Superior Court Bars Indemnification Claim Brought By Successful Chancery Plaintiffs
This decision will counsel plaintiffs to seek indemnification under a contract during the underlying action for breach of that contract, and not to initiate a subsequent, separate action.
The plaintiff shareholders of a subsidiary brought an action against the parent company for breach of the merger agreement between the two companies. The plaintiffs prevailed in that action and were awarded damages. They sought attorneys’ fees and costs, but the Court of Chancery’s final order did not address that issue.
After the final order and judgment was entered, the plaintiffs requested reimbursement for their attorneys’ fees, pursuant to the indemnification provision in the merger agreement. When the defendant refused, the plaintiffs filed this action in Superior Court.
The Superior Court granted summary judgment to the defendant, holding that the plaintiffs’ request for indemnification was barred by res judicata and the statute of limitations. The claim for attorneys’ fees arose at the same time the defendant breached the merger agreement and thus should have been raised in the Chancery action.Share