Also known as:wholly-successful · fully successful · entirely successful
Written by attorneys · grounded in primary & secondary sources — see below
A complete victory by a director in defending a proceeding to which the director was made a party because of the directorship. The victory may occur on the merits or through any other disposition that fully terminates all claims against the director without adverse consequences.
Sources & Authorities
How it applies
Common Examples
2
Dismissal With Prejudice Triggers Indemnity
Winston Ward, a director of Walker Valley Produce, faced a consumer suit alleging deceptive marketing tied to his board role. The court granted his motion to dismiss all claims with prejudice. Ward then sought reimbursement of his defense costs from the corporation.
Settlement Carve-Out Counts as Success
Winona Walsh, a director of Westbrook Dynamics, was sued in a class action over pricing practices. The company settled the claims against itself but expressly carved Walsh out of the agreement and obtained her dismissal with prejudice at no cost. Walsh demanded that the corporation cover her separate defense expenses.
Put it into practice
Test Yourself
9
Practice Questions5
· 1 primary source
Select any source to read its text and confirm it supports the definition.
Model Codes
Hornbooks
Sun-Times Media Grp., Inc. v. Black954 A.2d 380, 397 (Del. Ch. 2008)
Common questions
Frequently Asked
4
Does a dismissal with prejudice always satisfy the wholly successful standard?+
Yes. A court order dismissing every claim against the director with prejudice terminates the proceeding entirely in the director's favor and counts as success on the merits or otherwise under the statute.
Supporting sources
Does a global settlement that leaves the director untouched prevent mandatory indemnification?+
No. When the director is carved out of a settlement and receives a dismissal with prejudice without payment or admission, the director remains wholly successful in the defense of the claims brought against the director personally.
Supporting sources
Can a negotiated stipulation requiring a short ethics course still qualify as wholly successful?+
It depends on whether the stipulation imposes any sanction or adverse finding. A dismissal with prejudice that follows a minimal non-punitive requirement may still be treated as success otherwise, but authorities differ on whether any concession defeats the standard.
Supporting sources
Does a mixed outcome for co-defendants affect the director's right to mandatory indemnification?+
No. The statute examines only whether the director achieved complete success in the claims asserted against the director. A judgment against the corporation or other parties does not negate the director's separate exoneration.
Supporting sources
Business Associations RelationshipsLiability rules related to business associations · Liability of corporate officers and directors under the Model Business Corporation Act (2016)NEXTGENFoundational