825 S.E.2d 752
Va.2019Background
- Dominion Resources and Alstom contracted under a Virginia-governed "Alliance Agreement" requiring certain insurance and mutual indemnities; Alstom obtained two eroding policies (Zurich $5M; Allianz $18M) naming Dominion as additional insured.
- A separate excess policy from AEGIS (obtained and paid for by Dominion independently) reimbursed Dominion for litigation defense and settlement costs after a fatal boiler accident suit; combined insurance fully reimbursed Dominion’s losses.
- Dominion sued Alstom for breach of contract, seeking the amounts it recovered from AEGIS, alleging Alstom failed to defend and procured eroding rather than noneroding insurance.
- Alstom moved to dismiss, arguing Dominion suffered no recoverable damages because AEGIS already paid and that the collateral source rule does not apply to contract claims (to prevent double recovery).
- The U.S. District Court for D. Conn. certified the determinative question to the Virginia Supreme Court: whether Virginia’s collateral source rule applies in breach-of-contract actions when the plaintiff has been fully reimbursed by an insurer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Virginia’s collateral source rule applies to breach-of-contract claims | Rule applies; AEGIS reimbursement is collateral and cannot be credited against Dominion’s contractual damages | Rule is a tort doctrine and should not apply in contract cases; allowing it would permit double recovery | Answered yes: Virginia recognizes the collateral source rule can apply in certain breach-of-contract cases |
| Whether Dominion has suffered recoverable damages if fully reimbursed by insurer | Dominion seeks recovery of amounts paid by AEGIS because collateral source rule bars considering that reimbursement | No damages remain because AEGIS already made plaintiff whole; summary judgment appropriate | Not resolved on facts here; court held inquiry is case-specific—rule may apply but not in every contract case |
Key Cases Cited
- Schickling v. Aspinall, 235 Va. 472 (1988) (articulating Virginia collateral source rule in tort context)
- Acuar v. Letourneau, 260 Va. 180 (2000) (applying collateral source rule to tort claim; noting rule not previously extended to contracts)
- Bullard v. Alfonso, 267 Va. 743 (2004) (describing collateral source rule scope and examples of collateral benefits)
- Acordia of Virginia Ins. Agency, Inc. v. Genito Glenn, L.P., 263 Va. 377 (2002) (settlement with one tortfeasor reduces remaining tortfeasors’ liability)
- CPM Virginia, LLC v. MJM Golf, LLC, 291 Va. 73 (2015) (Court noted it had not applied collateral source rule outside tort context)
- Kamlar Corp. v. Haley, 224 Va. 699 (1983) (discussing compensatory damages principle in tort and contract)
- Baltimore & Ohio R.R. Co. v. Wightman, 70 Va. (29 Gratt.) 431 (1877) (early recognition that insurance payments need not reduce defendant’s liability)