Also known as: holds harmless · held harmless · holding harmless · hold-harmless · indemnify · indemnification
Written by attorneys · grounded in primary & secondary sources — see below
A contractual provision or statutory obligation by which one party agrees to protect another from liability, loss, or expense arising from specified claims or transactions. The protection extends to both present and former status holders when the liability stems from that capacity and does not arise from a disqualifying breach of duty.
Hector Huerta sued Harbor Shipping after a cargo loss. Harbor Shipping's initial disclosures listed its liability policy. The policy obligated the insurer to cover any judgment against Harbor Shipping and to reimburse it for amounts paid to satisfy the judgment. The court ordered production of the full policy under the disclosure rule.
Highland Farms purchased twenty properties under a blanket title policy from Ridge Properties. Unrecorded municipal liens later surfaced. Ridge Properties refused the claim citing a bulk-search endorsement. Highland Farms sued for the costs of clearing title, arguing the policy required indemnification for unexcepted defects.
Select any source to read its text and confirm it supports the definition.
Henry Harrison, a director of Helios Energy, faced a shareholder derivative suit over a failed acquisition. He prevailed on summary judgment. Harrison then sought reimbursement of his defense costs from the corporation. The board approved payment because he succeeded on the merits.
Hana Huang, former manager of Highland Steel, settled a customer negligence claim arising from her project approvals. She paid the settlement and her attorney fees from personal funds. Huang demanded reimbursement from the LLC. The company refused, claiming her departure ended any obligation.
Hakeem Harris, a partner in Harbor Shipping, personally guaranteed a loan used solely for partnership operations. The lender obtained judgment against Harris after default. Harris sought indemnification from the partnership for the judgment and defense costs. The partnership agreement was silent on the issue.
Hamid Hassan, a director of Helios Energy, was sued for alleged breach of duty but obtained dismissal with prejudice. He incurred substantial legal fees defending the action. Hassan demanded that the corporation pay those expenses. The corporation resisted, arguing the dismissal did not establish success on the merits.
An LLC must indemnify a person for claims or liabilities incurred by reason of the person's former capacity as manager, provided the liability does not arise from a breach of statutory duties of loyalty, care, or good faith. The operating agreement's silence does not eliminate this default obligation. The timing of the lawsuit after departure is irrelevant when the claim stems from conduct during the managerial role.
Supporting sources
Yes, when the guarantee was given solely to obtain financing for the LLC and the member acted in good faith within authority. The resulting judgment and defense costs qualify as liabilities incurred by reason of member capacity. The operating agreement's silence leaves the statutory default in place.
Supporting sources
A director is entitled to indemnification of expenses when wholly successful on the merits or otherwise in defending a proceeding brought because of the directorship. Success includes dismissal with prejudice. The corporation must pay those expenses even if the operating agreement is silent.
Supporting sources
…not benefits that appellant purposefully sought for himself. [^maj-8]: Under the separation agreement, appellant is bound to "indemnify and hold [his] Wife harmless from any and all attorney fees, costs and expenses which she may incur by reason of the default of [appellant] in the performance of any of the obligations…