Ken Seiff v. Tokenize Inc.

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
KEN SEIFF and BLOCKCHANGE )
VENTURES I L.P., )
)
Plaintiffs, )
)
v. ) C.A. No. 2019-1031-SG
)
TOKENIZE INC., )
)
Defendant. )
MEMORANDUM OPINION
Date Submitted: October 23, 2020
Date Decided: November 19, 2020
John M. Seaman, of ABRAMS & BAYLISS LLP, Wilmington, Delaware, Attorneys
for Plaintiffs.
P. Clarkson Collins, Jr. and Albert J. Carroll, of MORRIS JAMES LLP, Wilmington,
Delaware; OF COUNSEL: Brian J. Capitummino, of WOODS OVIATT GILMAN
LLP, Rochester, New York, Attorneys for Defendant.
GLASSCOCK, Vice Chancellor
The Plaintiffs seek advancement of legal fees and expenses under an
indemnification agreement with the Defendant, Tokenize, Inc. Tokenize sued the
Plaintiffs in New York, and the Plaintiffs prepared quickly and vigorously to defend
the claims. They prepared a motion to dismiss, and, after Tokenize filed an
Amended Complaint, a motion to dismiss that pleading as well. They made
significant efforts to collect evidence in anticipation of discovery. They submitted
an undertaking to repay and sought advancement from Tokenize.
Although, as must be obvious from the paragraph above, the Plaintiffs were
aware of the Complaint and Amended Complaint in the New York action, Tokenize
failed to perfect service under New York law, and ultimately dismissed the Amended
Complaint against the Plaintiffs, without prejudice. It contests the Plaintiffs’ right
to advancement for the New York action as moot,1 and also objects to the amounts
sought as unreasonable.
Tokenize suggests that this matter is moot, because the litigation in New York
is over; it indicates that, if the Plaintiffs have a remedy, it must be to sue for
indemnification, not advancement. The Plaintiffs make two responses. First, that
the holder of an advancement right cannot have that right defeated by an indemnitor,
upon being presented with a demand to pay advanceable fees and expenses already
1
That is, Tokenize voiced this point in oral argument, but failed to raise it in briefing on this
Motion for Summary Judgement; the argument, therefore, is waived. I address it in the
Memorandum Opinion, however, for the sake of completeness.
1
incurred, effecting a dismissal without prejudice. This, per the Plaintiffs, would
deny the rights-holders the full benefit of the advancement bargain. Second, the
Plaintiffs point out that the particular contract here provides explicitly that
advancement claims may be enforced after the termination of the litigation. The
latter contention I find conclusive here. Therefore, the Plaintiffs are entitled to
advancement. It is difficult to imagine that these claims are also not also
indemnifiable, as the Plaintiffs succeeded in convincing Tokenize to abandon the
New York action. That issue is not before me, however, and nothing in this
Memorandum Opinion should be read to prevent Tokenize from seeking declaratory
judgement that the Plaintiffs are not entitled to indemnification, thus triggering the
undertaking to repay. Properly incurred fees and expenses, however, must be
advanced.
Having resolved the predicate issue, I find the expenses sought, including
fees, reasonable. Therefore, the Plaintiffs are entitled to advancement of the
amounts sought. My reasoning follows.
2
I. BACKGROUND 2
A. The Parties
Plaintiff Ken Seiff is a resident of New York.3 Seiff has been a director of
Tokenize Inc. since at least January 2019.4
Plaintiff Blockchange Ventures I L.P. (“Blockchange”) is a Delaware limited
partnership with its principal place of business in New York. 5 Blockchange
beneficially owns approximately 6.67% of the common stock of Tokenize. 6
Defendant Tokenize Inc. (“Tokenize” or the “Company”) is a Delaware
corporation with its principal place of business in New York. 7
B. The Books and Records Action
In May 2019, Seiff initiated an action before this Court pursuant to
8 Del. C. §220 (the “Books and Records Action”). 8 Tokenize formed a special
committee (the “Committee”) charged with considering and responding to Seiff’s
demands on behalf of Tokenize.9 Although the parties negotiated a resolution of the
2
The factual recitation here is drawn from uncontroverted statements made in the Plaintiffs’
Verified Complaint for Advancement, Dkt. No. 1 (the “Complaint” or “Compl.”), the Defendant’s
Answer to Verified Complaint, Dkt. No. 10 (the “Answer”), and evidence submitted under
affidavit with the parties’ papers.
3
Answer ¶ 4.
4
Id.
5
Id. ¶ 5.
6
Id.
7
Id. ¶ 6. Tokenize was originally formed under the name Case Wallet, Inc. Decl. of Brian J.
Capitummino, Ex. 2 ¶ 6, Dkt. No. 19 [hereinafter Capitummino Decl.].
8
See Capitummino Decl., Ex. 1; Verified Compl. for Inspection of Books and Recs., Seiff v.
Tokenize Inc., C.A. No. 2019-0369-SG, Dkt. No. 1.
9
Capitummino Decl., Ex. 1 at 1.
3
Books and Records Action, 10 the Committee’s final report speculated that the action
was “costly and distracting” and “resulted in the unsealing of previously-redacted
allegations that could prove damaging to Tokenize.” 11 Ultimately, the parties
negotiated a stipulation to resolve the Books and Records Action in March of the
following year. 12
C. The New York Action
On November 19, 2019, Tokenize initiated an action against Seiff and
Blockchange in the Supreme Court of Monroe County, New York (the “New York
Action”), alleging breach of fiduciary duty, tortious interference with contract,
tortious interference with prospective business relations, and a count against
Blockchange for aiding and abetting Seiff’s breach of fiduciary duty. 13 Among
other attempts to disrupt Tokenize’s business, the New York Complaint alleges that
the Books and Records Action was “a sham lawsuit”14 calculated “to frustrate
[Tokenize’s] ability to raise funds, and to create a liquidity crisis in an attempt to
10
See generally Stip. and Order of Dismissal, Seiff v. Tokenize Inc., C.A. No. 2019-0369-SG, Dkt.
No. 53.
11
Capitummino Decl., Ex. 1 at 3.
12
Capitummino Decl. ¶ 20.
13
See Compl., Ex. A. Tokenize subsequently amended their complaint in the New York Action,
omitting the cause of action for tortious interference with contract. See Capitummino Decl., Ex. 2
[hereinafter the “New York Complaint” or “New York Compl.”].
14
New York Compl. ¶¶ 43, 44.
4
gain control of Tokenize’s highly valuable intellectual property for [Seiff’s and
Blockchange’s] own gain at the expense of the other shareholders of Tokenize.” 15
In response to the New York Action, Seiff and Blockchange filed a motion to
dismiss on December 13, 2019.16 On January 2, 2020, Tokenize filed an amended
complaint,17 which Seiff and Blockchange also moved to dismiss.18 Pursuant to
Rule 306-b of the New York Civil Practice Law and Rules (“CPLR”), Tokenize had
120 days, until March 18, 2020, to effectuate service of the summons and
complaint.19 However, the New York Action was dismissed voluntarily without
prejudice on January 28, 2020 without service ever being perfected.
D. Seiff and Blockchange Initiate the Advancement Action
Shortly after Tokenize initiated the New York Action, Seiff sent a letter to
Tokenize demanding advancement and indemnification for expenses incurred by
himself and Blockchange defending that action pursuant to 8 Del. C. § 145, under
Article 6 of Tokenize’s bylaws (the “Bylaws”), and under the indemnification
agreement entered into between Seiff and Tokenize on November 19, 2018 (the
“Indemnification Agreement”). 20 On November 25, 2019, Plaintiffs’ counsel sent
15
Id. ¶ 51.
16
Capitummino Decl. ¶ 8; Pls.’ Mot. for Summ. J. ¶ 14, Dkt. No. 16.
17
Capitummino Decl. ¶ 9; see generally New York Compl.
18
See generally Transmittal Decl. of John M. Seaman, Ex. M, Dkt. No. 16 [hereinafter Seaman
Decl.].
19
N.Y. C.P.L.R. 306-b (McKinney 2012).
20
Seaman Decl., Ex. E; see also Seaman Decl., Ex. A.
5
an email to counsel for Tokenize transmitting copies of signed engagement letters
with the Plaintiffs’ New York and Delaware counsel, each requiring a $15,000
retainer, and again demanded advancement and indemnification.21
E. Procedural History
After not receiving a response from Tokenize to either demand, the Plaintiffs
initiated this application for advancement (the “Advancement Action”).22
I heard oral argument on the Plaintiffs’ Motion for Summary Judgment on
October 21, 2020.23 At oral argument, the Plaintiffs requested advancement of
attorneys’ fees and expenses incurred prosecuting this action (the “fees-on-fees”) in
addition to those requested in their original Complaint.24 Per my instructions, the
parties submitted supplemental declarations with respect to the fees-on-fees through
October 23, 2020 and I consider the matter submitted for decision as of that date. In
total, the Plaintiffs seek advancement of $134,037.11, comprising $85,958.40 for
defense of the New York Action 25 and $48,078.71 for pursuing this action.26
21
Seaman Decl., Ex. F.
22
Answer ¶¶ 19–22.
23
See Judicial Action Form, Dkt. No. 25.
24
See Suppl. Decl. of John M. Seaman ¶ 2, Dkt. No. 26; Suppl. Decl. of James H. Nicoll ¶ 2, Dkt.
No. 26.
25
See Pls.’ Mot. for Summ. J. ¶ 34.
26
Suppl. Decl. of John M. Seaman ¶ 3.
6
II. ANALYSIS
In support of their Motion, the Plaintiffs rely on the language of the
Indemnification Agreement27 and their fee invoices submitted to Tokenize with each
undertaking for advancement. 28 Tokenize does not dispute that the Plaintiffs were
entitled to advancement under the Indemnification Agreement. 29 Rather, Tokenize
argues that its dismissal of the New York Action on January 28, 2020 mooted the
advancement claim. It also opposes the amount of the fees sought as unreasonable
and argues that the Advancement Action and the Books and Records Action are
calculated to force Tokenize into a liquidity crisis for Seiff’s benefit. 30
A. Relevant Legal Standard
The standard governing a motion for summary judgment is well-settled.
Summary judgment is appropriate when “there is no genuine issue of material fact
and . . . the moving party is entitled to judgment as a matter of law.” 31 The court
must view the evidence presented in the light most favorable to the nonmoving party,
and the moving party bears the burden of demonstrating the absence of a material
factual dispute. 32 The party opposing summary judgment may not rest upon its
27
See Seaman Decl., Ex. A.
28
See id., Exs. F–J.
29
Def.’s Opp’n to Pls.’ Mot. for Summ. J. ¶ 4 [hereinafter Opp’n Br.], Dkt. No. 19; see also
Seaman Decl., Ex. A §1(d) (providing that Blockchange is entitled to indemnification and
advancement to the same extent as Seiff).
30
Opp’n Br. ¶¶ 1, 4.
31
Ct. Ch. R. 56(c).
32
Levy v. HLI Operating Co., 924 A.2d 210, 219 (Del. Ch. 2007).
7
pleadings, but “must set forth specific facts showing that there is a genuine issue for
trial,” or risk summary judgment being entered against them. 33
B. The Plaintiffs are Entitled to Advancement as a Matter of Law Pursuant
to the Indemnification Agreement
1. The Plaintiffs’ Request is not Moot
Tokenize does not dispute that the Indemnification Agreement provides the
Plaintiffs a right to advancement. 34 However, because the litigation in New York is
over, Tokenize argues 35 that this matter is moot—if the Plaintiffs have a remedy, it
must be to sue for indemnification, rather than advancement. 36 The Plaintiffs make
two responses. First, the Plaintiffs argue that a defendant cannot defeat a claim for
advancement of expenses incurred simply by dismissing the action for which
advancement is sought. This, per the Plaintiffs, would deny the rights-holders the
full benefit of the advancement bargain. Second, the Plaintiffs point out that the
Indemnification Agreement explicitly provides that Tokenize “shall advance all
Expenses incurred by or on behalf of [the Plaintiffs] in connection with any
33
Ct. Ch. R. 5.
34
Opp’n Br. ¶ 4.
35
See note 1, supra.
36
See Tr. of Oral Arg. on Pls.’ Mot for Summ. J. 42, Dkt. No. 29; Def.’s Response and Opp’n to
Pls.’ Suppl. Appl. For Advancement ¶ 4, Dkt. No. 27; Answer ¶¶ 1, 3, 28, 29, 31, 33, 37.
8
Proceeding by reason of Indemnitee’s Corporate Status . . . whether [such Expenses
are requested] prior to or after final disposition of such Proceeding.” 37 I find this
latter contention persuasive. The New York Action is a “Proceeding,” for which
Tokenize is obligated to advance expenses, 38 regardless of whether that Proceeding
has concluded. Because the Indemnification Agreement provides a right to
advancement after final disposition of the New York Action, I need not address
whether, in the absence of such a provision, a plaintiff’s claim for advancement
would be mooted under the circumstances here. Therefore, the Plaintiffs are entitled
to advancement under the Indemnification Agreement.
2. The Plaintiffs’ Legal Expenses are Reasonable
Under the Indemnification Agreement, Tokenize is only obligated to advance
reasonable legal expenses.39 In contractual fee-shifting cases, the Court has broad
37
Seaman Decl., Ex. A § 5.
38
“Proceeding” is defined in the Indemnification Agreement as “any threatened, pending or
completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry,
administrative hearing or any other actual, threatened or completed proceeding, whether brought
by or in the right of the Company or otherwise…in which [Seiff] was, is or will be involved as a
party or otherwise, by reason of his or her Corporate Status, by reason of any action taken by him
or of any inaction on his part while acting in his or her Corporate Status.” See id. § 13(f).
39
The Indemnification Agreement defines “Expenses” as “all reasonable attorneys’ fees, retainers,
court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, delivery service fees and all other
disbursements or expenses of the types customarily incurred in connection with prosecuting,
9
discretion in determining the amount of fees and expenses to award.40 The Court
reviews a fee application pursuant to the factors set forth in Rule 1.5(a) of the
Delaware Lawyers’ Rules of Professional Conduct (“DLPRC”): 41
(1) the time and labor required, the novelty and difficulty of the
questions involved, and the skill requisite to perform the legal service
properly;
(2) the likelihood, if apparent to the client, that the acceptance of the
particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers
performing the services; and
(8) whether the fee is fixed or contingent.42
defending, preparing to prosecute or defend, investigating, participating, or being or preparing to
be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery in
any Proceeding.” Seaman Decl., Ex. A § 13(d). Similarly, the Delaware Supreme Court has held
that a corporation is limited in its authority to advance expenses to those expenses that are
“reasonable.” Citadel Holding Corp. v. Roven, 603 A.2d 818, 823–24 (Del. 1992).
40
Kaung v. Cole Nat. Corp., 884 A.2d 500, 506 (Del. 2005); see also Mahani v. EDIX Media Gp.,
Inc., 935 A.2d 242, 245 (Del. 2007); Danenberg v. Fitracks, Inc., 58 A.3d 991, 995 (Del. Ch.
2012).
41
Weil v. VEREIT Operating P’ship, L.P., 2018 WL 834428 (Del. Ch. Feb. 13, 2018); White v.
Curo Texas Holdings, LLC, 2017 WL 1369332, at *4 (Del. Ch. Feb. 21, 2017).
42
Del. Lawyers’ R. Prof'l Conduct 1.5(a).
10
However, the advancement stage “is not the proper stage for a detailed analytical
review of the fees, whether in terms of the strategy followed or the staffing and time
committed.”43 Second-guessing an attorney’s judgment as to whether certain work
was necessary “is hazardous and should whenever possible be avoided.” 44
Preliminarily, Tokenize challenges the reasonableness of all of the Plaintiffs’
expenses by asserting that the Advancement Action is a form of gamesmanship.45
Tokenize has alleged, for example, that Seiff is attempting to use this advancement
proceeding to pay for work done to pursue his earlier Books and Records Action. 46
This suggestion is conclusory. The Plaintiffs have averred that their expenses were
incurred solely in the New York Action and this Action, and Tokenize points to
nothing in the record to refute that assertion. Accordingly, I will not consider this
argument further. 47
43
Duthie v. CorSolutions Med., Inc., 2008 WL 4173850, at *2 (Del. Ch. Sept. 10, 2008).
44
Arbitrium (Cayman Is.) Handels AG v. Johnston, 1998 WL 155550, at *4 (Del. Ch. Mar. 30,
1998), aff’d, 720 A.2d 542 (Del. 1998)); see also Weil v. VEREIT Operating P’ship, L.P., 2018
WL 834428, at *12 (“The summary nature of an advancement proceeding further counsels against
granular review.”).
45
Opp’n Br. ¶¶ 1, 20, 43, 53.
46
Opp’n Br. ¶ 35.
47
See Reddy v. Elec. Data Sys. Corp., 2002 WL 1358761, at *9 (Del. Ch. June 18, 2002) (holding
that determining advancement rights cannot be equated with a trial on the merits of the underlying
cause of action for which advancement is being sought, “because the clear authorization of
11
More specifically, Tokenize disputes the reasonableness of the Plaintiffs’
initial demand because they retained both New York and Delaware counsel to defend
the New York Action. 48 The New York Action asserted claims related to Seiff’s
Delaware Books and Records Action. 49 Seiff also indicated in his emails of
November 21 and 25, 2019, that he was seeking advancement under Delaware law,
the bylaws of Case Wallet, LLC (a Delaware entity), and the Indemnification
Agreement (also governed by the laws of Delaware). 50 It is not unreasonable to
retain Delaware counsel to defend an action in which Delaware law is at issue.
Tokenize next contends that, because the Plaintiffs were never served with a
complaint in the New York Action, it was unreasonable to retain legal representation
at all. 51 There is nothing to suggest that either the Indemnification Agreement or
Delaware law condition advancement rights on service of process. It is the threat of
litigation that triggers the advancement right, not the filing of particular motions or
advancement rights presupposes that the corporation will front expenses before any determination
is made of the corporate official’s ultimate right to indemnification.”).
48
Id.
49
See Seaman Decl., Ex. D ¶¶ 35–58.
50
See id. Ex. E, Ex. F.
51
Opp’n Br. ¶ 30.
12
the achievement of certain litigation milestones. 52 Because a threat of litigation is
not only created when the party is served, it is reasonable to incur expenses to defend
an action prior to service being perfected. I note that it is Tokenize who controlled
the timing and progress of the New York litigation. Tokenize filed the complaint.
Tokenize filed the amended complaint. It was Tokenize’s responsibility to
determine when to make service of process, and when to dismiss the action. It comes
with some ill grace for Tokenize to assert that it may escape contractual advancement
obligations it extended to the Plaintiffs, based upon its own litigation choices.
Next, Tokenize criticizes the Plaintiffs for incurring fees “after the [New York
Action] was voluntarily dismissed.” 53 In determining reasonableness, the Court
need not “assess independently whether counsel appropriately pursued and charged
for a particular motion, line of argument, area of discovery, or other litigation
52
See Seaman Decl., Ex. A § 13(f) (defining Proceeding as “any threatened . . . action, suit,
arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing
or any other actual, threatened or completed proceeding”); 8 Del. C. § 145(a) (“A corporation shall
have power to indemnify any person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action.”).
53
Opp’n Br. ¶ 31.
13
tactic.”54 Nevertheless, having reviewed the invoices from Plaintiffs’ counsel, I
have identified $2,405.00 in charges incurred after the New York Action was
dismissed. 55 Abrams & Bayliss LLP charged nothing to the New York Action after
December 13, 2019. 56 Mackenzie Hughes LLP submitted two invoices including
expenses incurred in the New York Action after it was dismissed, on February 18,
2020 and April 10, 2020.57 The invoices reveal that six hours and six minutes were
charged to the New York Action after it was dismissed.58 In those entries, Plaintiffs’
counsel details their efforts discussing the dismissal, researching the implications of
a dismissal without prejudice for future litigation, and attempting to secure a
settlement whereby Tokenize would dismiss the New York Action with prejudice.59
Tokenize does not dispute that the dismissal allows it to potentially revive the New
York Action at a later date.60 I find the expenses incurred analyzing the effect of a
54
Danenberg v. Fitracks, Inc., 58 A.3d 991, 997 (Del. Ch. 2012); cf. Duthie v. CorSolutions Med.,
Inc., 2008 WL 4173850, at *1 (Del. Ch. Sept. 10, 2008) (“[I]t is neither practicable nor reasonable
to attempt to draw some line defining which defensive strategy [ ] is appropriate.”).
55
See Seaman Decl., Ex. J (including a spreadsheet summarizing total expenses as of each invoice
date).
56
See id.
57
See id. Exs. H, J.
58
See id.
59
See id.
60
See Opp’n Br. ¶ 33.
14
dismissal without prejudice and attempting to secure a dismissal with prejudice are
reasonable.
The argument that the Plaintiffs’ pre-dismissal invoices are unreasonable
similarly fails. To challenge these expenses, Tokenize notes that “at least 37.9 hours
are associated with reviewing discovery,” despite the New York Action never
reaching the discovery phase; 61 that “at least 5.8 hours of attorney time ($2,262)”
was spent in connection with the settlement discussions Tokenize initiated; 62 and
that “at least 17.5 hours ($6,825) [was spent] researching and preparing Plaintiffs’
motion to dismiss Tokenize’s Amended Complaint, despite that pleading not adding
any new claims.” 63 As noted above, the Court is not required to undertake a detailed,
line-item review of counsels’ invoices. Tokenize offers no reason why collecting
and reviewing client documents to prepare for discovery, engaging in settlement
negotiations, or preparing a motion to dismiss an amended complaint are
unreasonable categories of expenses. Furthermore, Plaintiffs’ counsel’s invoices
61
Id. ¶ 35.
62
Id. ¶ 36.
63
Id. ¶ 37.
15
reflect reasonable litigation activities. In general, it is not unreasonable to prepare
for discovery in advance and most of the discovery-related invoices reflect
reasonable internal discussions about and preparation for discovery against Seiff.64
Settlement negotiations are also reasonable. Preparing a motion to dismiss an
amended complaint is reasonable as well.65 Although the amended complaint did
not add new counts against Seiff, it did include new factual assertions.66 Because
all of these activities are reasonable, expenses incurred in connection with that
activity are properly advanceable.
Lastly, I reject Tokenize’s argument that the Plaintiffs’ fees were improperly
increased by their refusal to settle the New York Action. Tokenize points out that it
offered to pay the advancement request in full on April 8, 2020. 67 However, it did
so only on the condition that payment would occur in June 2020. 68 Under the
64
See, e.g., Capitummino Decl., Ex. 4 (including the following entries: Nov. 25, 2019,
“teleconference with Joe [Edmonds] to discuss documents and emails . . . and the best way to get
them over to us for our review”; Nov. 26, 2019, “Prepare a Sharefile folder and email the link to
Ken [Seiff] and Joe [Edmonds] allowing them to upload Ken’s emails for our review.”).
65
Tokenize does not, for example, argue that the motion was frivolous.
66
Capitummino Decl., Ex. 2 ¶¶ 14–15, 39–40, 49, 70, 72.
67
Capitummino Decl., ¶ 23; Seaman Decl., Ex. I.
68
Capitummino Decl. ¶¶ 22–23.
16
Indemnification Agreement, the Plaintiffs are entitled to advancement within a
maximum of thirty days from the demand. 69 The Plaintiffs made clear that they
would be seeking advancement by November 21, 2019,70 and submitted an
undertaking for advancement for $30,000 on November 25, 2019.71 The offer to
settle was, therefore conditional and at a discount; the Plaintiffs were under no
obligation to accept and failure to accept cannot defeat their advancement claim. It
is not unreasonable for a party to reject a settlement offer that fails to make them
whole.
Plaintiffs’ counsel have submitted sworn declarations, under penalty of
perjury, that their invoices reflect the time necessary to properly prepare a defense
to the New York action.72 Tokenize has not introduced any evidence to contradict
those declarations. Under these circumstances, I will not second-guess an attorney’s
judgment as to the time spent on matters within the scope of the Agreement’s
69
Seaman Decl., Ex. A § 5.
70
Seaman Decl., Ex. E.
71
Seaman Decl., Ex. F.
72
See generally Decl. of John M. Seaman Pursuant to Rule 88, Dkt. No. 16; Decl. of James H.
Nicoll Pursuant to Rule 88, Dkt. No. 16.
17
advancement obligations. 73 Because the record before the Court presents no reason
to doubt the reasonableness of their expenses, the Plaintiffs are entitled to
advancement pursuant to the Indemnification Agreement.
C. The Plaintiffs are Entitled to Fees-on-Fees
The Plaintiffs also seek attorneys’ fees and expenses incurred in prosecuting
this Advancement Action as provided for in the Indemnification Agreement.74
Tokenize does not deny that the Indemnification Agreement grants the Plaintiffs
these fee-on-fees. Instead, Tokenize opposes the Plaintiffs’ right to fees-on-fees on
the same grounds as it opposes their claim for advancement generally: that the claim
is moot and that the expenses are unreasonable. Plaintiffs’ counsel have submitted
supplemental sworn declarations as to their time and expense in prosecuting this
action. 75 I find, for the reasons enumerated above, the Plaintiffs are also entitled to
an award of the attorneys’ fees and expenses incurred in prosecuting this
Advancement Action.
73
Lynch v. Gonzalez, 2020 WL 5587716, at *3 (Del. Ch. Sept. 18, 2020).
74
See Judicial Action Form, Dkt. No. 25; Suppl. Decl. of John M. Seaman ¶ 3, Dkt. No. 26; Suppl.
Decl. of James H. Nicoll ¶ 3, Dkt. No. 26.
75
See generally Suppl. Decl. of John M. Seaman Pursuant to Rule 88, Dkt. No. 26; Suppl. Decl.
of James H. Nicoll Pursuant to Rule 88, Dkt. No. 26.
18
D. The Plaintiffs are Entitled to Prejudgment Interest
The Plaintiffs also seek prejudgment interest from the date that they first
delivered invoices to Tokenize, January 21, 2020.76 Pre-judgment interest is
awarded as a matter of right, from the date a contract mandates that payment was
due. 77 Under the contract at issue, Tokenize had thirty days from the date of demand
for a sum certain to make payment. The parties should compute interest at the legal
rate for each invoice submitted for fees actually accrued, running from thirty days
following the submission of each invoice with a demand for repayment. I retain
jurisdiction to consider any dispute as to the pre-judgment interest due.
III. CONCLUSION
For the foregoing reasons, the Plaintiffs’ Motion for Summary Judgment is
GRANTED. The parties should submit an appropriate form of order.
76
See Seaman Decl., Ex. G.
77
E.g., Citadel Holding Co. v. Roven, 603 A.2d 818, 826 (Del. 1992).
19