A recent Court of Chancery decision rejected an attempt to recoup advancement based on the terms of an indemnification clause. See Computer Sciences Corporation v. Pulier, C.A. No. 11011-CB (Del. Ch. May 21, 2019), for this recurring issue in Delaware corporate and commercial litigation.

Issue Addressed:  May a company recoup, via an indemnification claim, the amounts it previously was required to pay via an advancement ruling, based on the applicable contractual indemnification provisions.

Prior Procedural History:

·     Prior rulings in this matter were highlighted in prior blog posts on these pages–including rulings granting advancement.  See also transcript ruling in this matter cited at footnotes 12 and 13, that granted advancement based on the prior holding that: “conduct as an officer . . . was squarely at issue.”  Slip op. at 4 (citing footnotes 12 and 13).

Court’s Holding:

·     Based on the applicable terms of the indemnification provision in the agreement of sale, the court determined that the indemnification provisions only covered post-closing losses for “board-approved” liabilities related to the sale, which was not the basis for the prior advancement granted in this case.