In addition to being a great place to find lobster, Maine may also be one of the country’s best jurisdictions for a policyholder seeking defense from its commercial general liability carrier.
In Zurich American Ins. Co. v. Electricity Maine LLC, the U.S. District Court for the District of Maine found against Zurich and in favor of Electricity Maine LLC, one of several defendants in an underlying class action lawsuit alleging pricing violations against the power company. Most notably, the court confirmed that Maine has a particularly low threshold for triggering an insurer’s duty to defend. The court found an “occurrence” despite Zurich’s argument that all the underlying allegations involved intentional conduct. And perhaps most shockingly, the court found the possibility of “bodily injury” based solely on the underlying complaint’s request for “actual damages in an amount to be proven at trial.” There is no mention in the complaint of emotional distress or mental anguish, but the court found an allegation of “bodily injury” anyway, relying on Maine’s broad duty to defend rules.
Based on this decision, a CGL policy can be triggered in Maine by virtually any general allegation of damage caused by negligence. Maine follows what it calls the “comparison test” and seems to allow for a duty to defend unless there is absolutely no chance of an eventual judgment that would fall within the scope of coverage provided by the policy.
Once again, we have an important reminder on two fronts. First, the duty to defend should be broadly construed, and some courts are willing to give the policyholder every benefit of the doubt, particularly in the face of ambiguous underlying allegations. Second, never forget choice of law. If you can go to Maine to resolve a duty to defend dispute (or to eat lobster), do it.