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

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386006_1104%3A4

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2011
- **Citation:** 564 U.S. 1046

## Text

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\% 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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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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386006_1104%3A4. Public record. Not legal advice.