Attorney Howard Goldman was quoted in the Boston Business Journal regarding Nstar’s potential liability for damages caused to Boston Back Bay businesses that were affected by the power outage.
Nstar liability from outage hinges on whether negligence occurred
by Lisa van der Pool, Boston Business Journal
Nstar officials have insisted in press reports that the utility isn’t liable for losses resulting from the big Back Bay power outage in mid-March, but some local attorneys say that may be wishful thinking on the part of the power company’s leadership.
Firms that experienced business interruptions and revenue loss, may have a strong case to make if negligence eventually is found to be a factor in the transformer fire that caused the widespread, two-day long outage, the attorneys said.
“(Nstar is) liable like anyone else for damages that flow from negligence,” said Tony Doniger, a business litigation partner at Boston-based Sugarman, Rogers, Barshak & Cohen, who also lost power at his Back Bay home.
“They’re not immune,” Doniger said.
An Nstar spokesman, Michael Durand, said the fire was caused “by the catastrophic failure of a connector between an electrical cable and a transformer in our Scotia Street substation. The failure caused cable cooling fluid to ignite, leading to the fire that ultimately caused the outage.”
The first step for businesses that want to try to recoup cash is to contact their insurance companies to see what type of plan they have, said Mary-Pat Cormier, a civil litigation partner at Edwards Wildman Palmer LLP in Boston.
Restaurateur Steve DiFillippo, who owns Davio’s and Avila in the Back Bay, said he lost upwards of $20,000 during the blackout, because the lights abruptly went out during dinner service on Tuesday night. But DiFillippo’s insurance kicks in after 24 hours, and his power was only out for seven hours, said DiFillippo in an email.
Cormier said that once the insurance route is exhausted, the next step would be to potentially file a claim against Nstar for lost revenue.
Cormier herself was affected by the blackout, as her law firm, Edwards Wildman, is located at 111 Huntington in the Back Bay. Power came back on during the second day but it was spotty. Cormier worked from home the first day, and forwarded articles about the blackout to clients so they would know why she was sluggish to respond.
“It was impossible to access documents and we had to get an extension to answer a complaint,” said Cormier of the inconvenience.
Businesses that file claims against Nstar for damages during the blackout will have a struggle getting money out of the utility — unless it’s eventually found that there was negligence.
“Unless (the fire) was due to something they didn’t check, or they cut corners… barring that, it’s going to be an uphill battle,” said Leonard Kopelman, a municipal law expert, with Boston-based Kopelman and Paige PC.
Howard Goldman of Goldman & Pease LLC agrees with Kopelman, and cited a 1993 case, “FMR Corp. v. Boston Edison.” In that case businesses in the financial district sued Boston Edison for several different power outages in 1983 and 1987.
Boston Edison was eventually found not liable for lost business during the power outages because there was no physical damage, according to a decision in the case, which was decided in the Supreme Judicial Court of Massachusetts.
“The courts will not award damages to such businesses under a tort or strict liability theory where personal injury or physical property damages have not resulted,” said Goldman in an email. “And damages are not recoverable under a breach of contract theory due to the regulatory agreements between the state and Nstar as such contracts and agreements do not expressly provide for such economic damages, for to do so would most likely bankrupt the utility companies.”
Most lawyers agree that businesses looking to recover damages should primarily target their insurance companies, and make sure they’ve documented any damage or losses, said Alan Reish, a director in the litigation practice of Goulston & Storrs Goulston & Storrs Latest from The Business Journals Follow this company .
“All the businesses impacted … should be putting their insurance carrier on notice of their losses,” said Reish. “If they don’t ask, they won’t get it. They need to get the ball rolling quickly.”
Meanwhile Chris Coombs, owner of the restaurant Deuxave, which lost over $10,000 during the blackout, has contacted his insurance company, but hasn’t heard back on whether its lost revenue will be covered. The restaurant only collected $135 the night the power went out and it was closed on the second night, a Wednesday.
“The fortunate part is that we have a fantastic business model,” said Coombs. “We’re structured for long-term success, so a few days doesn’t really crush us. We’ll be just fine in the long run.”