More on the Lloyd's Trap
Cashing either the check from Citibank or selling the credit notes is a dangerous move right now. The "suggestion" of the lawyer handling the matter for names is to wait until after a decision is made on class certification, probably in late June, before deciding on whether or not to cash the check or sell the credit notes. Here, in more detail, is why.
The law firm of Beatie and Osborn in New York City has brought a class action case against Lloyd's in the Federal Court in Washington, D.C. The case is both offensive and defensive and uses legal arguments generally not heard before in the U.S. or the UK. The class action, if certified, "sweeps up" all the defensive cases in 25 states into one master case. Part of the pleadings is a request that the class be structured to include all unsettled names worldwide.You can start to get a flavor of the case by reviewing the pleadings titled "North Carolina Defense" which are attached along with my extract of same. I am sorry I do not have the actual pleadings to form the class action in computer readable form.
By cashing the Citibank check or selling the debt credits you are "confirming" your agreement to the settlement with Lloyd's that is contained within the Citibank settlement and you are "acknowledging" the R&R debt. Lloyd's will eventually seek to have all new cases brought by names thrown out based upon the settlement clause. If you have "confirmed" your agreement to the clause by taking money and/or property, you have made it more difficult or impossible for your lawyers to keep you in the cases. Two cases of immediate interest are the U.S. class action mentioned here and the UNO's new misfeasance in public office case.
I would expect that Lloyd's will wait until after September 30, 2004 to spring their trap. This is the date that the checks expire, so by then they will have gotten the largest number of "patsies" to sign their rights away by endorsing the checks or selling the debt credits. At that point, they will change their pleadings to demand that all names who were in Citibank (and that is most of us) be deleted from the cases. The lawyers will then have a bloody battle. If you have taken the money from Citibank, you have made it easy for Lloyd's to pick you off.
Here is an extract from the troublesome clause clipped from an appeal brief:
Pursuant to the settlement, Objectors release "all claims, rights, or causes of action or liabilities of any kind whatsoever" relating to the LATF against Lloyd's. Lloyd's will use the release in this case and various state and federal courts in the United States will interpret that release . . . to waive Objectors' defenses and counterclaims?
From one of the Beatie pleadings we have:
Under the Settlement Agreement, the Names release:
any and all claims, rights or causes of action or liabilities of any kind whatsoever . . . that any [Name] ever had, now has or hereafter may have against the Released Parties, or any of them, whether or not asserted in this [case] and whether known or unknown, based on or arising out of any matter, cause, thing, act or failure to act whatsoever by any of the Released Parties in relation to the establishment, conduct, administration, operation, supervision, direction or oversight of the LATF . . . .
From a letter one of the names wrote objecting to the Citibank Settlement:
7. The inclusion of “Credit Notes” useable against claims by Lloyd’s has no proper place in a claim against Citibank for breach of fiduciary duty and for an accounting. Lloyd’s is not a party, its claims are not in issue, and it is not legally bound by the settlement. The “Credit Notes” presume that the class members have debt to Lloyd’s, which is not a party to this case. This is a hotly disputed issue.
8. The “Credit Notes” are worthless window dressing. Plaintiff Class Members are defined as those Names who have rejected R&R, i.e. those who do not acknowledge any debt to Lloyd’s. This is a back door way for Lloyd’s, which is not even a party to this case, to bootstrap its claims. The inclusion of “Credit Notes” against claims by Lloyd’s is like the Trojan Horse. They tend to undermine the claims we and other members of the Plaintiff Class Members have against Lloyd’s, whether filed yet or not.
9. To purport to settle our case by giving us “credits” against those debts, valuing Lloyd’s claims at 100% of face is worse than worthless. By definition of the class, every Plaintiff Class Member has already rejected a more favorable settlement offer by Lloyd’s than the 100% of claims this “settlement” implicitly forces on them. To give the credits any value, a Plaintiff Class Member would have to acknowledge the debt, at 100% and do that in a short time window. Indeed, each would have to acknowledge the full amount of the claim, something well beyond the minor percentage of the fabricated “claims” for which Lloyd’s has settled without suit.
Action groups, including the ANA and UNO, are desperate for money and are urging their members to cash their checks now and pay over some or all the proceeds to the group. Ask them if they have a written opinion from counsel regarding the impact of the cashing the check or selling the debt credits will have on your future ability to pursue Lloyd's. Have them send you a copy of the opinion if they have it.