Is NStar Liable For Back Bay Blackout?

BOSTON (CBS) - NStar officials have insisted in press reports that the utility isn't liable for losses resulting from the big Back Bay power outage earlier this month, 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 told the Boston Business Journal.

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 said his insurance kicks in after 24 hours and his power was only out for seven.

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."

Lisa van der Pool of the Boston Business Journal can be seen weekdays at 6 a.m. on WBZ-TV.

You can follow Lisa on Twitter at @lvanderpool.