In an April 8 2016 judgment, the Central District Court declined an insured's motion to file a third-party notice against its insurer in the framework of a class action (Selmor v Migdal Insurance Co Ltd, CA 38191-01-15).
A claim and a request to certify the claim as a class action were filed against several electrical appliance traders and importers, including Selmor.
The plaintiffs argued that Selmor had breached the Consumer Protection Law 1981 regarding statutory warranty by:
- requiring consumers to provide a warranty certificate or purchase invoice as a condition for supplying repair services during the statutory warranty period; and
- failing to attach a warranty sticker to its goods, as required by said law.
The alleged damages included mental anguish, wasted time and general expenses.
Motion for leave for third-party notice against insurer
According to a 2015 Supreme Court judgment, a third-party notice can be filed in the framework of a class action subject to court approval. Leave to send a third-party notice should be filed together with the defendant's response to the motion to certify the claim as a class action.
Selmor filed a motion for leave to submit a third-party notice against Migdal Insurance Co Ltd. Selmor argued that the plaintiffs' losses were covered under the product liability and third-party liability policies issued by Migdal, and therefore the motion should be granted.
The court highlighted that leave to file a third-party notice in a class action will be granted only if the defendant presents a proper basis for the liability of the third party. The court examined the wording of the relevant policies and dismissed Selmor's motion for the following reasons.
Product liability policy
The court ruled that the insured event involved damage caused in connection with a product; however, according to the claim, the product was not damaged and did not cause any damage and such arguments were not covered under the policy. The alleged damages did not include "death, bodily injury, sickness, physical or mental damage", which were covered under the policy. Further, the required payment for service during the warranty period was not "physical loss or damage to tangible property". Therefore, the alleged damages were not covered under the policy due to its definition of 'damage', which was the same as in the third-party liability policy. The policy also excluded damage to the product itself.
Third-party liability policy
The court ruled that, in keeping with the definition of an 'insured event' in the policy, damage must be caused by an unexpected event. The plaintiffs' argument that Selmor had refused to provide repair services because the consumer had been unable to present a warranty certificate or purchase invoice was not considered to be an 'unexpected event'. Further, under Exclusion 3, the policy did not cover liability deriving from "products manufactured, sold, supplied [or]… marketed by the assured… after said products departed from the direct possession of the assured".
Due to the poor prospect of the third-party notice against the insurers, the court declined the motion.
For further information on this topic please contact Tammy Greenberg or Aviv Klepner at Levitan, Sharon & Co by telephone (+972 3 688 6768) or email ([email protected] or [email protected]). The Levitan, Sharon & Co website may be accessed at www.levitansharon.co.il.
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