Memorandum, the Court concludes that
plaintiff has stated a claim for breach of fiduciary duty. Under Pennsylvania law, corporate
directors and officers owe a fiduciary duty to the corporation. See 15 Pa. Cons. Stat. §§ 512(a),
1712(a); Main, Inc. v. Blatstein, No. CIV. A. 98-5947, 1999 WL 424296, at *14 (E.D. Pa. June
23, 1999). This duty “generally is owed solely to the corporation and may be enforced directly
by the corporation or indirectly by a shareholder in a shareholder derivative action brought under
the right of the corporation.” In re Forman Enterprises, Inc., 281 B.R. 600, 610 (Bankr. W.D.
Pa. 2002). This duty “may not be enforced directly by a shareholder or by another person or
group.” 15 Pa. Cons. Stat. § 1717.
Nevertheless, courts applying Pennsylvania law have recognized exceptions to this
general rule. Importantly, when a corporation is insolvent, corporate directors and officers owe a
fiduciary duty to the creditors of the corporation. See Brown v. Presbyterian Ministers Fund,
484 F.2d 998, 1005 (3d Cir. 1973); In re Bruno, 553 B.R. 280, 286 (Bankr. W.D. Pa. 2016).

This fiduciary relationship with creditors applies in the context of insolvent limited liability
companies, such as BTS, as well. See Hipple v. Hipple, No. CV 12-1256, 2016 WL 320216, at
*12 (E.D. Pa. Jan. 27, 2016).
Central to Rios and Gamboa’s argument is the distinction between direct and derivative
claims. In addressing this issue, courts analyze the nature of the complaint and the type of relief
requested. See Impala Platinum Holdings Ltd. v. A-1 Specialized Servs. & Supplies, Inc., No.
CV 16-1343, 2016 WL 8256412, at *6 (E.D. Pa. Sept. 16, 2016). “[Statutory] standing to bring
a direct claim against a director exists only if the claimant sustained a personal injury which is
independent of any injury suffered by the corporation. If the creditor’s alleged injuries cannot be

readily distinguished from those of the corporation, it does not give rise to a separate cause of
action.” Id. (citations omitted). “It is not enough to establish that a recovery will yield a benefit
to the creditor. To the contrary, a direct claim requires proof that the creditor’s injury is unique
and unrelated to any damage sustained by the corporation or other creditors.” In re Bruno, 553
B.R. at 286. In contrast, an action is derivative (in the corporate shareholder context) when “the
gravamen of the complaint is injury to the corporation . . . or if it seeks to recover assets for the
corporation or to prevent dissipation of its assets.” Hill v. Ofalt, 85 A.3d 540, 548 (Pa. Super. Ct.
2014). “If damages to a shareholder result indirectly, as the result of injury to the corporation,
and not directly, the shareholder cannot sue as an individual.” Id; see ALI Principles of
Corporate Governance § 7.01(a) (“An action in which the holder can prevail only by showing an
injury or breach of duty to the corporation should be treated as a derivative action.”).
In this case, plaintiff, a creditor of an insolvent LLC, BTS, asserts a direct breach of
fiduciary duty claim against Rios and Gamboa. Multiple Pennsylvania federal and state courts
have permitted creditors of insolvent corporations to assert fiduciary duty claims directly under

Pennsylvania law. In Impala Platinum Holdings, the Court accepted plaintiff creditor’s
argument that “it has [statutory] standing to pursue a direct claim against Defendants as directors
[of the insolvent corporation]” “based on duties it was owed as a creditor of an insolvent
corporation.” 2016 WL 8256412, at *6–7. Similarly, in Travelers Casualty & Surety Co. v. Irex
Corp., the Court held that a fiduciary relationship existed between the plaintiff—a creditor of an
insolvent corporation—and defendant, the sole shareholder of the corporation. Travelers Cas. &
Sur. Co. v. Irex Corp., No. 02-CV-2142, 2002 WL 32351176, at *3 (E.D. Pa. May 31, 2002). In
part on this basis, the Travelers court permitted plaintiff’s direct breach of fiduciary duty claim
to proceed. Id., at *4; see Sugartown Worldwide LLC v. Shanks, No. CIV.A. 14-5063, 2015 WL

1312572, at *12 (E.D. Pa. Mar. 24, 2015) (holding that the creditor successfully stated a direct
fiduciary duty claim against the owners and board members of an insolvent corporation despite
failing to allege that the corporation was insolvent); Robar Dev. Corp. v. Minutello, 408 A.2d
851, 853 (Pa. Super. Ct. 1979) (recognizing a fiduciary duty owed directly to creditors of an
insolvent corporation by the corporation’s primary stockholders and officers where, at the
officers’ direction, the corporation first paid the debts of the officers rather than the creditors);
Heaney v. Riddle, 23 A.2d 456, 458 (Pa. 1942).
Therefore, the only remaining question is whether plaintiff has adequately pled a direct
injury suffered as a result of a breach of fiduciary duty by Rios and Gamboa. In this case, the
central allegation of the First Amended Complaint is that fraudulent transfers of BTS assets
facilitated BTS’s breach of the RSA, which resulted in direct financial harm to plaintiff. The
Court therefore concludes—as it did in its July 19, 2017 Memorandum—that plaintiff has pled
sufficient facts to state a claim for breach of fiduciary duty. See, e.g., ASD Specialty Healthcare
Inc. v. New Life Home Care Inc., No. 3:11-CV-068, 2011 WL 5984024, at *5 (M.D. Pa. Nov. 29,

2011).
V. CONCLUSION
For the foregoing reasons, Defendants Rios and Gamboa’s Motion to Dismiss Pursuant to
Rule 12(b)(1) for Lack of Standing, treated as a motion to dismiss pursuant to Rule 12(b)(6), is
denied. An appropriate order follows.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10398576. Public record. Not legal advice.