Guess v. Significance Foundation
Plaintiff L. Donald Guess (Guess) incurred substantial attorney fees to two law firms defending him in a federal court action (the federal civil action). In the federal civil action, the government sought injunctive relief against Guess and against a family of entities, including defendant The Significance Foundation (Foundation), in which Guess had served in numerous capacities, including an as officer and director of Foundation. After the federal civil action was resolved in favor of the defendants, Guess sought indemnification from Foundation for the attorney fees he incurred in defending the federal civil action. When Foundation declined to indemnify Guess, he filed the present action against Foundation. The dispute was tried to the court, which ruled in favor of Guess's claims for indemnity.
On appeal, Foundation asserts the trial court's judgment must be reversed for three reasons. First, Foundation contends that as a matter of law the legal expenses incurred by Guess in defending the federal civil action were not incurred "by reason of [Guess] being or having been a Director [or] officer" of Foundation, and therefore his legal expenses fall outside the scope of the indemnity provisions of Foundation's bylaws. Second, Foundation contends that because Guess paid a substantial portion of the legal fees by obtaining loans from third parties, and there was no evidence at trial that Guess remained liable to repay those loans, he did not suffer any "expenses or liabilities" for which Foundation owed indemnification. Finally, Foundation argues the trial court improperly admitted into evidence the legal billings of Guess's attorneys.
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