Applying a contractual fee-shifting provision when it is not clear which party prevailed, is a topic that does not benefit from an extensive body of case law, relatively speaking. The recent Court of Chancery decision in Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund I, LLLP, C.A. No. 7906-VCG (Del. Ch. Dec. 31, 2020), provides an additional source of authority for resolving this issue of outsized importance to lawyers and clients alike. See Slip op. at pages 15 and 16.
The court also addressed when an “ordinary” contractual indemnification provision might allow for first-party claims for fee shifting, and refers to the recent Chancery decision in International Rail Partners, highlighted on these pages, to explain that only when a contract explicitly provides for first-party claims in an ordinary or “bilateral commercial” contractual indemnification provision will it be deemed to cover fee shifting–as compared to governing documents of a company or “constitutive business entity documents”, such as an LLC agreement, that provide for advancement and indemnification provisions. See Slip op. at 11 to 13.
In this matter, which was also the subject of many other Chancery decisions, some of which have been highlighted on these pages, the court observed that over eight years of hotly contested litigation the parties incurred collectively about $60 million in legal fees.
Over $122 million in damages was sought, but the plaintiffs were only awarded about $212,000.
The court provides sound reasoning to explain why there was no clear victor in this litigation and for those and related reasons, the court declined to award fees to either party.
Editor’s note: There is no typo in the name of the defendant above. The correct designation for the defendant entity is: LLLP.