Often times, a corporate official seeking advancement or indemnification will demand “fees on fees” – i.e. recovery of the costs associated with making a demand for advancement or indemnification.

As a general matter, a party otherwise entitled to advancement of defense costs is not entitled as well to the routine costs of claiming such entitlement and thereafter cooperating with the corporation in connection with the advancement process.  See Fasciana v. Electronic Data Systems Corp.(Fasciana I), 829 A.2d 160, 175 (Del. Ch. 2003) (the Delaware Supreme Court “does not hold that a plaintiff seeking advancement is entitled to have all of his expenses advanced if he merely proves that some portion of the case against him is subject to a contractual right of advancement”).

Rather, such a party may be entitled to fees, in the discretion of the Court, upon a showing that the corporation has unreasonably refused to advance properly requested fees to which he or she is clearly entitled.  See Xu Hong Bin v. Heckmann Corp., No. 4802-CC, 2010 WL 187018, at *5 (Del. Ch., Jan. 8, 2010) (holding that the plaintiff “[was] not entitled to be reimbursed for any fees incurred seeking indemnification rights . . . because [the corporation] has not disputed [his] right to indemnification or refused to pay reasonable expenses”).

If you would like to speak to a litigator in Fox Rothschild’s Delaware office, please reach out to Sid Liebesman (302) 622-4237 or Seth Niederman (302) 622-4238.