A federal appeals court overturned a lower court decision Thursday, holding a Travelers Cos. Inc. unit must reimburse an employee's pension association in California according to its management liability insurance in connection with a lawsuit against the organization.
Retirees and beneficiaries sued Stockton, San Joaquin County Employees' Pension Association of California 2017 for maintenance of a reserve fund they claimed was overfinanced and should have been used to pay them supplementary benefits, according to the complaint San Joaquin County Employee retirement Assn. v. Travelers Casualty and Surety Co. of America.
Travelers denied coverage on the grounds that the disputes were subject to a "prior and ongoing procedure" exclusion in their policies. The association brought an action against the insurer and accused it of breach of contract and bad faith.
The lower court ruled in Traveler's favor, but was overturned by a unanimous three-judge appeals panel at the 9th U.S. District Court. in San Francisco.
The district court ruled in favor of the insurer after establishing the trial "has little connection to the allegations" in a 1
Lawyers in the case did not respond to a request for comment.