The opinion of the court was delivered by: Catherine C. Blake United States District Judge
This court already has recited the facts of this case in Miller v. U.S. Foodservice, Inc., 361 F.Supp.2d. 470 (D.Md. 2005). In another decision, the court ruled that plaintiff James L. Miller is entitled to advance payment of his reasonable legal fees and expenses, as incurred, to the extent required under his Employment Agreement with defendant U.S. Foodservice ("USF"). Miller v. U.S. Foodservice, 405 F.Supp.2d 607 (D.Md. 2005).
Now pending before the court is a motion by Miller demanding the reimbursement of his legal fees. Miller asserts that USF agreed to an extremely broad indemnification provision in the Employment Agreement that requires USF to reimburse Miller for nearly all of his attorneys' fees to date. These fees total more than $260,000. USF, in turn, disputes the manner in which Miller has allocated his legal expenses between claims covered by the Employment Agreement and those claims that allegedly are not, and Miller's failure to apportion attorneys' fees for work common to all the claims and counterclaims. For the reasons that follow, I agree with USF that Miller has not established what legal fees and expenses are properly compensable. Accordingly, I will deny Miller's demand for reimbursement without prejudice, as set forth herein.
This court previously held that "Miller is entitled to advance payment of his reasonable legal fees and expenses, as incurred, pursuant to the Employment Agreement." Miller III, 405 F.Supp. at 621.*fn1 The court ordered Miller to "submit appropriate documentation of his reasonable attorneys' fees no later than January 6, 2006." Id. In response, Miller sent USF's counsel copies of all invoices from the two law firms representing him and demanded payment of $264,182.89 -- an amount that includes all time, except 2.6 hours, spent by both law firms on all claims and counterclaims from the outset of this litigation. See Pl. Mem., Ex. 1 (Dec. 29, 2005 Letter from Rosenberg to Webb, with enclosures).
The Employment Agreement provides in pertinent part: The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provisions of this Agreement, or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code").
Pl.'s Reply, Ex. 1 at App. 5 (emphasis added).
Miller has argued, and the court has found, that "this Agreement" means, unambiguously, the Employment Agreement. See Miller III, 405 F.Supp.2d at 618-19. Thus, the pertinent question is whether there are any fees or expenses incurred by Miller in this litigation that do not arise out of claims or counterclaims involving the validity or enforceability of, or liability under, any provisions of the Employment Agreement.
A. Allocation of Legal Fees and Expenses
Despite Miller's assertion to the contrary, this case involves matters that are both within and without the ambit of the fee-advancement provision of the Employment Agreement. Thus, Miller is required to allocate his legal fees and expenses between covered and uncovered claims. See Fasciana v. Elec. Data Sys. Corp., 829 A.2d 160, 175 (Del. Ch. 2003). Miller has failed to meet this burden.
1. Non-Parties to the Employment Agreement
USF asserts that while USF was a party to the Employment Agreement, Royal Ahold and Ahold USA are not. Miller and his counsel have investigated and drafted claims asserted in Counts IV, V, and VI against Royal Ahold and Ahold USA. Those counts assert claims against Royal Ahold and Ahold USA for fraud, negligent misrepresentation, and promissory estoppel, all stemming from Miller's resignation from Royal Ahold's Executive Board ("RVB"). None of these claims, however, relates in any way to the "validity or enforceability of" the Employment Agreement or to USF's "liability" thereunder. Miller counters that Royal Ahold and Ahold USA -- USF's parent and affiliate, respectively -- "directed and approved USF's non-compliance with the [Employment] Agreement, and they, themselves, have counterclaimed against Miller for his purported failure to properly perform his obligations under the [Employment] Agreement as Chairman, President, and CEO of USF." Pl. Reply 3. While this may be the ...