Reed Smith Client Alerts

The Delaware Supreme Court recently dismissed an appeal of an order granting summary judgment as an improper interlocutory appeal because the Court of Chancery also entered a Fitracks order, and, therefore, the order granting summary judgment was not “final” for the purpose of appeal.1 This decision, at least implicitly, endorses the use of Fitracks orders and confirms that the Court of Chancery retains jurisdiction over disputes under those orders.2

Mr. Salomon, a former officer of Kroenke Sports and Entertainment, LLC and the Outdoor Channel Holdings (the Companies), brought an action in the Court of Chancery seeking advancement for costs and fees incurred during an arbitration proceeding and related confirmation of that arbitration. The Companies moved to dismiss the advancement action because it claimed that, according to an affidavit Salomon filed in a different action, Salomon was insolvent.3 Therefore, the Companies argued, Salomon would be unable to repay the amounts advanced to him under the terms of his undertaking if it was ultimately determined that he was not entitled to indemnification under title 8, section 145 of the Delaware Code.4 Salomon, in turn, moved for summary judgment on his advancement claims.

The Court of Chancery denied the Companies’ motion to dismiss and granted Salomon’s motion for summary judgment.5 The Court of Chancery also ordered the parties to submit a Fitracks order to govern the submission of invoices and the handling of advancements through the final disposition of the case.6 The Companies appealed the summary judgment decision to the Delaware Supreme Court as a “final” decision on the merits prior to the entry of a Fitracks order.7

The Delaware Supreme Court dismissed the appeal of the motion for summary judgment, finding it to be an improper appeal of an interlocutory (that is, nonfinal) ruling, because the Court of Chancery used what is known as a Fitracks order to implement the procedure for submitting invoices and handling payments.8 In addition, and without officially endorsing the use of Fitracks orders, the court signaled its approval of those orders:

But even if the Companies had appealed from the Fitracks Order – which was proposed by the parties and adopted by the Court of Chancery after the appeal was filed – the appeal would be interlocutory because, under the Fitracks Order, the Court of Chancery retains jurisdiction to resolve disputes about the amount of fees and expenses for which Salomon demands advancement going forward.9