Eddystone Rail Co. v. Rios

431 F.Supp.3d 638

EDDYSTONE RAIL COMPANY, LLC , Plaintiff/Counter-Defendant,

v. Julio RIOS , Jeremy Gamboa, Bridger Logistics, LLC, Ferrellgas Partners, L.P., Ferrellgas, L.P., Bridger Rail Shipping, LLC, Bridger Real Property, LLC, Bridger Storage, LLC, Bridger Swan Ranch, LLC, Bridger Terminals, LLC, Bridger Transportation, LLC, J.J. Addison Partners, LLC, J.J. Liberty, LLC, Bridger Administrative Services II, LLC, Bridger Energy, LLC, Bridger Lake, LLC, Bridger Leasing, LLC, and Bridger Marine, LLC, Defendants, Bridger Logistics, LLC, Ferrellgas Partners, L.P., and Ferrellgas, L.P., Defendants/Counterclaimants.

CIVIL ACTION No. 17-495

United States District Court, E.D. Pennsylvania.

Filed March 26, 2019

Andrew J. Sloniewsky, Filiberto Agusti, Nicholas Petts, Jennifer Quinn-Barabanov, Steven J. Barber, Steptoe & Johnson LLP, Timothy Work, Paul Hastings LLC, Washington, DC, Terence Grugan, Henry E. Hockeimer, Jr., Ballard Spahr LLP, Philadelphia, PA, Jeffrey M. Theodore, Braunhagey & Borden LLP, San Francisco, CA, for Plaintiff/Counter-Defendant.

Alicia Ragsdale Olszeski, Brian C. Walsh, Bryan Cave Leighton Paisner LLP, St. Louis, MO, Lawrence G. Scarborough, Bieta Andemariam, Bryan Cave Leighton Paisner LLP, New York, NY, Sarah Hartley, Bryan Cave Leighton Paisner LLP, Denver, CO, Jacob A. Kramer, Rachel A. Beck, Bryan Cave Leighton Paisner LLP, Washington, DC, Richard L. Scheff, Michael Christopher Witsch, Armstrong Teasdale, LLP, Julie B. Negovan, Griesing Law LLC, Philadelphia, PA, Steven Taylor, Jeremy Fielding, Jonathan D. Kelley, Michael Kalis, Kirkland & Ellis LLP, Christian A. Orozco, John R. Christian, Kent D. Krabill, Lynn Pinker Cox & Hurst LLP, Dallas, TX, Rachel A. Beck, Bryan Cave Leighton Paisner LLP, Washington, DC, for Defendants/Counterclaimants.

MEMORANDUM

ROBERT F. KELLY, Sr., District Judge

Presently before this Court is the Motion to Dismiss Plaintiff's First Amended Complaint for Lack of Subject-Matter Jurisdiction Pursuant to Fed. R. Civ. P. 12(b)(1) filed by all of the Defendants, Plaintiff Eddystone Rail Company, LLC's ("Eddystone") Opposition to Defendants' Motion to Dismiss, Defendants' Reply and Eddystone's Sur-Reply. For the reasons set forth below, the Motion to Dismiss will be denied.

I. BACKGROUND

Since the parties and the Court are all familiar with the facts of this matter, we will not state the underlying facts at length. In February 2013, Bridger Transfer Services, LLC ("BTS") entered into a Rail Services Agreement ("RSA") with Eddystone under which Eddystone agreed to construct and operate a facility on the Delaware River in Eddystone, Pennsylvania (the "Transloading Facility") for the purpose of transloading (transferring) crude oil from railcars to barges that would carry the oil down the river to Philadelphia-area refineries.¹ The RSA was negotiated on behalf of BTS by BTS's parent, Defendant Bridger Logistics, LLC ("Bridger Logistics"), and two corporate officers of Bridger Logistics, Defendants Julio Rios ("Rios") and Jeremy Gamboa ("Gamboa"). Pursuant to the RSA, BTS committed to purchase a minimum volume of rail-to-barge crude oil transloading capacity over the course of five years. BTS made that capacity available to its affiliates so that they could supply Bakken crude oil to the Monroe Refinery in Trainer, Pennsylvania ("Monroe Refinery").² From March 2013 to April 2014, Eddystone built the Transloading Facility. From May 2014 through January 2016, Eddystone transloaded every trainload of crude oil onto barges that BTS and Defendants brought to Eddystone.

In June 2015, BTS's parent, Bridger Logistics, was purchased by Defendants Ferrellgas Partners, L.P. and Ferrellgas, L.P. (collectively, "Ferrellgas"). At that time, BTS owed to Eddystone a remaining minimum volume obligation of approximately $150 million. Eddystone alleges that Ferrellgas promptly caused Eddystone to abandon more than $10 million of net accounts receivables with its affiliates, the Defendants in this litigation. In addition, Ferrellgas allegedly began crediting the revenue associated with BTS's transloading capacity to its affiliate Defendant Bridger Rail Shipping, LLC ("Bridger Rail Shipping") and causing Bridger Rail Shipping to cover the RSA payments as they came due, while leaving the long-term obligation in BTS. According to Eddystone, as it became clear that a halt to shipping was imminent, Ferrellgas caused BTS to transfer the remainder of its assets to the affiliates who are now Defendants in this litigation. Eddystone asserts that BTS then defaulted on the RSA. Eddystone alleges that Jamex Marketing paid $10.00 for the now valueless BTS, which twelve months earlier had $98.1 million in assets, and renamed BTS as Jamex Transfer Services, LLC ("JTS").

On April 19, 2016, pursuant to the RSA's dispute resolution provision, Eddystone initiated an arbitration against the newly-purchased and renamed JTS before the Society of Maritime Arbitrators ("SMA") in New York. The arbitration was litigated through 2016 until January 5, 2017, when, after a month of negotiations, a settlement was reached. Under the terms of the settlement, JTS agreed not to oppose entry of an Arbitration Award against it for a discounted present value of $139,050,406.77.³ For additional consideration paid to Eddystone, other third-parties were released from any and all follow-on claims.

On January 24, 2017, the SMA panel issued its Arbitration Award holding JTS liable for its obligations under the RSA. On February 17, 2017, Eddystone filed its Petition to Confirm the Arbitration Award in the amount of $139,050,406.77 against JTS in the United States District Court for the Southern District of New York (17-cv-1266-WHP). (Pl.'s Opp'n, Ex. 1) (Pet. to Confirm Arb. Award (Feb. 17, 2017), Eddystone Rail Co., LLC v. Jamex Transfer Servs., LLC , No. 17-cv-1266-WHP (S.D.N.Y.).) Given that the award arose out of a dispute regarding BTS's obligations under a maritime contract, Eddystone alleged that the court's jurisdiction was founded in admiralty under 28 U.S.C. § 1333(1).⁴ ( Id. , Ex. 1 ¶ 3.) The Defendants in this action requested, but were denied, leave to intervene in order to argue that the Arbitration Award should not be confirmed. In January 2019, however, the court agreed to stay the action pending our determination regarding alter ego liability. ( Id. , Ex. 2 (Mem. Op. & Order at 9) (Jan. 11, 2019), Eddystone Rail Co., LLC v. Jamex Transfer Servs., LLC , No. 17-cv-1266-WHP (S.D.N.Y.).)

On February 2, 2017, Eddystone filed this lawsuit, and filed its First Amended Complaint ("FAC") on September 7, 2018. (Doc. Nos. 1, 183.) Regarding subject-matter jurisdiction, Eddystone alleged:

This Court has subject-matter jurisdiction pursuant to 28 U.S.C. § 1333(1) (maritime jurisdiction). Eddystone seeks to enforce payment of a debt arising under a maritime contract. The maritime contract in question concerns Eddystone's providing the service of transloading crude oil from railcars delivered to Eddystone's facility to vessels at the facility's dock for subsequent shipment downriver. This Court also has jurisdiction under 28 U.S.C. § 1367(a) (supplemental jurisdiction).

FAC ¶ 31. Eddystone asserts claims for alter ego based on a breach of the RSA, intentional and constructive fraudulent transfer under the Pennsylvania Uniform Fraudulent Transfer Act, 12 Pa. C.S. §§ 5104(a), 5105, and breach of fiduciary duties of care and loyalty to creditors. (See id. ¶¶ 76-103.)

Defendants, Bridger Logistics and Ferrellgas (collectively, "BL/FG Defendants") asserted various defenses, as well as the following amended counterclaims against Eddystone: Counterclaim I – Tortious Interference with Contract; Counterclaim II – Fraudulent Inducement; Counterclaim III – Negligent Misrepresentation; Counterclaim IV – Breach of Contract; Counterclaim V – Breach of Implied Covenant of Good Faith and Fair Dealing; and Counterclaim VI – Rescission. Most of the BL/FG Defendants' defenses, as well as Counterclaims II – VI are premised entirely upon the RSA.⁵

There has been extensive motion practice in this case since its inception. Discovery, which is on-going, is a massive endeavor and involves a production of approximately 3 million pages. Defendants filed their Motion to Dismiss for Lack of Subject-Matter Jurisdiction on January 25, 2019, and Eddystone's Opposition was filed on February 22, 2019. (See Doc. Nos. 283, 294.) Defendants filed their Reply on March 11, 2019. (Doc. No. 301.) Eddystone filed its Sur-Reply on March 18, 2019. (Doc. No. 304.)

II. LEGAL STANDARD

A party may challenge a court's subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). "At issue in a Rule 12(b)(1) motion is the court's ‘very power to hear the case.’ "

Petruska v. Gan non Univ. , 462 F.3d 294, 302 (3d Cir. 2006) (footnote omitted) (quoting Mortensen v. First Fed. Sav. and Loan Ass'n , 549 F.2d 884, 891 (3d Cir. 1977) ). A motion filed under Rule 12(b)(1) may take two forms: (1) a facial attack, where the party contesting subject-matter jurisdiction attacks the face of the complaint; or (2) a factual attack, where the existence of subject-matter jurisdiction is attacked as a matter of fact. See id. n.3. "A facial attack concerns an alleged pleading deficiency[,] whereas a factual attack concerns the actual failure of a plaintiff's claims to comport factually with the jurisdictional prerequisites." Lincoln Ben. Life Co. v. AEI Life, LLC , 800 F.3d 99, 105 (3d Cir. 2015) (internal quotation marks and alterations omitted); Constitution Party of Pa. v. Aichele , 757 F.3d 347, 358 (3d Cir. 2014).

When a party files a Rule 12(b)(1) motion that mounts a facial attack to subject-matter jurisdiction, a court may consider only "the allegations of the complaint and documents referenced therein and attached thereto, in the light most favorable to the plaintiff." Gould Elecs. Inc. v. United States , 220 F.3d 169, 176 (3d Cir. 2000) (citations omitted). In...