Ruling for insurer overturned in coverage dispute with NBCUniversalPosted On: Jul. 15, 2019 2:10 PM CST
A U.S. District Court erred in holding NBCUniversal Media LLC units were not entitled to $6.9 million in coverage in connection with a television production’s delays caused by 2014 Hamas rocket attacks in Israel because of two war exclusions in its policy.
However, the 9th U.S. Circuit Court of Appeals in San Francisco remanded the case to the lower court to consider whether yet a third war exclusion in a OneBeacon Insurance Group Ltd. unit’s policy might apply to the situation.
New York-based NBC Universal filed suit against OneBeacon unit Atlantic Specialty Insurance Co. in 2016, stating it was entitled to coverage in connection with production delays for “Dig,” a 10-episode series that was set predominantly in Jerusalem.
Production on the 90-minute pilot episode began on or about June 1, 2014, and was completed on June 26, 2014. The show then went on hiatus.
Hamas began launching rockets from Gaza into Israel on July 9, 2014. Two days later, Universal decided to postpone production, which had been scheduled to resume July 20, 2014.
After the U.S. State Department warned of a potential escalation in violence, however, production was eventually moved to Croatia and New Mexico.
Atlantic denied coverage on the basis the claim was not covered under its policy’s war exclusions, and Universal filed suit in Universal Cable Productions LLC, et al. v. Atlantic Specialty Insurance Co.
The District Court in Pasadena, California, agreed with the insurer and held two war exclusions in the policy precluded coverage: one for war, and another for “warlike action by a military force.” https://www.businessinsurance.com/article/20171012/NEWS06/912316504/NBCUniversal-not-entitled-to-coverage-for-production-delays-in-Israel
A unanimous three-judge panel overturned the ruling on the exclusions in Friday’s decision. “Both ‘war’ and ‘warlike action by a military force’ have a specialized meaning in the insurance context and the parties had, at the least, constructive notice of the meaning,” said the 9th Circuit ruling.
“The district court erred when it failed to apply that meaning. Under that specialized meaning, both ‘war’ and ‘warlike action by a military force’ require hostilities between either de jure or de facto sovereigns, and Hamas constitutes neither,” said the ruling. “De jure” refers to existing in law.
“Hamas’ conduct consisted of intentional violence against civilians conduct which is far closer to acts of terror than ‘warlike action by a military force,’” said the ruling, in reversing the District Court’s summary judgment on the first two war exclusions and the lower court’s holding that Atlantic breached its contract when it denied coverage.
The ruling added, however, that the District Court did not address a third war exclusion in the policy, as to whether Hamas’ actions constituted “insurrection, rebellion, or revolution.” It remanded the case to the District Court to consider that exclusion.
Attorneys in the case could not immediately be reached for comment.