Waltuch v. Conticommodity Services, Inc

Facts

Plaintiff was a renown silver trader. In 1979 and 1980, Plaintiff was vice-president and chief metals trader for Defendant when the silver market price went up sharply as several big groups bought large shares of silver futures, and then fell sharply soon afterward. Investors brought claims against Plaintiff and Defendant, and Plaintiff was dismissed from the suits while Defendant paid out about $35 million. Plaintiff still spent $1.2 million in legal expenses. Plaintiff spent another $1 million defending himself against CFTC charges of fraud and market manipulation. Waltuch brought this action to recover his legal expenses pursuant to Article Ninth of Defendant’s articles of incorporation. Defendant countered that Section: 145 of Delaware’s General Corporation Law prohibits indemnification when there is no indication of a corporate officer’s good faith. Plaintiff believed that the statute allowed a company to circumvent the good-faith requirement, which they did under Article Ninth which did not contain a good-faith requirement. Plaintiff also argues that since he was not responsible for paying anything in the private suits that he fell under the “successful on the merits or otherwise” language of the statute which would then require Defendant’s indemnification. Defendant argues that their private suit payments were on behalf of Plaintiff and therefore he should not be considered successful on the merits.