(See, e.g., a 2008 opinion in which the court wrote: "The accumulation of cases like this, where the stockholders get it coming and going because of the corporation's refusal to honor mandatory advancement contracts, is regrettable, and at some point, a case of sufficient dollar value will arise such that a board is sued for wasting the corporation's resources by putting up a clearly frivolous defense.") One area of advancement law that is less developed than other areas, but has received increasing attention over the last few years, is how the courts should handle disputes arising out of the ongoing requests for advancement after the entitlement to advancement has been established.
(c) If, after notice and a reasonable opportunity to respond, the court determines that Rule 11(b) has been violated, the court may impose an appropriate sanction on any attorney, law firm, or party that violated the rule or is responsible for the violation. Notes of Advisory Committee on Rules—1987 Amendment The amendments are technical. Notes of Advisory Committee on Rules—1993 Amendment .
The issue becomes even more complex when the court finds that a director or officer is entitled to advancement for some, but not all, of the claims asserted in the underlying proceeding, so the issue is not always one of reasonableness but the more fundamental question of entitlement, as in the Court of Chancery's 2008 opinion in a 2003 opinion, then-Vice Chancellor Leo E. ordered counsel for the party seeking advancement to provide an affidavit to certify in good faith that the expenses sought were reasonable.
(See also , requiring certification of counsel that amounts sought were consistent with the opinion establishing entitlement.) Though commendable in its simplicity, at times this approach has not resolved the problem of monthly disputes over bills, or delays in payment.
This requires an attorney to make an objectively reasonable inquiry into the facts and law prior to filing and not to pursue an action that is not objectively reasonable based on the facts. By contrast, other jurisdictions, such as the court in The court considers the totality of the factors based on the circumstances; no one factor is dispositive or given greater weight than another.
Both prongs are highly fact-dependent, with broad discretion reserved to the trial court. However, considering the desire for restraint on sanctions, in close calls the attorney whose filing is challenged is entitled to be given the benefit of the doubt.