Delaware Business Litigation Report

Delaware Supreme Court Interprets Deadline for Bringing Indemnification Claims

North American Leasing, Inc. v. NASDI Holdings, LLC, No. 192, 2020 (Del. Apr. 11, 2022)
Defendants acquired construction entities from plaintiffs and agreed to indemnify plaintiffs for any losses arising from performance and payment bonds on existing projects. Losses occurred in connection with one of the projects in 2017, and plaintiffs gave the defendants notice of indemnification claims for nearly $21 million. Defendants rejected the claims as untimely under the acquisition agreement, which they argued had a strict notice deadline of 2016.

A majority of the Supreme Court affirmed the Court of Chancery’s holding in favor of plaintiffs for the full amount of their claim. The Supreme Court’s decision turned on its interpretation of “but in any event” language in the acquisition agreement relating to the deadline for providing notice of an indemnification claim. Defendants argued that the language explicitly established a strict 2016 deadline even if claims or losses had not yet arisen. The Supreme Court, however, agreed with the Court of Chancery that the only reasonable interpretation of the language was for the time limitations to run once the indemnitee became aware of the existence of the claim. Two justices dissented, reasoning that the plain language of “in any event” created a strict 2016 deadline for notice of all indemnification claims, even if losses had not yet arisen, and that the agreement provided for alternative remedies to indemnification for the harm plaintiffs had suffered.

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