The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
STATESVILLE DIVISION
CIVIL ACTION NO. 5:23-CV-00059-KDB-DCK
CROWN EQUIPMENT
CORPORATION,
Plaintiffs,
v. ORDER
DAVID BRADY, ET AL.,
Defendants.
THIS MATTER is before the Court on Defendant Pneu-Mech Systems Manufacturing,
Inc.’s (hereinafter “PMSMI”) Motion to Dismiss Defendants David Brady, William Tucker,
Brawtus Holding Company, LLC, and Brawtus Management Company, LLC’s (“Cross-
claimants”) First Amended Crossclaims (Doc. No. 79). The Court has carefully considered this
motion and the parties’ briefs and exhibits. Because the Court finds that the Cross-claimants have
plausibly alleged their entitlement to indemnity the Court will DENY the motion.
I. LEGAL STANDARD
Under Federal Rule of Civil Procedure 8(a)(2), a pleading, including a crossclaim, 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). However, “Rule 8(a)(2) still requires a ‘showing,’ rather than a blanket assertion,
of entitlement to relief.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 n.3 (2007).
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for “failure to state a
claim upon which relief can be granted” tests whether the complaint is legally and factually
sufficient. See Fed. R. Civ. P. 12(b)(6); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atlantic
Corp., 550 U.S. at 570; Coleman v. Maryland Court of Appeals, 626 F.3d 187, 190 (4th Cir. 2010),
aff'd sub nom. Coleman v. Court of Appeals of Maryland, 566 U.S. 30 (2012). In evaluating
whether a claim is stated, “[the] court accepts all well-pled facts as true and construes these facts
in the light most favorable to the plaintiff,” but does not consider “legal conclusions, elements of
a cause of action, ... bare assertions devoid of further factual enhancement[,] ... unwarranted
inferences, unreasonable conclusions, or arguments.” Nemet Chevrolet, Ltd. v.
Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009). Construing the facts in this manner,
a complaint must only contain “sufficient factual matter, accepted as true, to state a claim to relief
that is plausible on its face.” Id. (internal quotations omitted). Thus, a motion to dismiss under
Rule 12(b)(6) determines only whether a claim is stated; “it does not resolve contests surrounding
the facts, the merits of a claim, or the applicability of defenses.” Republican Party of North
Carolina v. Martin, 980 F.2d 943, 952 (4th Cir. 1992).
II. DISCUSSION
In this action, Crown Equipment Corporation (“Crown”) filed suit against a large group of
defendants based on damages it allegedly suffered from the allegedly negligent design and
manufacture of an industrial oven by PMSMI. (See Doc. No. 1). Further, Crown alleges that certain
individuals and entities engaged in a scheme to form various corporate entities, and over time, shut the
entities down to avoid client obligations. (Doc. No. 1, ¶¶ 1-5.). These Defendant entities and individuals
included the Cross-claimants, who were the initial entities and their owners (who remained on the Board
of Directors of PMSMI after the sale). However, the Cross-claimants assert in their crossclaim that they
had no control over PMSMI or involvement in any alleged wrongdoing and the individual Cross-
claimants in fact advised PMSMI not to pursue the business relationship with Crown. In terms of their
legal crossclaim, the Cross-claimants seek indemnity from PMSMI based on the indemnification
provisions of the corporation’s bylaws and pursuant to the common law doctrines of an implied-in-fact
contract or a contract implied-in-law.
As discussed above, the question before the Court at this early stage is not whether the Cross-
claimants’ indemnification claim will prevail on the merits (which, of course, will depend in turn on the
success of Crown’s disputed claims against them in the first place). Rather, the Court need only decide
if, accepting their factual allegations as true, whether it is plausible that the Cross-claimants are entitled
to indemnification. Based on the Cross-claims and a review of the PMSMI bylaws referenced in that
pleading, the Court readily finds that the Cross-claimants’ claim for indemnification is, at a minimum,
plausible. Indeed, the bylaws — as is typical in North Carolina corporate documents — specifically promise
indemnification for officers and directors. The Court also notes that to the extent there might be any
challenge to the authenticity or application of the proffered bylaws, PMSMI chose not to file any Reply
to the Cross-claimants’ opposition. Therefore, PMSMI’s motion to dismiss will be denied.
I. ORDER
NOW THEREFORE IT IS ORDERED THAT:
1. PMSMI’s Motion to Dismiss First Amended Cross-claims (Doc. No. 79) is
DENIED; and
2. This case shall proceed towards a resolution on the merits of the remaining claims
in the absence of a voluntary resolution of the dispute among the parties.
SO ORDERED ADJUDGED AND DECREED.
Signed: August 20, 2024
Kenneth D. Bell
United States District Judge woe