Extract of the
NORTH CAROLINA DEFENSE
I. A Contract Cannot Be Enforced Against a Party Who Did Not Knowingly Assent to its Terms.
The condition imposed by Parliament for the legislation was no more than a requirement that LloydÕs tell the truth to the Names considering renewal of their status as underwriting members and to those persons considering the possibility of becoming underwriting members.
Parliament required LloydÕs to disclose its past, present, and anticipated liabilities for asbestos use. LloydÕs did not disclose its liabilities, and contrary to its prior statements, did not have Òrigorous accounting controlsÓ. LloydÕs prior statements in the recruiting brochure about having Òrigorous accounting controlsÓ have now been proven false.
LloydÕs agreed to these conditions of disclosing its liabilities, and then Parliament passed the legislation LloydÕs had requested, restructured LloydÕs, and granted LloydÕs extraordinary rule making and other powers.
By this legislation, the LloydÕs Act of 1982, the U.K. Parliament delegated legislative power to LloydÕs and to the Council of LloydÕs.
A short time after passage of the LloydÕs Act of 1982, LloydÕs admitted that it had failed to comply with the condition, and reported to the Parliament about supplying Òbetter quality information,Ó i.e., telling the truth, as follows:
The Council of LloydÕs very much regrets that the undertaking to implement the recommendations . . . within 2 years of the Royal Ascent has not been kept.
The Society of Lloyd's v. Webb, 156 F.Supp.2d 632, 635 (N.D. Tex. 2001).
During the five years that LloydÕs failed to improve information disseminated to prospective Names, approximately ten thousand new names joined LloydÕs, most of whom were U.S. investors. Webb, supra, 156 F. Supp.2d at 635.
The paragraphs relating to the condition imposed by Parliament, the failure of LloydÕs to comply with the condition, LloydÕs letter to the Parliament confessing non-compliance, and the number of Names recruited in the following years were found against LloydÕs by United States District Judge Jorge Solis sitting in the United States District for the Northern District of Texas in Webb, supra, 156 F. Supp.2d 632 (N.D. Tex. 2001).
LloydÕs obligation to give accurate information to the Names considering renewal and to the new Names was a condition precedent to the exercise of the powers granted to LloydÕs and the Council of LloydÕs by the LloydÕs Act 1982.
As a consequence, the Council of LloydÕs, which was created by the LloydÕs Act 1982, and all byelaws passed pursuant to the LloydÕs Act 1982 lacked power and effect for failure of the condition.
By 1993-94, LloydÕs reserves had become seriously insufficient, primarily due to asbestos claims. In an investigation conducted by the Commissioner of Insurance of the State of New York, the Commissioner found, on the basis of documentation supplied by LloydÕs and accepted as accurate by the Commissioner, that LloydÕs syndicates were under-reserve by as much as 18 billion United States dollars. See Report to the New York Superintendent of Insurance by Supervising Insurance Examiners dated May 11, 1995.
Initially, LloydÕs attempted to collect deficiencies in the syndicates insuring against asbestos losses by Òcash callsÓ on the Names that were members of those syndicates.
Because those Òcash callsÓ were generally unsuccessful, LloydÕs faced insolvency, bankruptcy, liquidation, and a winding up of its affairs.
LloydÕs developed the R&R Plan to address the severe deficiencies in its reserves. The R&R Plan was a program of re-insurance for all liabilities from 1992 and earlier years and was to be administered by Equitas Reinsurance Limited and Equitas Limited.
Pursuant to the R&R Plan, any underwriting member who consented to the Plan paid a premium to be used to reinsure all losses in all syndicates for 1992 and the prior years.
Approximately one thousand seven hundred (1,700) Names refused to accept the R&R Plan, refused to pay the premiums, and refused to become participants in the R&R Plan.
Despite LloydÕs failure to comply with the condition for the passage of the LloydÕs Act 1982, LloydÕs exercised the powers granted under the Act.
For example, LloydÕs passed, effective December 6, 1995, Byelaw Number 22, ÒThe Reconstruction and Renewal Byelaw,Ó granting the Council of LloydÕs extraordinary powers including the power to bind the Names as underwriting members to agreements they did not see, review, approve, or accept.
The Reconstruction and Renewal Byelaw gave the Council power to Òcarry into effect the scheme forming part of the Reconstruction and Renewal Proposals . . . for the reinsurance by a company formed or to be formed by or with the assistance of The Society.Ó ÒR&R Byelaw,Ó Part C, Paragraph 3, Subdivision (1)(a).
The R&R Byelaw also granted the Council power to Òdo all such things as may appear to the Council to be desirable or expedient in connection with preparing and carrying into effect the Equitas scheme. R&R Byelaw, Part C, Paragraph 3, Subdivision (1)(b).
The byelaw further authorized the Council to direct Names to assent to the Equitas program and to make them liable for R&R debt. R&R Byelaw, Part C, Paragraph 4, Subdivision 1(a) Ð (d).
Over their objection or their refusal to agree to or their failure to agree to the R&R program, the non-participating Names were made Òcontract signatoriesÓ to the R&R program by a substitute agent appointed by LloydÕs.
AUA9, the substitute agent appointed by LloydÕs to act for the Names, was a company Òindirectly owned and controlledÓ by LloydÕs.
Even though the Names had not agreed to the R&R settlement proposal and the contract, AUA9 committed all non-participating Names to the Equitas re-insurance contract.
As a result of the acts by LloydÕs and AUA9, LloydÕs claimed that the non-accepting Names became liable for the R&R debt as well as all future syndicate deficiencies.
Acting on behalf of and through LloydÕs, Equitas Reinsurance Limited and Equitas Limited obtained judgments against individual Names for R&R debt in the courts of the United Kingdom.
The United States Constitution, Section 10, Article I, provides that no State shall pass any law impairing the ÒObligation of Contracts.Ó
The common law and statutory laws of the states of the United States and of the State of North Carolina provide that a party may not be bound to a contract unless he agrees to it and acknowledges his agreement.
According to the North Carolina Foreign Money Judgments Recognition Act, at ¤ 1C-1804(b)(3), ÒA foreign judgment shall not be recognized if . . . the cause of action on which the judgment is based is repugnant to the public policy of this state . . ..Ó
In this foreign action, LloydÕs seeks to enforce rights against the Names under the R&R contract when the contract rights were created by LloydÕs and rejected or never accepted by the Names.
Because Defendant, and other Names, rejected or did not accept the R&R contract, the cause of action resulting in the judgment at issue conflicts with the public policy of the State of North Carolina and the Constitution of the United States of America that a contract cannot be enforced against a party who did not knowingly assent to its terms.
II. LloydÕs Created the Contract Rights for Itself by Various ByelawsÉ
The relevant byelaws are unenforceable and voidable because LloydÕs failed to satisfy the conditions imposed on it by the Parliament of the United Kingdom in exchange for the legislation granting LloydÕs the power to pass the byelaws.
III. Unlawful Delegation of Legislative and Governmental Power
Because the LloydÕs Act 1982 constituted an unlawful delegation of legislative and governmental power by the Parliament of the United Kingdom to a private business entity, the relevant byelaws passed by LloydÕs under the statutory authority are unenforceable and voidable.
IV. Non-payment of Stamp Duty Creates an Illegal Debt
Equitas executed an assignment of the supposed R&R debt to LloydÕs, Complaint at ¦¦ 2, 20, and was required by U.K. law to pay a duty on the assignment of the debt.
Because no duty was paid, the transfer of the supposed R&R debt from Equitas to LloydÕs was invalid.
Because the transfer of the supposed R&R debt from Equitas to LloydÕs was invalid, LloydÕs does not have standing to enforce the judgments at issue in this case.
V. Lack of Personal Jurisdiction
According to State of North Carolina Foreign Money Judgments Recognition Act, ¤ 1CÐ1804(a)(2), ÒA foreign judgment shall not be conclusive if . . . the foreign court did not have personal jurisdiction over the defendantÉ.Ó
Defendant was not served with the Writ of summons, or any other process, in the action in England.
The court in England did not have personal jurisdiction over Defendant..
None of the exceptions to the requirement that the court in England have personal jurisdiction over the Defendant apply. Defendant was not personally served in England, did not voluntarily appear in the proceeding, did not agree to submit to the jurisdiction of the court in England with respect to the subject matter involved in that suit, was not domiciled in England when the suit was brought, did not have a business office in England, and did not operate a motor vehicle or airplane in England.
VI. Lack of Notice
According to State of North Carolina Foreign Money Judgments Recognition Act, ¤ 1CÐ1804(b)(1), ÒA foreign judgment shall not be recognized if . . . the defendant in the proceedings in the foreign court did not receive notice of the proceedings in sufficient time to enable him to defend . . ..Ó
Defendant did not have notice of the English action in a timely manner and, therefore, was not able to defend himself.
VII. The Amount Alleged by Plaintiff Is Incorrect.
In the event that this Court finds that the debt is enforceable, the amount alleged by Plaintiff as due and owing is incorrect.
In 1982 and the years prior to 1982, LloydÕs syndicates insuring against losses sustained from personal injury recoveries based on exposure to asbestos had become insolvent or were rapidly becoming insolvent.
LloydÕs accountants told LloydÕs in a letter dated February 8, 1982, that it could not estimate the reserves necessary for the syndicates insuring asbestos losses and that these syndicates were severely under reserved, perhaps by billions of dollars.
LloydÕs failed to disclose to the prospective new Names and to the old Names considering renewal the extent of the losses suffered by the syndicates insuring against asbestos losses and failed to disclose the financial condition of the syndicates insuring against asbestos losses.
Specifically, to conceal the financial condition of the syndicates, LloydÕs concealed the status of the trust accounts in the LATF by using funds from solvent syndicates to pay the losses suffered by insolvent syndicates.
In addition, LloydÕs concealed the financial condition of the syndicates by using inadequate accounting and financial controls and failed to disclose and/or misrepresented its inadequate accounting and financial controls for the syndicates.
LloydÕs represented Òthat there was in existence a rigorous system of auditing which involved the making of a reasonable estimate of outstanding liabilities including unknown and unnoted lossesÓ but, in fact, the system did not make any reasonable estimates.
The information describing its accounting and financial controls for the syndicates and the LATF trust accounts for the syndicates and the Names given by LloydÕs to the Names considering renewal of their participation as underwriting members and to the prospective Names were found by the Court of Appeals of the House of Lords to be false. Jaffray v. Society of LloydÕs, 2002 WL 1654876, at ¦¦ 321-25, 374-76 (C.A. July 26, 2002).
Defendant would not have become a Name and would not have renewed his membership if he had known about the losses attributable to asbestos claims, the financial condition of the syndicates, or the lack of proper accounting and financial controls for the syndicates.
As a result of Plaintiff LloydÕs conduct, Defendant suffered monetary losses.
Defendant is entitled to a set-off or recoupment of his losses.
CLASS ACTION ALLEGATIONS
The predominating, common questions of law and fact include, but are not necessarily limited to, the following:
(a) whether LloydÕs failed to disclose the extent of the losses due to asbestos and environmental claims;
(b) whether LloydÕs misrepresented the extent of the losses due to asbestos and environmental claims;
(c) whether LloydÕs failed to disclose the financial condition of the syndicates;
(d) whether LloydÕs misrepresented the financial condition of the syndicates;
(e) whether LloydÕs failed to disclose its accounting and financial controls for the syndicates;
(f) whether LloydÕs misrepresented its accounting and financial controls for the syndicates;
(g) whether LloydÕs owed a fiduciary duty to the Names;
(h) whether LloydÕs breached a fiduciary duty to the Names;
(i) whether LloydÕs could bind Names to the R&R program despite the Names rejecting or refusing to accept the program; and
(k) whether LloydÕs could bind the Names to the R&R program despite its
failure to fulfill the requirements imposed on it by Parliament.
Editorial Note: In this section, for the sake of brevity, the text has been omitted as it repeated the allegation that were used above and focused on getting forum here in the US as a result of the fact that the LloydÕs American Trust Fund is governed by New York law.
I. Negligent Misrepresentation
Plaintiff and Counterclaim Defendant Lloyd's negligently misrepresented the losses generated by asbestos and environmental claims, the financial condition of the syndicates, and its accounting and financial controls for the syndicates.
Plaintiff and Counterclaim Defendant Lloyd's fraudulently concealed and/or mis-stated the extent of the losses generated by the asbestos and environmental claims, the financial condition of the syndicates, and its accounting and financial controls for the syndicates.
III. Consumer Fraud
In its efforts to sign and re-sign Names, Plaintiff and Counterclaim Defendant Lloyd's fraudulently concealed and/or and mis-stated the extent of the losses generated by the asbestos and environmental claims, the financial condition of the syndicates, and its accounting, and the financial controls for the syndicates.
Lloyd's acts and omissions were unfair and deceptive trade acts and practices.
Defendant and Counterclaim Plaintiff and other class members who signed or re-signed as Names during this time were directly, foreseeably, and proximately injured by Lloyd's acts and omissions.
Lloyd's acts and omissions violated New York's Consumer Protection From Deceptive Acts and Practices Act, General Business Law ¤ 349, and similar statutes in effect in other states.
As a result of Lloyd's acts or failure to act, Counterclaim Plaintiff and the other class members are entitled to damages as set forth in this counterclaim.
IV. Breach of Fiduciary Duty
Plaintiff and Counterclaim Defendant Lloyd's breached its fiduciary duty to Defendant and Counterclaim Plaintiff and others similarly situated by failing to disclose and/or misrepresenting the extent of the losses generated by the asbestos and environmental claims, by failing to disclose and/or misrepresenting the financial condition of the syndicates, and by misrepresenting its accounting and financial controls for the syndicates.
(1) Dismissing Plaintiff's Complaint with prejudice;
(2) granting Defendant a set-off or recoupment against Plaintiff based on Plaintiff's misconduct and in an amount equal to losses suffered by Defendant;
(3) declaring this action to be a Rule (b)(2) and (b)(3) class action and certifying Defendant and Counterclaim Plaintiff as the class representatives and his counsel as class counsel;
(4) enjoining Plaintiff and Counterclaim Defendant Lloyd's from enforcing any and all judgments for alleged R&R debt obtained against any and all members of the class;
(5) enjoining Plaintiff and Counterclaim Defendant Lloyd's from prosecuting any action in an effort to obtain a judgment for alleged R&R debt against any and all members of the class;
(6) declaring that the members of the class are entitled to a set-off or recoupment against Plaintiff based on Plaintiff's misconduct and in an amount equal to losses suffered by the members of the class;
(7) awarding damages to the class;
(8) awarding Defendant and Counterclaim Plaintiff the costs and disbursements of this action, including a reasonable allowance for the fees and expenses of Defendant's and Counterclaim Plaintiff's attorneys and experts;
(9) Defendant and Counterclaim Plaintiff respectfully demands a jury; and
(10) granting Defendant and Counterclaim Plaintiff and the other members of the class any further relief this Court deems just and proper.