Dr. Guy Kezirian v. World College of Refractice Surgery and Visual Sciences PBC

• Court: Court of Chancery of Delaware
• Decided: February 13, 2026
• Docket: C.A. No. 2025-1243-SEM
• Status: Published

Opinion

COURT OF CHANCERY OF THE STATE OF DELAWARE SELENA E. MOLINA LEONARD L. WILLIAMS JUSTICE CENTER SENIOR MAGISTRATE IN CHANCERY 500 NORTH KING STREET, SUITE 11400 WILMINGTON, DE 19801-3734

February 13, 2026

Joseph L. Christensen, Esquire Tammy L. Mercer, Esquire Anne M. Steadman, Esquire Alberto E. Chávez, Esquire Levi Akkerman, Esquire Akerman, LLP Christensen Law LLC 222 Delaware Avenue, Suite 1710 1201 N. Market Street, Suite 1404 Wilmington, DE 19801 Wilmington, DE 19801

Re: Dr. Guy Kezirian v. World College of Refractive Surgery and Visual Sciences PBC, C.A. No. 2025-1243-SEM

Dear Counsel:

This letter opinion resolves the parties’ cross-motions for summary judgment.

As authorized under 8 Del. C. § 145, the defendant’s bylaws provided for

advancement of fees and expenses incurred by current and former officers sued “by

reason of the fact” of their positions. When the defendant sued its former chairman

for alleged misconduct in that role, it agreed to advancement. But after that same

conduct caused difficulties with the plaintiff’s other business interests and he was

sued in another forum, the defendant decried advancement as a step too far (among

other defenses).

For the reasons explained herein, I disagree with the defendant and hold the

plaintiff is entitled to advancement and fees on fees. I further decline the defendant’s C.A. No. 2025-1243-SEM February 13, 2026 Page 2 of 24

fee shifting request. This is a letter decision, issued under 10 Del. C. § 350 and Court

of Chancery Rule 144(g), through which the parties agreed to submit this action to

me for a final decision. This letter decision is not subject to exceptions and

constitutes a decision of the Court of Chancery.

I. BACKGROUND

On October 30, 2025, Dr. Guy Kerzirian (the “Plaintiff”) initiated this action

seeking to enforce his right to advancement from World College of Refractive

Surgery and Visual Sciences PBC (the “Defendant”). 1 The matter proceeded before

me on an expedited basis and the parties teed this matter up for my decision through

cross-motions for summary judgment. 2 The material facts are not in dispute.3

A. The Initial Disputes

The Defendant was incorporated as a public benefit corporation on July 2,

2021. 4 Whether the Plaintiff was authorized to act as sole incorporator or initial

director remains disputed. Per the Defendant, the Plaintiff was but one member of

1 Docket Item (“D.I.”) 1. 2 D.I. 21 (“Def.’s Opening Br.”), 23 (“Pl.’s Opening Br.”). 3 Counsel for the Defendant emphasized at argument that the Defendant is not conceding that the Plaintiff was a properly seated director when the alleged wrongdoing occurred. Rather, counsel represented that the parties have expressly reserved that dispute for consideration at the indemnification phase. This reserved dispute is not material to my ruling herein. 4 Def.’s Opening Br. Ex. 1. C.A. No. 2025-1243-SEM February 13, 2026 Page 3 of 24

an international team of ophthalmologists who worked together to create an

independent credentialing and peer review service for surgeons specializing in the

field of refractive surgery. 5 When entrusted to formalize the vision into what became

the Defendant, the Plaintiff executed (in the Defendant’s story) a surreptitious

control scheme; acting as sole incorporator and sole director and purporting to issue

himself a controlling interest in the Defendant for cents on the dollar. The Defendant

contends the Plaintiff’s actions only came to light in 2024, in connection with an

independent audit. Shortly thereafter, on June 4, 2024, the Plaintiff resigned as the

Defendant’s chairman and director.6

This purported scheme and resignation has spurned three lawsuits. The first

was brought by the Plaintiff. Around two months after his resignation, the Plaintiff

sued the Defendant and its board, alleging they had defamed him in their post-

separation emails to the Defendant’s stockholders (the “Plaintiff’s Action”). 7 In the

Plaintiff’s Action, the Plaintiff sought damages and a declaration that his conduct

was proper, and that he owns a controlling interest in the Defendant.8 A few months

later, in November 2024, the Defendant’s founders and board brought a competing

5 Def.’s Opening Br. Ex. 12 ¶ 17. 6 Def.’s Opening Br. Ex. 8. 7 Def.’s Opening Br. Ex. 11. 8 Id. C.A. No. 2025-1243-SEM February 13, 2026 Page 4 of 24

action seeking mirror-image relief: a declaration that the Plaintiff’s conduct was

improper, and that he is not a stockholder, let alone a controlling one (the

“Defendant’s Action”). 9

As far as I know, the Plaintiff’s Action remains pending. The Plaintiff never

sought advancement for that offensive proceeding, which the parties agree is outside

any advanceable realm (as discussed more below). On the other hand, the Defendant

did advance the Plaintiff’s fees and expenses in connection with the Defendant’s

Action, which has since been dismissed. 10

B. The PEH Action

At issue here is the third action, filed on August 20, 2024 (the “PEH

Action”). 11 The PEH Action arises from the Plaintiff’s indirect interest in Physician

Equity Holdings, LLC (“PEH”), as the sole owner of Aligned Investment

Management, LLC (“AIM”), PEH’s General Manager. 12 Neither PEH nor AIM have

any connection or relationship with the Defendant other than the Plaintiff, who is

affiliated with each entity.

9 Def.’s Opening Br. Ex. 12. 10 Pl.’s Opening Br. Ex. N. The Defendant only agreed after several refusal letters and an action filed in this court. See Pl.’s Opening Br. Ex. D, G, H, J, M; see also Dr. Guy Kezirian v. World College of Refractive Surgery and Visual Sciences PBC, C.A. No. 2025-1032- SEM, D.I. 16 (Del. Ch. Oct. 20, 2025) (Stipulation of Dismissal). 11 Def.’s Opening Br. Ex. 10. 12 See Def.’s Opening Br. at 8–9; Ex. 10 ¶ 2. C.A. No. 2025-1243-SEM February 13, 2026 Page 5 of 24

But the Plaintiff’s resignation from the Defendant and the publicity and

lawsuits that followed led to concerns within and surrounding PEH. The Plaintiff

allegedly admitted as much, representing in communications with PEH members

that the Defendant made “very damaging” statements about him and those were

having “spillover effects” on PEH.13 Seeing those spillover effects, the preferred

members of PEH decided to disassociate AIM from PEH.

Under Section 11.5 of PEH’s LLC agreement, PEH has a right to call units

held by a member if there is an “Adverse Triggering Event.”14 An Adverse

Triggering Event includes (1) “[c]onduct that injures, harms, corrupts, demeans,

defames, disparages, libels, slanders, destroys, or diminishes in any way the

reputation or goodwill of” PEH and (2) “[c]omission of any act that is intended or

would reasonably be expected to harm the reputation of” PEH or “which would

reasonably be expected to lead to unwanted or unfavorable publicity to” PEH. 15 In

response to the controversy surrounding the Plaintiff’s exit from the Defendant, on

July 24, 2024, PEH delivered a call notice for AIM’s interests. 16 The Plaintiff, on

13 See Def.’s Opening Br. Ex. 10 ¶ 52. See also Def.’s Opening Br. Ex. 8 (reflecting a communication purportedly from the Plaintiff to PEH members regarding the Defendant’s allegations). 14 Def.’s Opening Br. Ex. 7. 15 Id. 16 Def.’s Opening Br. Ex. 9. C.A. No. 2025-1243-SEM February 13, 2026 Page 6 of 24

behalf of AIM, appeared to accede to the call initially but ultimately the Plaintiff and

AIM made clear they disputed the call and removal. 17

With this challenge, on August 20, 2024, the preferred members of PEH

brought the PEH Action seeking to confirm the validity of the call and resulting

repurchase and for other relief, including an injunction against AIM barring it from

acting as General Manager for PEH. Both the Plaintiff and AIM were named as

defendants. To the best of my knowledge, the PEH Action remains pending, and

AIM has filed counterclaims. 18

C. Funding Attempts

The Plaintiff has attempted to fund his defense of the PEH Action through

different avenues. He first sought insurance coverage from PEH’s insurance

policy.19 In doing so, the Plaintiff represented that the allegations in the PEH Action

“arise from AIM’s rights and obligations as the General Manager and member” of

PEH. 20 It appears coverage was denied.21

17 This background is taken from the complaint in the PEH Action; it does not represent any findings of fact and merely summarizes and conveys the allegations therein for context. 18 See Def.’s Opening Br. Ex. 21. 19 Def.’s Opening Br. Ex. 13. 20 Id. 21 See Def.’s Opening Br. Ex. 23 (confirming “[c]o-counsel have informed us that neither Dr. Kezirian nor AIM have received any coverage for any matter, including PEH”); Def.’s Opening Br. Ex. 24 Resp. to Interrog. 1 (“Neither Plaintiff nor AIM have received any advancement, indemnification, or payment from any sources for any fees and expenses C.A. No. 2025-1243-SEM February 13, 2026 Page 7 of 24

Then, the Plaintiff sought indemnification from PEH under PEH’s LLC

agreement, representing that the claims related to AIM’s activities as PEH member

and General Manager and the Plaintiff, as an agent of AIM, was also entitled to

indemnification.22 PEH refused the indemnification demand as premature, noting

that the alleged misconduct would also be outside the scope of indemnification even

if the request was ripe. 23

The Plaintiff then turned to the Defendant’s insurer. On July 1, 2025, the

Plaintiff demanded coverage arguing the PEH Action arose from his role and actions

in connection with the Defendant. 24 The Defendant’s insurer denied the demand

and, through letter dated July 22, 2025, characterized it as untimely and unfounded

because the Plaintiff was not sued in an “insured capacity” but rather as the “sole

owner of AIM,” a former member of PEH.25

Plaintiff or AIM have incurred in connection with the Arizona Action.”), Resp. to Interrog. 3 (“To the best of their information, knowledge and belief neither Plaintiff nor AIM have received a written response to the January 15, 2025 letter”). 22 Def.’s Opening Br. Ex. 14. 23 Def.’s Opening Br. Ex. 15. 24 Def.’s Opening Br. Ex. 16. 25 Def.’s Opening Br. Ex. 17. C.A. No. 2025-1243-SEM February 13, 2026 Page 8 of 24

D. The Demand

Finally, on September 22, 2025, the Plaintiff demanded advancement from

the Defendant (the “Demand”).26 In the Demand, the Plaintiff argued that the PEH

Action was “by reason of the fact” of his former role with the Defendant and, as

such, the Defendant was required to advance his fees and expenses. Specifically, he

sought advancement of $463,012.48 within 30 days.

The Plaintiff’s demand was brought under the Defendant’s bylaws (the

“Bylaws”). 27 The right to indemnification under Section 6.1 of the Bylaws extends

to proceedings brought “by reason of the fact that [the Covered Person] is or was a

director or officer of the” Defendant. Through Section 6.2, the Defendant granted

advancement of indemnifiable expenses, to the fullest extent under Delaware law,

upon receipt of an undertaking by the “Covered Person.” As even greater protection,

Section 6.3 of the Bylaws also flips the burden of proof onto the Defendant if a

“Covered Person” makes a claim for advancement, such is not paid within 30 days,

and the “Covered Person” has to sue for recovery: “In such action the corporation

shall have the burden of proving that the Covered Person is not entitled to the

requested indemnification or advancement of expenses under applicable law.”

26 Def.’s Opening Br. Ex. 18. 27 Def.’s Opening Br. Ex. 3. C.A. No. 2025-1243-SEM February 13, 2026 Page 9 of 24

On October 22, 2025, the Defendant denied the Demand, finding it facially

deficient and seeking fees and expenses outside the advanceable scope.28

E. Procedural Posture

The Plaintiff initiated this action on October 30, 2025. 29 It was assigned to me

and the parties quickly agreed to an expedited case schedule, teeing this matter up

for resolution on cross-motions for summary judgment.30 The parties also agreed to

submit this action to me for a final decision under 10 Del. C. § 350 and Court of

Chancery Rule 144(g). 31 In doing so, the parties waived the right to seek judicial

review of my decision at the trial court level and agreed that my final decision will

constitute a decision of the Court of Chancery, appealable to the Delaware Supreme

Court subject to the same procedural and substantive standards as are applicable to

appeals from decisions of the Chancellor or a Vice Chancellor.

With that streamlining stipulation, the parties expeditiously briefed cross-

motions for summary judgment. 32 I heard argument on January 14, 2026, and took

both motions under advisement.33

28 Def.’s Opening Br. Ex. 20. 29 D.I. 1. 30 D.I. 7, 10–11. 31 D.I. 9, 11. 32 D.I. 20, 23, 27–28. 33 D.I. 31. C.A. No. 2025-1243-SEM February 13, 2026 Page 10 of 24

II. ANALYSIS

The standard of review on these cross-motions for summary judgment is clear.

Where, like here, “the parties have filed cross motions for summary judgment and

have not presented argument to the Court that there is an issue of fact material to the

disposition of either motion, the Court shall deem the motions to be the equivalent

of a stipulation for decision on the merits based on the record submitted with the

motions.”34

The primary issue before me is entitlement: is the Plaintiff entitled to

advancement of his fees and expenses incurred in the PEH Action. The question is

largely one of contract interpretation and the burden, per the Bylaws, is on the

Defendant to prove the Plaintiff is not so entitled.35 The Plaintiff also seeks fees on

fees, while the Defendant argues that the Plaintiff’s action amounts to bad faith

litigation sufficient to support shifting fees in its favor. I rule in favor of the Plaintiff.

34 Ct. Ch. R. 56(h). 35 Underbrink v. Warrior Energy Servs. Corp., 2008 WL 2262316, at *7 (Del. Ch. May 30, 2008) (“Courts use the tools of contract interpretation when construing bylaw provisions relating to indemnification and advancement.”); Def.’s Opening Br. Ex. 3 § 6.3 (“In any such action the corporation shall have the burden of proving that the Covered person is not entitled to the requested indemnification or advancement of expenses under applicable law.”). C.A. No. 2025-1243-SEM February 13, 2026 Page 11 of 24

A. The Plaintiff is entitled to advancement.

The Defendant makes three primary arguments against advancement. First,

the Defendant argues that the PEH Action is brought against the Plaintiff personally,

not in connection with his covered status, and is largely an action against, and in

connection with the Plaintiff’s ownership of, AIM. This, per the Defendant, renders

the action outside the scope of advancement. Second, the Defendant argues that the

Plaintiff is estopped from seeking advancement because of his earlier coverage

requests. And third, the Defendant argues that even if the Plaintiff is entitled and not

estopped from seeking advancement, the Demand is facially deficient and this suit

unripe. I address, and dispose of, these arguments in turn.

1. The PEH Action is “by reason of the fact” of the Plaintiff’s prior role with the Defendant.

Through the Bylaws, the Defendant granted mandatory advancement when

(1) a “Covered Person,” (2) is defending any proceeding, and (3) provides an

undertaking. Entitlement is essentially presumed, and if the Defendant denies a

demand for advancement, the burden is on it to prove the “Covered Person” was not

made a party to the proceeding “by reason of the fact” of their position. C.A. No. 2025-1243-SEM February 13, 2026 Page 12 of 24

There is no dispute here that the Plaintiff is a “Covered Person.”36 The

Plaintiff is also defending claims against him in the PEH Action, which is a

proceeding. And he has provided an undertaking. Yet the Defendant has refused

advancement based on nexus. The burden, thus, falls to the Defendant to prove that

the Plaintiff’s involvement in the PEH Action was not “by reason of the fact" that

he was an officer of the Defendant. The Defendant failed to meet that burden.

The “by reason of the fact” nexus in the Bylaws is not a creation of the

Defendant; it is an express incorporation and adoption of the known meaning of that

language as used in 8 Del. C. § 145. Under settled Delaware law, “if there is a nexus

or causal connection between any of the underlying proceedings . . . and one’s

official corporate capacity, those proceedings are ‘by reason of the fact’ . . . without

regard to one’s motivation for engaging in that conduct.” 37 “This connection is

established if the corporate powers were used or necessary for the commission of

the alleged misconduct. Further, the requisite nexus can be established even if the

cause of action does not specify a claim of breach of fiduciary duty owed to the

corporation.”38 “The nexus is also established if the underlying claim is ‘inextricably

intertwined’ with” official actions requiring the former officer or director “to defend

36 See supra note 3. 37 In re Genelux Corp., 2015 WL 6390232, at *4 (Del. Ch. Oct. 22, 2015). 38 Bernstein v. TractManager, Inc., 953 A.2d 1003, 1011 (Del. Ch. 2007). C.A. No. 2025-1243-SEM February 13, 2026 Page 13 of 24

those actions and possibly disprove allegations that they acted improperly in those

capacities.”39

To assess whether a proceeding is “by reason of the fact,” this Court must

closely examine the underlying pleadings. “The Court must seek to discern the

nature of the claims which [the director] is called upon to defend by reading the

[complaint] as a whole and providing a reasonable interpretation of the substance of

the allegations of each count.”40 If, in doing so, the claims are properly characterized

as personal, not directed at the director in an official capacity, advancement should

be denied. 41

In arguing the claims in the PEH Action are personal and not “by reason of

the fact,” the Defendant relies primarily on Shearin v. E.F. Hutton Group, Inc.,42

Stifel Financial Corp. v. Cochran,43 and Weaver v. ZeniMax Media, Inc.44

39 Nielsen v. EBTH Inc., 2019 WL 4755865, at *8 (Del. Ch. Sept. 30, 2019), judgment entered, 2019 WL 7194433 (Del. Ch. Dec. 23, 2019). 40 Weaver v. ZeniMax Media, Inc., 2004 WL 243163, at *4 (Del. Ch. Jan. 30, 2004). 41 Pontone v. Milso Indus. Corp., 100 A.3d 1023, 1050 (Del. 2014). 42 652 A.2d 578 (Del. Ch. 1994). 43 809 A.2d 555 (Del. 2002). 44 2004 WL 243163 (Del. Ch. Jan. 30, 2004). The Defendant also points me to Ephrat v. MedCPU, Inc., 2019 WL 2613281 (Del. Ch. June 26, 2019), Charney v. Am. Apparel, Inc., 2015 WL 5313769 (Del. Ch. Sept. 11, 2015), and Perik v. Student Res. Ctr., LLC, 2024 WL 181848 (Del. Ch. Jan. 17, 2024) which I find inapposite. C.A. No. 2025-1243-SEM February 13, 2026 Page 14 of 24

The courts in Shearin, Stifel, and Weaver emphasized the distinction between

claims arising from personal employment obligations and official duties. In Shearin,

this court held that a former officer was not entitled to indemnification for claims

relating to breach of an employment contract because those claims did not involve

the officer’s duties to the corporation and its shareholders.45 Similarly in Stifle, the

Delaware Supreme Court held that claims were properly characterized as personal

and not brought against the officer in their official capacity where they arose from

an employment contract and promissory note.46 And, in Weaver, this Court

segregated one count in the underlying litigation as outside mandatory advancement

because it was expressly for personal breaches of an employment agreement. 47

But those holdings have their limits, as this Court has repeatedly recognized.

For example, Vice Chancellor Laster, in Paolino v. Mace Security International,

Inc., eschewed “the idea that when an employment agreement is at issue, Section

145 goes out the window. The cases instead show that Section 145 will not apply

when the parties are litigating a specific and personal contractual obligation that does

not involve the exercise of judgment, discretion, or decision-making authority on

45 Shearin, 652 A.2d at 594–95. 46 Stifel Fin. Corp., 809 A.2d at 562. 47 Weaver, 2004 WL 243163, at *5. C.A. No. 2025-1243-SEM February 13, 2026 Page 15 of 24

behalf of the corporation.” 48 Stated another way, to avoid advancement under a

contractual, personal obligation argument, “the claim for which the corporation

seeks to avoid advancement must clearly involve a specific and limited contractual

obligation without any nexus or causal connection to official duties.”49

Absent such clear delineation, claims which are “inextricably intertwined”

with corporate actions are still “by reason of the fact.” Then-Master LeGrow found

such intertwining where a CEO was required “to defend his actions as CEO, and

possibly disprove the allegations that he acted improperly in that capacity[,]” even

though he was sued in his capacity as a seller for breach of a merger agreement.50

Vice Chancellor Glasscock followed suit in Hyatt v. Al Jazeera American Holdings

II, LLC where he went claim by claim to determine which purportedly contractual

claims were inextricably intertwined with and required defense of corporate actions,

and, as such, were advanceable. 51

Chancellor Bouchard’s decision in Thompson v. Orix USA Corp. is also

instructive.52 There, the defendant’s director left his position to focus his efforts on

48 985 A.2d 392, 403 (Del. Ch. 2009). 49 Id. at 407. 50 Rizk v. Tractmanager, Inc., C.A. No. 9073–ML (Del. Ch. May 30, 2014) (MASTER’S FINAL REPORT). 51 2016 WL 1301743, at *9 (Del. Ch. Mar. 31, 2016). 52 2016 WL 3226933, at *1 (Del. Ch. June 3, 2016). C.A. No. 2025-1243-SEM February 13, 2026 Page 16 of 24

a new, allegedly competitive business enterprise. The defendant sued that new

enterprise alleging it tortiously interfered with contracts between the defendant and

the director. Although the plaintiff was not named as a defendant, the lawsuit

implicated his conduct, and he demanded advancement. Under the same “by reason

of the fact” lens, the Chancellor rejected arguments that the action was personal in

nature; although the claims were against a separate entity and related to the former

director’s role with that entity, they also challenged the former director’s conduct

and alleged failings in his former official capacity with the defendant.53 That was a

sufficient nexus for their involvement to be “by reason of the fact,” supporting

advancement.

Here, the claims against the Plaintiff in the PEH Action are inextricably

intertwined with the very conduct for which the Defendant conceded he was entitled

to advancement in the Defendant’s Action. True, the claims are contractual, tied to

the rights of PEH members in PEH’s LLC agreement, but the underlying conduct

for which the Plaintiff will need to defend was taken in his official capacity as a

former officer or director of the Defendant. To defend himself in the PEH Action he

will possibly need to disprove the allegations that he acted improperly in that

capacity. The Plaintiff is not, like in the cases proffered by the Defendant, being sued

53 Id. at *4–6. C.A. No. 2025-1243-SEM February 13, 2026 Page 17 of 24

in connection with a specific and personal contractual obligation separate from his

decision making while with the Defendant. The claims against him have a sufficient

nexus or causal connection to his official duties; but for his official (although, per

the Defendant, wrongful) conduct, he would not be facing the claims in the PEH

Action.

Specifically, through the PEH Action, the PEH members seek a declaration

that their call right was validly exercised because the actions of the Plaintiff injured,

harmed and diminished the reputation and goodwill of PEH sufficiently to qualify

as an “Adverse Triggering Event” under the PEH LLC agreement. The actions at

issue are those alleged by the Defendant; that the Plaintiff engaged in a surreptitious

control scheme upon founding the Defendant. Like in Thompson, the Plaintiff will

likely need to defend the actions taken in his former role with the Defendant to

defend against the findings sought in the PEH Action.

The Defendant argues against such nexus, compelling me to focus on the

layers of complexity in the PEH Action; the lens of the PEH LLC Agreement, and

the claims as stated in the complaint in the PEH Action. But, in doing so, I would

improperly elevate the form of the pleadings over the substantive concerns raised C.A. No. 2025-1243-SEM February 13, 2026 Page 18 of 24

about the Plaintiff’s conduct. Delaware advancement law compels me to take the

opposite focus. 54

In so holding, I also reject the Defendant’s argument that granting

advancement in this action “would create perverse incentives and unintended

consequences” or risk doctrinal sprawl.55 This holding, rather, supports the

important policy underlying advancement: “that corporate officials should be able

to defend not only their pocketbooks, but also their good names.” 56 The Plaintiff’s

good name, and the appropriateness of his conduct while with the Defendant, has

been challenged directly in the PEH Action. Contractual underpinnings and pleading

formalities aside, the Plaintiff’s defense of the PEH Action is a defense of his good

name and the appropriateness of his conduct as an officer of the Defendant. Under

the Bylaws, he is entitled to advancement therefor.

2. The Plaintiff is not estopped by his prior funding requests.

The Defendant argues that by seeking funding from other sources before

asserting his right to advancement from the Defendant, the Plaintiff conceded the

PEH Action was not advanceable and should be estopped from arguing otherwise.

Not so.

54 See Barr v. Genesis CMG Hldgs., LLC, 2025 WL 3720720 (Del. Ch. Dec. 23, 2025). 55 Def.’s Opening Br. at 29. 56 Barrett v. Am. Country Hldgs., Inc., 951 A.2d 735, 744 (Del. Ch. 2008). C.A. No. 2025-1243-SEM February 13, 2026 Page 19 of 24

Nothing in the Bylaws requires the Plaintiff to file a demand for advancement

first, or in lieu of, other coverage avenues, nor is there anything inconsistent about

the Plaintiff seeking coverage from multiple sources. Just as “[t]he fact that another

party has paid legal fees voluntarily for a covered person does not diminish the

covered person’s advancement right[,]” neither does the covered person’s request

for such alternative coverage estop a later request for advancement.57

I further disagree that his representations to those sources that the claims arose

from or related to his connection to the entity through which he sought coverage is

inconsistent; the claims in the PEH Action can (and are) both “by reason of the fact”

of his former position with the Defendant and related to his ownership of AIM and

position with PEH. None of those are mutually exclusive; they coexist.58

3. The Demand is not deficient, and this action is ripe.

Finally, the Defendant argues that the Demand is facially deficient, and this

action is unripe. I disagree.

57 Colaco v. Cavotec Inet US Inc., C.A. No. 10369-VCL, at 63:19–21 (Del. Ch. Mar. 10, 2015) (TRANSCRIPT). 58 Cf. Pers. Decisions, Inc. v. Bus. Planning Sys., Inc., 2008 WL 1932404, at *6 (Del. Ch. May 5, 2008) (holding that the defendant was estopped “when it would be unconscionable to allow a person to maintain a position inconsistent with one to which he acquiesced, or from which he accepted a personal benefit.”) (internal citations omitted). C.A. No. 2025-1243-SEM February 13, 2026 Page 20 of 24

Through the Demand, the Plaintiff demanded advancement of $463,012.48

within 30 days. The Defendant argues that the Plaintiff failed, however, to provide

any support for the amount demanded and, as such, this action is not ripe and should

be dismissed, requiring the Plaintiff to “submit an advancement demand that

comports with Delaware law rather than requiring [the Defendant] to engage in a

Fitracks procedure based on a facially deficient advancement demand.”59

This argument is borne primarily from Vice Chancellor Laster’s March 10,

2015 transcript ruling in Colaco v. Cavotex Inet US Inc. 60 Therein, the Vice

Chancellor found persuasive a defendant’s argument that the plaintiffs seeking

advancement did not serve a “sufficiently specific demand” because they “fail[ed]

to provide detailed support for their invoices and fail[ed] to connect particular

amounts to counts being defended.”61 He explained his view that such “information

needs to be provided beforehand as part of the demand so that the party who is

obligated to provide advancements can evaluate the claim, determine what to dispute

and what not to dispute, and generally figure out how to proceed.” 62 He went on to

provide his view about “what really ought to happen[:] people ought to provide the

59 Def.’s Opening Br. at 34. 60 C.A. No. 10369-VCL (Del. Ch. Mar. 10, 2015) (TRANSCRIPT). 61 Id. at 65:17–22. 62 Id. at 65:24–66:5. C.A. No. 2025-1243-SEM February 13, 2026 Page 21 of 24

information upfront.” 63 He then explored the risks of a hard-and-fast rule and

cautioned those seeking to rely on his oral ruling: “I’m not making a rule for all time

here. Nobody should say, “Oh, Laster is legislating from the bench,” or things like

that. . . . This isn’t a ruling for all time; this is an explanation of why I’m granting

judgment on the pleadings in this case.”64 Finally, the Vice Chancellor concluded

that the plaintiffs before him did not provide sufficient support in the underlying

demand and needed to try again.

Here, I conclude the Plaintiff’s demand was sufficiently detailed to ripen the

dispute before me. Through the Demand, the Plaintiff identified the PEH Action as

the underlying proceeding for which he seeks advancement and specified the amount

of expenses incurred thus far. The Plaintiff proposed that, if the Defendant agreed

“at least conceptually, to advance” than the Plaintiff would “discuss providing

additional information or documents (subject to an appropriate confidentiality

agreement or stipulated protective order), as necessary for [the Defendant] to

evaluate the fees.”65 This provided a good faith estimate and opening for discussions

between the parties. I struggle to appreciate why the Defendant needed underlying

documentation to determine if the litigation was within the realm of advancement.

63 Id. at 66:14–15. 64 Id. at 68:14–24. 65 Def.’s Opening Br. Ex. 18. C.A. No. 2025-1243-SEM February 13, 2026 Page 22 of 24

The failure to engage is one of the risks highlighted by Vice Chancellor Laster while

declining to set a strict rule; that companies would fail “to respond meaningfully and

. . . simply deny these things in knee-jerk fashion because they think that the people

involved are bad people.” 66 Rather, he advised, and I agree, “people ought to try to

work these things out; ideally without having to come to court. Or if you do have to

come to court, come to court on narrower issues.” 67 Here, the Defendant bears equal

responsibility for the parties’ failure to narrow the issues brought before this Court.

Further, as recognized in the Chancellor’s standard assignment letter for

advancements heard by the Court’s Magistrate Judges, these actions are best heard

in bifurcated fashion. That permits the Court to first address the issue of entitlement

to advancement and, only if the claimant is so entitled, establish a procedure for

challenges to the requested fees. I do so here, ruling that the Plaintiff is entitled to

advancement, without passing on the reasonableness of the amount demanded.

Now that entitlement is resolved, a Fitracks process will follow.68 Going into

that process, I caution the Plaintiff on allocation. AIM is not a “Covered Person”

entitled to advancement. To the extent the Plaintiff is implicitly seeking

advancement for AIM, which is also a defendant in the PEH Action, this ruling

66 Colaco, C.A. No. 10369-VCL, at 66:16–18. 67 Id. at 66:19–22. 68 Danenberg v. Fitracks, Inc., 58 A.3d 991 (Del. Ch. 2012). C.A. No. 2025-1243-SEM February 13, 2026 Page 23 of 24

rejects as much. Going forward, the Plaintiff is reminded: “When counsel represents

both covered and non-covered persons, counsel must allocate fees and expenses

depending on whether the activity benefitted the party holding the advancement

right.” 69 The Plaintiff is entitled to advancement of expenses incurred in defending

his conduct in connection with the Defendant as and to the extent that conduct is

challenged and implicated in the PEH Action; the overall litigation expenses of the

co-defendants must be proportioned appropriately. 70

B. The Plaintiff is entitled to fees on fees.

The Plaintiff also seeks fees on fees. “This Court awards fees on fees when a

plaintiff successfully shows an entitlement to advancement that wrongfully was

withheld by the defendant corporation.”71 Here, the Bylaws guaranteed the Plaintiff

broad advancement, which the Defendant wrongfully withheld. The Defendant

makes the same ripeness arguments as above to avoid fees-on-fees; I find them

unpersuasive. The Plaintiff is entitled to fees on fees incurred in connection with this

proceeding, and for interest thereon under Delaware law.

69 Weil v. VEREIT Operating P’ship, L.P., 2018 WL 834428, at *8 (Del. Ch. Feb. 13, 2018). 70 See Kerbs v. Bioness Inc., 2022 WL 3347993, at *3–4 (Del. Ch. Aug. 15, 2022). See also Thompson, 2016 WL 3226933, at *6. 71 In re Genelux Corp., 2015 WL 6390232, at *6. C.A. No. 2025-1243-SEM February 13, 2026 Page 24 of 24

C. The Defendant has not demonstrated bad faith sufficient to overcome the American Rule

Finally, the Defendant moves for fee shifting under the bad faith exception to

the American Rule. Far from bad faith, I find the Plaintiff’s claims meritorious and

deny the Defendant’s request for fee shifting in its favor. 72

III. CONCLUSION

For the foregoing reasons, the Plaintiff is entitled to advancement under the

Bylaws and is awarded fees on fees. The Plaintiff’s motion for summary judgment

is granted and the Defendant’s motion is denied. The parties shall meet and confer

promptly on an implementing order and procedures consistent with Danenberg v.

Fitracks, Inc. 73

72 In its bad faith argument, the Defendant decried the Plaintiff’s failure to produce insurance communications despite the Plaintiff’s confirmation that no such records exist. See Def.’s Opening Br. Ex. 24 Resp. to Interrog. 1, 3. Failing to produce documents that do not exist cannot support a bad faith finding. Likewise, I struggle to see how the Plaintiff’s efforts to secure alternative coverage were wrongful or indicative of bad faith. The Defendant conceded at argument that its bad faith argument was circumstantial, borne from the parties’ litigious relationship. But, considering the circumstances reflected in the limited record before me, I cannot reasonably infer glaringly egregious conduct by the Plaintiff. 73 58 A.3d 991.