Posts tagged Attorney Fees

Court Of Chancery Explains Their Corporate Benefit Rule

Zimmerman v. Crothall, C.A. 6001-VCP (October 14, 2013)

When litigation confers a benefit upon a corporate entity, it is only fair that entity pay the fees incurred. Yet what constitutes a benefit may be contested, particularly by the corporation that is the subject of the suit. Here the Court held that forcing the LLC to comply with its agreements constituted such a benefit that fees should be awarded.

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Court Of Chancery Explains When To Award Fees For Litigation Misconduct

ASB Allegiance Real Estate Fund v. Scion Breckenridge Managing Member LLC, C.A.5843-VCL (September 16, 2013)

When does a litigant"s conduct before or after the litigation is filed justify fee shifting? This careful decision answers that question.

To begin with, mere silence about a drafting error during contract negotiations is not the sort of fraud that warrants fee shifting.

As to post litigation fee shifting, needlessly increasing the costs as a leverage technique does warrant fee shifting. The decision also gives a litany of other examples that is a useful guide.

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Court Of Chancery Declines Award While Case On Appeal

Huff v. Longview Energy Company, C.A. 8453-CS (August 12, 2013)

This is an interesting decision because it involves some real nerve by directors who seek indemnification even after they lost big time in the underlying litigation. Their claim is that some of the counts against them were withdrawn, they were "successful" and hence entitled to be indemnified. The Court avoided deciding if this is correct by holding that so long as the underlying case is on appeal, it is better to wait to see how the appeal turns out and if the previously withdrawn claims are reinstated.

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Court Of Chancery Limits Advancement

Emerging Europe Growth Fund L.P. v. Figlus, C.A. 7936-VCP (March 28, 2013)

When may a partnership demand advancement of its litigation expenses from a limited partner who has arguably breached the partnership agreement?  Only when the partnership agreement is very clear in granting that right, according to this decision.

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Court Of Chancery Explains Fee Award In Disclosure Case

In re PAETEC Holding Corp. Shareholders Litigation, C.A. 6761-VCG (March 19, 2013)

This decision gives a good explanation of how to calculate fees in a supplemental disclosure case.  It is particularly noteworthy in comparing the fees awarded to those won in other cases.

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Court Of Chancery Limits Fees For Unsuccessful Claims

Dawson v. Pittco Capital Partnership,  C.A. 3148-VCN (January 31, 2013)

This decision affirms the rule that attorney fees should be apportioned between those claims that succeeded and those that did not.

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Agreement to Indemnify Does Not Include Fees

Bear Stearns Mortgage Funding Trust 2007-AR2 v. EMC Mortgage LLC,  C.A. 6861-CS (January 15, 2013, revised January 17, 2013) As this decision points out, an agreement to indemnify against loss does not necessarily mean that the indemnitee also recovers its attorney fees. This decision was substantially modified on 1/12/15 Share

Court Of Chancery Awards Fees Separately For Disclosure And Settlement

In re MoneyGram International Inc. Shareholder Litigation, C.A. 6387-VCL (January 7, 2013)

This is a somewhat unusual fee award because of the way the Court did the calculation of the amount. The court divided the award into two parts, one for the additional disclosures and the second part for the settlement fund created by the plaintiff's efforts. The disclosure award is also larger than typical awards for added disclosures.

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Court Of Chancery Permits Limits On Advancement

Miller v Palladium Industries Inc., C.A. 7475-VCN (December 31, 2012)

This decision illustrates the need for careful drafting of bylaws regarding advancement rights.  The plaintiff claimed entitlement to mandatory advancement under the Company's bylaws.  However, the bylaws also provided that advancement was required "unless" the Board decided otherwise. The Court held that the word "unless" made advancement discretionary.  In contrast, a different bylaw that made advancement subject to board approval has been held to be mandatory so long as the request met the board's technical requirements as to the form of the requested advancement.  A word can make a lot of difference.

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Court Of Chancery Imposes Attorney Fees For Bad Faith

Soterion Corporation v. Soteria Mezzanine Corporation, C.A. 6158-VCN (October 31, 2012)

Too often a plaintiff will file suit just to put pressure on the other side to get a settlement of a business dispute.  In this decision, after finding that the complaint included knowingly false factual allegations, the Court imposed attorneys' fees on the plaintiff for suing when it had decided "not to bring his claim to definitive adjudication."  This illustrates the Court of Chancery's understandable lack of tolerance for litigants who waste its time and the other side's money.

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Court Of Chancery Explains How To Calculate Award In Non-Monetary CAse

Dias v. Purches, C.A. 7199-VCG (October 1, 2012)

This is a classic example of what not to say in an argument unless you want to get the Court mad. In addition, this decision again explains how to calculate a fee award when the corporate benefit achieved is non-monetary.

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Supreme Court Upholds Southern Peru Case

Americas Mining Corporation v. Theriault, No.  29, 2012 (August 27, 2012) The Delaware Supreme Court has upheld the largest attorney fee award in Delaware history.  In doing so, the Court has squarely upheld the use of percentages to award fees out of the common fund created by the litigation and disclaimed the so-called "lodestar" approach. The decision is also noteworthy for its upholding of the Court of Chancery's damages award, also probably the largest in Delaware history. On September 27, 2012, the Supreme Court also denied a motion for reargument. The reargument opinin is noteworty bcaue it rejected te "look through" theory that the benefit confererd by a derivative suit should be limited to the interest in the corporation held by its the non-defendant stockholders. Share

Court Of Chancery Resolves Allocation Issue

ASB Allegiance Real Estate Fund v. Scion Breckenidge Managing Member LLC,  C.A. 5843-VCL (July 9, 2012)

Allocating a fee claim between various losing parties in the case that you won is difficult most of the time.  This decision shows that when all the claims are sufficiently related, you may not need to do so.  The defendants are then jointly and severally liable.

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Court Of Chancery Awards Fees For Defending Fee Request

Coughlin v. South Canaan Cellular Investments, C.A. 7202-VCL (July 6, 2012)

In a "man bites dog" case, the Court of Chancery awards attorney fees for opposing a Rule 11 claim for fees.  This illustrates that the Court really does not like Rule 11 motions and those need to be made only after careful thought.

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Court Of Chancery Awards Fees For Fraud

Paron Capital Management LLC v. Crombie,  C.A. 6380-VCP (May 22, 2012)

Recovering attorney fees is rare in Delaware litigation.  However, this decision enforces another of the few exceptions to the American rule that usually denies a fee award.  The exception is for when a fraud requires a plaintiff to spend the fees in defense or prosecution of a claim involving a third party.  In that case, the fees are really just damages caused by the fraud and may be recovered.

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