White v. Curo Texas Holding, LLC, CA 12369-VCL

Background

White and Kumar, former officers/directors of Texas Hospice, sought contractual advancement of legal fees under §8.03 of the Texas Purchase Agreement (TPA) for defense of a Qui Tam action and a government investigation; Curo Texas Holdings (Curo) refused full payment.
This Court previously held (Rule 12(b)(6) Decision and Entitlement Order) that White and Kumar are Indemnified Persons entitled to advancement for the Qui Tam action and government investigation; the Entitlement Order directed use of Fitracks procedures to quantify amounts.
Under the Fitracks procedures, the claimant’s Delaware counsel certifies fees as advanceable; the respondent must pay undisputed amounts (and at least 50% if disputing more than half).
White and Kumar submitted $5,121,651.73 in demands; Curo paid only $858,898.20 (≈17%) and objected to the remainder, withholding $4,262,753.53 (≈83%).
Curo’s objections included (1) form/reasonableness of entries, (2) that some invoices pertained to non-covered persons or non-covered matters (e.g., other entities, Brown Action, home-health business), and (3) a novel “Cap Argument” that a separate deal-related indemnity cap limits advancement.
The Court largely grants White and Kumar’s Rule 88 motion: it rejects Curo’s procedural and substantive objections (except certain invoices for non-covered parties/expenses) and rejects the Cap Argument; directs further Fitracks processing consistent with the opinion and awards proportionate enforcement expenses and interest.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
1) Are White and Kumar entitled to advancement for fees defending the Qui Tam action and government investigation?	White: Yes — §8.03 grants mandatory advancement and prior orders already found entitlement.	Curo: No or limited — sought to relitigate scope and impose conditions.	Held: Yes — entitlement affirmed; Curo cannot impose extra conditions beyond the contract (e.g., budgets).
2) Must defendant pay invoices that counsel certified but which Curo says lack detail or are unreasonable/duplicative?	White: Certifications by Responsible Delaware Counsel and the invoices as a whole suffice; granular line-by-line review improper at advancement stage.	Curo: Many entries lack detail or are excessive; demands closer scrutiny and reductions.	Held: Most such objections rejected; certifications suffice absent clear abuse; one clerical billing error was corrected.
3) Are expenses for other entities or non-covered matters (Hunton/Duane Morris for third parties, Stanton, Brown Action, home-health business) advanceable?	White: Some such work was necessary and benefitted their defense and thus is advanceable.	Curo: Expenses for non-covered parties/matters are outside §8.03 and thus not advanceable.	Held: Expenses for entities that are not covered persons (e.g., Be Gentle, pre-retention Duane Morris work, Stanton expenses) are not advanceable; work that is useful to covered proceedings (including overlapping Brown/home-health issues) is advanceable if it would have been incurred absent the non-covered matter.
4) Does the TPA’s deal-related indemnity cap (Article IX §9.03(d)) limit advancement under §8.03 (the "Cap Argument")?	White: No — advancement under §8.03 is a separate, uncapped contractual right; deal-related indemnity caps do not apply.	Curo: Yes — advancement is a form of damages; indemnity exclusivity and cap in Article IX limit recovery to the escrow amount (~$858,898.20).	Held: Rejected — Court reads agreements as a whole; Article VIII advancement rights are distinct and uncapped; cap applies to deal-related indemnification, not personal advancement; even if arguable, advancement is a loan/credit and cap is inapplicable at this stage.

Key Cases Cited

Citadel Holding Corp. v. Roven, 603 A.2d 818 (Del. 1992) (party seeking advancement bears burden to justify amounts).
Danenberg v. Fitracks, Inc., 58 A.3d 991 (Del. Ch. 2012) (Fitracks procedures for advancement submissions and certifications).
Mahani v. EDIX Media Group, Inc., 935 A.2d 242 (Del. 2007) (use Delaware Rules of Professional Conduct factors to assess reasonableness of fees).
Homestore, Inc. v. Tafeen, 888 A.2d 204 (Del. 2005) (nexus/capacity analysis favors advancement where claims relate to corporate role).
Kaung v. Cole National Corp., 884 A.2d 500 (Del. 2005) (summary advancement proceedings are not for detailed line-by-line fee review).
Advanced Mining Sys., Inc. v. Fricke, 623 A.2d 82 (Del. Ch. 1992) (advancement is a credit/loan distinct from indemnification liability).
Fasciana v. Electronic Data Sys. Corp., 829 A.2d 160 (Del. Ch. 2003) (advancement stage should avoid micromanaging fee disputes; enforcement expenses proportionate to success).