Winshall v. Viacom International, Inc., Del. Supr., No. 39, 2013 (Oct. 8, 2013).
Issue Addressed: The Supreme Court affirmed a Chancery ruling that Viacom was not entitled to contractual indemnification, and thus was required to release escrow funds. A prior Supreme Court decision in this case from July 2013, regarding arbitrability, was highlighted on these pages here. Three prior Chancery decisions involving these parties, which provide more background details, were highlighted on these pages here, here and here.
The Delaware Supreme Court emphatically reiterated the Delaware motion to dismiss standard under Court of Chancery Rule 12(b)(6), to be one of “reasonable conceivability”, which is akin to “possibility”–and less stringent than the federal “plausibility” standard under the federal version of Rule 12(b)(6), which has been interpreted by the U.S. Supreme Court to be found at some point in the continuum between “possibility and probability.” See footnote 12.
The Court also clarified the standard applicable to the filing cross-appeals, and rejected the view that even if appellee prevailed, appellee must cross appeal to challenge an adverse subsidiary part of the trial court ruling. See footnote 13.
The Supreme Court also rejected claims for breach of implied covenant of good faith and fair dealing.
The Court explained that the duty to indemnify based on a contract will not also include the duty to defend unless the word “defend” is explicitly stated. See footnotes 28 to 30 and 36. The Court concluded that the language of the agreement did not require defense costs in the absence of a breach of an underlying representation or warranty.