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Showing 29 posts in Attorneys' Fees/Costs/Interest.

Court Of Chancery Awards Fee In Mootness Case

Posted In Attorneys' Fees/Costs/Interest

Frechter v. Cryo-Cell International Inc., C.A. 11915-VCG (October 7, 2016)

Now that disclosure-only settlements seem almost a thing of the past, so-called “mootness” fee awards or settlements may become more common. These occur when the corporation moots the claim by doing what the plaintiff says should be done, such as removing an invalid bylaw that tries to shift attorney fees.  However, attorney fees for such cases may not be as large as some might expect. This decision shows how the fee applications will be considered, with particular stress on the benefit resulting from the litigation.

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Court Of Chancery Rejects Fee Application From Litigation Funder

Posted In Attorneys' Fees/Costs/Interest

Judy v. Preferred Communication Systems, Inc., C.A. 4662-VCL (September 19, 2016)

This is a decision worth reading because it so well tells an interesting story. But its legal significance may well be that it holds a litigation funding firm is not entitled to an attorney fee award at least when it does not have a written agreement with a plaintiff entitling it to fees. Hence, if you are going to fund litigation, get the deal in writing. Of course, the decision has other important holdings, all set out in a good review of existing law on when fees may be awarded absent a contract.

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Court Of Chancery Determines Fee In A Transitory Property Case

Posted In Attorneys' Fees/Costs/Interest

Baker v. Sadiq, C.A. 9464-VCL (August 16, 2016)

When a derivative suit is settled in connection with a merger that cashed out minority stockholders, it makes sense to have the settlement proceeds go to those stockholders in proportion to their ownership. Thus, if they owed 10% of the stock and the majority owner is the party funding a settlement, the former stockholders get 10% of a settlement. How then is the attorney fee award for creating that benefit to be calculated? This decision holds that the fee should be based on just the amount of the actual benefit received by the former stockholders.

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Court Of Chancery Determines When Right To Advancement Vested In An LLC Agreement

Posted In Attorneys' Fees/Costs/Interest

Harrison v. Quivus System LLC, C.A. 12084-VCMR (August 5, 2016) (transcript )

This decision provides an excellent review of when the right to advancement under an LLC agreement vests so as to not be lost by the later discharge of the officer involved. Basically, when advancement is provided for upon becoming a covered person, the later discharge and suit against that person does not cause her to lose the right to have her fees advanced.  Importantly, in the LLC context – where the LLC Act defers to the parties’ choices in contracting – ultimately, the contractual language will control in any given case.  

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Court of Chancery Explains How To Apply Multiple Advancement Rights

Posted In Attorneys' Fees/Costs/Interest

Narayanan v. Sutherland Global Holdings Inc., C.A. 11757-VCMR (July 5, 2016)

This detailed decision explains how to interpret multiple sources, such as bylaws and contracts, to determine any conditions to the right to have attorney fees advanced. Absent some provision that ties each source together, each acts as an independent right to advancement. Thus, a condition imposed by one source is not a condition to advancement under an independent source of that right.

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Court Of Chancery Explains Limits On Discovery In Advancement Case

Posted In Attorneys' Fees/Costs/Interest

Harrison v. Quivus Systems LLC, C.A. 12084-VCMR (April 7, 2016)

This is an interesting bench ruling because it illustrates the limits on discovery into the reasonableness of the fees sought in an advancement case. In general, that discovery will be postponed until after the Court determines there is a right to advancement.

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Court Of Chancery Explains Advancement Rights Of Seller Representative

Posted In Attorneys' Fees/Costs/Interest

Hyatt v. Al Jazeera America Holdings II, LLC, C.A. 11465-VCG (March 31, 2016)

This is an interesting advancement case as it applies the usual test of whether the former directors have been sued “by reason of the fact” they were directors in the context of suit against former owners’ representative for a merger agreement escrow account. Thus, it is a helpful precedent to apply that test. The court held that advancement would be required when the acts alleged involved acts the former directors took in their capacity as directors, even if the underlying suit was against them as former owner representatives.  Thus it is the acts that lead to potential liability that count, not the capacity in which you are sued.

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Court Of Chancery Denies Advancement Until Undertaking Executed

Posted In Attorneys' Fees/Costs/Interest

Wong v. USES Holding Corp., C.A. 11475-VCN (February 26, 2016) 

This decision states what should be obvious — you do not get your expenses advanced until you undertake to repay them if you lose. Note the opinion also sets out the process to have advancement claims processed by a  special master.

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Court Of Chancery Explains Advancement Rights Of Former Director

Posted In Attorneys' Fees/Costs/Interest

Marino v. Patriot Rail Company LLC, C.A. 11605-VCL (February 29, 2016) 

As is well known, a former director may be entitled to have his fees advanced in suits against him even after he has resigned from the board. This decision explains the history behind those rights and how they have been steadily expanded over the years. It upholds advancement for acts committed as a director but not for post-resignation acts. It also sets out yet another way in which disputes over the amounts to be advanced will be determined.

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Court Of Chancery Limits Attorney Charging Lien

Posted In Attorneys' Fees/Costs/Interest

Sutherland v. Sutherland, C.A. No 2399-VCN (February 26, 2016)

An “attorney charging lien” allows an attorney to recover compensation for his services from a fund recovered with his assistance.  This decision limits the application of such liens to recoveries where the attorney has not already been paid for the work that led to that recovery.  In other words, if you have already been paid for the work that generated a fund, you cannot lien that fund for other work that did not generate it, even if it occurred in the same litigation. 

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Court Of Chancery Explains When A Fee Award Is Timely

Posted In Attorneys' Fees/Costs/Interest

Avaya Inc. v. Charter Communications Holding Company LLC, C.A. 10568-VCN (January 29, 2016)

Normally, the Court of Chancery does not favor fee applications before the litigation is completed. When, as here, the underlying instrument that provides for a fee award does permit such an application, the Court may grant it even when there is litigation between the same parties pending elsewhere.

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Court Of Chancery Awards Fees To Unsuccessful Objector

Posted In Attorneys' Fees/Costs/Interest

In Re Riverbed Technology Inc. Stockholders Litigation, C.A. 10484-VCG (December 2, 2015)

In what is probably an unprecedented decision, the Court in this case awarded fees to an unsuccessful objector to a settlement of merger litigation. Note that the Court was very cautious in doing so and warns that this should not be taken as encouragement to object to settlements.

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Court Of Chancery Declines Stay In LLC Advancement Case

Posted In Attorneys' Fees/Costs/Interest

Tulum Management USA LLC v. Casten, C.A. 11321-VCN (November 9, 2015)

A Delaware court will not stay its hand in favor of litigation elsewhere in an advancement or indemnification case absent “exceptional circumstances.”  More ›

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Court Of Chancery Explains When Director May Bring An Advancement Case

Posted In Attorneys' Fees/Costs/Interest

IN RE Genelux Corporation, C.A. 10612-VCP (October 22, 2015)

This is another example of when a director may seek advancement when he is acting affirmatively and not merely as a defendant.

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