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Citadel Holding Corp. v. Roven - 603 A.2d 818 (Del. 1992)

Rule:

It is an elementary canon of contract construction that the intent of the parties must be ascertained from the language of the contract. Only when there are ambiguities may a court look to collateral circumstances.

Facts:

Plaintiff Alfred Roven, former director, filed an action alleging that Roven was entitled to indemnification from defendant Citadel Holding Corporation for the expenses he incurred in defending a suit brought against him by Citadel based on their indemnity agreement and the Corporation’s by-laws. Roven incurred substantial expenses in defending the suit. While the suit was still pending, plaintiff Roven initiated an action in state court, which granted partial summary judgment to the plaintiff. The Corporation appealed arguing that plaintiff was not entitled to indemnification because it was not “by reason of his service as a director.”

Issue:

Did the lower court err in granting summary judgment in favor of the plaintiff director and determining that he was entitled to indemnification for litigation expenses?

Answer:

No.

Conclusion:

The Supreme Court of Delaware held that Rovens right under the indemnity agreement to initial advancements for litigation expenses was not dependent on his right to indemnification and the expenses that he had incurred in pursuing his counterclaims and affirmative defenses were covered by the indemnity agreement. The Court affirmed the grant of partial summary judgment to the plaintiff director.

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