Dominion Energy Inc. v. Zurich American Insurance Co.
An insurer's duty to defend extends to litigation that alleges facts that are potentially within the scope of insurance coverage, even if facts outside the pleadings may indicate that the litigation may lack merit. Three men passed away after a catastrophic failure at Boiler 3 at the Salem Harbor Station in November 2007. Two other men, who attempted to help the decedents, were injured. The estates of the decedents filed complaints against Dominion Energy Inc., Alstom and Dennis Nygaard in Massachusetts Superior Court and alleged that Nygaard was negligent when he inspected the boiler and that Alstom, which maintains its principal place of business in Connecticut, failed to properly supervise. Dominion Energy Inc. filed a complaint in Connecticut District Court and alleged that Zurich American Insurance Co. is legally responsible to defend Dominion Energy in the Massachusetts action, pursuant to a policy that was issued to Alstom Inc. The Zurich policy was issued in Connecticut. Zurich moved to transfer and argued that many witnesses are located in Massachusetts. Dominion's choice of forum deserves substantial weight. The District Court denied the motion to transfer. "Zurich has not demonstrated, by clear and convincing evidence," wrote the court, "that it would be inefficient or unfair for this court to determine, as a matter of law, the meaning and application of an insurance policy issued in Connecticut to a corporation headquartered here." On the merits, although provisions exist that may restrict Dominion's coverage, Zurich American Insurance possesses the duty to defend Dominion in Massachusetts court, because Dominion is an additional insured under the policy, and because the complaints in the Massachusetts action allege facts that potentially are within the scope of coverage. The Connecticut District Court granted Dominion's motion for partial summary judgment on the duty to defend.