American Chemicals & Equipment Inc v. Continental Casualty Company et al

American Chemicals & Equipment Inc sponsored a 401(k) retirement plan that faced a class-action lawsuit alleging ERISA fiduciary breaches related to imprudent investments and excessive fees. The company sought defense and indemnification from its insurer, Continental Casualty Company, under a fiduciary liability policy. Continental refused coverage, contending the underlying claims did not fall within the policy's coverage grant and were barred by exclusions. American Chemicals then filed suit against Continental for declaratory relief and damages. On June 2, 2017, the United States District Court for the Northern District of Illinois ruled on cross-motions for summary judgment, examining the policy's terms and the nature of the allegations in the underlying ERISA action.

The court granted American Chemicals’ motion for summary judgment regarding the duty to defend, holding that the underlying lawsuit potentially fell within coverage, thus triggering Continental's defense obligation. The court denied summary judgment on the duty to indemnify, finding issues of fact remained. Continental’s corresponding motions were granted in part and denied in part.

Whether Continental Casualty Company had a duty to defend and indemnify American Chemicals & Equipment Inc under the fiduciary liability insurance policy for the underlying ERISA class action, specifically concerning the definition of a covered “Claim” and the applicability of certain policy exclusions.

The ruling clarified the broad standard for an insurer's duty to defend under fiduciary liability policies in the ERISA context, reinforcing that the duty is triggered where the allegations of the underlying complaint arguably fall within the policy’s coverage. It highlighted the distinction between the duty to defend and the narrower duty to indemnify, influencing how insurers assess coverage obligations in retirement plan litigation.