This post was prepared by Andrew J. Czerkawski, an associate in the Delaware office of Lewis Brisbois, who is scheduled to be sworn in to the Delaware Bar in December 2023.
In Tilton v. Stila Styles, LLC, 2023 Del. Super. LEXIS 772 (Del. Super. Ct. Sep. 19, 2023), the Delaware Superior Court found an advancement claim unripe.
Tilton served as the sole manager of Stila Styles, LLC, a single-member Delaware LLC (the “Company”). When the Company’s sole member removed her as manager, the Plaintiff challenged her removal in the Court of Chancery, lost, appealed, and lost again.
Tilton, the Plaintiff, sent the Company completely redacted legal fee invoices. The Company in turn requested unredacted copies. The Plaintiff sent back partially redacted copies but on the same day filed a complaint against the Company seeking in the Superior Court, inter alia, her outstanding fees and expenses the Company did not advance pending the appeal of the Court of Chancery suit.
The Court determined that the Plaintiff “prematurely” sought a judgment on the pleadings and brought an “unripe” advancement claim. In doing so, the Court admonished: “Rather than provide [the Company’s] counsel with an opportunity to determine the reasonableness of [the Plaintiff’s] advancement requests, [the Plaintiff] precipitously sought court intervention.” The Court further advised: “[t]hese are the exact sort of litigation tactics that unnecessarily burden the Court and vitiate what would otherwise be a good faith petition for judicial relief.”
Finding the advancement claim “unripe,” the Court instructed that “[the Plaintiff’s] counsel frustrated any viable process to resolve the advancement requests in good faith by providing partially redacted invoices the same day that they filed the instant action, seeking payment of those entries.” The Court ordered the parties to meet and confer on the advancement claim because “[w]hether the entries themselves are reasonable or not is a factual dispute, and until the parties meet and confer on a good faith basis to resolve the advancement demands, moving for judgment on the pleadings is not ripe, and hence, improper.”
Takeaways: First, before filing a complaint, the party seeking advancement should provide the board with invoices redacted only as necessary to preserve any privilege. Second, the party seeking advancement should wait until the board responds, or, if the board returns no timely response, the party seeking advancement should wait a reasonable amount of time in which a board could otherwise respond.