Sunday, November 24, 2013

Citadel Holding Corporation v. Roven case brief

Citadel Holding Corporation v. Roven case brief summary
603 A.2d 818 (Del. 1992)

Plaintiff former director filed an action alleging that he was entitled to indemnification from defendant corporation for the expenses he incurred in defending a suit brought against him by the corporation. The Superior Court of the State of Delaware in and for New Castle County granted partial summary judgment to the director. The corporation appealed. The director cross-appealed from the denial of his request for prejudgment interest.

The corporation brought suit in federal court against the former director alleging that he violated federal securities laws while he was a director. The former director incurred substantial expenses in defending the suit. While the suit was still pending, the former director initiated an action in state court alleging that the corporation was contractually bound to indemnify him for his litigation expenses. The trial court determined that the corporation was obligated to advance the costs of defending the suit to the former director.


  • The court held: 
  • (1) the former director's right under the indemnity agreement to initial advancements for litigation expenses was not dependent on his right to indemnification, 
  • (2) the expenses the former director incurred in pursuing his counterclaims and affirmative defenses were covered by the indemnity agreement, 
  • (3) the former director could not assert the attorney-client or work product privileges to defeat the corporation's attempts to discover evidence regarding the reasonableness of the litigation expenses, and 
  • (4) the former director was entitled to prejudgment interest as a matter of law.

The court affirmed the grant of partial summary judgment to the former director and reversed the denial of his request for prejudgment interest. The court remanded the matter for further proceedings.

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