Adirondack Insurance Exchange v. Russo

Background

Adirondack Insurance Exchange sued Angelo Russo, Laura Russo, and Interlaken Owners, Inc., seeking declarations about the parties’ rights and obligations under a homeowners insurance policy. The dispute arose from an August 4, 2020 incident in which a falling tree at 75 Mill Road struck Laura Russo’s brother, John Brescia Goldstein, who later died.

The policy was issued to Angelo Russo and also treated Laura Russo as an insured. It provided personal-liability coverage and a defense for certain claims involving bodily injury or property damage. It also excluded bodily injury to an insured and excluded coverage for bodily injury to a person regularly residing at the insured location. The policy’s medical-payments coverage likewise excluded injury to a person regularly residing there, other than a residence employee.

After Goldstein’s estate brought a wrongful-death lawsuit against the Russo defendants and Interlaken, Adirondack provided coverage to the Russo defendants. Laura Russo separately sued Interlaken, alleging that she suffered severe mental and emotional trauma after witnessing her brother’s death. Interlaken then brought a third-party claim against Angelo Russo, asserting that he was responsible for the tree and seeking indemnification, contribution, and attorneys’ fees.

The third-party claim was sent to Adirondack on June 21, 2021. Adirondack issued a disclaimer on July 7, 2021, relying on the policy’s exclusions. Adirondack nevertheless agreed to defend Angelo Russo until the court ruled on whether the disclaimer was valid.

Issues and Analysis

Adirondack moved for summary judgment under Rule 56. Summary judgment is a ruling issued without a trial when there is no genuine dispute about a fact that could affect the outcome and the moving party is entitled to judgment under the law.

The defendants did not challenge the substance of the policy exclusions. Instead, they argued that the exclusions could not be enforced because they had not received copies of the policy or the Homeowners–Special Form. The court rejected that argument under New York insurance law, holding that delivery or actual possession of an insurance policy is not required to complete the insurance contract. The court also found that the Homeowners–Special Form had been incorporated by reference in the renewal policy.

The court further noted that the Russo defendants had previously received benefits under the Homeowners–Special Form, including property-damage coverage and coverage for the wrongful-death lawsuit. The court concluded that they could not accept the benefits of that coverage while avoiding the exclusions limiting it.

The court also rejected the argument that Adirondack’s disclaimer was untimely. It determined that the wrongful-death lawsuit did not trigger a duty to disclaim because that lawsuit sought damages for Goldstein’s death, not for Laura Russo’s alleged injuries. The lawsuit Laura Russo filed against Interlaken also did not trigger that duty because Interlaken was not insured by Adirondack. The third-party claim against Angelo Russo was the first relevant claim involving bodily injury to an Adirondack insured and a claim against another insured.

Because the third-party claim was tendered on June 21, 2021, and the disclaimer was issued approximately 17 days later, the court found the disclaimer timely.

Ruling

The court granted Adirondack’s motion for summary judgment for the declaratory relief requested in the complaint. It declared that Adirondack was not required to provide insurance coverage to any party for the claims in the underlying or third-party actions; that Adirondack had no duty to defend or indemnify Angelo Russo or any other party for those claims; and that Adirondack could withdraw from the defense it was providing Angelo Russo in the third-party action.

Judge Philip M. Halpern directed the clerk to terminate the pending motion and close the case.