Benjamin Snipes v. WorkCo, Inc. d/b/a Toku

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

BENJAMIN SNIPES,

Plaintiff,

v. C.A. No. 2026-0110-CDW

WORKCO, INC. d/b/a TOKU,

Defendant.

REPORT DENYING THE PARTIES’
CROSS-MOTIONS FOR SUMMARY JUDGMENT

Date Submitted: March 30, 2026
Date Decided: May 12, 2026

Margaret M. DiBianca, Ann C. Cordo, DIBIANCA LAW, LLC, Wilmington,
Delaware; Counsel for Plaintiff Benjamin Snipes

Michael A. Barlow, Gates H. Young, QUINN EMANUEL URQUHART &
SULLIVAN, LLP, Wilmington, Delaware; Counsel for Defendant WorkCo,
Inc. d/b/a Toku

WRIGHT, M.
A former high-level employee of a Delaware corporation seeks

advancement of the unpaid portion of fees and expenses he incurred in

defending litigation filed against him by the corporation, which resolved while

this action was pending. The corporation argues that resolution of the

underlying proceeding moots the plaintiff’s advancement claim, and that even

if the claim is not moot plaintiff is not entitled to advancement because he did

not serve in a role for which the corporation’s bylaws provide advancement.

On the parties’ cross-motions for summary judgment, I conclude that resolution

of the underlying action did not moot this action, and that there is a genuine

issue of material fact whether the former employee occupied a covered

position. I deny the cross-motions.

I. FACTUAL BACKGROUND

I begin by describing the parties and the advancement rights granted

under Toku’s bylaws, before turning to the events in the underlying litigation

and this case.

A. The Parties

Plaintiff Benjamin Snipes is an attorney who served as the “Head of

Legal” for defendant WorkCo, Inc., d/b/a Toku (“Toku”) from June 2023 to
July 12, 2024. 1 Toku is a Delaware corporation with its principal place of

business in Wilmington, Delaware. 2

B. Advancement Rights Under Toku’s Bylaws

Toku’s bylaws grant broad advancement rights to its current and former

directors and officers. Sections 6.1 and 6.3 deal with advancement rights.

Section 6.1 outlines who is entitled to advancement and indemnification:

[Toku] shall, to the maximum extent and in the
manner permitted by the Delaware General
Corporation Law, indemnify each of its directors and
officers against expenses (including attorneys’ fees),
judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with
any proceeding, arising by reason of the fact that
such person is or was an agent of the corporation.
For purposes of this Section 6.1, a “director” or
“officer” of the corporation includes any person
(a) who is or was a director or officer of the
corporation, (b) who is or was serving at the request
of the corporation as a director or officer of another
corporation, partnership, joint venture, trust or other
enterprise, or (c) who was a director or officer of a
corporation which was a predecessor corporation of
the corporation or of another enterprise at the request
of such predecessor corporation. 3

Section 6.3 specifically articulates a right to advancement:

Expenses incurred in defending any action or
proceeding for which indemnification is required

1 Verified Compl. for Advancement ¶ 4, Dkt. 1 (“Compl.”); Def.’s Answer to the

Compl. ¶ 4, Dkt. 15 (“Ans.”); Pl.’s Opening Br. in Supp. of His Mot. for Summ. J. at
3, Dkt. 16 (“Pl.’s Opening Br.”).
2 Compl. ¶ 5; Ans. ¶ 5.

3 Compl., Ex. B (“Bylaws”) § 6.1.

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pursuant to Section 6.1 or for which indemnification
is permitted pursuant to Section 6.2 following
authorization thereof by the Board of Directors shall
be paid by the corporation in advance of the final
disposition of such action or proceeding upon receipt
of an undertaking by or on behalf of the indemnified
party to repay such amount if it shall ultimately be
determined by final judicial decision from which
there is no further right to appeal that the
indemnified party is not entitled to be indemnified as
authorized in this Article VI. 4

The bylaws define “officers” as a president, secretary, chief executive

officer, chief financial officer, treasurer, one or more vice presidents, one or

more assistant secretaries and treasurers, and “any such other officers as may be

appointed in accordance with the provisions of Section 5.3 of these bylaws.” 5

“Subordinate Officers” are appointed under Section 5.3 by Toku’s board or by

the chief executive officer if the board empowered them to do so. 6 Section 6.1

clarifies that the rights to advancement and indemnification extend to “any

person who . . . is or was a director or officer[.]” 7

While the Bylaws do not define “proceeding,” Toku’s certificate of

incorporation elaborates on the term. The certificate grants indemnification

4 Bylaws § 6.3.

5 Id. § 5.1.

6 Id. § 5.3.

7 Id. § 6.1.

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rights for “action[s] or proceeding[s], whether criminal, civil, administrative or

investigative[.]” 8

C. Toku Sues Snipes

On December 20, 2024, Toku filed an action in this court against Snipes

and one of Toku’s competitors, LiquiFi, Inc., relating to Snipes’ departure from

Toku to become General Counsel at LiquiFi. 9 The complaint alleges Snipes

took confidential and privileged Toku information with him to LiquiFi, and in

doing so (1) breached Confidentiality and Non-Disclosure Agreements 10 he

signed with Toku, (2) violated the Delaware Uniform Trade Secrets Act, and

(3) breached his fiduciary duties as “one of Toku’s key high-level

employees.” 11 The complaint also alleges that Snipes tortiously interfered with

Toku’s prospective customers and violated the Delaware Deceptive Trade

Practices Act by making false, misleading, and disparaging statements about

Toku and its business. 12 Toku also asserted the Delaware Uniform Trade

Secrets Act, tortious interference, and Delaware Deceptive Trade Practices Act

8 Compl. Ex. A § 8(B).

9 Verified Compl., WorkCo, Inc. d/b/a Toku v. LiquiFi, Inc., C.A. No. 2024-1334-JTL

(Del. Ch.) (“Underlying Action”), Dkt. 1 (“Underlying Action Compl.”).
10 See Unsworn Transmittal Decl. of Gates H. Young Pursuant to 10 Del. C. § 3927 in

Support of Def.’s Answering Br. in Opp’n to Pl. Benjamin Snipes’s Mot. for Summ.
J., Dkt. 23, Exs. 21–22.
11 Underlying Action Compl. ¶¶ 100–135.

12 Id. ¶¶ 136–147, 159–166.

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claims against LiquiFi and added claims for unjust enrichment and aiding and

abetting breach of fiduciary duty. 13

D. Snipes Seeks Advancement and the Underlying Action
Winds Down

On December 11, 2025, Snipes served a written demand for

advancement of expenses he had incurred to date defending the Underlying

Action, with an undertaking to repay any amounts advanced for which he is not

entitled to indemnification. 14 During this time, Toku, Snipes, and LiquiFi

engaged in negotiations to settle the Underlying Action. 15

On January 23, 2026, Snipes filed the Complaint. 16 The Complaint

asserts three counts against Toku: (1) to compel Toku to advance Snipes’ fees

and expenses under its bylaws; 17 (2) to compel Toku to advance Snipes’ fees

under its certificate of incorporation; 18 and (3) for payment of fees-on-fees

incurred in this advancement action. 19

13 Id. ¶¶ 115–130, 136–172.

14 Compl. ¶ 17; id. Ex. D; Pl.’s Opening Br. 6.

15 See Def.’s Mot. for Summ. J. ¶ 17, Dkt. 16 (“Def.’s Mot.”); Pl.’s Resp. in Opp’n to

Def.’s Mot. for Summ. J. ¶ 8, Dkt. 22 (“Pl.’s Resp.”).
16 Dkt. 1.

17 Compl. ¶¶ 20–24.

18 Id. ¶¶ 25–30. While the complaint raises a count for advancement under Toku’s
certificate of incorporation, the certificate only grants mandatory indemnification
rights—it does not contain a right to advancement. See id. Ex. A Art. VIII.
“Although the right to indemnification and advancement are correlative, they are
separate and distinct[.]” E.g., Homestore, Inc. v. Tafeen, 888 A.2d 204, 212 (Del.
2005). Snipes also does not argue in briefing that the certificate confers a right to

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On January 30, Toku offered to dismiss the Underlying Action without

prejudice.20 In its offer, Toku represented that, as part of a proposed settlement,

LiquiFi agreed to pay to pay Snipes’ attorney fees up to January 30, and asked

Snipes to provide his invoices to date so Toku could calculate the settlement

value. 21 Three days later, Snipes’ counsel contacted Toku’s counsel with the

total amount of fees Snipes incurred in the Underlying Action and this suit. 22

Snipes’ counsel also informed Toku that “unless the [U]nderlying [A]ction is

resolved such that Mr. Snipes is no longer being sued or threated with suit” he

believed these advancement proceedings should continue, but was still open to

settling the Underlying Action. 23 On February 6, Snipes’ counsel followed up

on her initial response by attaching invoices through February 5. 24

advancement. See, e.g., Dkt. 16 at 9–13. “Issues not briefed are deemed waived.”
Emerald P’rs v. Berlin, 726 A.2d 1215, 1224 (Del. 1999). I do not analyze Toku’s
certificate of incorporation in depth because it does not affect my analysis of the
issues before me, and Snipes waived that argument by not raising it in his briefs.
19 Compl. ¶¶ 31–33.

20 Def.’s Mot. ¶ 19; Def’s Answering Br. in Opp’n to Pl.’s Mot. for Summ. J. 9, Dkt.

23 (“Def.’s Answering Br.”).
21 Def.’s Mot. ¶ 19; see Pl.’s Resp. ¶ 8.
22 Def.’s Mot. ¶¶ 20–21; Unsworn Transmittal Decl. of Gates H. Young Pursuant to

10 Del. C. § 3927 in Support of Def.’s Mot. for Summ. J., Dkt. 17 (“First Young
Decl.”), Ex. 17 (email from Snipes’ counsel with fee calculations).
23 First Young Decl., Ex. 16.

24 Def.’s Mot. ¶ 22; First Young Decl., Ex. 18.

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On February 13, LiquiFi and Toku settled the Underlying Action, 25 and

LiquiFi was formally dismissed as a defendant on March 9. 26 As part of the

settlement, LiquiFi agreed to pay Snipes’ fees and expenses in the Underlying

Action and this action through February 5. 27 Later that day, Toku informed

Snipes that it intended to move to dismiss its claims in the Underlying Action

against him without prejudice. 28 Toku filed that motion on February 20. 29

Snipes opposed the dismissal on March 10. 30 On March 24, Vice Chancellor

Laster dismissed the Underlying Action without prejudice, but with a

significant restriction:

Toku cannot refile its claims in any forum unless
either (1) Snipes files a lawsuit against Toku (other
than his advancement claim) or (2) Toku uncovers
evidence of Snipes’ use—not mere possession—of
its confidential information or trade secrets in
connection with an incident that was not the subject
of discovery in [the Underlying Action]. 31

25 Def.’s Mot. ¶ 23; Pl.’s Resp. ¶ 8.

26 Underlying Action, Dkt. 239.

27 Def.’s Mot. ¶ 23; Pl.’s Resp. ¶ 8. LiquiFi has paid Snipes’ fees and expenses
through February 5. Id. ¶ 8.
28 Def.’s Mot. ¶ 23; Pl.’s Resp. ¶ 8.

29 Pl.’s Mot. to Dismiss Against Def. Snipes Without Prejudice Pursuant to Ct. Ch. R.

41(a)(2), Underlying Action, Dkt. 234.
30 See Def. Snipes’ Resp. in Opp’n to Pl.’s Mot. to Dismiss Without Prejudice,

Underlying Action, Dkt. 240.
31 Underlying Action, Dkt. 245.

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While the Underlying Action was winding down, Snipes and Toku

briefed their cross-motions for summary judgment for summary judgment on

Snipes’ entitlement to advancement. 32 On March 30, the court heard oral

argument on the cross-motions. 33

II. ANALYSIS

As the party seeking advancement, Snipes bears the burden to

demonstrate, by a preponderance of the evidence, that he is entitled to

advancement. Gilbert v. Unisys Corp., 2024 WL 3789952, at *8 (Del. Ch.

Aug. 13, 2024) (citing Sassano v. CIBC World Mkts. Corp., 948 A.2d 453,

463–64 (Del. Ch. 2008)). “Proof by a preponderance of the evidence means

proof that something is more likely than not. It means that certain evidence,

when compared to the evidence opposed to it, has the more convincing force

and makes you believe that something is more likely true than not.” Agilent

Techs., Inc. v. Kirkland, 2010 WL 610725, at *13 (Del. Ch. Feb. 18, 2010)

(quotation omitted).

The parties have cross-moved for summary judgment under Court of

Chancery Rule 56(c), under which a moving party is entitled to summary

judgment “if the pleadings, depositions, answers to interrogatories and

admissions on file, together with the affidavits, if any, show that there is no

32 Dkts. 16–17, 22–23, 26–27.

33 Dkt. 36.

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genuine issue as to any material fact.” Baring v. Condrell, 2004 WL 5389666,

at *3 (Del. Ch. Oct. 18, 2004).

Generally, the court must view the evidence in the light most favorable to

the non-moving party. Merrill v. Crothall-Am., Inc., 606 A.2d 96, 99 (Del.

1992). When the parties have cross-moved for summary judgment and have

not presented argument to the court that there is an issue of fact material to the

disposition of either motion, the court deems the motions to be the equivalent of

a stipulation for decision on the merits based on the record submitted with the

motions. Ct. Ch. R. 56(h). “Nevertheless, ‘even when presented with cross-

motions for summary judgment, a court must deny summary judgment if a

material factual dispute exists.’” Stempien v. Marnie Properties, LLC, 2019

WL 1224557, at *2 (Del. Ch. Feb. 11, 2019) (quoting Bank of N.Y. Mellon v.

Realogy Corp., 979 A.2d 1113, 1119 (Del. Ch. 2008)).

Snipes contends he is entitled to advancement under Toku’s bylaws

because, as “Head of Legal,” he was an officer under the bylaws, that he was

made a party to the Underlying Action by reason of his position with Toku, and

the bylaws impart a mandatory obligation on Toku to advance his unpaid legal

fees and expenses. 34 Toku argues it has no duty to pay Snipes’ fees because the

Underlying Action was dismissed, rendering Snipes’ advancement claim moot.

Alternatively, if these proceedings are not moot, Toku maintains that Snipes is

34 See generally Pl.’s Opening Br.; Pl.’s Answering Br.; Pl.’s Reply.

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not entitled to advancement because he was never an officer as defined in the

bylaws. Even if Snipes was entitled to payment, Toku asserts that LiquiFi has

paid all of the fees Snipes incurred in the Underlying Action and the remaining

amount he seeks from Toku are “manifestly unreasonable.” 35

I begin with a brief discussion of the law surrounding advancement to

frame my analysis of the parties’ motions. Then I address Toku’s contention

that this advancement action is moot. I conclude my analysis by determining

whether Snipes is entitled to advancement under Toku’s bylaws.

A. The Law of Advancement

“Rights to indemnification and advancement are deeply rooted in the

public policy of Delaware corporate law in that they are viewed less as an

individual benefit arising from a person's employment and more as a desirable

mechanism to manage risk in return for greater corporate benefits.” Kaung v.

Cole Nat. Corp., 884 A.2d 500, 509 (Del. 2005). Section 145 of the Delaware

General Corporation Law (“DGCL”) 36 provides the “statutory framework for

when and how a corporation may provide advancement [and indemnification

rights] to an officer, director, employee, or agent of the corporation.” Sassano,

948 A.2d at 460 (citing 8 Del. C. § 145).

Section 145 serves the dual policies of: (a) allowing
corporate officials to resist unjustified lawsuits,

35 Def.’s Answering Br. 12.

36 8 Del. C. §§ 101–398.

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secure in the knowledge that, if vindicated, the
corporation will bear the expense of litigation; and
(b) encouraging capable women and men to serve as
corporate directors and officers, secure in the
knowledge that the corporation will absorb the costs
of defending their honesty and integrity.

VonFeldt v. Stifel Fin. Corp., 714 A.2d 79, 84 (Del. 1998).

Section 145(e) empowers a corporation to pay the expenses and attorney

fees incurred by a current or former officer or director in defending against a

lawsuit or other similar proceeding, “upon receipt of an undertaking by or on

behalf of such director or officer to repay such amount if it shall ultimately be

determined that such person is not entitled to be indemnified by the corporation

as authorized in” Section 145. 8 Del. C. § 145(e). “In other words, a right to

advancement is, effectively, a loan.” Gilbert, 2024 WL 3789952, at *8 (citing

Advanced Min. Sys., Inc. v. Fricke, 623 A.2d 82, 84 (Del. Ch. 1992)).

“Advancement is ‘purely permissive,’ but many Delaware corporations

‘provide for mandatory advancement as an enticement to attract qualified

individuals to serve as directors and officers.’” Id. at *9 (quoting Holley v.

Nipro Diagnostics, Inc., 2014 WL 7336411, at *7 (Del. Ch. Dec. 23, 2014)).

A corporation may grant advancement rights in its governing documents

or by separate contract. See 8 Del. C. § 145(f). “‘General rules of contract

interpretation apply when construing the provisions of a company’s charter or

bylaws.’” Centrella v. Avantor, Inc., 2024 WL 3249274, at *5 (Del. Ch. July 1,

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2024) (quoting Krauss v. 180 Life Scis. Corp., 2022 WL 665323, at *3 (Del.

Ch. Mar. 7, 2022)). “Delaware adheres to the ‘objective’ theory of contracts,

i.e. a contract’s construction should be that which would be understood by an

objective, reasonable third party.” Osborn ex rel. Osborn v. Kemp, 991 A.2d

1153, 1159 (Del. 2010) (quotation omitted). “When a contract is clear and

unambiguous, the court ‘will give effect to the plain-meaning [sic] of the

contract's terms and provisions.’” Gilbert, 2024 WL 3789952, at *8 (quoting

Osborn, 991 A.2d at 1159–60). “This approach places great weight on the

plain terms of a disputed contractual provision, and [Delaware courts] interpret

clear and unambiguous terms according to their ordinary meaning. [Delaware

courts] do not consider extrinsic evidence unless [they] find that the text is

ambiguous.” Cox Commc’ns, Inc. v. T-Mobile US, Inc., 273 A.3d 752, 760

(Del. 2022) (quotation and citations omitted). Finally, contract language “is not

rendered ambiguous simply because the parties do not agree upon its proper

construction. Rather, a contract is ambiguous only when the provisions in

controversy are reasonably or fairly susceptible of different interpretations or

may have two or more different meanings.” Rhone-Poulenc Basic Chems. Co.

v. Am. Motorists Ins. Co., 616 A.2d 1192, 1196 (Del. 1992).

With this framing in mind to guide my analysis, I now turn to the parties’

arguments.

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B. Dismissal of the Underlying Action Does Not Moot Snipes’
Advancement Claim in This Action

Toku’s assertion that Snipes’ advancement claim is moot has two parts.

First, Toku contends that the Underlying Action reached a “final disposition” in

February when Toku informed Snipes it intended to dismiss its claims against

him, 37 and, therefore, Snipes was not “defending” the Underlying Action after

that date, even if the proceeding did not formally conclude. 38 Second, Toku

posits that because LiquiFi has paid Snipes’ fees incurred through February 6,

and the Underlying Action concluded, there is nothing left for the court to

grant. 39 Toku concludes that, together, these facts render Snipes’ advancement

claim moot. Snipes counters that he was still “defending” claims the

Underlying Action until it was dismissed several weeks later in March. 40

Delaware law does not have a definitive answer as to when an

advancement proceeding is rendered moot, but this is not the first time the court

has confronted this question. I begin this section with discussions of Haseotes

v. Cumberland Farms, Inc., 41 Underbrink v. Warrior Energy Services Corp., 42

37 Def.’s Answering Br. 10–13; Tr. of Oral Arg. on Cross-Mots. for Summ. J. (“Tr.”)

8, 25–26, Dkt. 30.
38 See Def.’s Mot. ¶¶ 27–33; Def.’s Reply ¶¶ 6–10; Tr. 38.

39 Def.’s Mot. ¶¶ 35–38; Def.’s Reply ¶ 13; see Tr. 8–9; Def.’s Answering Br. 20.

40 Pl.’s Resp. ¶¶ 12–15; Pl.’s Reply Br. 1–3.

41 C.A. No. 14921 (Del. Ch. July 23, 1996) (TRANSCRIPT) (“Haseotes Tr.”).

42 2008 WL 2262316 (Del. Ch. May 30, 2008).

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Seiff v. Tokenize, Inc., 43 and Invictus Special Solutions Master I., L.P. v.

Invictus Global Management, LLC, 44 where the court evaluated similar

mootness arguments. Using the framing of the cases, I then address each part

of Toku’s argument. First, I determine the date Snipes stopped “defending” the

Underlying Action. Then, using that date, I address whether Snipes incurred

advanceable fees that LiquiFi has not paid.

1. Mootness is a Fact-Specific Determination

In Haseotes, the plaintiff sought advancement and indemnification for

four underlying actions. Haseotes Tr. 13–16. Two of the proceedings for

which the plaintiff demanded advancement reached a final judgment before the

court convened a hearing on the plaintiff’s entitlement to advancement. Id. 13–

16, 37–38. The first was a tax proceeding where the Massachusetts court

entered judgment against the plaintiff. Id. 46. The second was an adversarial

bankruptcy action which was dismissed by stipulation without prejudice. Id.

27, 50. The defending company argued that the plaintiff’s need for

advancement was mooted because both proceedings reached their final

disposition, and that the plaintiff should have to seek indemnification at that

point. Id. 41–47.

43 2020 WL 6791233 (Del. Ch. Nov. 19, 2020).

44 C.A. No. 2023-1099-NAC (Del. Ch. Sep. 9, 2024) (TRANSCRIPT) (“Invictus

Tr.”).

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The court agreed with the company as to the tax proceeding, but ordered

it to advance fees related to the bankruptcy. As the court reasoned, while “a

literal or technical reading of the company’s bylaw would permit advancement”

after an action reached its final disposition, “it would defeat the purpose of the

advancement [and] indemnification statute to” find for the plaintiff on the tax

action. Id. 79. In so doing, the court held that the plaintiff’s claim related to

the tax should be denied because “there [was] nothing at [that] point to

advance” 45 and the court should not “force the company to perform what may

be a useless act; that is to pay out advance indemnification where the nature of

the judgment itself suggests that it may not be ultimately indemnifiable.” Id. 80.

The court distinguished the tax action from the bankruptcy action, because the

bankruptcy action’s dismissal was effectively in the plaintiff’s favor and there

was no equitable basis to deny advancement. See id. 49–50, 81.

A similar question was presented in Underbrink. In Underbrink, the

plaintiffs sought advancement for several counts in an underlying action that

were decided favorably. 2008 WL 2262316, at *5–6, *15. The defending

corporation argued that, under the court’s ruling in Haseotes, the plaintiffs’

“claim to recover their expenses” for the dismissed counts in the underlying

action “is moot and properly should be made in an indemnification action.” Id.

at *15. The court found the facts distinguishable from Haseotes, because the

45 Haseotes, C.A. No. 14921 at 78.

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case was “not a situation where a [covered person] is seeking advancement of

expenses for litigation which he has lost” and “[i]t would be inequitable to deny

advancement to [the plaintiffs] because they ultimately succeeded in portions of

the [underlying action] shortly before the conclusion of this advancement

action.” Id. at *15.

In Seiff, the defending company filed suit against the plaintiff, a director,

in New York for breaches of fiduciary duties. 2020 WL 6791233, at *2. The

plaintiff served his advancement demand on the company less than a week

later, then moved to dismiss the New York action shortly after. Id. at *2–3.

The company amended its New York complaint less than three weeks later,

before voluntarily dismissing the lawsuit, without prejudice, before serving the

amended complaint. Id. at *2.

After the company failed to respond, the plaintiff filed the advancement

case. Id. at *3. The company argued that because it dismissed the New York

action, the advancement claim was moot, and the plaintiff must sue for

indemnification. Id. at *4. As the court concluded, because the explicit terms

of the relevant advancement provision entitled plaintiff to fees requested “after

final disposition” of a covered proceeding, the plaintiff was entitled to

advancement, and the court did not need to address the equitable concerns

raised in Haseotes and Underbrink. Id.

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Most recently, the court answered this question in Invictus when

resolving the parties’ cross-motions for summary judgment. The counterclaim-

plaintiffs in Invictus sought advancement of their fees and expenses for three

underlying proceedings and fees-on-fees in the advancement proceeding.

Invictus Tr. 6. The company maintained that under Section 145 “if an

advancement demand or proceeding is pending but unresolved before the

underlying action is resolved, then that advancement request becomes moot.”

Id. 19.

In its analysis, the Invictus court sought to harmonize the conclusions

reached in Haseotes, Underbrink, and Seiff with Section 145 and Delaware’s

strong public policy favoring advancement rights. Id. 14–19. The court held

that if an underlying action concludes while advancement proceedings are

ongoing, then a defending company must pay “sums owed that have not been

paid[,]” but a final disposition could “cut off the [covered person’s] ability to

incur further advanceable sums for that particular proceeding[.]” Id. 20. In so

doing, the court rejected the company’s argument that Section 145 rendered any

pending advancement claims for concluded proceedings moot. Id. 19. The

court explained it was not precluded from imposing limitations on equitable

grounds, such as when a plaintiff delayed in seeking advancement until well

after the underlying proceeding resolved, or if the individual “lost the

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underlying action in an obviously non-indemnifiable way.” Id. 21. With this

framing in mind, I now address the parties’ contentions.

2. Snipes Was Defending the Underlying Action Until It
Was Dismissed on March 24

Toku argues Snipes was no longer “defending” the Underlying Action

once he rejected Toku’s offer to dismiss the Underlying Action without

prejudice on February 2. 46 Toku says a plain reading of the bylaws compels

this because a dismissal without prejudice concludes the Underlying Action.

Alternatively, Toku reasons that because the Underlying Action went away and

advancement rights under Toku’s bylaws are ripe only if the covered person is

defending a proceeding, there is “no action or proceeding to defend against.”47

Thus, Toku concludes, his advancement claim is stale and “there is nothing left

for this [c]ourt to order.” 48 Snipes maintains that Toku’s conclusion is “plainly

wrong” because the Underlying Action did not conclude until March and he

incurred additional, unpaid fees from the date of Toku’s settlement offer to the

date of dismissal. 49

To determine what the drafters of corporate bylaws intended, “Delaware

courts start with the text. And if the text is unambiguous, Delaware courts end

46 Tr. 20–22, 28–31; Def.’s Reply ¶¶ 5–10; see Def.’s Mot. ¶¶ 30–33, 39–43; Def.’s

Answering Br. 10–14. See also Tr. 24–26.
47 Tr. 26.

48 Def.’s Mot. ¶ 29.

49 Pl.’s Answering Br. 1–2.

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there too.” Gunderson v. Trade Desk, Inc., 326 A.3d 1264, 1280 (Del. Ch.

2024) (quotation and citation omitted); see, e.g., Gentile v. SinglePoint Fin.,

Inc., 788 A.2d 111, 113 (Del. 2001) (citation omitted). Section 6.3 of the

bylaws is unambiguous. Section 6.3 grants indemnitees advancement for

“[e]xpenses incurred in defending any action or proceeding.” 50 Defend is

defined as “[t]o deny, contest, or oppose an allegation or claim[.]” Defend,

BLACK’S LAW DICTIONARY (12th ed. 2024). Merriam-Webster expands on this,

defining the word in a legal context as “to deny or oppose the right of a plaintiff

in regard to a suit or wrong charged.” 51 Delaware courts interpret the term

broadly in the advancement context, holding that actions taken to “defeat or

offset” the claims or allegations raised are within the definition of “defending.”

Citadel Hldg. Corp. v. Roven, 603 A.2d 818, 824 (Del. 1992); see also Sun-

Times Media Gp., Inc. v. Black, 954 A.2d 380, 397–98 (Del. Ch. 2008). Read

plainly, Section 6.3 entitles an indemnitee to advancement of expenses incurred

in denying, contesting, opposing, defeating, or offsetting allegations, claims, or

rights of the opposing party in any proceeding to which they are involved

because of their corporate status.

Toku cites no authority to support its contention that once it offered to

dismiss the Underlying Action without prejudice, Snipes could no longer be

50 Bylaws § 6.3.

51 Defend, MERRIAM-WEBSTER.COM DICTIONARY, https://www.merriam-webster.

com/dictionary/defend (last visited April 20, 2026) (parentheses omitted).

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“defending” the Underlying Action because Toku was no longer prosecuting

it. 52 The record in the Underlying Action makes clear that a settlement was not

guaranteed when Toku offered to dismiss the Underlying Action without

prejudice on January 30. The parties were still negotiating a briefing schedule

on LiquiFi’s request to move for summary judgment, and Snipes was actively

seeking leave to move for summary judgment, which the court later granted, all

in the 21 days from Toku’s settlement offer to when it moved to dismiss. 53 I

am also satisfied Snipes was still defending the Underlying Action when he

opposed Toku’s without-prejudice dismissal—the order granting dismissal

attaches significant conditions to Toku’s ability to reassert claims against

Snipes. Because I conclude that Snipes was defending the claim beyond

February 6, I find that there are still outstanding fees and expenses to which

Snipes may be entitled. 54 Thus, I reject Toku’s contention there is “nothing

left” to award Snipes because LiquiFi has paid all of the fees Snipes incurred

before February 6.

Finally, Toku has not demonstrated there is an equitable basis to preclude

Snipes’ advancement claim. Snipes served his demand while the Underlying

52 Def.’s Mot. ¶¶ 31–33; Def.’s Answering Br. 10–11; Def.’s Reply ¶¶ 6–7; see Tr.

25–29.
53 See Underlying Action, Dkts. 229–34.

54 At argument, Snipes’ counsel confirmed that the amount at issue as of March 30,

after deducting the fees and expenses reimbursed by LiquiFi, is approximately
$1,000. See Tr. 40–41.

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Action was still ongoing (weeks before Toku alleges it committed to dismiss its

claims against him), the bylaws do not establish a deadline for an indemnitee to

serve an advancement demand on Toku, and the Underlying Action’s

disposition is not obviously unindemnifiable. Therefore, I find that this

advancement proceeding is not moot.

C. A Genuine Issue of Material Fact Exists Regarding Snipes’
Officer Status

In addition to its mootness argument, Toku argues Snipes is not entitled

to advancement because he is not an “officer” under Toku’s bylaws. 55 Toku

asserts Snipes “was never appointed to any of the ‘officer’ roles listed” in the

bylaws, nor was he “appointed to a ‘subordinate officer’ role” through the

process in the bylaws. 56 Toku contends that because the bylaws only grant

mandatory advancement rights to officers the listed officers or properly

appointed subordinate officers, Snipes is not entitled to advancement. 57

Snipes counters that Vice Chancellor Laster held in the Underlying

Action that Snipes was an officer of Toku, and his ruling there forecloses

Toku’s argument here. 58 Snipes also maintains that Toku cannot contest his

55 Def.’s Answering Br. 14–16; Def.’s Reply ¶ 5; Tr. 9–15.

56 Def.’s Answering Br. 14.

57 Def.’s Answering Br. 14–16; Tr. 18–20.

58 Pl.’s Resp. ¶ 11.

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officer status here when, in the Underlying Action, Toku contradictorily alleged

Snipes was an officer. 59

Upon careful review of the record before me, I cannot determine if

Snipes is an “officer” within the meaning of Toku’s bylaws. Snipes was hired

as Toku’s Head of Legal. 60 At oral argument, Toku stated that Snipes was

hired “through the usual mechanisms” by executing an employment contract,

and that Snipes was not appointed by Toku’s board of directors. 61 Toku also

submitted an affidavit from its CEO that claims none of Toku’s board of

directors, its President, or himself appointed Snipes to “any officer

role pursuant to Toku’s [b]ylaws or to a subordinate officer role as defined” in

the bylaws. 62

Toku also elaborated that Snipes’ employment contract was signed by

Toku’s CEO, but still maintains that an employment contract is “not appointing

[Snipes] to . . . a subsidiary officer position under” the bylaws. 63 Toku’s

position is that, even if its CEO hired Snipes and executed his employment

contract, that is not an “appointment” under its bylaws. Toku says the bylaws

59 See Pl.’s Resp. ¶ 11; Pl.’s Reply 6–9; Tr. 37–39.

60 Pl.’s Opening Br. 1–2; Pl.’s Resp. ¶ 11; Def.’s Answering Br. 2, 5, 15–16.

61 Tr. 14–15.

62 Unsworn Dec. of Kenneth O’Friel, Dkt. 23.

63 Tr. 16.

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require Toku’s board either to appoint an individual to a subsidiary officer role,

or to create the officer role and authorize the President or CEO to fill it. 64

Snipes’ evidence does not provide much clarity either. In his papers,

Snipes relies only on Toku’s allegations and Vice Chancellor Laster’s

determination that Snipes was a de facto officer for purposes of Section 3114 of

Title 10 of the Delaware Code. 65 At argument, Snipes’ counsel continued to

rely on Toku’s allegations in the Underlying Action. 66 To counter Toku’s

procedural argument, Snipes asserted that Toku is a small company, where the

two founders “seemed to hold all powers relevant to” Toku. 67 But counsel

could not definitively comment on Toku’s general adherence to the corporate

formalities that form the foundation of its argument, and there is no other

evidence in the record from which I can confidently make that determination

myself. 68 Snipes also contends that I should disregard the affidavit Toku

submitted because it contradicts prior sworn testimony and Toku offered it only

to “create a material dispute of fact in response to” his motion for summary

judgment. 69

64 See Tr. 17.

65 See Compl. ¶¶ 2, 8–9, 14, 16; Pl.’s Opening Br. 1–2, 4–6; Pl.’s Resp. ¶ 11; Pl.’s

Reply 6–9.
66 Tr. 37–39.

67 Tr. 40.

68 See Tr. 40–41.

69 Pl.’s Reply 8–9; Tr. 38.

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Toku counters that Snipes’ status as a de facto officer under Section 3114

only goes to his entitlement to mandatory indemnification under Section

145(c). 70 Toku reasons that the legislature’s choice to include reference to

Section 3114 in Section 145(c) but not Section 145(e) implies that the

legislature intended to leave corporations discretion in deciding who to grant

advancement rights. 71 Toku continues by maintaining that the entirely

permissive nature of advancement and Delaware law governing the

interpretation of corporate instruments means the term “officer” should be

strictly construed to the definition in Toku’s bylaws. 72

Based on the record before me, I conclude there is a genuine issue of

material fact whether Snipes was an officer of Toku such that he is entitled to

advancement under Toku’s bylaws. Neither side offered sufficient proof on

whether Toku’s board created Snipes’ position as an officer and appointed him,

either directly or by expressly delegating such authority to the CEO. Neither

side offered conclusory evidence that officer, as used in Toku’s bylaws,

encompasses or excludes de facto officers. Neither side offered sufficient

evidence of Toku’s day-to-day operations and method for appointing officers

which would allow me to determine if Toku routinely adhered to its bylaws or,

70 Tr. 13.

71 Tr. 19–20.

72 See Tr. 11–15.

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instead, routinely ignored corporate formalities when placing individuals in

officer or subsidiary officer roles. I thus conclude an issue of material fact

exists as to whether Snipes’ is an officer under Toku’s bylaws that is necessary

to determine his entitlement to advancement. Therefore, I deny the parties’

cross motions for summary judgment. 73

III. CONCLUSION

For the reasons explained above, I deny the parties’ cross-motions for

summary judgment. This is a Report under Court of Chancery Rule 144. It is

not a “final entitlement decision” so it is not subject to expedited exceptions

under the Chancellor’s assignment letter, 74 and exceptions are thus stayed

pending a final entitlement decision. I ask the parties to confer and submit a

proposed scheduling order to bring the entitlement issue to a prompt and final

decision.

73 Because I conclude I cannot grant summary judgment on Snipes’ officer status, I do

not address the parties’ other contentions.
74 Dkt. 5 at 2.

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