A motion to dismiss a Third-Party Notice Against an Insurer in the early stage of the Litigation based on a War and Terror Exclusion

One of the events arising from the 7 October massacre has recently been brought before the Court in proceedings filed against the Municipality of Sderot, a town located approximately eight kilometers from central Gaza.

On the morning of 7 October, a group of pensioners set out on a trip by minibus, traveling from central Israel to the Dead Sea. When the minibus arrived at Sderot, it stopped due to a flat tire. A few minutes after the minibus stopped, sirens sounded. The 13 pensioners tried to enter a nearby reinforced shelter, whose doors were supposed to be open when rocket sirens were activated.

The shelter doors did not open leaving the pensioners exposed outside, trying to lie on the floor to protect themselves. Shortly afterwards, armed Hamas terrorists arrived and opened fire on all the 13 men and women lying on the floor. All of them were murdered on the spot except for the bus driver who was the only survivor.

A claim for negligence was filed by the estates of the murdered pensioners against the City of Sderot.

Sderot in turn issued a motion to adjoin several third parties, such as Motorola Solutions (the builders of the shelter doors that failed to open) and Israel Phoenix Insurance Co. (hereinafter: the Phoenix) which is the Insurer of the Public Liability Policy of Sderot.  The Israel Phoenix was represented by Adv. Sharon Shefer and Adv. Moshe Stern, a senior partner of Levitan, Sharon & Co.

Adv. Shefer, on behalf of Phoenix, issued a motion to dismiss the said request in limine - mentioning that Phoenix had previously issued a formal coverage declination letter relying on a war/hostilities/terror exclusion.

The Grounds for the motion to dismiss:

  • The request to adjoin the Phoenix does not give any explanation how the Terror and War exclusion can be circumvented.
  • The said Exclusion which is a standard exclusion states:

“The Policy does not cover any loss or damage caused directly or indirectly due to war, invasion, act of a foreign enemy, act of hostility or any war like acts (whether war was declared or not), act of Terror and Sabotage.”

  • No coverage as a matter of law: even assuming the factual allegations in the main claim were correct, the event described falls within the war and terror exclusion.
  • No ambiguity requiring interpretation: the Exclusion is explicit and standard, leaving no genuine interpretive dispute.
  • “Reasonable expectations” of the insured cannot rewrite the contract: the Municipality’s assertion for expectation of broad coverage for “any act or omission” could not nullify an express and unambiguous Exclusion.
  • Tender framework and Insured’s awareness: the insurance policy wording was tied to tender documentation and policy wording known to the Insured; accordingly, arguments premised on surprise or a “hidden” exclusion cannot be relevant in these specific circumstances.

Phoenix also argued that there was no necessity to await the outcome of the main action: as the third-party claim on the face of it is not relevant. Early dismissal promotes procedural economy and avoids unnecessary litigation, with no merit.

The decision

The Court accepted Phoenix’s contention, stating that in appropriate cases, a third-party notice may be struck out at the preliminary stage where it is clear that it lacks a legal basis. On that basis, the Court ordered the third-party notice against Phoenix to be dismissed (without costs).

Practical implications

This outcome underscores several important points relevant to coverage disputes:

  1. Early-stage dismissal request should be used where the third-party notice, on its face, cannot succeed even if the main claim’s facts are assumed to be true.
  2. Express exclusions carry significant weight when they are clear, unambiguous, and consistent with standard market practice.
  3. The “reasonable expectations” of the insured doctrine remains limited and is not typically applied to negate explicit contractual terms absent real ambiguity.
  4. Tying the policy to tender documentation may strengthen the Insurer’s position where the Insured’s awareness of the operative wording can be demonstrated from the contractual framework.
  5. Effective case management and strategic procedural planning can generate substantial cost savings by narrowing issues early and avoiding unnecessary participation in irrelevant litigation.
  6. Although the underlying case was tragic, a well-prepared motion to strike out the claim in limine, filed by the Levitan, Sharon team led by Adv. Sharon Shefer, was granted, thereby saving the Insurers significant costs.