Billing Associates Northwest LLC v. Addison Data Services LLC, 2:20-cv-01854-RSM

Background

Billing Associates Northwest (WA LLC) contracted in 2011 to market ADS’s (Texas LLC) submetering/billing services; the contract designated Texas law and required ADS to deposit tenant payments into a Trust Account.
Billing Associates terminated the contract in 2014; ADS filed Chapter 7 in July 2014, a Trustee was appointed, and an automatic stay prevented some investigation until the stay lifted in December 2016.
In May 2015 Billing Associates agreed to and received a liquidated allowed unsecured claim under a Settlement Agreement and Release that the Bankruptcy Court later approved.
Billing Associates alleges ADS diverted Trust funds to ADS’s operating account and to managers; it later reopened the bankruptcy (2020) and filed this suit alleging breach of fiduciary duty by ADS and aiding-and-abetting by ADS’s managers/affiliates.
The district court previously dismissed claims twice (with leave to amend). Defendants moved to dismiss the Second Amended Complaint under Rule 12(b)(6); Billing Associates failed to timely oppose. The court dismissed all claims without leave to amend, finding the Release, statutes of limitations, and Texas’s one-satisfaction rule dispositive.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Bankruptcy Settlement Agreement/Release bars the claims	Billing Associates contends the Release did not cover ADS/non-ADS Defendants because the Trustee and common counsel allegedly represented otherwise during discussions	ADS argues the Release unambiguously released all claims arising on or before the effective date and was approved by the Bankruptcy Court	Release is unambiguous and bars the claims; dismissal appropriate under Rule 12(b)(6)
Whether claims are time-barred / whether equitable tolling applies	Billing Associates claims it learned critical facts only after the bankruptcy closed and thus equitable tolling or later discovery saves claims	Defendants argue plaintiff knew or should have known facts earlier; plaintiff’s amendments are inconsistent and untimely; judicial estoppel and ordinary SOL principles apply	Claims against ADS (and Remaining Defendants) are barred by statute of limitations; equitable tolling not warranted; judicial estoppel and prior pleadings inconsistent with later assertions
Whether Texas’s one‑satisfaction rule precludes recovery	Billing Associates implies its present claim seeks distinct relief from the bankruptcy recovery	ADS contends plaintiff already recovered for the injury via the bankruptcy release and cannot recover again under a different theory	One‑satisfaction rule bars relitigation of the same injury; thus an independent basis to dismiss
Whether claims against Remaining Defendants survive (duty, jurisdiction, timeliness)	Billing Associates alleges aiding-and-abetting and points to Trustee/counsel conflicts; it purchased or sought to pursue claims after bankruptcy	Remaining Defendants argue claims are time‑barred, plaintiff fails to plead a duty owed to it (vs. Trustee), and plaintiff has not carried burden to show personal jurisdiction	Claims against Remaining Defendants dismissed: barred by SOL; other defenses (including lack of jurisdiction) unopposed and persuasive

Key Cases Cited

Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (establishes plausibility standard for complaints)
Ashcroft v. Iqbal, 556 U.S. 662 (legal conclusions not accepted as true on a motion to dismiss)
Baker v. Riverside County Office of Educ., 584 F.3d 821 (9th Cir. 2009) (Rule 12(b)(6) standard discussion)
Skilstaf, Inc. v. CVS Caremark Corp., 669 F.3d 1005 (9th Cir. 2012) (bankruptcy release effect on subsequent claims)
Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299 (Tex. 2006) (Texas one‑satisfaction rule)
In re Shoot the Moon, LLC, 635 B.R. 568 (Bankr. Mont. 2022) (dismissal based on prior settlement/release)
Boucher v. Shaw, 572 F.3d 1087 (9th Cir. 2009) (automatic stay protections do not extend to corporate officers)
Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797 (9th Cir. 2004) (plaintiff bears burden to show personal jurisdiction)