Kaufman v. Shoenberg

Seitz, Chancellor: Plaintiff seeks an attorney’s fee for services rendered in connection with the so-called Eleventh cause of action. I ruled that since the corporation complied with the demand made in connection with the Eleventh cause of action within a reasonable time thereafter, the Eleventh cause should be dismissed. See Kaufman v. Shoenberg, Del.Ch., 91 A.2d 786. The question therefore is whether, as a matter of law, a stockholder is entitled to his reasonable investigation fees if his demand produces some real benefit to the corporation without the necessity for litigation. I conclude that he is so entitled if he is able to substantiate his contention factually. I reach this conclusion because I believe substantially the same benefit accrues to the corporation whetlfer it be as the result of the demand or of successful litigation. To grant a fee based upon legitimate investigation expenses in connection with a successful demand is to discourage litigation and yet encourage stockholder vigilance without unduly prejudicing the general corporate welfare. See 60 Harvard Law Review 835. I leave it to the parties to decide whether or not they desire a hearing on plaintiff’s right to, and the amount of such investigation fees. The parties may also comment on whether the fee, if any, [283] is properly within the scope of this litigation or whether it should be brought as a separate action. Order on notice.