This section contains the nature of the case and procedural background.

The contract at issue is governed by Virginia law and concerned services performed by Alstom (D) at Dominion Resources' (P) power-generation facilities. As required D obtained an insurance policy with an aggregate limit of $5 million and an excess policy with an $18 million limit, both naming P as an additional insured. Both are 'eroding' policies, in which the costs of defending a lawsuit are considered part of the loss. P independently obtained an excess insurance policy from Associated Electric & Gas Insurance Services. A boiler accident injured five workers, three fatally. The workers and estates filed a lawsuit against P, D, and others, which ultimately resulted in a settlement agreement. P paid more than $5 million to settle the claims and incurred more than $9.9 million in defense expenses. P received a total of more than $5 million from D’s policies. It additionally received payment from its policy for the remaining expenses it incurred in defending and settling the litigation. The parties agree that the combination of insurance payments has fully reimbursed P for the costs it incurred in defending and settling the litigation. P's insurance company has not brought any claims against D's insurers for reimbursement of the amounts it paid to P. In the underlying case, P alleged that D breached the Agreement in two ways: (1) by failing to defend P in the boiler accident litigation, and (2) by obtaining eroding rather than noneroding insurance policies. P sought as damages the sum it expended in defending and settling the boiler accident litigation not covered by D’s policies. P sought to recover from D the same amount it received from P’s insurance policy. P moved to dismiss P's action because P has suffered no recoverable damages. D argues that P should be barred from obtaining a double recovery and that the collateral source rule does not apply in contract actions.

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