Amicus Curiae Brief — Tropp v. Corporation of Lloyd's

gz (y) ; ee U.S.

\% MAY 12 2011

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No. 10-1249

CLERK

IN THE

Supreme Court of the United States

RICHARD A. TROPP, ON BEHALF OF HIMSELF AND ALL

OTHERS SIMILARLY SITUATED,

Petitioner,

Vv.

CORPORATION OF LLOYD’S ALSO KNOWN AS

THE SOCIETY OF LLOYD'S,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Second Circuit

BRIEF AMICUS CURIAE OF AMERICAN

NAMES ASSOCIATION IN SUPPORT OF

PETITIONER RICHARD A. TROPP

GREG J. RYAN

Counsel of Record

LAW OFFICES OF GREG J. RYAN

1010 Second Avenue

Suite 2500

San Diego, CA 92101

(619) 239-4848

greg@gjryan.com

Counsel for Amicus Curiae

WILSON-EPES PRINTING Co., INC. — (202) 789-0096 — WASHINGTON, D. C. 20002

TABLE OF CONTENT

TABLE OF AUTHORITIES

INTERESTS OF AMICUS CURIA!

SUMMARY OF ARGUMENT

ARGUMENT

l. DUE PROCESS REQUIRES U.S. COURTS TO

EXAMINE WHAT ACTUALLY HAPPENED

IN ENGLAND AND Not JUST PRESUME

THE ENGLISH SYSTEM AFFORDED DUI

PROCESS...

li. THE LLOYD’S JUDGMENTS ARE REpU¢

NANT ‘T'O U.S. SECURITIES LAWS

CONCLUSION

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dber Kelly, 397 U.S. 254 (19

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119 U.S 601 (19

Corporation

553 (2nd Cir. 199

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ipital Gains R

S. 180 (1963

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Queen’s Bench, Nov 3, 2000), a

2002) 146 S.J.L.B. 214 (Al ivatlal

002 WL 165487 cA

IN THE

Supreme Court of the Anited States

RICHARD A. TROPP, ON BEHALF OF HIMSELF AND A

OTHERS SIMILARLY SITUATED.

ns > . y

Petitions

PORATION OF LLOYD’S ALSO KNOWN A

THE SOCIETY OF LLOYD'S.

os _

Re Sponae

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Second Circuit

BRIEF AMICUS CURIAE OF AMERICAN

NAMES ASSOCIATION IN SUPPORT OF

PETITIONER RICHARD A. TROPP

INTEREST OF AMICI CURIAE

American Names Association is a_ national,

professional organization whose mission is to educate

the public, legislators and the courts on the Lloyd's

crisis and to assist American investors in Lloyd's

(“Names”).’ At its peak, the ANA membership was

‘ The letters of consent have been lodged with the Clerk of the

Court by both petitioner and respondent. No counsel for any

party in this case authored this bref in whole or in part, and no

person or entity other than ANA and Law Offices of Greg J

Ryan, who authored this brief pro bono, made any monetary

contmbution to the preparation or submission of this brief

>)

a4

approximately 1,000 of the approximately 3,000

Names in the Unites States. The resolution of the

issue presented in this case is of great importance to

ANA and its members who remain exposed to Lloyd's

efforts to collect on its English Judgments.

The Law Offices of Greg J. Ryan represented 17

California Names in a recognition action filed by

Lloyd’s in the United States District Court for the

Southern District of California, Soc’y of Lloyd’s v.

Blackwell, 127 Fed. Appx 961 (9th Cir. 2005). Greg J.

Ryan, Esq. is admitted to practice before the United

States Supreme Court. Mr. Ryan has prepared this

brief pro bono on behalf of himself and the ANA. The

California Names represented by this firm were, for

the most part, not sophisticated investors. Many of

them had already sold off their property to pay

Lloyd’s and were facing the loss of their homes and

ability to afford health care. It is no exaggeration to

say that the loss of funds to Lloyd’s left many Names

destitute.

SUMMARY OF ARGUMENT

The story of the crisis at Lloyd’s and the response

thereto is a complicated one. But the issue before the

Court is a narrow one: Is the Uniform Foreign Money

Judgments Recognition Act, as applied by New York

and other jurisdictions, compatible with the require-

ments of the Due Process Clause? The case before

the Court is compelling and involves fundamental

public policy issues affecting American citizens.

The English money judgment in this case arose out

of the most catastrophic insurance loss in history and

is the result of a well-documented but unlitigated

fraud scheme by Lloyd’s. American Names, including

Mr. Tropp, were recruited as investors by agents of

3

Lloyd’s as a part of a massive recruitment campaign

in the 1970's and 1980’s with assurances that Lloyd’s

was a sound and conservative investment. What

Lloyd’s knew but the Names were deliberately not

told was that they were assuming unlimited liability

for guaranteed losses because by the time they joined

Lloyd’s, it was facing devastating and unquantifiable

losses due to broadly worded comprehensive liability

policies written decades earlier. Without their know-

ledge, Lloyd’s placed American Names in syndicates

that it Knew, in time, would face tens of thousands of

claims due to asbestos contamination. By departing

from centuries of tradition and recruiting American

Names and others in an effort to dilute liability for

asbestos losses, Lloyd’s was able to stave off disaster

for more than a decade. But when the losses

exploded publicly in 1991, the American Names were

among those who faced personal financial ruin.

Although the American Names have a compelling

fraud defense, they have never been able to assert it,

in spite of the fact that judgments have been entered

against them by English courts and Lloyd’s now

seeks to collect on those judgments in this country.

That is in large part because no remedy existed

under English law for Lloyd’s fraudulent failure to

disclose material facts to Names. In a senes of

decisions, the English Courts ruled that Lloyd’s owed

no duty to the Names to regulate the business of

insurance at Lloyd’s lawfully or in good faith or with

reasonable care or diligence. The English Courts

reaffirmed that, under English law, Lloyd’s owed no

duty in tort to make disclosure of material infor-

mation to Names.

The Uniform Foreign Money Judgments Recog-

nition Act permits a court to enforce the English

4

judgments only if they were obtained in accordance

with due process and public policy — that is, only if

there really was a meaningful opportunity to be heard

and the judgments are not contrary to fundamental

public policy. Treating the Name’s allegations that

they were fraudulently induced into investing in

Lloyd’s as an irrelevancy, English courts bound

American Names to an unconscionable contract, pre-

cluded them from raising any affirmative defenses,

and prevented them from discovering or presenting

any evidence to challenge the existence or amount of

their alleged liability.

With their English judgments in hand, Lloyd’s

initiated a wave of litigation in United States courts

for recognition and enforcement of the judgments.

But even this litigation offered Names no chance to

litigate the ments of their fraud claims against

Lloyd’s. As noted by the District Court in this case,

the Names were singularly unsuccessful in decisions

by courts across the country. The fulcrum for these

decisions was the “system-level” analysis under the

UFMJRA, which is to say that there was no analysis

of the fairness of the procedures applied in particular

cases — it was only noted that the judgments were

obtained under the English system and therefore,

were presumed to be fair. Soc’y of Lloyd's v.

Ashenden, 233 F.3d 473 (7th Cir. 2000).

When it comes to Lloyd’s and what happened to the

Names in the U.K., the “system” was anything but

fair. It is respectfully submitted that this Court

should grant Mr. Tropp’s petition for a writ of

certiorari.

=

5

ARGUMENT

I. DUE PROCESS REQUIRES U.S. COURTS TO

EXAMINE WHAT ACTUALLY HAPPENED IN

ENGLAND AND Not JUST PRESUME THE

ENGLISH SYSTEM AFFORDED DUE PROCESS

The English proceeding, based on the “pay now

sue later” and “conclusive evidence” clauses, was

essentially one of “summary prejudgment.” Fuentes

v. Shevin, 407 U.S. 67, 72 n.5 (1972). Upon receiving

the complaint, the Names were to submit their

property to Lloyd’s without any chance before

judgment — indeed before a separate protracted and

expensive proceeding — to litigate their defense of

fraud. And because of the “conclusive evidence”

clause, the Names were not apprised of the basis for

calculation of the amounts claimed, nor where they

permitted to inquire into that basis. Absent some

“extraordinary” situation, however, the “root require-

ment” of procedural due process is that “an individual

be given an opportunity for a hearing before he is

deprived of any significant property interest.” Jd. at

82, quoting Boddie v. Connecticut, 401 U.S. 371, 378-

79 (1971); U.S. v. James Daniel Good Realty, 510

U.S. 43 (1993); North Georgia Finishing, Inc. v.

Di-Chem, Inc., 419 U.S. 601 (1975); Connecticut v.

Doehr, 501 U.S. 1 (1991). And the reason is plain:

The purpose of this requirement is not only to

ensure abstract fair play to the individual. Its

purpose, more particularly, is to protect his

use and possession of property from arbitrary

encroachment — to minimize substantively unfair

or mistaken deprivations of property, a danger

that is especially great when the State seizes

goods simply upon the application of and for the

benefit of a private party.

6

Fuentes, 407 U.S. at 81 (1972). It is thus well-

established that, save in “extraordinary situations,”

Sniadach v. Family Finance Corp., 395 U.S. 337, 339

(1969), Tropp’s rights to due process entail “an

opportunity to be heard ‘at a meaningful time and in

a meaningful manner.” Fuentes, 407 U.S. 67 (1972).

What Names received in England, however, con-

tained none of the reality, and scarcely the hint of

even the appearance, of such meaningful right to be

heard.

In the case at bar, the cumulative effect of Clauses

5.5 and 5.10 of the Equitas Contract is that the

Names cannot have a hearing on the merits of their

defense, cannot have discovery as to the amount

claimed and cannot even challenge the opposing

party’s calculation of the amount due. Clause 5.10

alters the usual evidentiary rules to provide, in effect,

that only Lloyd’s may introduce evidence. The effect

of all this is to turn the court into a rubber stamp. In

short, there is no meaningful pre-deprivation hearing

under the Lloyd’s Equitas scheme, either before or

after judgment.

The Names were not provided with a meaningful

opportunity to raise their defenses to payment of the

Equitas premium. The Names were merely allowed

to litigate whether they had the right to raise such

defenses before a judgment was entered. In reality,

the only thing litigated in England was whether the

Names would be denied their right to assert their

affirmative defenses. Because the English court

precluded such defenses, the merits of the Names

fraud defenses were never litigated. For Lloyd’s, it

was like shooting fish in a barrel.

Until Names are given a meaningful opportunity to

evaluate the amount of the claims against them and

7

to contest the validity of the claims of the grounds of

fraud, it is clear that enforcement by U.S. Courts of

the foreign judgments at Lloyd’s behest would ratify

the violation of well-established norms of due process

of law by which Lloyd’s obtained the judgments.

James Daniel Good Realty, supra; Fuentes, supra;

Sniadach, supra; Mathews v. Eldridge, 424 U.S. 319

(1976); Goldberg v. Kelly, 397 U.S. 254 (1970).

The general rule that state processes may not be

deployed to take property before a hearing is made

available to determine the would-be taker’s right is

not absolute. Where the taker’s interests are great,

and those of the person whose property is in jeopardy

are slight, pre-hearing deprivation may be permis-

sible provided the risk of error is small, post-

deprivation hearing is expeditious and sure, recom-

pense is available if there is error. Mathews uv.

Eldridge, supra; U.S. v. James Daniel Good Realty,

supra. The balance in this test and in this case is

overwhelmingly in Tropp’s favor.

First and foremost, the Names’ interests are in

their property, which may be subject to levy and

execution if the Lloyd’s judgment is recognized and

enforced. This is no small interest, as the amount of

the Lloyd’s judgment represents a multiple of Tropp’s

entire net worth. Second, Names have a valid and

judicially cognizable interest in an accurate and

complete report of Lloyd’s claims, including an

understanding of the reasons for the enormous losses.

Lloyd’s never has been willing to provide Names with

this information. It can be obtained only through the

power of the courts. Third, Names have an interest

in a fair and complete adjudication of their claims

that Lloyd’s committed fraud against them.

8

Separately and collectively, these interests are grave

indeed.

Lloyd’s attempts to align its interests in pre-

hearing deprivation with the interests of its former

policyholders. But Equitas has already been fully

funded, and Lloyd’s is suing the Names as Equitas’

assignee, for its own account. It is to Equitas that

relevant policyholders must now look, not to Lloyd’s.

Equitas already has all the funds it required as a

condition of entering into the Equitas Reinsurance

Contract. There is thus no reason for imposing a

“pay now, sue later” and “conclusive evidence” regime

on the Names except to deliver an overwhelming

strategic advantage to Lloyd’s in litigation, enabling

it effectively to escape scrutiny, and ultimately

liability, for any fraud committed against the Names

in the course of their disastrous relationship with

Lloyd’s.

Lloyd’s has implied that Names have available to

them a separate action in England for fraud through

which they could recover their property even if it is

taken before determination of the fraud question.

But pre-hearing deprivations are permitted only in

situations of exigence. See, e.g., James Daniel Good

Realty, supra. Lloyd’s neither pleaded, nor did the

English courts hold, that the circumstances were so

exigent that a pre-hearing deprivation of property

could be justified.

Lloyd’s contention that the Names are free to

litigate their claims against it in a separate, sub-

sequent proceeding after they have paid the Equitas

judgment is fictive for 2 reasons: For many Names,

such as Tropp, the resources to undertake such a

separate suit after they have been financially

devastated by paying out the funds demanded in this

9

action, is illusory. Second, under English law, there

is no effective remedy against Lloyd’s for fraudulent

non-disclosure because English law does not recog-

nize Lloyd’s duty to disclose material facts of which

Lloyd’s had exclusive knowledge. Soc’y of Lloyd’s v.

Jaffray, 2000 WL 1629463 (Queen’s Bench Division

(Comm. Court), Nov. 3, 2000) (Creswell, J). Affd

(2002) 146 S.J.L.B. 214 (AC) available at 2002 WL

1654876.

Under English law, Lloyd’s liability would be based

on the principle of caveat emptor and thus, no

consideration would be given by the English courts to

the Names’ allegations that Lloyd’s breached any

duty to disclose material facts to the Names. Jaffray

21-25.

The risk of error is enormous where, as the court in

England freely acknowledged, when discussing the

“conclusive evidence” clause that Lloyd’s records and

calculation are to be conclusive evidence (that is to

say the only evidence) unless there is a manifest

error on the face of those records. And refusing to

require disclosure of the records by Lloyd’s to the

defendants, the court held that it is for the name to

identify and demonstrate some clear error. Soc’y of

Lloyd’s v. Fraser, [1998] C.L.C. 1630 (C.A.) available

at 1998 WL 1043675.

It is hard to imagine a better prescription for error

than to allow only one side to introduce evidence and

to deny the other side discovery with respect to it.

The balance of interests then is fairly simple to state:

the financial ruin of individuals, with all the

attendant horrible consequences for family members

and persons who may be dependent upon them, as

against the speedy provision of funds to a corporation

10

that has neither pleaded nor presented exigent

circumstances.

II. THE LLOYD’S JUDGMENTS ARE REPUGNANT

TO U.S. SECURITIES LAWS

It is beyond question that the U.S. Securities Law

expresses the fundamental public policy of the United

States. The protection of unwary investors from

being duped by unscrupulous sellers of securities is

an exigency of the utmost priority in contemporary

society. The central objective of the securities laws is

to protect the public against unlawful and fraudulent

investment schemes and to promote full disclosure

of all information that is necessary to make an

investment.

This Court has repeatedly explained that the

U.S. securities laws were intended to remedy the

deficiencies of the common law. For example, the

Court stated in Herman and MacLean v. Huddleston,

459 U.S. 375 (1983) at 388-89:

“(T]he typical fact situation in which the classic

tort of misrepresentation and_ deceit

evolved was light years from the world of

commercial transactions to which Rule 10b-

5 is applicable. Moreover, the antifraud

provisions of the securities laws are not

coextensive with common law doctrines of

fraud. Indeed, an important purpose of the

federal securities statutes was to rectify

perceived deficiencies in the available common

law protections by establishing higher stan-

dards of conduct in the securities industry.”

In Securities & Exchange Commission v. Capital

Gains Research Bureau, Inc. 375 U.S. 180 (1963) the

Court stated, at 188:

11

“The Investment Advisers Act of 1940 was the

last in a series of Acts designed to eliminate

certain abuses in the securities industry, abuses

which were found to have contributed to the

stock market crash of 1929 and the depression of

the 1930’s. It was preceded by the Securities Act

of 1933, the Securities Exchange Act of 1934, the

Public Utility Holding Company Act of 1935, the

Trust Indenture Act of 1939, and the Investment

Company Act of 1940. A fundamental pur-

pose, common to these statutes, was to

substitute a philosophy of full disclosure

for the philosophy of caveat emptor and

thus to achieve a high standard of business

ethics in the securities industry.”

The Jaffray case shows that the English law

applied to Names was indeed “light years” from the

policies embodied in the U.S. securities law. For

example, the definition of “fraud” applied by the

Jaffray court was one that excluded from the

definition the withholding of material facts from the

Names. According to the Jaffray decision, the only

way the Names could prove “fraud” as so defined, was

to show knowing or reckless falsehood. The Jaffray

court held that “mere omissions are not sufficient.”

(at J 29) Furthermore, even when the Jaffray court

found as a fact that it had been falsely represented

to prospective Names “that there was in place a

rigorous system of auditing,” the court concluded that

the Names were not entitled to any relief, because

“the Names had however failed to prove that Lloyd’s

did not believe the representations to be true or that

they even knew that they were or became untrue or

were reckless as to whether they were true or

untrue.” (f 587 vi) The English court applied a

common law standard closely akin to the doctrine of

12

caveat emptor, which was and is completely foreign to

the policies of U.S. securities laws.

Lloyd’s led the U.S. courts to believe that the

remedies in England would vindicate the Names’

substantive nghts and would not subvert the policies

of federal and state securities’ law of insuring “full

and fair disclosures” by issuers. Bonny v. Society of

Lloyd’s, 3 F.3d 156 at 161 (7th Cir. 1993), had

held that “remedies in England vindicate plaintiffs’

substantive rights while not subverting the United

States’ policies of insuring full and fair disclosures

by issuers and deterring the exploitation of U.S.

investors”; and Roby v. Corporation of Lloyd’s, 996

F2d. 1353, at 1364 (2nd Cir. 1993) had held: “the

public policies of the securities laws would be

contravened if the applicable foreign law failed

adequately to deter issuers from exploiting American

investors.”

It is clear from these opinions that the courts were

convinced by Lloyd’s that in England, American

investors would not be deprived of the ability to

obtain redress for material non-disclosures or for

having been fraudulently induced to invest in Lloyd’s.

That representations of Lloyd’s were untrue has

now been established by a number of sources, includ-

ing the case of Society of Lloyd’s v. Jaffray, Queens

Bench Division (Commercial Court), November 3,

2000, affirmed by Court of Appeal on July 26, 2002.

The Jaffray decision reveals that contrary to the

representation by Lloyd’s te the U.S. courts, the

Names had: (a) no remedy under English law for

Lloyd’s failure to disclose material facts to the Names

being recruited to unknowingly assume massive

underwriting liabilities previously incurred; (b) no

remedy of rescission; (c) no remedy for nepligent mis-

13

representation; and most critically, (d) no remedy

that fulfilled the policy of the United States securities

laws.

Some of the portions of Jaffray that contradict

Lloyd’s representations to U.S. courts are set out

below:

“28. It is no doubt because of the decisions and

reasoning in some of these cases that we are not

concerned with a case which alleges that Lloyd’s

are liable to the Names because of a breach of

contract. Nor are we concerned with the

breach of an alleged duty of care, whether

committed in bad faith or otherwise. In

particular, we are not concerned with a

case based upon the allegation that Lloyd’s

fraudulently failed to disclose material

facts to prospective Names. Any such case

is not within the threshold fraud issue.

“29. This is important because a significant

amount of the argument of the litigants in

person, and particularly Sir William Jaffray,

sought to advance just such a case. For example,

It was said that Lloyd’s motto is “Fidentia” that

Lloyd’s owed the Names a duty of the

utmost good faith and that Lloyd’s was in

breach of that duty in that it fraudulently

failed to give information to prospective

Names as to the risks associated with

asbestos related claims because it knew

that, if it did, prospective Names would be

put off. Submissions along these lines were

advanced with great vigor and conviction, but

they cannot assist the Names in this appeal

because in order to establish the tort of

deceit the Names must establish relevant

14

fraudulent misrepresentations. Mere omis-

stons are not sufficient.”

“398 .... We’re of the strong view that the

decision not to refer to asbestosis at the

Rota meetings was misguided, and so

misguided as to have given rise to suspicion

as well as resentment in many names. But

it does not follow that the decision was

dishonest nor does it necessarily lead to the

conclusion that Lloyd’s was guilty of any

dishonest representation.”

“454. It is clear that during this period

Lloyd’s was encouraging new membership.

At a Council Meeting of 13 May 1985, the new

Chairman Mr. Peter Miller referred to a

paper to be circulated to Chairs ‘indicating

the line which would be taken ... in

forthcoming speeches which will encourage

applications for membership . . . This will take

account of the need for increased member-

ship as a result of a shortage of capacity and

the conflicting adverse publicity arising from

reported underwriting losses for recent

years.’ On July 5, 1985, Sir Peter Green

wrote his ‘fishing trip letter’ quoted at

paragraph 233 above. The letter is much relied

by the names because of its reference to the

‘overpayment of past profits is falling for recoup-

ment from a far larger number of current names’

and the reference to it being critical if old names

were to resign or new names would not join. But

the letter also reflects the difficulty with the

Revenue and states that ‘there are plenty of

horrors in the pipeline and they must be

reserved for even if the figures are not available.

15

The “true and fair” requirement should a

this.”

N

N

p—

f

re

“477. We have great anxiety about the fact

that names continued to join Lloyd’s and be

placed on syndicates which were infected

by the long-tail liabilities, where the

premium received for the outstanding

liabilities was in the event massively too

little. The rnsk of that premium being inade-

quate must on any view have been increasing

during this period, and we see no sign of

anyone at the centre contemplating that a

warning of the increased risk should be

given (for instance, at Rota) to names, and

particularly new names. The attitude was

that it should be left to members’ agents.

Relevant documents such as Sir Peter Green’s

fishing trip letter did not focus on the position of

new names, (in the sense of future names) at all

So far as persons at the centre were concerned,

they were faced with the following facts: profits

had been distributed in the 1950’s and

1960’s and it was people who had become

members since those days who were going

to have to pay the losses;

587. As to the appeal on the grounds for which

permission has been given, our conclusions

may be summarised as follows:

i. There was representation in the

1981 brochure that there was in

place a rigorous system of auditing

which involved the making of a

reasonable estimate of outstanding

liabilities including unknown and

unnoted losses. (Paragraph 321)

id

Subsequent brochures’ contained

essentially the same representation,

even though the word ‘rigorous’ no

longer appeared. (Paragraph 323)

The 1981 brochure also contained a

representation that Lloyd’s believed that

such a system was in place. So did

subsequent brochures. (Paragraphs 321

and 323).

iv. The globals contained no relevant repre-

sentations. ((Paragraphs 326 and 343).

The representations in (i) and (ii)

were during the relevant period,

untrue. (Paragraphs 375 and 376).

vi. The Names have however failed to

prove that Lloyd’s did not believe

the representations to be true or

that they either knew that they

were or became untrue or were

reckless as to whether they were

true or untrue. (Section VII).

vil. It follows that the judge was right

to determine the threshold fraud

issue in favour of Lloyd’s and to hold

that Lloyd’s is not liable to the Names in

the tort of deceit. It further follows that

the appeal on the merits, which the

Names had permission to bring, fails

and must be dismissed.

In 1997, the English Court held in Soc’y of Lloyd's

vu. Lyon, Leighs & Wilkinson CLC 1398 (1997) avaiable

at 1997 WL 1104500 that the Names were not

entitled to litigate claims of fraud in the inducement

of their membership or underwniting at Lloyd’s as

17

a set-off to their obligations to pay the Equitas

premium.

There was a huge gulf between what Lloyd’s told

the U.S. Courts and the harsh truth about the lack of

remedies the Names had against Lloyd's in England.

The U.S. Courts assumed, in the absence of evidence

otherwise, that the Names would have adequate

safeguards and remedies. More particularly, the U.S.

court could not have anticipated that the Names

would be deprived of their day in court on their fraud

claims because the Equitas contract was not even in

issue. It was not until it was free of the U.S. courts,

that Lloyd’s divulged the terms of the Equitas

contract and thus revealed previously undisclosed

limitations on the Names’ ability to pursue their

defenses including: (a) the “conclusive evidence”

clause of the Equitas contract which prevented

American Names from challenging the computations

of the Names’ liability for the Equitas premium

(which is the basis for the present judgment) —

decisions of the English courts found as a fact that

they contained errors and were unreliable, see Society

of Lloyd’s v. Fraser, [1998] C.L.C. 1630 (C.A.) supra

and (b) the “pay now, sue later” clause of the Equitas

contract which Lloyd’s used to prevent these Names

and others from raising Lloyd’s fraud as a set-off or

defense to Lloyd’s claims.

The Names do not claim that the entire English

legal system is lacking in due process and inade-

quate, but they do assert that in the instance of the

American Names, and when it comes to Lloyd’s, the

English system is anything but fair or impartial.

Lloyd’s misrepresented the law of England, and while

it was assuring U.S. Courts that the Names would

have effective remedies in England, Lloyd’s was

18

secretly taking steps to further deprive the American

Names, including Mr. Tropp, of due process in the

English legal system. The judgments were imposed

without adequate safeguards and protections of the

Names against fraud and misrepresentation in the

sale of securities. All of this was in contradiction to

the Lloyd’s representations to the American courts

that American Names would be provided with full

due process, adequate remedies at law and in equity,

and with remedies that would fulfill the policies of the

American securities laws.

Names are not seeking to “relitigate” defenses they

raised and lost in England. To the contrary, the

Names are asking the Court not to enforce the

English judgments precisely because they were not

permitted to litigate their fraud defenses at all. The

Names were not allowed to litigate Lloyd’s fraud in

inducing their investment and participation as

Names. The Names were not allowed to litigate

Lloyd’s and AUAQ’s breaches of fiduciary duty in

binding them to the Equitas contract. The Names

were not allowed to obtain discovery, or to refute in

any way, the basis of their alleged lability for

insurance losses, the amount of such losses, or the

method of calculating such losses. Moreover, under

English law, fraudulent non-disclosure by Lloyd’s is

not an actionable wrong and there was not considera-

tion given, nor could there have been consideration

given, by the English courts to the Names allegation

that Lloyd’s breached a duty to disclose material facts

tothe Names. Jaffray J 21-25.

CONCLUSION

—~

In an enforcement proceeding, the U.S. Courts do

not act as mere implementers of an earlier foreign

decision. For sound policy reasons, a degree of defer-

19

ence is given to a foreign decision. Hilton v. Guyot,

159 U.S. 113, 16 S.C. 139 (1895). But that deference

is in no sense dictated by legal compulsion. It has

always been recognized as grounded in a choice that

is made by the adjudicating jurisdiction. That is why

states provide for non-recognition of foreign judg-

ments in appropriate cases. England may be content,

at least where Lloyd’s of London is concerned, with

the deprivation of English property without any effec-

tive ability of the property-holder to interpose rele-

vant defenses before that property is taken. But the

property here sought resides in the United States,

not in England. It would be an affront to the most

cherished ideals of American law — and a violation

of explicit U.S. law — if that property should be

surrendered before there has been a thorough airing

of the Names’ side of the case.

On this petition, Tropp faces the prospect that he

will have gone to the U.S. Courts, then to the English

Courts, and then back to the U.S. Courts without

ever having a determination on the merits of his

claim that Lloyd’s deliberately misled him into

investing in Lloyd’s. For all of these reasons, the

petition for a writ of certiorari should be granted.

Respectfully submitted,

GREG J. RYAN

Counsel of Record

LAW OFFICES OF GREG J. RYAN

1010 Second Avenue

Suite 2500

San Diego, CA 92101

(619) 239-4848

greg@g)jryan.com

Counsel for Amicus Curiae