AT&T Corp. v. Certain Underwriters at Lloyd’s London (NJ App. August 3, 2009)
AT&T sought coverage under both primary and excess fiduciary liability policies for several suits against it relating to a stock-option plan. The suits alleged that AT&T breached its contractual obligations relating to stock options provided in its acquisition of a company. In addition to liabilities arising out of breach of a fiduciary duty, the policies provided coverage for negligent acts in the administration of certain employee-benefit plans. The court held that the insurers were not obligated to provide a defense or coverage for the suits since they did not allege a negligent act in the administration of benefits. Instead, the allegations amounted to a breach of contract, for which the policies do not provide coverage.
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By Bryan D. Richmond and Sharon Angelino