IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

GWEN I. GERLOFS,

Petitioner/

Counterclaim Respondent,

v. 

CITIZENS BANK, N.A., 

Respondent/

Counterclaim Petitioner.

ADAPTHEALTH LLC,

Cross-Claim Respondent/

Counterclaim Petitioner.

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) C.A. No. N23C-09-178 MAA CCLD

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Submitted: March 7, 2024

Decided: April 29, 2024

Citizens Bank, N.A.’s Application for Fees and Costs: 

GRANTED, in part.

MEMORANDUM OPINION

Christopher P. Simon, Esquire (Argued) and Kevin S. Mann, Esquire, of CROSS & 

SIMON, LLC, Wilmington, Delaware, Attorneys for Gwen I. Gerlofs.

Ronald N. Brown, III, Esquire and Daniel P. Klusman, Esquire, (Argued), of DLA 

PIPER LLP, Wilmington, Delaware, Attorneys for Citizens Bank, N.A.

Steven L. Caponi, Esquire, Matthew B. Goeller, Esquire and Megan E. O’Connor, 

Esquire, (Argued), of K&L GATES LLP, Wilmington, Delaware, and Thomas R. 

DeCesar, Esquire, of K&L GATES LLP, Harrisburg, Pennsylvania, Attorneys for 

AdaptHealth, LLC.

Adams, J. 
2

INTRODUCTION

Plaintiff Gwen I. Gerlofs (“Gerlofs”) initiated this action to secure the release 

of $4 million from an escrow account (the “Escrow Funds”) maintained by Citizens 

Bank, N.A. (“Citizens”). AdaptHealth LLC (“AdaptHealth”), the buyer in a 

September 2021 sale in which Gerlofs was the seller, had deposited the Escrow 

Funds in connection with that sale. An agreement between Gerlofs, AdaptHealth, 

and Citizens governs the Escrow Funds (the “Escrow Agreement”). When it came 

time to release the Escrow Funds to Gerlofs, AdaptHealth made a last-minute 

objection to stop the transfer. On November 3, 2023, the Court granted summary 

judgment in favor of Gerlofs, holding that the plain language of the Escrow 

Agreement supported disbursement of the Escrow Funds.

Though that holding resolved the primary dispute in this litigation, Citizens 

now seeks indemnification of its costs pursuant to the Escrow Agreement. 

AdaptHealth accepts that Citizens is contractually entitled to its full costs, but 

Gerlofs disputes Citizens’ application. AdaptHealth and Gerlofs also disagree over 

which of them is primarily responsible for Citizens’ costs. This is the Court’s 

opinion on those issues.

For the reasons stated herein, Citizens’ application for fees and costs is 

GRANTED as modified. Gerlofs and AdaptHealth shall each pay one-half of the 
3

awarded fees and costs Citizens incurred before April 28, 2023. Gerlofs shall pay 

all of the awarded fees and costs Citizens incurred on or after April 28, 2023.

FACTS AND PROCEDURAL HISTORY

I. The Escrow Agreement

Gerlofs, AdaptHealth, and Citizens entered the Escrow Agreement on 

November 3, 2021.

1

 The Escrow Agreement was part of the transaction in which 

Gerlofs sold Pumps It, Inc. (“Pumps It”) to AdaptHealth.2 The Escrow Agreement 

called upon Citizens to be the “Escrow Agent,” with Gerlofs and AdaptHealth as the 

“Escrow Parties.”3 Subject to its full terms, the core of the Escrow Agreement was 

that AdaptHealth had one year to make claims against the Escrow Funds and then 

Citizens would release any undisputed funds to Gerlofs within three business days 

of November 2, 2022 (the “Termination Date”).

Citizens’ obligations as Escrow Agent were limited, and Citizens did not 

agree to become a de facto arbitrator for Gerlofs and AdaptHealth. For example, 

Section 6(a) of the Escrow Agreement provides:

Notwithstanding anything to the contrary in this Agreement, the 

Escrow Agent shall only disburse Escrow Funds from the Escrow 

Account pursuant to (i) joint written instructions from both of the 

1

 D.I. No. 1 (“Compl.”), Ex. A (“Escrow Agreement”).

2

 Id.

3

 Id.
4

Escrow Parties . . . or (ii) a final, non-appealable judgment, order or 

decree of a court of competent jurisdiction or arbitration award . . . .4

Section 8(e) of the Escrow Agreement adds:

In the event that the Escrow Agent shall be uncertain as to its duties or 

rights under this Agreement, or shall receive any certificate, statement, 

notice, instruction, direction or other instrument from any other party 

with respect to the Escrow Funds which, in the Escrow Agent’s 

reasonable and good faith opinion, is in conflict with any of the 

provisions of this Agreement, or shall be advised that a dispute has 

arisen with respect to the Escrow Funds or any part thereof, the Escrow 

Agent shall be entitled, without liability to any person, to refrain from 

taking any action other than to keep safely the Escrow Funds until the 

Escrow Agent shall be directed otherwise in accordance with Joint 

Instructions or an order of a court with jurisdiction over the Escrow 

Agent. The Escrow Agent shall be under no duty to institute or defend 

any legal proceeding, but may, in its discretion and at the expense of 

the Escrow Parties as provided in subjection (f) immediately below, 

institute or defend such proceedings.

Section 8(f), in turn, provides:

The Escrow Parties authorize the Escrow Agent, if the Escrow Agent is 

threatened with litigation or is sued, to interplead all interested parties 

in any court of competent jurisdiction and to deposit any particular 

Escrow Funds with the clerk of that court. In the event of any dispute 

under this Agreement, the Escrow Agent shall be entitled to petition a 

court of competent jurisdiction and shall perform any acts ordered by 

such court.

Along with those limits on Citizens’ obligations came limits on Citizens’ 

liability. The Escrow Agreement is laden with explicit limitations on the risk 

4

 Id. § 6(a) (emphasis added).
5

Citizens agreed to bear in its role as Escrow Agent.5 Most pertinent to this dispute, 

Section 9 of the Escrow Agreement provides:

The Escrow Parties agree jointly and severally to indemnify the Escrow 

Agent for, and to hold it harmless against, any and all claims, suits, 

actions, proceedings, judgments, deficiencies, damages, settlements, 

liabilities and expenses (including reasonable legal fees and expenses 

of attorneys chosen by the Escrow Agent) as and when incurred, arising 

out of or based upon any act, omission, alleged act or alleged omission 

by the Escrow Agent or any other cause, in any case in connection with 

the acceptance of, or performance or non-performance by the Escrow 

Agent of, any of the Escrow Agent's duties under this Agreement, 

except as a result of the Escrow Agent's bad faith, willful misconduct 

or gross negligence. As between the Escrow Parties, each of them shall 

bear the foregoing in proportion to their respective responsibility, if 

any, with respect to the foregoing, or, if neither of them bears greater 

responsibility than the other, each Escrow Party shall bear one-half of 

the foregoing.6

The Escrow Agreement also contained a collection of provisions to resolve

any claims made by AdaptHealth. For purposes of this fee application, the critical 

point is that AdaptHealth was required to make claims against the Escrow Funds, if 

at all, “on or before November 2, 2022 (the ‘Termination Date’).”7 The Escrow 

Agreement stated, “[t]he Escrow Agent shall disregard any Claims that are not 

submitted by notice given on or before the Termination Date.”8 

5

 See, e.g., id. §§ 3, 6(a), 7, 8(a)–(e), 9, 16, 19(g).

6

 Id. § 9.

7

 Id. § 6(b).

8

 Id.
6

II. The Escrow Dispute

On November 3, 2022, Citizens emailed AdaptHealth and Gerlofs, advising 

them that the Termination Date had passed and “Citizens Bank has not received, nor 

is aware of, any outstanding or pending claims.”9 In that email, Citizens asked the 

parties to “please let [Citizens] know” if there were any unresolved claims.10 That 

same day, AdaptHealth responded, “[p]lease be advised there are a number of claims 

being resolved by the parties and the escrow should not be released until the parties 

are in agreement on the open claims.”11

The purported claims AdaptHealth referenced in its November 3, 2022 email 

were disputes between AdaptHealth and Gerlofs regarding certain pre-closing 

liabilities of Pumps It, as well as an insurer’s contemplated attempt to recoup 

overpayments it made to Pumps It.

12

 Despite those issues, AdaptHealth did not 

timely submit a claim against the Escrow Funds in accordance with the Escrow 

Agreement.13 Nevertheless, Citizens refused to disburse the Escrow Funds without 

AdaptHealth’s consent pursuant to the Escrow Agreement.

14

 Litigation thus ensued.

9

 Compl., Ex. B.

10

 Id.

11

 Chancery Dkt. No. 32 (“Pl.’s Mot for Summ. J.”), Ex. D.

12

 See Chancery Dkt. No. 39 (“AdaptHealth’s Opp’n to Pl.’s Mot. for Summ. J.”), Ex. D.

13

 See Pl.’s Mot. for Summ. J., Ex. B at 11.

14

 Id.
7

III. Proceedings in the Court of Chancery

This matter commenced on November 22, 2022 when Gerlofs filed suit for 

release of the escrow funds against Citizens in the Court of Chancery (the “Chancery 

Litigation”).

15

 On December 23, 2022, Citizens answered Gerlofs’s complaint.

16

 

Contemporaneously, Citizens filed its own counterclaim against Gerlofs and 

crossclaim against AdaptHealth, which sought only to interplead the Escrow 

Funds.17 In doing so, Citizens was the first to serve AdaptHealth in this matter.18 

On December 30, 2022, Gerlofs served Citizens with interrogatories, requests for 

admission, and requests for production of documents.19 On January 12, 2023, 

Gerlofs answered Citizens’ counterclaim and lodged her own crossclaim against 

AdaptHealth.20 Gerlofs then moved for summary judgment against Citizens on 

February 13, 2023.21 AdaptHealth answered the crossclaims against it and filed a 

counterclaim against Gerlofs on March 6, 2023.22

Vice Chancellor Cook held a scheduling conference between the parties on 

February 24, 2023.23 That conference centered on how to proceed on Gerlofs’s

15

 Chancery Dkt. No. 1.

16

 Chancery Dkt. No. 4.

17

 Id.

18

 Chancery Dkt. No. 6.

19

 Chancery Dkt. No. 5.

20

 Chancery Dkt. No. 8.

21

 Chancery Dkt. No. 15.

22

 Chancery Dkt. Nos. 23, 24.

23

 See Chancery Dkt. No. 26 (“Feb. 24, 2023 Tr.”).
8

motion for summary judgment, Citizens’ request to interplead, and an ultimately 

withdrawn motion for default judgment24 Gerlofs filed against AdaptHealth.25 At 

that early stage in the Chancery Litigation, Citizens explained that this litigation was 

“purely an AdaptHealth and Gerlofs dispute, which is why [Citizens] moved to 

interplead the funds pursuant to the escrow agreement.”26 Citizens also argued that 

the dispute between AdaptHealth and Gerlofs should be resolved before Citizens 

responded to Gerlofs’s motion for summary judgment because Citizens “take[s] no 

position on where the funds go.”27 Citizens said deferring Citizens’ response to 

Gerlofs’s motion would be “in the interest of all the parties, it would keep [Citizens’] 

costs down, which [Citizens has] tried to be as efficient as possible in responding to 

all the filings in this case over the past two to three months in an effort to do that.”28

At the February 24 conference, Gerlofs signaled agreement with Citizens’ 

interpleader motion, saying, “we don’t have any objection to . . . Citizens 

interpleading the funds to the Court. As long as the funds end up with [Gerlofs], I 

don’t think we care whether Citizens is holding them now or the Court is holding 

24

 Apparently, AdaptHealth was confused by its designation as a nominal party, which led 

AdaptHealth to delay in responding to the other parties’ pleadings. Id. at 13:2–19.

25

 Id. at 3:18–4:10.

26

 Id. at 9:4–7.

27

 Id. at 9:14–15.

28

 Id. at 9:17–21.
9

them now.”29 Vice Chancellor Cook also indicated that interpleading the Escrow 

Funds would be proper, saying:

as to the Citizens Bank issue on deposit with the Register in Chancery, 

I would strongly encourage the parties to talk about a procedure for that. 

I trust that, based on what’s been said during the call, that maybe the 

parties can reach a resolution and provide a stipulated order that would 

address the concerns raised by Citizens Bank and that we can try to get 

some efficiencies here.30

Following the scheduling conference, Gerlofs submitted a proposed briefing 

schedule for her motion for summary judgment.

31

 Vice Chancellor Cook rejected 

the proposal, explaining that it was unduly condensed and did not account for the 

contemplated deposit of the Escrow Funds with the Register in Chancery.32 Shortly 

after, on March 21, 2023, Gerlofs withdrew her original motion for summary 

judgment against Citizens and replaced it with a motion for summary judgment 

against both Citizens and AdaptHealth.33

AdaptHealth opposed Gerlofs’s motion for summary judgment on April 27, 

2023.34 On May 4, 2023, Citizens submitted a letter to Vice Chancellor Cook 

explaining that the parties had negotiated interpleading the Escrow Funds up until 

the April 27 answering brief deadline, but Gerlofs ultimately rejected Citizens’ 

29

 Id. at 15:19–23.

30

 Id. at 22:14–21.

31

 Chancery Dkt. No. 28.

32

 Chancery Dkt. No. 29.

33

 Chancery Dkt. Nos. 31, 32.

34

 Chancery Dkt. No. 39.
10

proposed stipulation.35 Citizens maintained that it took no position as to 

disbursement of the funds, except that Citizens would retain its reasonable attorneys’ 

fees.36 Vice Chancellor Cook scheduled a hearing on the summary judgment motion 

to take place on June 28, 2023.37

On June 6, 2023, after the attempts to obtain a stipulation failed, Citizens 

moved to interplead the Escrow Funds.38 AdaptHealth did not oppose Citizens’ 

motion,39 but Gerlofs did.40 Gerlofs’s two objections to the interpleader motion 

were: (1) that Citizens’ request for $34,000 in legal fees incurred to that point was 

unreasonable; and (2) that by releasing Citizens as a party, Gerlofs would be required 

to follow third-party discovery rules as to Citizens.41 Gerlofs’s opposition brief also 

evinces a dissatisfaction with Citizens’ choice to take a neutral position in the dispute 

instead of siding with Gerlofs, which Gerlofs maintains would have “promptly and 

efficiently close[d] this matter.”42

35

 Chancery Dkt. No. 42.

36

 Id.

37

 Chancery Dkt. No. 47.

38

 Chancery Dkt. No. 48 (“Citizens’ Mot. to Interplead”).

39

 Chancery Dkt. No. 52.

40

 Chancery Dkt. No. 51 (“Pl.’s Opp’n to Interpleader”).

41

 See id. at 9.

42

 Id.
11

At the June 23, 2023 hearing, Vice Chancellor Cook addressed the motion to 

interplead.43 Vice Chancellor Cook reiterated his support for interpleading the 

Escrow Funds, saying:

We had a hearing some months ago. I thought I gave pretty clear 

guidance and encouragement that the parties allow Citizens Bank to 

interplead the funds. And I must say that I’m disappointed that we are 

where we are today, where that hasn’t happened. And it seems to me 

as though, for whatever reason, this is being made needlessly 

complicated, and we’ve got a party here that I’m not sure needs to be 

here.44

Gerlofs nonetheless maintained her opposition to interpleader, raising the 

then-fledgling fee dispute and the potential for more convenient discovery if Citizens 

remained a party.45 Gerlofs continued:

Our beef here is not with AdaptHealth either, because, frankly, they 

don’t have a claim to these funds, so . . . we don’t need to sue 

AdaptHealth and start a lawsuit over a dispute on the funds, because 

they didn’t assert claims. So what we need is a court order . . . declaring 

that there’s no restrictions to turn over the funds.46

Vice Chancellor Cook took the matter under advisement at the conclusion of the 

hearing.47

On July 11, 2023, Vice Chancellor Cook requested the parties to submit a joint 

letter regarding the Court of Chancery’s jurisdiction over the case in response to a 

43

 See Chancery Dkt. No. 61 (“June 23, 2023 Tr.”).

44

 Id. at 23:16–23.

45

 Id. at 24:14–23.

46

 Id. at 25:11–17.

47

 Id. at 72:6–7.
12

June 20, 2023 holding48 in another Court of Chancery matter.49 At a September 18, 

2023 hearing on the subject matter jurisdiction question, Vice Chancellor Cook 

opined that the Court of Chancery lacked subject matter jurisdiction because a 

declaratory judgment was an adequate legal remedy.50 The Chancery Litigation was 

subsequently transferred to this Court.51

IV. Proceedings in the Superior Court

Having been teed up in the Court of Chancery, the substantive litigation in 

Superior Court was relatively short-lived. The parties’ submissions in this Court 

were generally confined to letters describing the posture of the case with attachments 

containing the filings from the Chancery Litigation. On November 3, 2023, the 

Court heard argument on Gerlofs’s motion for summary judgment and Citizens’ 

motion to interplead.52 The Court granted Gerlofs’s motion, finding that 

AdaptHealth’s failure to submit a claim to Citizens before the Termination Date 

precluded any genuine dispute as to whether the Escrow Funds should be disbursed 

to Gerlofs.53 The Court asked the parties to brief the issue of Citizens’ costs.

54

48

 See ISS Facility Servs., Inc. v. JanCo FS 2, LLC, 2023 WL 4096014 (Del. Ch. June 20, 2023).

49

 Chancery Dkt. No. 60.

50

 Chancery Dkt. No. 69 (“Sept. 18, 2023 Tr.”) at 12:7–17:16.

51

 Chancery Dkt. No. 68.

52

 D.I. No. 14 (“Nov. 3, 2023 Tr.”).

53

 Id. at 55:7–59:20.

54

 Id. at 59:21–60:12.
13

Citizens began on December 4, 2023 by filing its application for costs—

particularly the fees generated by Citizens’ counsel, DLA Piper LLC (US) (“DLA 

Piper”).

55

 AdaptHealth filed a response on December 18, 2023, which did not 

oppose Citizens’ fees but said Gerlofs should pay the bulk of them.56 Gerlofs also 

responded to Citizens’ application on December 18, 2023, challenging Citizens’ 

entitlement to fees and saying AdaptHealth should be fully responsible for any fees 

that were awarded.57 Citizens replied to the Escrow Parties on January 3, 2024.58 

The same day, Gerlofs and AdaptHealth responded to each other’s responses to 

Citizens.59 On January 17, 2024, Gerlofs and AdaptHealth each replied to the other’s 

January 3 brief.60 The Court heard argument on Citizens’ fee application on 

February 21, 2024.61 On March 7, 2024, the parties informed the Court that they 

had failed to “agree on a procedure for mediating the fee dispute,” and therefore a 

decision would be necessary.62

55

 D.I. No. 19 (“Citizens’ Mot. for Costs”).

56

 D.I. No. 21 (“AdaptHealth’s Resp. to Citizens’ Mot. for Costs”).

57

 D.I. No. 22 (“Pl.’s Opp’n to Citizens’ Mot. for Costs”).

58

 D.I. No. 24 (“Citizens’ Reply”).

59

 D.I. No. 26 (“AdaptHealth’s Opp’n to Pl.’s Br.”); D.I. No. 27 (“Gerlofs’s Opp’n to 

AdaptHealth’s Br.”).

60

 D.I. No. 30 (“Gerlofs’s Reply Br.”); D.I. No. 31 (“AdaptHealth’s Reply Br.”).

61

 D.I. No. 36.

62 D.I. No. 37. After the February 21, 2024 hearing, the Court reached out to the parties to inquire 

as to whether the parties wished to mediate the fee dispute along with their other outstanding 

disputes.
14

STANDARD OF REVIEW

The Court “has broad discretion in determining the amount of fees and 

expenses to award.”63 The Court is guided by a non-exhaustive list of factors in Rule 

1.5(a) of the Delaware Lawyers’ Rules of Professional Conduct.64 This inquiry does 

not require a line-by-line assessment of the requested fees.65 The Court avoids 

relying on hindsight to scrutinize an attorney’s judgment about whether work was 

appropriate.66 “The party seeking an award of fees and expenses bears the burden 

of establishing the amount sought is reasonable.”67

ANALYSIS

As a starting point, the Court notes that Citizens’ entitlement to fees is not 

limited to what is available at common law. Rather, the Escrow Agreement 

63

 Seidman v. Blue Foundry Bancorp, 2023 WL 4503948, at *8 (Del. Ch. July 7, 2023) (quoting 

Black v. Staffieri, 2014 WL 814122, at *4 (Del. Feb. 27, 2014) (TABLE)).

64

 Id. (citing Mahani v. Edix Media Grp., Inc., 935 A.2d 242, 245–46 (Del. 2007); McGlothlin v. 

Petrunich Oral and Maxillofacial Surgery, 2023 WL 5747520, at *6 (Del. Super. Sept. 6, 2023). 

The factors set forth in Rule 1.5(a) are: (1) “the time and labor required, the novelty and difficulty 

of the questions involved, and the skill requisite to perform the legal service properly;” (2) “the 

likelihood, if apparent to the client, that the acceptance of the particular employment will preclude 

other employment by the lawyer;” (3) “the fee customarily charged in the locality for similar legal 

services;” (4) “the amount involved and the results obtained;” (5) “ the time limitations imposed 

by the client or by the circumstances;” (6) “ the nature and length of the professional relationship 

with the client;” (7) “the experience, reputation, and ability of the lawyer or lawyers performing 

the services;” and (8) “whether the fee is fixed or contingent.” Del. Lawyers’ R. Prof’l Conduct 

1.5(a).

65

 Seidman, 2023 WL 4503948, at *8 (citations omitted).

66

 Id. (citations omitted).

67

 Roma Landmark Theaters, LLC v. Cohen Exhibition Co. LLC, 2021 WL 5174088, at *3 (Del 

Ch. Nov. 8, 2021) (citing Glob. Link Logistics, Inc. v. Olympus Growth Fund III, L.P., 2010 WL 

692752, at *1 (Del. Ch. Feb. 24, 2010)).
15

explicitly commands that AdaptHealth and Gerlofs must indemnify Citizens for any 

expenses incurred in connection with Citizens’ role as Escrow Agent.68 The Escrow 

Agreement places only two limitations on Citizens’ indemnity rights. The first 

limitation is that Citizens cannot be indemnified for costs incurred “as a result of 

[Citizens’] bad faith, willful misconduct or gross negligence.”69 The second 

limitation restricts attorneys’ fees to those that are “reasonable.”70 The Escrow 

Agreement also instructs that Gerlofs and AdaptHealth “shall bear [Citizens’ costs] 

in proportion to their respective responsibility.”71 The Court will address each of 

these components of Section 9 of the Escrow Agreement in turn.

I. Citizens’ Good Faith

Gerlofs is alone in challenging Citizens’ conduct in this matter.72 Gerlofs’s

critiques of Citizens’ conduct revolve around three main points. First, Gerlofs 

argues that Citizens should have acquiesced to Gerlofs’s demand for disbursement 

of the Escrow Funds since Gerlofs’s claim was meritorious.

73

 Relatedly, Gerlofs 

says Citizens was wrong to not admit central allegations in Gerlofs’s complaint.74 

Third, Gerlofs argues Citizens and DLA Piper were unjustified in not providing a 

68

 Escrow Agreement § 9.

69

 Id.

70

 Id.

71

 Id.

72

 See AdaptHealth’s Resp. to Citizens’ Mot. for Costs at 1.

73

 Pl.’s Opp’n to Citizens’ Mot. for Costs at 8–10.

74

 Id. at 9–10.
16

sum certain of their requested fees after the grant of summary judgment, which 

Gerlofs contends mandated additional briefing. In the Court’s view, none of 

Gerlofs’s arguments (or Citizens’ actions) even approaches bad faith.

Gerlofs’s argument that “the Complaint required no action on the part of 

Citizens” strains credulity.75 Gerlofs—and only Gerlofs—decided to bring suit 

against Citizens while leaving AdaptHealth as only a nominal party.76 By Gerlofs’s

account, she should have been permitted to file suit against an uninterested party, 

not serve the only other interested party, and then obtain an unopposed judgment. 

No matter how strong Gerlofs’s substantive position may have been, that is not how 

disputes are resolved in an adversarial process.

Citizens’ response to the complaint was appropriate and, from the start, an 

effort to minimize its expenses. Citizens’ counterclaim against Gerlofs and 

crossclaim against AdaptHealth sought only to interplead the funds so that Citizens 

could avoid any costs or liability in this litigation.

77

 As Citizens explained in that 

early pleading, Citizens feared it might incur multiple liability if it disbursed the 

Escrow Funds without joint instructions or a court order.

78

 Gerlofs, through the 

Escrow Agreement, expressly authorized Citizens to interplead the funds in this

75

 Id. at 12–13.

76 Although named as a “Nominal Party” in the caption, Gerlofs never served AdaptHealth.

77

 Chancery Dkt. No. 4 at 19–22.

78

 Id. at 20.
17

exact situation.79 Citizens cannot be faulted for responding to a suit filed against it 

and following the terms of the Escrow Agreement.

Gerlofs’s argument that Citizens wrongly withheld admissions in its answer 

to Gerlofs’s complaint is similarly unpersuasive. Gerlofs points to four paragraphs 

of her complaint that she says Citizens should have admitted. Two of them are 

patently legal conclusions that did not require a response.

80

 The two factual

averments provide: “[n]o Claims were made by AdaptHealth prior to the 

Termination Date”81 and “[n]o Claims were made or filed by the Termination 

Date.”82 To each of those, Citizens replied: “Citizens is without knowledge or 

information sufficient to form a belief as to the truth of the allegations in this 

paragraph.”83 When Gerlofs later served requests for admissions as part of the 

79

 Escrow Agreement § 8(f) (“The Escrow Parties authorize the Escrow Agent, if the Escrow 

Agent is. . . sued, to interplead all interested parties in any court of competent jurisdiction and to 

deposit any particular Escrow Funds with the clerk of that court.”); see also id § 8(e):

In the event that the Escrow Agent shall . . . receive any . . . instruction . . . with 

respect to the Escrow Funds which, in the Escrow Agent's reasonable and good 

faith opinion, is in conflict with any of the provisions of this Agreement . . . the 

Escrow Agent shall be entitled, without liability to any person, to refrain from 

taking any action other than to keep safely the Escrow Funds until the Escrow 

Agent shall be directed otherwise in accordance with Joint Instructions or an order 

of a court with jurisdiction over the Escrow Agent.

80

 See Chancery Dkt. No. 1 ¶ 31 (“No condition exists which prevents distribution of the Escrow 

Funds to [Gerlofs].”); id. ¶ 32 (“[Gerlofs] is entitled to the Escrow Funds.”).

81

 Id. ¶ 16.

82

 Id. ¶ 30.

83

 Chancery Dkt. No. 4 at 6, 11.
18

discovery process, Citizens admitted that “[AdaptHealth] delivered no Claims to 

[Citizens] prior to the Termination date.”84

Though Citizens’ admission might seem to conflict with its earlier statements

that it lacked requisite knowledge, the Court has no basis to question Citizens’ 

compliance with Superior Court Civil Rule 11. Gerlofs’s argument in this regard

overlooks the subtle but important distinction between what Gerlofs averred in her 

complaint and what she asked in discovery. 

Gerlofs’s complaint simply stated that AdaptHealth made no “Claims” before 

the Termination Date. Section 6(b) of the Escrow Agreement defines “Claims” as 

“claims against the Escrow Funds in accordance with Article 7 of the Purchase 

Agreement.”85 Thus, determining whether the allegations set out in paragraphs 16

and 30 of Gerlofs’s complaint were true would require an interpretation of Article 7 

of Gerlofs and AdaptHealth’s purchase agreement. But Section 8(a) of the Escrow 

Agreement expressly provides, “[t]he Escrow Agent shall not be . . . deemed to have 

knowledge of, or have any obligation to make inquiry into or consider, any term or 

provision of any agreement between any of the Escrow Parties . . . including without 

limitation any documents referenced in this Agreement.”86 Paragraphs 16 and 30 of 

the complaint could also encompass claims AdaptHealth made directly to Gerlofs 

84

 Pl.’s Mot. for Summ. J., Ex. B at 11.

85

 Escrow Agreement § 6(b) (emphasis added).

86

 Id. § 8(a).
19

that Citizens would not know about. Accordingly, it was reasonable for Citizens to 

plead ignorance as to that broad allegation.

Unlike the complaint’s general averment that AdaptHealth did not make any

timely claims, the request for admission was much more targeted. The request for 

admission asked whether AdaptHealth “delivered . . . Claims to [Citizens] prior to 

the Termination Date.”87 This request was specifically about claims that were 

delivered to Citizens and thus necessarily within Citizens’ knowledge; therefore,

Citizens was much better positioned to respond to affirmatively. Citizens’ different

responses to different questions reflects an appropriate conscientiousness and hardly 

demonstrates bad faith.88

Last, Gerlofs’s contention that Citizens—or, more aptly, DLA Piper—

inappropriately refused to disclose the full amount of the accrued attorneys’ fees 

requires little discussion. In the interim between the Court granting summary 

judgment and Citizens filing its fee application, the parties discussed stipulating to 

the reasonableness of Citizens’ costs to avoid briefing on this issue.89 That effort 

failed, though, because Gerlofs demanded to cap DLA Piper’s fees at a fixed sum, 

accusing DLA Piper of “intend[ing] to give [itself] a blank check by agreement.”90 

87

 Pl.’s Mot. for Summ. J., Ex. B at 11 (emphasis added).

88

 The Court also notes that Citizens answered the complaint on December 23, 2022 and responded 

to Gerlofs’s requests for admissions on January 27, 2023. That month-long delay does not appear 

to have had a major effect on the trajectory of this litigation. 

89

 Citizens’ Mot. for Costs, Ex. C.

90

 Id.
20

But since DLA Piper was continuing to work—and bill—on this matter, there would 

be no final sum until Citizens was released.91 DLA Piper did, however, provide an 

estimate its expected final fees,92 which undercuts the notion that DLA Piper wanted 

to continue billing “without limitation or oversight.”93 The Court declines to hold 

that Citizens acted in bad faith by refusing to forfeit a portion of its contracted-for 

indemnity rights to appease another party.

The Court finds no bad faith on behalf of Citizens at any point in this litigation, 

whether in this Court or the Court of Chancery. Citizens is therefore entitled to be 

indemnified for its costs pursuant to Section 9 of the Escrow Agreement. The Court 

will now turn its attention to the determination of the reasonableness of Citizens’ 

fees and the parties’ respective obligations for paying those fees pursuant to the 

Escrow Agreement.

II. Reasonableness of DLA Piper’s Fees

The next question is whether the fees generated by DLA Piper are reasonable. 

There are two components of this inquiry: (1) whether the number of hours is 

reasonable; and (2) whether the hourly rate is reasonable.94 As noted, the Court has 

91 Section 9 of the Escrow Agreement broadly entitles Citizens to indemnification for all of its 

reasonable attorneys’ fees, with no exception for so-called “fees on fees.” See Escrow Agreement 

§ 9.

92

 DLA Piper said it had accrued approximately $80,000 to that point and that a stipulation would 

keep its final fees below $90,000. Citizens’ Mot. for Costs, Ex. C.

93

 Pl.’s Opp’n to Citizens’ Mot. for Costs at 13.

94

 See McGlothlin, 2023 WL 5747520, at *6.
21

substantial discretion on these issues because “[d]etermining a reasonable fee is 

necessarily an imprecise exercise.”95

A. The Number of Hours

The Court is satisfied that the number of hours DLA Piper has billed in this 

matter is reasonable. As before, Gerlofs is the only party to contest this point.96 The 

Court will not repeat the entire history of this litigation, but there is a consistent 

theme of Citizens attempting to mitigate its costs only to be opposed by Gerlofs. 

This first occurred in November 2022 when Gerlofs filed suit primarily against 

Citizens instead of AdaptHealth after Citizens took no role in the dispute. It occurred 

again in December 2022 when Citizens first sought to interplead the Escrow Funds, 

which Gerlofs opposed. It occurred again in February 2023 when Citizens sought 

to avoid briefing Gerlofs’s motion for summary judgment, which Gerlofs opposed. 

It occurred again in April 2023 when Citizens tried to obtain a stipulation regarding 

interpleader per Vice Chancellor Cook’s advice, which Gerlofs opposed. It occurred 

again in June 2023 when Citizens formally moved to interplead the funds, which 

Gerlofs opposed. And it occurred most recently in November 2023 when Citizens 

tried to obtain a stipulation as to its fees, which Gerlofs opposed.

95

 Id. at *7; see also Seidman, 2023 WL 4503948, at *8.

96

 See AdaptHealth’s Resp. to Citizens’ Mot. for Costs at 1.
22

Gerlofs was entitled to take those positions as part of her litigation strategy. 

But choices have consequences. Gerlofs cannot spend a full year preventing 

Citizens from exiting the litigation—knowing that Citizens is contractually entitled 

to indemnification—and then complain that Citizens did not do enough to mitigate 

its costs.

Gerlofs’s arguments as to specific time expenditures are unpersuasive. 

Gerlofs criticizes Citizens for billing for discovery that Citizens “forced upon itself”

by not admitting the complaint’s key allegations.97 As explained above, however,

there was nothing improper about Citizens’ answer to the complaint. Gerlofs also 

challenges the time Citizens spent attempting to interplead the funds,98 but such 

interpleader was specifically authorized by the parties’ Escrow Agreement99 and 

“strongly encourage[d]” by Vice Chancellor Cook.100 Finally, Gerlofs contests the 

time Citizens spent researching the subject matter jurisdiction question because 

Citizens ultimately took no position on that issue.

101 The Court will not fault counsel 

for preparing to respond to a question specifically asked by a Vice Chancellor. 

Citizens was a party to this litigation and therefore its lawyers had an obligation to, 

97

 Pl.’s Opp’n to Citizens’ Mot. for Costs at 18.

98

 Id.

99

 Escrow Agreement § 8(f).

100

 Feb. 24, 2023 Tr. at 22:14–21.

101

 Pl.’s Opp’n to Citizens’ Mot. for Costs at 18.
23

at the least, keep themselves informed of potentially case-dispositive 

developments.

102

In all, Citizens was forced into an active role in this contentious litigation. 

The actions it took were reasonable, and it continuously attempted to end its 

involvement with this case. No reduction in Citizens’ hours is necessary.

B. The Hourly Rate

The Court is less persuaded with respect to the hourly rate billed by DLA 

Piper. More particularly, the Court is concerned with the unexplained fluctuation in 

DLA Piper’s rates. In December 2022, the respective rates for partners and 

associates were $713.00 and $431.25.103 In May 2023, the rates increased to $895.00

and $540.00.104 In June 2023, the rate for partners increased again to $1,000.00.105 

In October 2023, the rate for partners decreased back to $895.00.106

 Gerlofs highlighted this fluctuation in her opposition to Citizens’ 

application.107 Citizens did not offer any explanation of the rate changes in its reply 

brief. At oral argument, Citizens had no answer for why the rates went back down 

after being increased. Even after the Court provided Citizens an opportunity to look 

102

 See, e.g., Del. Lawyers’ R. Prof’l Conduct 1.1, 1.3.

103

 Citizens’ Mot. for Costs, Ex. D.

104

 Id.

105

 Id.

106

 Id.

107

 Pl.’s Opp’n to Citizens’ Mot. for Costs at 17.
24

into the matter during the other parties’ presentations at oral argument, Citizens still 

had no cogent explanation for the fluctuation.

The Court reiterates that Citizens bears the burden on its own application for 

costs.108 Also, while not presumptively unreasonable, the fluctuation of DLA 

Piper’s hourly rates, without explanation, adds heft to Citizens’ burden to show their 

reasonableness. Despite that, Citizens’ only argument on this point is “[n]ot only 

are Citizens’ hourly rates reasonable, but Gerlofs has presented no evidence 

whatsoever that they are unusually high in the legal market.”

109

 This attempt to shift 

the burden is unavailing.110

Because the Court is unassured of the reasonableness of DLA Piper’s 

increased rates in this matter, the Court will only award fees commensurate with the 

initial hourly rates: $713.00 for partners, $431.25 for associates. Accordingly, the 

total hours DLA Piper accrues in this matter shall be multiplied by those rates to 

determine the award of attorneys’ fees to Citizens.

108

 See Roma Landmark Theaters, 2021 WL 5174088, at *3.

109

 Citizens’ Reply Br. at 1

110

 Citizens quotes All Pro Maids, Inc. v. Layton as saying, “[d]efendants presented no evidence 

that the rate charged by Brockstedt for his services as APM’s primary litigation counsel was 

unusually high in the Wilmington legal market. I therefore reject Defendants arguments that 

Brockstedt’s rate was excessive and unreasonably high.” 2004 WL 3029869, at *5 (Del. Ch. Dec. 

20, 2004). That quote, though, does not contradict the precedent that an applicant bears the burden 

of establishing the reasonableness of its fees. In All Pro Maids, the defendants argued that a 

Wilmington-based attorney should be held to Sussex-based rates because the parties resided in 

Sussex. Id. The court only made the above-quoted comment after explaining that defendants’ 

evidence of lesser rates in Sussex was inapposite. Id.
25

III. Allocation of the Costs

The remaining question is how Citizens’ costs should be allocated among 

AdaptHealth and Gerlofs. The Escrow Agreement provides some guidance, saying: 

“As between the Escrow Parties, each of them shall bear [Citizens’ costs] in 

proportion to their respective responsibility, if any, with respect to the foregoing, or, 

if neither of them bears greater responsibility than the other, each Escrow Party shall 

bear one-half of the foregoing.”

111

 The Court must therefore evaluate the respective 

responsibility of AdaptHealth and Gerlofs for Citizens’ fees.

A. Pre-April 28, 2023 Costs

Citizens’ costs in the early stages of this litigation can be fairly blamed on 

each of the Escrow Parties for different reasons. Gerlofs is perhaps most directly 

responsible because she chose to make Citizens integrally involved in this dispute. 

That was an inefficient choice. Nothing in the Escrow Agreement calls for Citizens 

to be a party to litigation regarding the Escrow Funds. To the contrary, Sections 8(e) 

and 8(f) of the Escrow Agreement explicitly contemplate Citizens not being a party 

to disputes over the Escrow Funds. Nor did Citizens ever breach the Escrow 

Agreement. Although Gerlofs contends Citizens should have simply ignored 

AdaptHealth’s belated objection, Section 6(a) of the Escrow Agreement plainly 

states that Citizens “shall only disburse the Escrow Funds” pursuant to joint 

111

 Escrow Agreement § 9.
26

instructions or a court order.112 Citizens would have breached the Escrow 

Agreement if it acceded to Gerlofs’s demands.

The more efficient course for Gerlofs would have been to bring an action only 

against AdaptHealth and, once successful, deliver that judgment to Citizens. That is 

the route the plaintiff took in the analogous case Vice Chancellor Cook ordered 

briefing on,

113 and that path had been charted by similarly situated plaintiffs before

Gerlofs.114 The Escrow Agreement itself contemplates an Escrow Party presenting 

Citizens with an order from an action in which Citizens was not a party.115 In sum, 

Citizens’ costs were directly caused by Gerlofs unwarranted decision to file suit 

against Citizens instead of AdaptHealth.

Still, AdaptHealth’s role in sparking this controversy cannot be ignored. As 

imperfect as Gerlofs’s pursuit of her claims may have been, Gerlofs’s efforts would 

not have been necessary if AdaptHealth had not objected wrongfully to disbursement 

of the Escrow Funds.116 AdaptHealth may not have directly initiated Citizens’ 

112

 Id. § 6(a) (emphasis added).

113

 See ISS Facility Servs., 2023 WL 4096014, at *1-2.

114

 See, e.g., Elavon, Inc. v. Elec. Transaction. Sys. Corp., 2022 WL 667075, at *1-2 (Del. Ch. 

Mar. 7, 2022); I/Mx Information Mgmt. Sols., Inc. v. MultiPlan, Inc., 2013 WL 3322293, at *1 

(Del. Ch. June 28, 2013).

115

 Escrow Agreement § 6(a) (“The delivery to the Escrow Agent by an Escrow Party of a court 

order . . . shall constitute a representation to the Escrow Agent that such order . . . constitutes an 

Order hereunder and the Escrow Agent shall be entitled to rely thereon without any further duty 

of inquiry or investigation.”).

116 The Court makes no determination through this opinion as to the merit of any other claims 

outstanding in this litigation.
27

involvement in this dispute, but AdaptHealth’s conduct was the source of the events 

that followed. Thus, AdaptHealth too has responsibility for Citizens’ costs.

AdaptHealth and Gerlofs’s actions were interdependent factors that only led 

to Citizens’ costs in tandem. Without AdaptHealth’s contractually unsupported 

decision to withhold consent to disbursement, there would have been no litigation

over the Escrow Agreement. Without Gerlofs’s contractually unsupported decision 

to force Citizens into this litigation over the Escrow Agreement, Citizens would have 

no litigation costs. Therefore, AdaptHealth and Gerlofs responsibility for Citizens’ 

initial costs is in equipoise, so the Escrow Parties must evenly split those costs.

B. Post-April 28, 2023 Costs

The analysis changes with respect to the costs Citizens incurred following 

Gerlofs’s unilateral refusal to consent to Citizens interpleading the Escrow Funds. 

That refusal was cemented, at the latest, on April 28, 2023.117 Importantly, 

AdaptHealth was willing to consent to interpleader, which would have ended 

Citizens’ involvement in this matter.118 The Court sees this as a turning point in the 

parties’ respective responsibility for Citizens’ costs. After April 28, 2023, the only 

reason Citizens was involved in this litigation—and incurring associated costs—was 

117

 Chancery Dkt. No. 42.

118

 AdaptHealth’s Resp. to Citizens’ Mot. for Costs, Ex. B.
28

Gerlofs’s refusal to let Citizens out. It follows that Gerlofs is responsible for all the 

costs Citizens incurred from then on.

Gerlofs raises three arguments as to why she justifiably held out from the 

interpleader stipulation: (1) “[t]he procedure for interpleader would have forced Ms. 

Gerlofs to answer a new action for interpleader, and then assert cross claims against 

AdaptHealth;” (2) “the mechanism Citizens actually proposed required Ms. Gerlofs 

to bear sole responsibility for all of Citizens’ fees;” and (3) “Citizens would no 

longer be a party, and Ms. Gerlofs would have to seek facts through third party 

discovery.”119 None of these arguments is effective here.

Regarding the first and third reasons, they demonstrate that Gerlofs was not 

keeping Citizens in this case for substantive reasons. Instead, Citizens’ involvement

was merely convenient for Gerlofs, and Gerlofs evidently chose to reduce her own 

litigation costs at the expense of Citizens. Gerlofs was free to make that choice, but 

she is not free to make AdaptHealth pay for it. Notably, those same procedural 

“efficiencies” applied equally to AdaptHealth, yet AdaptHealth still consented to 

interpleader.

The analysis is essentially the same with regard to Gerlofs’s fear of having to 

pay Citizens’ fees herself. Though this is closer to a substantive dispute, it appears 

to the Court that Gerlofs could have simply tacked that relatively small fee dispute 

119

 Gerlofs’s Opp’n to AdaptHealth’s Br. at 5.
29

on to her main claims against AdaptHealth. Citizens’ proposed order said only that 

Citizens’ costs would be retained from the Escrow Funds—at a point when 

entitlement to the Escrow Funds was contested.120 The proposed order did not 

reference who would ultimately be responsible for Citizens’ costs. The Court does 

not agree with Gerlofs that consenting to interpleader would have involved 

consenting to pay all of Citizens’ fees.

At bottom, Gerlofs made a series of strategic decisions in this litigation that, 

while permissible, were markedly inefficient with respect to Citizens. Gerlofs made 

those choices despite the broad indemnity rights Citizens enjoyed under the Escrow 

Agreement. As a result, Gerlofs is responsible for the majority of Citizens’ costs in 

this litigation.

CONCLUSION

In conclusion, Citizens’ application for costs is GRANTED, but the hourly 

rates used to calculate the award of attorneys’ fees shall be fixed at $713.00 for 

partners and $432.25 for associates. Any awarded costs Citizens incurred before 

April 28, 2023 shall be paid in equal shares by Gerlofs and AdaptHealth, with each 

party paying one-half of such costs. Any awarded costs Citizens incurred on or after 

April 28, 2023 shall be paid solely by Gerlofs.

120

 AdaptHealth’s Resp. to Citizens’ Mot. for Costs, Ex. A.
30

The parties shall meet and confer regarding how they wish to structure the 

respective payments of the awarded costs and disbursement of the Escrow Funds. 

The parties shall jointly submit a letter and proposed order to the Court no later than 

May 17, 2024 arranging those respective transfers. For the avoidance of doubt, any 

costs incurred by Citizens up until the submission of the proposed order shall be 

included in the award, subject to the rate limitation noted above.

IT IS SO ORDERED.