Danenberg v. Fitracks, Inc.
2012 Del. Ch. LEXIS 53
| Del. Ch. | 2012Background
- Danenberg seeks advancement and indemnification from Fitracks, Inc. for defense of claims by Aetrex Worldwide in the Underlying Action.
- The court previously held that Fitracks must advance and indemnify Danenberg but did not fix the exact amounts in a Summary Judgment Opinion dated Jan. 3, 2012.
- Danenberg applied for a specific award of fees and expenses after the parties failed to agree on the amounts to date.
- Danenberg seeks $292,019.91 in advancement and $276,332.13 in indemnification; the court must determine reasonableness under Rule 1.5(a) factors.
- The court recognizes the ‘Pizza Principle’ and the broad burdens imposed by a broad, unfocused counterclaim against Danenberg in the Underlying Action.
- The court outlines procedures for future advancement requests and discusses appointing a special master as a last resort.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Reasonableness of advancement for Underlying Action | Danenberg's fees constitute a reasonable estimate under Rule 1.5(a). | Fees were inflated given stage of action and limited contested work. | Danenberg reasonably entitled to $292,019.91. |
| Reasonableness of indemnification for this Action | Indemnification for this action reflects reasonable work and is supported by the same factors. | Costs were excessive due to defendant's conduct and strategy in the underlying matter. | Danenberg reasonably entitled to $276,332.13. |
| Procedures for future advancement requests | Special master unnecessary; streamlined procedures suffice. | Special master may be warranted to ensure efficiency and reasonableness. | Adopted a structured monthly advancement process and meet-and-confer framework; no automatic special master required. |
Key Cases Cited
- Mahani v. EDIX Media Gp., Inc., 935 A.2d 242 (Del. 2007) (Rule 1.5(a) factors guide reasonableness of fees)
- Citadel, 603 A.2d 821, 603 A.2d 821 (Del. 1992) (indemnification and advancement rights arise from contract and statute)
- Sugarland Indus., Inc. v. Thomas, 420 A.2d 142 (Del. 1980) (Sugarland factors inform reasonableness of fees)