Court Of Chancery Explains When Duplication Avoids Advancement Obligation
Pontone v. Milso Industries Corporation, C.A. No. 8842-VCP (August 22, 2014)
If a party has 2 possible sources of reimbursement for her fees, may she choose which one to sue? This decision deals with the case law on when a prior advancement of fees precludes a party from seeking advancement of new fees from a different party. The short answer is that a party may chose who to seek advancement from when more than 1 source is obligated.
The decision is also important for its analysis on when a claim may relate back to the time when the director was still a director, even if the claim also deals with post-directorship acts. That is important because the director is only entitled to advancement for acts related to his role as a director.
Finally, the opinion is useful for its discussion on when counterclaims are subject to advancement. For example, a counterclaim for defamation may be subject to advancement.