Attorney Fees for Enforcing Indemnification Rights in Litigation under Delaware Law
May 2, 2023
Publication| Commercial Litigation
Parties entering into transactions often provide for indemnification rights in their agreements. Those agreements typically provide for reimbursement of attorney fees and costs as indemnifiable losses. For instance, the ABA Model Stock Purchase Agreement defines “Loss” as “any cost, loss, liability, obligation, claim, cause of action, damage, deficiency, expense (including costs of investigation and defense and reasonable attorney fees and expenses), fine, penalty, judgment, award, assessment, or diminution of value.” ABA Mergers & Acquisitions Comm., Model Stock Purchase Agreement with Commentary 30-31 (2d ed. 2010). When a dispute arises about responsibility for an indemnifiable loss, the dissatisfied indemnitee not uncommonly initiates litigation. Can the indemnitee recover its attorney fees for bringing suit to enforce the indemnification right under so-called “standard” indemnity provisions? Stated differently, are attorney fees incurred in indemnification lawsuits between parties to a contract an indemnifiable loss?