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Citadel Holding Corporation v. Roven

Delaware Supreme Court
603 A.2d 818 (Del. 1992)


Alfred Roven (plaintiff) was a director of Citadel Holding Corporation (Citadel) (defendant). Roven and Citadel entered into an Indemnity Agreement that had a specific indemnity provision. The Indemnity Agreement also contained a provision granting Roven a right to advance payment from Citadel of costs and expenses Roven incurred as a result of defending himself against claims arising from his business with Citadel. Citadel brought suit against Roven for violating Section 16(b) of the Securities Exchange Act of 1934. To defend himself in that suit, Roven asked for an advance payment for legal fees from Citadel pursuant to his Indemnification Agreement. When Citadel refused to pay, Roven brought suit for breach of contract. The lower court ruled in favor of Roven, holding that he was entitled to the advances. Citadel appealed on the grounds that if Roven was not going to be entitled to indemnification in the suit against him, he should not be awarded advance payment for his defense either.

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