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Stifel Financial Corp. v. Cochran6/13/2002
Liquidating Trust v. Continental Cas. Co., 624 A.2d 1191, 1196 (Del. 1993).
Stifel maintains, however, that this Court approved the Sorensen holding in Goldman v. Braunstein's, Inc., 240 A.2d 577 (Del. 1968). We do not so read Goldman. Goldman held that an action seeking damages based on wrongful termination of an employment contract was governed by the three year statute of limitations covering actions based on a promise. Id. at 578. Goldman reconciled §§ 8106 and 8110 (the predecessor to § 8111) by distinguishing between claims arising out of services already performed (subject to 8111), and claims arising upon or after termination of the employer-employee relationship (subject to 8106). Id. While not approving Sorensen, the Court in Goldman did note that its decision was not inconsistent with Sorensen's determination that § 8111 was intended to bar all claims arising out of the employer-employee relationship, because "a claim arising out of that relationship would necessarily be one referable to the period during which the relationship existed, not after its termination." Id., distinguishing Sorensen, 142 F. Supp. 354. See also Compass v. American Mirrex Corp., 72 F. Supp. 2d 462 (D. Del. 1999) (holding that if plaintiff alleges a breach of a duty to provide benefits for work already performed, then § 8111 applies, but if plaintiff alleges employer breached a different duty arising out of employment agreement, then § 8106 applies).
Even at the federal level there is some doubt as to Sorensen's viability. Rich v. Zeneca, Inc., 845 F. Supp. 162 (D. Del. 1994). In Rich, the District Court held that Delaware's general three year statute of limitations, rather than the one year statute of limitations for wage claims, applied to a suit brought by a former employee under ERISA alleging wrongful discharge for the purpose of interfering with the employee's attainment of rights under his ERISA plan. Id. at 166. After reviewing Goldman and its progeny, the District Court said " hese cases suggest that 10 Del. C. § 8111 . . . should not be read as being so comprehensive as to bar all claims arising out of the employer-employee relationship. Rather 10 Del. C. § 8111 is directed to claims alleging a breach of a duty to pay wages, salary or overtime for work performed." Id.
More to the point, the Court of Chancery has held that, because indemnification is essentially a contractual right, the three year statute of limitations is applicable to indemnification claims. Scharf v. Edgcomb Corp., 1997 WL 762656, *5 (Del. Ch. 1997), appeal denied, 705 A.2d 243 (Del. 1998). We agree with the reasoning of the Court of Chancery and hold that, because indemnification is a right conferred by contract, under statutory auspice, actions seeking indemnification are subject to the three year limitations period that encompasses both actions "based on a promise" and those "based on a statute." 10 Del. C. § 8106. In sum, Sorensen, to the extent it is still viable, was never binding state-law precedent and our decision here leaves the Goldman dichotomy intact for all claims seeking wages, salary, overtime, or other true "benefits" arising from the employment relationship. Our analysis is strengthened by the general rule that, if there is doubt as to which of two statutes of limitations applies, that doubt should be resolved in favor of the longer period. Sonne v. Sacks, 314 A.2d 194, 196 (Del. 1973).
III.
Stifel also contends that Cochran's claim for indemnification of the arbitration action judgment should have been dismissed pursuant to §145(b) because the arbitration action was brought "by or in the right of the corporation." Cochran replies that the trial court correctly concluded that
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