A long line of cases has held that a standard indemnification provision in a bilateral commercial contract will be presumed not to provide for fee-shifting with respect to claims between the contracting parties absent a clear and unequivocal articulation of an intent to do so. In International Rail Partners v. American Rail Partners, C.A. No. 2020-0177-PAF (Del. Ch. Nov. 24, 2020), Vice Chancellor Paul Fioravanti refused to extend that presumption to indemnification and advancement provisions in limited liability company agreements.
Defendant American Rail Partners was a Delaware limited liability company with two members: plaintiff International Rail Partners (IRP) and nonparty SBS. Plaintiff Marino was IRP’s CEO and controlled two other affiliates, including the parent of IRP. The company’s LLC agreement provided that the company would be managed by a board of directors, and identified Marino as a director, chairman of the board, and CEO of the company. The Agreement also provided that day-to-day management of the company would be performed by IRP in accordance with a management agreement, which was incorporated by reference in the LLC agreement.
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