Any Other Result Would Retard Individuals Going Into “Corporate Service.”
The Delaware Supreme Court, in Trascent Mgt. Consulting, LLC v. Bouri, Case No. 126, 2016 (Del. Supreme Ct. Nov. 28, 2016), was confronted with an LLC’s claim that it did not have to advance costs of defense to a “key man” employee in a contractual breach suit brought by the LLC based on LLC’s plenary claim that key man had fraudulently induced his employment through upfront misrepresentations. The high court rejected this argument because corporate advancement of defense costs is to be encouraged under Delaware law until a court makes a final, nonappealable determination that indemnification of the key man was not required. It found that entertainment of the plenary “fraud in the inducement” defense would subvert the advancement procedures and reduce the ability to attract capable individuals into corporate service.