Law360, Los Angeles (April 25, 2017, 10:17 PM EDT) — The question of whether a 2014 armed conflict between Israel and the Hamas militant group was a “war” has taken center stage in Universal Cable Productions’ bid for coverage of costs to move production of a TV series away from Jerusalem amid the strife, with the company’s insurer asserting that coverage is barred by several war exclusions.
Universal, a subsidiary of NBCUniversal Media LLC, had initially planned to shoot the entirety of a USA Network miniseries called “Dig” — a murder mystery set in Jerusalem and starring Jason Isaacs and Anne Heche — in the ancient Mediterranean city. But after the conflict between Israel and Hamas escalated in summer 2014, the company decided to move production to Croatia and New Mexico.
When Universal sought coverage under a policy issued by Atlantic Specialty Insurance Co., the insurer declined, citing exclusions for losses related to war and warlike actions.
Universal and Atlantic presented opposing definitions of war in competing summary judgment motions filed Monday in California federal court. According to Universal, the technical definition of war requires both sides in a conflict to be sovereign states or quasi-sovereign entities possessing characteristics of such states. Hamas, which has been designated a terrorist organization by the U.S. government, is neither, the production company argued.
“In short, without the limiting principle that the hostilities or conflict be between two sovereigns or quasi-sovereigns, the [war] exclusion would extend far beyond its intended scope and improperly lead to absurd results,” Universal’s attorneys wrote.
Atlantic, meanwhile, asserted that Universal’s definition of war is divorced from the realities of modern warfare, saying in its brief that numerous world leaders and media outlets, as well as some of Universal’s own representatives, characterized the 2014 conflict as a war. According to court documents, the 50-day clash left 2,200 Palestinians dead, as well as 67 Israeli soldiers and six Israeli civilians.
“The plaintiffs’ position is disingenuous,” the insurer’s attorneys wrote. “Before the decision to leave Israel, plaintiffs’ own representatives referred to the conflict as a war, and people around the globe have done the same.”
Universal began filming “Dig” in Jerusalem in June 2014 and completed shooting the pilot episode. That same month, after three kidnapped Israeli youths were found murdered, Israeli authorities publicly blamed Hamas, prompting the group to retaliate by firing rockets and mortars into Israel. In response, Israeli forces mounted an extensive military campaign that included air and ground strikes against Hamas in the Gaza Strip.
In July 2014, after the U.S. State Department issued warnings about worsening conditions in and around Israel, Universal opted to move production out of the country. The company then sought coverage for extra expenses and costs under the Atlantic policy.
However, the insurer refused to pay, citing the policy’s war exclusions. Universal sued Atlantic in California federal court in June, asserting claims for breach of contract and bad faith and seeking damages of at least $6.9 million.
In its summary judgment brief, Universal said Atlantic’s position on the war exclusions improperly conflates acts of war with acts of terrorism, which fall within the policy’s coverage.
“In the post-9/11 world, insureds reasonably expect the two risks will be treated separately, and underwritten and evaluated by an insurer separately,” Universal’s attorneys wrote. “To conflate the two, as Atlantic is doing here, means that an insured who pays for terrorism insurance is not getting the benefit of its bargain if coverage is precluded by the war exclusions.”
According to Universal, because the federal government has named Hamas a terrorist organization, the parties are precluded under the so-called political question doctrine from litigating the issue of whether Hamas is a sovereign or quasi-sovereign state. In any event, the company said, the group does not meet either definition.
Atlantic countered that, pursuant to California law, the “common, ordinary” meaning of the word “war” must be applied to the exclusions. Here, the two combatants stated they were at war, and people and news outlets around the world also characterized the conflict as a war, including news services affiliated with NBCUniversal and members of the team tasked with ensuring the security of the “Dig” cast and crew, the insurer contended.
“When informing the public about the 50-Day War, NBC News and MSNBC used the word ‘war’ in articles and on television,” Atlantic’s attorneys wrote. “But now, in furtherance of their insurance claim, plaintiffs argue that only the most technical definition will do. There is no credible support for this position and it ignores the realities of war in the 21st century.”
The plaintiffs are represented by Lucia E. Coyoca, Valentine A. Shalamitski and Daniel M. Hayes of Mitchell Silberberg & Knupp LLP.
The case is Universal Cable Productions LLC et al. v. Atlantic Specialty Insurance Co., case number 2:16-cv-04435, in the U.S. District Court for the Central District of California.
–Editing by Aaron Pelc.