Delaware Business Litigation Report

Court Declines to Award Fees on Fees in Advancement Proceeding Where Not Required under Indemnification Agreement and Plaintiff Failed to Achieve Cognizable Success in Prosecuting Claim

Kaung v. Cole National Corporation, C.A. No. 163-N, 2005 WL 3462250 (Del. Ch. Dec. 13, 2005). On remand in an advancement action, Plaintiff filed a motion requesting an award of his attorneys' fees and costs incurred in prosecuting his claim. In the previous proceeding, the Court of Chancery had held that Plaintiff was not entitled to advancement and ordered Defendant to repay fees that had already been advanced to him. On appeal, however, the Delaware Supreme Court held that the Court of Chancery erred in reaching the recoupment issue prematurely, rather than leaving it for a later proceeding in which Plaintiff's ultimate right to indemnification could be decided. On remand, the court denied Plaintiff's motion requesting an award of his attorneys' fees and costs. The court found the portion of Plaintiff's indemnification agreement providing for payment of attorneys and costs regardless of the outcome to be inapplicable, because that provision only applied where Defendant failed to perform its obligations under the agreement, which the court found was not the case. The court also rejected Plaintiff's alternative argument that the partial, procedural reversal that he achieved at the appellate level constituted a partial success in prosecuting his advancement claim, which would have entitled him to partial reimbursement. Share