Northeast Utilities Service Co. v. St. Paul Fire and Marine Insurance Co.
A property owner may not qualify as an "additional insured" on an insurance policy, if the underlying action fails to allege that another company that procured the insurance, because it planned to perform work on the property, was negligent. In 2007, Elias Anchundia, who worked for American Electrical, or AET, and co-worker Scott Schmukler were working on maintenance at an underground electrical vault owned by the Northeast Utility plaintiffs. There was an explosion, and Anchundia passed away. His widow sued, alleging the Northeast Utility plaintiffs were negligent. Anchundia's suit settled for $8 million and cost $1.5 million to defend. Schmukler's suit settled for $55,000 and cost $14,811 to defend. The Northeast Utility plaintiffs alleged that Utica Mutual Insurance Co. possessed the duty to defend and indemnify, because American Electrical, which had been working on network maintenance, obtained insurance coverage from Utica, and it added the Northeast Utility plaintiffs to the policy as "additional insureds." Utica objected its policy did not cover the explosion, because it restricted coverage to American Electrical's acts or omissions, and the underlying actions did not allege that AET was negligent. The Utica policy provided, "We will pay those sums that the insured [AET] becomes legally obligated to pay as damages because of `bodily injury' or `property damage.' " The District Court found that the Utica policy did not provide indemnity for the Northeast Utility plaintiffs in the underlying actions. American Electrical was not obligated to purchase insurance to protect the Northeast Utility plaintiffs against their own conduct. Because the underlying actions settled, there is no possibility that complaints in the underlying actions will be amended, to allege vicarious liability, or that a court will find that there was vicarious liability. Because Utica lacks the duty to indemnify, a second insurer, St. Paul Fire and Marine, which provided excess insurance for damages in excess of $1 million, also lacked the duty to indemnify. The Northeast Utility plaintiffs were unable to prove that Utica had actual knowledge of a potential cause of action or the duty to defend. The court granted judgment to Utica and to St. Paul.