March 25, 2019
M&A Indemnity: Attorneys’ Fees Claim Outlasts Contractual Indemnity
Francis Pileggi recently blogged about a Delaware Superior Court decision holding that claims for attorneys’ fees arising out of a breach of a merger agreement didn’t accrue until after the Delaware Supreme Court ruled on the underlying breach of contract claim & the defendants refused to pony up. Here’s an excerpt:
A recent decision by the Complex Commercial Litigation Division of the Delaware Superior Court in Winshall, et al. v. Viacom International, Inc., (Del. Super.: 2/19), ruled that a claim for indemnification was not ripe until a final adjudication, after appeal, was decided. In a matter involving a claim for indemnification for attorneys’ fees based on a finding of a breach of a merger agreement by the Court of Chancery, which was affirmed by the Delaware Supreme Court, the Superior Court held that a subsequently filed indemnification claim was not barred by the statute of limitations because the claim did not become ripe until the affirmance by the Delaware Supreme Court. See Slip op. at 17-19.
In contrast, the court dismissed the plaintiff’s claims for indemnity for taxes and diminution in value based on the defendant’s delay in making contractual earnout payments. Unlike the claim for legal fees, the court held that these claims accrued at the time the applicable provisions of the merger agreement were breached, and that the statute of limitations on them had run.
– John Jenkins