Delaware Business Litigation Report

Joint Tortfeasors and Fiduciary Duty Claims

 

It is becoming increasingly clear that Court of Chancery judges believe the Delaware Uniform Contribution Among Tortfeasors Act ("DUCATA") applies to breach of fiduciary duty claims.  E.g., Hampshire Group Ltd. v. Kuttner, 2010 WL 2739995, at *54 (Del. Ch. July 12, 2010);  J. Travis Laster & Michelle D. Morris, Breaches of Fiduciary Duty and the Delaware Uniform Contribution Act, 11 Del. L. Rev. 71 (2010).  In light of this development, attorneys representing directors alleged to have breached their fiduciary duties should make sure to address the effects of DUCATA when drafting settlement agreements.  Attorneys should include language providing that settling defendants are not liable for contribution to defendants who do not settle.

An example of language addressing Section 6304 of DUCATA might include language like the following: "In accordance with 10 Del. C. 6304(b), this settlement agreement reduces the damages that the plaintiff may recover against tortfeasors other than the settling defendants by the pro rata share of the settling defendants' liability. This language is intended to comply with 10 Del. C. 6304(b) so as to preclude any liability of the settling defendants to any other alleged tortfeasors, for contribution or otherwise."

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