In FGC Holdings Ltd. v. Teltronics, Inc., (Del. Ch., Jan. 22, 2007), read opinion here,  the Chancery Court awarded partial attorneys’ fees in a case that challenged a director’s seat via expedited proceedings under Section 225. The detailed facts of the case are set out in a prior opinion found at the following citation:  2005 Del. Ch. LEXIS 140 (Sept. 14, 2005).

The court noted that the award of attorneys’ fees is an exception to the American Rule that provides for each party to bear its own fees. The exception applies to egregious behavior when one party acts in bad faith, fraudulently, negligently, oppresively, frivolously, vexatiously, wantonly or oppressively.

The court also observed that 10 Del. C. Section 5106 allows the court, in its discretion, to award attorneys’ fees where equity so provides (case citation from footnote 15 omitted.) Of course, this is separate from costs that can be awarded pursuant to Chancery Court Rule 54(d) which were also awarded in this case.

Examples of why the court also awarded attorneys fees include: (i) continuing, baseless insistence that the trial did not involve a section 225 claim and that plaintiff’s did not prevail;  and (ii) opposition to a motion to amend the pleadings to conform to the evidence presented at trial.