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Current Developments in the Commercial Divisions of the
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Posted: January 12, 2016

Defendant Entitled to Indemnification by Former Employer, Including for Counterclaims

On January 7, 2016, the First Department issued a decision in G2 Fmv, LLC v. Thomas, 2016 NY Slip Op. 00026, holding that a defendant was entitled to indemnification for litigation expenses by his former employer, including those relating to the defendant’s counterclaims against the employer, explaining:

The Operating Agreement, which is governed by Delaware law, contains a comprehensive indemnification provision requiring plaintiff to indemnify members of the company from and against any and all expenses arising from all claims in which the Indemnified Party may be involved as a result of its status as a member of the company. The provision also requires plaintiff to advance indemnified costs and fees prior to the final disposition of any such claim.

The motion court properly found that the indemnification provision at issue was broad enough to encompass claims brought by members of plaintiff, such as defendant. The indemnification provision expressly applies regardless of whether any claim or action is brought by a third party, a Member, or by or in the right of the Company. Where, as here, the language of a contract is clear and unequivocal, a party will be bound by its plain meaning.

Indemnification for defendant’s personal claims (that is, claims that solely involve defendant’s personal interests) is not precluded by Delaware law, which provides LLC’s with the power to, indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever.

(Internal quotations and citations omitted) (emphasis added).

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