New York’s Highest Court Addresses Coverage Under Fiduciary Liability Policy


In its recent decision in Federal Ins. Co. v International Bus. Machs. Corp., 2012 NY Slip Op 1320 (N.Y. Feb. 21, 2012), the New York Court of Appeals - New York’s highest court - had occasion to consider whether an underlying ERISA lawsuit fell within the scope of coverage afforded under an excess fiduciary liability policy, and in particular, what it means to be acting in one’s capacity as a fiduciary.

Federal issued to IBM an Executive Protection Excess Insurance Policy, providing follow-form excess coverage over a fiduciary liability policy issued by Zurich.  IBM and the IBM Personal Pension Plan were named as defendants in a class action lawsuit alleging that various amendments made to its employees’ benefit plans violated ERISA laws pertaining to age discrimination.  IBM settled the underlying suit, which settlement included a payment to plaintiffs of their attorneys’ fees in prosecuting the lawsuit.  IBM, in turn, sought coverage for the payment of these fees under the Federal policy, claiming that the primary Zurich policy, with limits of liability of $25 million, had exhausted. 

Federal sought a judicial declaration that coverage was unavailable for the underlying suit as it did not fall within the Zurich policy’s definition of “wrongful act,” which was amended by endorsement to include:

  1. any breach of the responsibilities, obligations or duties by an Insured which are imposed upon a fiduciary of a Benefit Program by the Employee Retirement Income Security Act of 1974, as amended, or by the common or statutory law of the United States, or ERISA equivalent laws in any jurisdiction anywhere in the world;
  2. any other matter claimed against an Insured solely because of such Insured's service as a fiduciary of any Benefit Program;
  3. any negligent act, error or omission in the administration of any Benefit Program.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Traub Lieberman Straus & Shrewsberry LLP | Attorney Advertising

Written by:


Traub Lieberman Straus & Shrewsberry LLP on:

Popular Topics
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.