In TravelCenters of America LLC v. Brog, (Del. Ch., Dec. 5, 2008), read opinion here, the Chancery Court denied a claim for indemnification based on the argument that the provisions of the parties’ LLC agreement were breached. The Court reached this conclusion notwithstanding its reasoning in an earlier opinion that the notice provisions of the agreement were not complied with in connection with expressions of interest to nominate a person to the board of directors of the LLC pursuant to the procedures required in the agreement.
The Court determined that the notice provisions that were violated were conditions and not promises. Thus, in light of the agreement not obligating the defendant to assure that the conditions would occur–as compared to a provision that is a promise to perform, there was no entitlement to remedies for breach of the non-occurrence on the condition. Therefore, there was no right to indemnification that would otherwise apply to the breach of a promise in the agreement. The ruling was made based on a motion for judgment on the pleadings under Rule 12(c).
Three prior decisions in this case were summarized here.
UPDATE: The Wall Street Journal online edition highlighted this post here.