In DeLucca v. KKAT Management, LLC., download file, the Chancery Court granted both advancement and “fees on fees,” in the context of a judgment on the pleadings under Rule 12(c). The decision was based on an interpretation of unambiguous contract provisions as a matter of law.
Unlike the typical corporate advancement case, the present dispute involved limited liability companies and an Operating Agreement that promised to indemnify so long as there was no “fraud, gross negligence or willful violation of the law.” As to any claim that might give rise to indemnification, the KKAT Companies promised advancement.
KKAT attempted to impose a “corporate capacity” analysis on the agreements despite it absence from the contractual text. In sum, the court concluded that “this is yet another case in which defendants in an advancement case seek to escape the consequences of their own contractual freedom. Regretting the broad grant of mandatory advancement they forged on a clear day, they seek to have the judiciary ignore the plain language of their contracts and generate an after the fact judicial contract that reflects their current preference. But it is not the job of a court to relieve sophisticated parties of the burdens of contracts they wished they had drafted differently but in fact did not. Rather, it is the court’s job to enforce the clear terms of contracts. Here, that duty requires that DeLucca’s Motion for Judgment on the Pleadings as to an Entitlement to Advancement be granted.” The court also awarded fees on fees.
The court also noted that parole evidence was neither helpful nor necessary and that the legal policy of the State strongly emphasizes contractual text as the overridingly important guide to contractual interpretation (citing Twin City Fire Ins. Co. v. Delaware Racing Ass’n, 840 A.2d 624, 628 (Del. 2003) (“under standard rules of contract interpretation, a court must determine the intent of the parties from the language of the contract”)).