Waltuch v. Conticommodity Services, Inc.
§ Silver expert trader Waltuch worked for Conti trading silver.
§ Company and Waltuch were sued by private suits and Federal govt.
§ All private suits eventually settled and Conti paid settlement. This cost Waltuch personally 2.1 MM
§ Also cost Waltuch $1.2 MM in defending the government suit.
§ Waltuch is seeking indemnification for legal expenses.
§ Question if company must indemnify for expenses: §145 of Delaware act requires acting in good faith and can by agreement expand indemnification. §145(a) – (f).
§ Court holds corporation can agree by contract to expand indemnification beyond the statute BUT CANNOT be inconsistent with statute. The agreement doesn’t require good faith but the court says you cant do that…the power to indemnify is conditioned on good faith, and thus cannot draft an agreement such as to remove the good faith requirement of the statute.
§ Waltuch argues for reimbursement….company doesn’t want to pay.
§ Court NOTES under section (g) and (g) only, you can acquire insurance whether or not you have the power to indemnify, ie without requiring good faith, but not for other sections. It is specific to section (g).
§ Company says he didn’t act in good faith…at least to one claim. So Waltuch wins one claim and not the other.
§ The agreement reads successful on the merits or otherwise under §145(c). This doesn’t require good faith…just that he be successful. Court finds he was successful otherwise which = vindication as he was NOT Adjudged guilty on the personal suit.