Crace v. Robert Weed Plywood Corporation

CourtDistrict Court, N.D. Indiana
DecidedSeptember 20, 2025
Docket3:23-cv-00665
StatusUnknown

This text of Crace v. Robert Weed Plywood Corporation (Crace v. Robert Weed Plywood Corporation) is published on Counsel Stack Legal Research, covering District Court, N.D. Indiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Crace v. Robert Weed Plywood Corporation, (N.D. Ind. 2025).

Opinion

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF INDIANA SOUTH BEND DIVISION

NANCY CRACE, DONALD WEED,

Plaintiffs,

v. Case No. 3:23-CV-665-CCB-APR

ROBERT WEED PLYWOOD CORPORATION, DAVID WEED, WILLIAM WEED,

Defendants.

OPINION AND ORDER Before the Court are three motions to dismiss Plaintiffs’ First Amended Verified Complaint for Damages and Jury Trial Demand (ECF 59)1. One was filed by Defendant David Weed (ECF 71), another by Defendant Robert Weed Plywood Corporation (ECF 73), and the third by Defendant William Weed (ECF 74). Each motion seeks dismissal of all seven counts in the first amended complaint. Based on the applicable law, facts, and arguments, all three motions to dismiss will be granted. I. RELEVANT BACKGROUND This case arises from events at Robert Weed Plywood Corporation (“the Company”), a closely held corporation. The following facts are alleged in the First

1 Jurisdiction arises in this case based on the diversity of citizenship among the parties consistent with 28 U.S.C. § 1332 and this Court’s previous ruling identifying Robert Weed Plywood Corporation as an actual defendant rather than a nominal defendant. (See ECF 6). Nothing in the first amended complaint changes the Court’s previous jurisdictional analysis. Amended Verified Complaint (“FAC”) and accepted as true for purposes of deciding the pending motions to dismiss.

The Company was started on January 17, 1967, by Robert Weed. (ECF 59 at 2). Robert passed away in 2006 and left the Company to his children—Plaintiff Nancy Crace, Plaintiff Donald Weed, and Defendant David Weed. (Id.). After Robert’s death, David received 50.998% of the Company’s shares, while Donald and Nancy received 14.322% and 14.211% respectively. (Id. at 3). When Robert died, David also became CEO and Chairman of the Company. (Id. at 4). Under David’s leadership, the Company was

initially profitable such that Plaintiffs received profit distributions as shareholders. (Id.). Even so, Plaintiffs were given little information about the Company’s operations despite repeated requests. (Id.). Donald, Nancy, and David were beneficiaries of the Peggy Ann Weed Irrevocable Trust, established in 2009 and amended in 2012 (“Peggy Trust”). (Id.). David

took out an $8.25 million note from the Peggy Trust, payable in 2014. (Id.). David also took out a $2.97 million mortgage from the Peggy Trust and secured it with property owned by the Company. (Id. at 4–5). Plaintiffs were not told about these liabilities or whether they were ever repaid. (Id. at 5). According to Plaintiffs, these liabilities, purportedly incurred for the benefit of the Company, “decreased shareholder equity,”

and the value of the shares they hold. (Id.). In 2013, David paid a $10 million settlement to his ex-wife using the Company’s assets assuring Plaintiffs that he would repay the Company. (Id.). David has not confirmed to Plaintiffs that this amount was repaid despite multiple requests for confirmation. (Id.). And David took out other loans and tried to establish a line of credit on behalf of the Company using Peggy Trust assets as collateral. (Id.).

As of 2020, David was drawing an annual salary of $138,664 from the Company and received distributions of profit. (Id.). David’s son, Defendant William Weed, was also employed as a director and officer of the Company and drew an annual salary of $267,417. (Id. at 6). On September 17, 2021, William and David executed an employment agreement for David’s employment at the Company providing a yearly salary of $200,000 for him along with full benefits and coverage of all business expenses. (Id. at 6).

Before David received this 44% salary increase, the Company advised Donald and Nancy that the Company was either no longer profitable or would stop making profit distributions to shareholders. (Id.). Plaintiffs have not received any profit distributions since 2020. (Id. at 19). William replaced David as CEO of the Company on May 6, 2022, and as

Chairman of the Company’s Board on November 8, 2022. (Id. at 9). William owns or owned 1.981% of the Company’s shares. (Id. at 3). Peggy Weed, recently deceased, or the Peggy Trust owns or owned the shares of the Company not owned by David, Donald, Nancy, and William. (Id. at 4). On these facts, Plaintiffs bring four explicitly derivative claims2 and three direct

claims3 in the FAC against David and William. Plaintiffs’ claims are all based on

2 Count I: Breach of Fiduciary Duty; Count II: Unjust Enrichment; Count III: Waste, Self-Dealing, Mismanagement, and Misappropriation of Corporate Assets; and Count IV: Constructive Fraud. 3 Count V: Breach of Fiduciary Duty; Count VI: Constructive Fraud; and Count VII: Accounting David’s and William’s alleged financial misdeeds in their roles at the Company, which allegedly increased the value of their own shareholder benefits to intentionally decrease

the shareholder benefits owed to Plaintiffs. In raising their direct claims, Plaintiffs identify two known creditors of the Company. (Id. at 19). They allege they are entitled to recover damages owed them personally and that the creditors are owed less than they are. (Id.). They also state that no other shareholders could bring claims against David and William on these grounds. (Id.). Beyond their demands for records, Plaintiffs have not made any demand upon

the Company’s directors, officers, or managers to investigate and address their allegations of breach of fiduciary duty, self-dealing, corporate waste, mismanagement, and use of corporate office to achieve personal objectives. (Id. at 9). Plaintiffs allege that such a demand would be futile because David and William would be responsible for investigating their own actions; are not disinterested; would be subject to significant

risk of personal liability for Plaintiffs’ claims against them; and historically have both withheld information from Plaintiffs and interfered with their attempts to enforce their shareholder rights. (Id.). With some modified allegations, the FAC includes the same seven counts raised and dismissed by this Court in the original complaint. (Compare ECF 59, with ECF 1 and

56). In dismissing the original complaint, the Court found that the statute of limitations question must be decided by a factfinder; Plaintiffs’ direct claims were derivative claims; the original complaint did not plead demand, demand futility, or the Barth exception to the demand requirement; and Plaintiffs did not satisfy the demand requirement for their claims. (ECF 56). These same issues drive Defendants’ instant motions to dismiss. II. LEGAL STANDARD

The Court accepts all well-pleaded factual allegations as true and draws all reasonable inferences in the plaintiff’s favor when reviewing a motion to dismiss under Fed. R. Civ. P. 12(b)(6). See Reynolds v. CB Sports Bar, Inc., 623 F.3d 1143, 1146 (7th Cir. 2010). A complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The statement must contain

enough factual matter, accepted as true, to state a plausible claim, not a speculative one. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim must be plausible, not probable. Indep. Tr. Corp. v. Stewart Info. Servs.

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