Marino v. Patriot Rail Company LLC

Gary Marino (plaintiff) was CEO of Patriot Rail Company LLC (Patriot) (defendant). Patriot Rail LLC (grandparent) owned all interests in Patriot’s parent company, Patriot Rail Holdings LLC (parent). Marino controlled approximately 60 percent of the interests in the grandparent. Patriot was in ongoing discussions with Sierra Railroad Company (Sierra) about a merger. In 2008, Patriot filed suit against Sierra for breach of a letter of intent to merge. Sierra filed counterclaims for breach of the letter of intent and breach of a non-disclosure agreement, among other things. In 2012, Marino resigned from Patriot. In 2014, a jury awarded Sierra over $50 million in damages. Sierra filed a post-judgment motion seeking to add Marino and Patriot’s parent and grandparent companies as judgment debtors. After he resigned from Patriot, Marino continued to participate in the Sierra-Patriot litigation because of his controlling role in the grandparent. Marino filed suit against Patriot, seeking an indemnification advance to cover expenses Marino would incur in opposing Sierra’s post-judgment motion. Marino relied on Patriot’s certificate of incorporation, which stated that it would indemnify and advance all expenses to its directors and officers “to the fullest extent permitted by law.” Patriot argued that the indemnification coverage ended when Marino resigned from Patriot. Marino and Patriot each filed a motion for summary judgment.