CCLD Finds Insurer’s Advancement Obligation Triggered Prior to Final Non-Appealable Damages Judgment

Morris James LLP

Ferrellgas Partners L.P v. Zurich American Insurance Company, C.A. No. N19C-05-275 MMJ CCLD (Del. Super. Aug. 20, 2020)

The Superior Court of Delaware, Complex Commercial Litigation Division recently expanded on its advancement jurisprudence regarding litigation fees and costs due under director and officer insurance policies. The insured brought a declaratory judgment action against two insurers in a tower of coverage. Judge Mary M. Johnston declared, on summary judgment, that the insured was entitled to advancement of reasonable attorneys’ fees and costs from one of the insurers.

Despite her summary judgment ruling and the insurer’s decision to not pursue an appeal of that ruling, the parties were back before the Court. The insurer challenged its advancement obligations arguing that a declaratory judgment was insufficient to trigger its duty to pay because it was not an award of money damages and it was unable to ascertain the reasonableness of the fees sought because the invoices provided were too heavily redacted. Judge Johnston disagreed and held that a declaratory judgment finding that an insurer was obligated to advance legal fees and costs to an insured triggered the insurer’s payment duty even though money damages were not awarded. As to how the insured would seek reimbursement for attorneys’ fees and the insurer would determine the reasonableness of those fees, the Court adopted the procedure established by the Court of Chancery in Danenberg v. Fitracks, Inc., 58 A.3d 991, 1001-04 (Del. Ch. 2012) setting forth a mechanism for invoice submission, review, and dispute resolution. Finally, the Court awarded fees on fees to the insured for the fees and costs associated in filing and prosecuting its motion.     

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