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Court of Chancery Enforces Section 145 Indemnification Rights of Subrogee

Posted In Indemnification

Meyers v. Quiz-Dia LLC, C.A. No. 9878-VCL (Del. Ch. Mar. 16, 2018)

This is an interesting indemnification decision for its handling of subrogation rights in the indemnification context, one involving former Quiznos officers.  First, it holds that, generally speaking, when a party who may be secondarily liable for indemnifiable litigation costs covers the indemnitee’s litigation costs, it may then recover those costs from the party who is primarily liable.  Second, it questions whether the “volunteer” exception can apply to subrogation rights in the Section 145 indemnification context.  Third, it holds that the Court will enforce fee-sharing arrangements among defendants such that the indemnitee can only recover its pro rata proportion of the fees.  Fourth, it enforces such a limitation on a subrogee, such that the subrogee cannot recover more than the indemnitee could have recovered. Fifth, it holds that a subrogee has the same right to fees-on-fees that the indemnitee would have if it had been the party seeking indemnification.