2005 WL 3445787 (C.A.10)

For opinion see 182 Fed.Appx. 840

Briefs and Other Related Documents

United States Court of Appeals, Tenth Circuit.

THE SOCIETY OF LLOYD'S, Appellee,

v.

Stephen M. HARMSEN and Kelly C. Harmsen, Appellants.

No. 05-4069.

October 13, 2005.

On Appeal from the United States District Court for the District of Utah, Central Division The Honorable Tena Campbell, District Judge District Court No. 2:02cv0204C

Appellants' Brief

Steven A. Wuthrich, Attorney at Law, 1011 Washington, Ste. 101, Montpelier, ID 83254, (208)-847-1236, Fax: (208)-847-1230, Attorney for Appellants Stephen M. Harmsen and Kelly R. Harmsen.

*i TABLE OF CONTENTS

TABLE OF AUTHORITIES ... 1

CORPORATE DISCLOSURE STATEMENT ... 1

STATEMENT OF RELATED CASES ... 1

JURISDICTIONAL STATEMENT ... 1

ISSUES PRESENTED ... 2

STATEMENT OF THE FACTS ... 2

ARGUMENT AND AUTHORITIES ... 7

I. The Court erred in refusing to apply collateral estoppel against Lloyds in determining the conversion rate applicable to credit notes tendered by Harmsens in satisfaction of the Judgments ... 7

II. The court erred in refusing to strike the affidavit of Nicholas P. Demery as being in violation of the parol evidence rule ... 10

III. The court erred in refusing to judicially estop the Society of Lloyds from asserting that clause 18 of the Equitas contract did not apply to the conversion rate applicable to the Harmsens judgments ... 12

IV. The court erred in applying the law of the case doctrine in refusing to consider the Harmsen's conversion rate arguments, as well as set aside the judgment under Rule 60(b) ... 15

V. The court erred in ruling that the Utah Foreign Money Claims Act Applied to credit notes which are not money ... 20

CONCLUSION ... 22

STATEMENT OF ORAL ARGUMENT ... 22

CERTIFICATE OF COMPLIANCE ... 23

CERTIFICATE OF SERVICE ... 24

*i TABLE OF AUTHORITIES

Cases

Adams v. Kinder-Morgan, Inc. 340 F.3d 1083 (10th Cir. 2003) ... 8

Arizona v California, 460 U.S. 605, 618, 103 S.Ct. 1382, 75 L.Ed.2d 318 1983 ... 18

Arizona v. Shamrock Foods Co., 729 F. 2d. 1208, 1215 (9th Cir. 1984), cert denied, 469 U.S. 1197, 105 S.Ct. 980, 83 L.Ed.2d 982 (1985) ... 13

Becker v HSA/Wexford Bancgroup, L. L. C., 157 F.Supp. 2d 1243 (D.Utah 2001) ... 11

Concrete Works v City of Denver, 321 F.3d 950 (10th Cir. 2003) ... 16

Davis v Wakelee, 156 U.S. 680, 689, 15 S.Ct. 555, 39 L.Ed. 578 (1895) ... 14

Dickens Jardyce v Jardyce Syndrome ... 17

Electrical Distributors Inc v SFR, Inc., 166 F.3d 1074 (10th Cir. 1999) ... 11

Gage v General Motors Corp., 796 F.2d 345, 349 (10th Cir. 1986) ... 17

Horizon Holdings, LC v Genmar Holdings, Inc., 244 F. Supp.2d 1250 (D.Kan. 2003) ... 11

Huffman v Saul Holdings Ltd. Partnership, 262 F.3d 1128 (10th Cir. 2001) ... 19

In Re: Armstrong, 292 B.R. 678 (10th Cir. BAP, Utah, 2003) ... 11

Jackson v State of Alabama State Tenure Com'n, 405 F.3d 1276 (11th Cir. 2005) ... 19

*ii Jdanok v Gliddon Co., 327 F.2d 944, 952-53 (2nd Cir.) cert. denied 377 U.S. 934, 84 S.Ct. 1338, 12 L.Ed.2d 298 1964) ... 19

Jiron v. City of Lakewood, 392 F.3d 410 (10th Cir. 2004) ... 7

Liljeberg Health Services Acquisition Corp, 486 U.S. 847, 108 S.Ct. 2194, 100 L.Ed.2d 855 (1988) ... 20

Little Earth of United Tribes, Inc. V United States Dep't of Housing & Urban Dev., 807 F.2d 1433, 1441 (8th Cir. 1986) ... 19

McGuire v. Continental Airlines, Inc., 210 F.3d 1141 (10th Cir. 2000) ... 13

McIlarvy v Kerr McGee Coal Corp, 204 F.3d 1031 (10th Cir. 2000 ... 17

Messinger v Anderson, 225 U.S. 436, 32 S.Ct. R 739 ... 16

Naimie v Cytozyme Laboratories Inc., 174 F.3d 1104 (10th Cir. Utah, 1999). ... 11

New Hampshire v. Maine, 532 U.S. 121 S.Ct. 1808, 149 L.Ed. 2d 968 (2001) Reh. Den. 533 U.S. 968, 122 S. Ct. 10, 150 L.Ed. 2d 793 ... 14

Park Lake Resources v. U.S. Dept. Of Agriculture, 378 F.ed 1132 (10h Cir. 2004) ... 8

Pegram v. Herdrich, 530 U.S. 211, 120 S.Ct. 2143, 147 L.Ed. 2d 164 (2000) ... 13

Rockwell International Corp. V Hanford Atomic Metal trades Council. 851 F.2d 1208, 1210 (9th Cir. 1988) ... 13

Russell v Rolfs, 893 F.2d 1033, 1037 (9th Cir. 1990) ... 13

Schiavo Xrel Shindler v Schiavo, 403 F.3d 1289 (11th Cir. 2005) ... 19

*iii United States v. 49.01 Acres of Land, More or Less, 802 F.2d 387 (10th Cir. 1986) ... 13

U.S. v Smart, 393 F.3d 767 (8th Cir. 2005) ... 19

STATUES AND RULES

U.C. A. §78-22b 108(6) ... 20

U.C. A. §78-22b-111(1) ... 20, 21

28 U.S.C. § 19-61 ... 3

28 U.S.C. §1291 ... 1

28 U.S.C. §1332 ... 1

28 U.S.C. §1961 ... 6

F.R.C.P. Rule 60b(5)(6) ... 5

F.R.C.P. Rule 60b(6) ... 20

OTHER

1B Moor's Federal Practice „. 405[8], at 23842 (2d Ed. 1998) ... 13

Judicial Estoppel: The Refurbishing of a Judicial Shield, 55 Geo.Wash.L.Rev. 409, 410-12 (1987) ... 13

Precluding Inconsistent Statements: The Doctrine of Judicial Estoppel, 80 Nw.U.L.Rev. 1244 (1986) ... 13

*1 CORPORATE DISCLOSURE STATEMENT

Disclosure requirements of Rule 26.1 of the Federal Rules of Appellate Procedure do not apply to Appellants Stephen and Kelly Harmsen

STATEMENT OF RELATED CASES

This appeal is related to a prior appeal in The Society of Lloyd's vs Bennett, Case Nos. 03-4082, 03-4094, 03-4183 and The Society of Lloyd's vs Reinhart, Case No. 02-2301, all of which were consolidated for prior appeal. Further, the case is related to pending Bankruptcy Appellate Panel appeal filed by The Society of Lloyd's, Case No. UT-04-042, which decision was affirmed from an appeal from the Bankruptcy Appellate Panel decision, Case No. 05-04041, affirming the bankruptcy court's dismissal of involuntary bankruptcy petition filed by Lloyds against Stephen Harmsen.

JURISDICTIONAL STATEMENT

The United States District Court for the District of Utah had jurisdiction pursuant to 28 U.S.C. § 1332 because the Plaintiff/Appellee The Society of Lloyd's is a citizen of England and the Defendant/Appellants, including Defendants Stephen and Kelly Harmsen were all citizens of Utah. The amount in controversy below exceeded $75,000. This Court has jurisdiction pursuant to 28 U.S.C. §1291 because this is an appeal from the final decision by the United States District Court for the District of Utah entered on March 7, 2005 denying Defendants Harmsen's Motion to Quash Garnishment, Motion for Order or Entry of Satisfaction of Judgment, or Motion to Set Aside the Judgments under Rule 60(b). Further, the Court denied Harmsen's Motion to Strike the Affidavit of Nicholas P. Demery. Defendants Harmsens timely filed their Notice of Appeal on April 1,2005.

*2 ISSUES PRESENTED

I. DID THE COURT ERR IN REFUSING TO APPLY COLLATERAL ESTOPPEL AGAINST LLOYDS IN DETERMINING THE CONVERSION RATE APPLICABLE TO CREDIT NOTES TENDERED BY HARMSENS IN SATISFACTION OF THE JUDGMENTS?

II. DID THE COURT ERR IN REFUSING TO STRIKE THE AFFIDAVIT OF NICHOLAS P. DEMERY AS BEING IN VIOLATION OF THE PAROL EVIDENCE RULE?

III. DID THE COURT ERR IN REFUSING TO JUDICIALLY ESTOP THE SOCIETY OF LLOYDS FROM ASSERTING THAT CLAUSE 18 OF THE EQUITAS CONTRACT DID NOT APPLY TO THE CONVERSION RATE APPLICABLE TO THE HARMSENS JUDGMENTS?

IV. DID THE COURT ERR IN APPLYING THE LAW OF THE CASE DOCTRINE IN REFUSIN TO CONSIDER THE HARMSEN'S CONVERSION RATE ARGUMENTS, AS WELL AS SET ASIDE THE JUDGMENT UNDER RULE 60(b)?

V. DID THE COURT ERR IN RULING THAT THE UTAH FOREIGN MONEY CLAIMS ACT APPLIED TO CREDIT NOTES WHICH ARE NOT MONEY?

STATEMENT OF THE FACTS AND PROCEDURAL HISTORY

Plaintiff, The Society of Lloyd's filed it's Complaint on or about March 8, 2002 seeking to recover on certain English Judgment and American Judgment and enforcement of the English Judgment under principals of International Comity. ( Applnt. Appdx. 54-89) After various proceedings, the trial court, the Honorable Tena Campbell presiding, entered an Order granting Summary Judgment against all the Defendants and dismissing Counter-Claim filed by Defendants Harmsen. ( Applnt. Appdx. 89-1160). Proposed judgment was submitted to the court with respect to both Defendants and proposed partial satisfactions of judgments simultaneously submitted with regard to certain credits that Lloyds owed Harmsen after the English Judgments were entered. ( Applnt. Appdx. 117-129) Co-defendants and Harmsen both filed objection ( Applnt. Appdx. 114-116, *3 156-162) Defendants argued against the form of the judgments for not being a net sum judgment, or awarding interest at the rate set by the English Court as opposed to 28 U.S.C. § 19-61 and for utilizing a method by the which the interest proved and charged by the Plaintiff could not reasonably be determined.

The trial court overruled all of the objections. ( Applnt. Appdx. 165-174) and judgments were entered against both Harmsen Defendants on March 17, 2003 ( Applnt. Appdx. 175-182).

Defendants Harmsen filed their original Notice of Appeal from the underlying action on February 4th, 2003 and their Amended Notice of Appeal on April 9th, 2003 ( Applnt. Appdx. 164-165, 227-228).

The Tenth Circuit Court of Appeals ultimately affirmed the trial court with respect to all issues except for the interest issue raised by the Harmsens. (Tenth Circuit decision entered March 23, 2005 Case No. 03-4082, et al).

While the Appeal was pending the Plaintiff made numerous garnishment and attempts to collect on the indebtedness of Defendants Harmsen.[FN1] (See application for Writs of Garnishment, Applnt. Appdx. 246-248,249-254,255-260,261-266,267-281,284-287,288-293,288-293). During this same time Defendants Harmsen starting satisfying the judgments by means of certain credit notes[FN2] the underlying judgments. The Defendants moved for determination of the proper payment amount as early as June 8th of 2004 ( Applnt. Appdx. 222-226). Said credit notes provide:

FN1. The other co-defendants except for Gaddis and Bennett had posted bonds pending appeal.

FN2. The credit notes arise from a separate litigation in New York against Lloyds. Harmsens were members of that class action suit as well, and, therefore, members entitled to buy or sell credit notes.

*4 As part of a Stipulation and Agreement of Settlement dated May 8, 2002 (the ”“Stipulation‘â€(tm)) In re Lloyd's American Trust Litigation, 96 Civ. 1262 (RWS) (U.S.D.C., S.D.N.Y), you as a Class Member, are entitle to this Credit Note, representing a sum of money that may be used that may be used to offset your (or upon transfer as provided herein, another Class Member's) outstanding R&R Debt to Lloyd's. Use of this Credit Note for the payment of any R&R Debt shall also avoid any interest that may otherwise have been owing or charged by Lloyd's on such R&R Debt from July 1, 1999 until presented. Your Credit Note is freely transferable among Class Members. This Credit Note shall-expire, however, on March 31, 2005 and shall not be redeemable for cash or any other consideration other than to reduce your R&R Debt or that of other Class Members.

OWNER OF NOTE - This Credit Note is the property of Lloyd's Member #037776D.

CALCULATION OF AMOUNT OF NOTE - Under the proposed class action settlement, Credit Notes were allocated to Class Members based on each Class Member's OPL for the XXXXXXXX years of account.

AMOUNT OF TRANSFERABLE CREDIT - The amount of your Credit Note is Nine Thousand One Hundred Seventy And 00/100 ($9,170.00)-

HOW TO REDEEM THIS NOTE - This Credit Note may be redeemed by following the procedures set forth on the reverse.

TIME FOR REDEEMING THIS NOTE - This Credit Note is valid until March 31, 2005.

TRANSFERABILITY OF THIS CREDIT NOTE - You may transfer all or any portion of this Credit Note to one or more other Class Member(s) by following the procedures set forth on the reverse.

Class Members interested in purchasing Credit Notes, and registered holders of Credit Notes who are interested in selling their Credit Notes, may wish to notify Gilardi & Co, LLC (”“Gilardi‘â€(tm)) of their interest. Gilardi has agreed to maintain a list of the names, addresses and telephone numbers of Class Members who notify Gilardi of their wish to purchase or sell Credit Notes. The list of any potential buyers and sellers will be made available ( for information purposes only) to Class Members by visiting *5 www.gilardi.com//lloyds. No representation is made as to the market value of any Credit Notes or the fairness of any transaction.

DEFINITIONS - As used in this Credit Note, the following terms have the following meanings:

””R&R Debt‘â€(tm) means the Name's Equitas Premium and nay other outstanding underwriting liabilities covered by his/her Finality Statement plus accrued interest (but without the benefit of any allocation of the combined litigation settlement funds, debt credits, or refund of the members' special Central Fund contribution except to the extent provided for in an Action Group Settlement Agreement to which the Name is a Party).

”“Class Member‘â€(tm) means a former or current Name who underwrote American Business and who did not accept the offer of settlement or whose conditional acceptances of the offer of settlement were rejected.

( Applnt. Appdx. 2224, 313-360).

In response to the Motion, the court entered an Order granting the Motion for Determination of Payment Amount, but simply determined it in terms of English pound and did nothing with regard to the conversion rate. ( Applnt. Appdx. 243-244). Thereafter, on or about January 19th, 2005, both Appellants made a Motion to Quash Garnishment, for an Order of Entry of Satisfaction of Judgment, and a Motion to Set Aside Judgments under Rule 60(b). ( Applnt. Appdx. 289-300). In support of the motion, Appellants argued the Equitas Contract rate[FN3] should be applicable, provided the court with prior decisions entered against Lloyds with regard to the conversion rate cases, and argued both collateral and judicial estoppel should be applied. In the alternative, Harmsen move to have the *6 judgement set aside pursuant to F.R.C.P. Rule 60b(5)(6). ( Applnt. Appdx. 301-375)

FN3. The Equitas contract clause 18 provides: ”“Where any amount payable by a Name hereunder in respect of his Name's Premium is an amount dominated in U.S. Dollars or Canadian Dollars ... the Name shall instead pay an amount in sterling being one pound sterling for each US $1.51 and one pound sterling for each Can $2.05‘â€(tm).

Plaintiff Lloyds respond arguing the Utah Uniform Foreign Money Claims Act, was the applicable provision and the law of the case doctrine should be applied in support thereof. ( Applnt. Appdx. 430-508) As a part of their response Appellants submitted the declaration of Nicholas P. Demery a Lloyd's solicitor in England. Mr Demery testified that clause 18 of the Equitas Contract was placed in there because the Equitas Premium was calculated in English pound sterling. Since some of the names had liabilities in U.S. and/or Canadian dollars, which were to be covered by the Equitas Premium, an exchange rate was used based on the prevailing rate at the time (1996) for these U.S. and Canadian liabilities to be converted to English pounds sterling. He further states that applying clause 18 to the present situation was contrary to the purposes of said clause, and that the Sanderson case was one of which Lloyds made a mistake resulting from mis-communication and then argued that they did not agree to the 1996 exchange rate of $1.51 but simply that judgment was entered inadvertently. ( Applnt. Appndx. 477 - 483).

Appellants Harmsen responded with a Motion to Strike the Demery Affidavit, and a Memorandum in Support thereof. ( Applnt. Appndx. 509-534). The Society of Lloyd's submitted it's brief in opposition to the Motion to Strike ( Applnt. Appndx. 535-539) and the matter was heard on February 17, 2005. The Court entered its Order denying the motions of Kelly and Stephen Harmsen, both as to striking the Affidavit of Nicholas Demery and denying the Motion to Set Aside the Judgment and applied the law of the case doctrine on March 7, 2005. ( Applnt Appndx 540-543). Harmsens filed their Notice of Appeal on April 1, 2005. ( Applnt Appndx 545-546).

This Court entered its opinion in the underlying appeals of The Society of Lloyd's v Harmsen, Case No. 03-4082 on March 23, 2005, denying the underlying appeals of Stephen Harmsen with *7 respect to all issues except for the interest issue under 28 U.S.C. § 1961, on which grounds the opinion of the trial court was reversed and remanded. ( Applnt. Appndx 554-600). No appeal was taken from that decision of the Tenth Circuit.

ARGUMENTS AND AUTHORITIES

I. THE COURT ERRED IN REFUSING TO APPLY COLLATERAL ESTOPPEL AGAINST LLOYDS IN DETERMINING THE CONVERSION RATE APPLICABLE TO CREDIT NOTES TENDERED BY HARMSENS IN SATISFACTION OF THE JUDGMENTS.

Defendants Stephen and Kelly Harmsen presented to the court three cases, to-wit: (1) The Society of Lloyd's v James David Tufts III, and Thomas Otto Lind, Eastern District of Louisiana District Court Cas No. 03-2316 entered July 27, 2004 which held that the applicable exchange rate was that existing on the date that the English Judgment was being enforced (i.e the day the Complaint was filed).[FN4] ( Applnt. Appdx. 302, 362-365); (2) The Society of Lloyd's v Carlo Abramson, Untied States Judicial District Court for the Northern District of Texas, Case No. 3:03-MC-001-P which court held on a Motion for Summary Judgment that the conversion rate of the English judgment to British pounds was to be formed at the $1.51 rate as set forth in the Equitas Contract. ( Applnt. Appdx. 302-303, 362-375) (This case specifically decided in the context of Lloyds names that the precise Equitas Contact provision being urged by Harmsen was applicable and the proper rate of exchange), and (3) The Society of Lloyd's v Ray M. Sanderson, Northern District of Indiana, Case No. 3:03CU0373.

FN4. The rate on the date the Plaintiff filed it's Complaint in this case was a $1.43.

The Abramson case was never appealed and accordingly is binding authority upon the Plaintiff in this case under the doctrine of res judicata, specifically issue preclusion. For example, *8 in Jiron v. City of Lakewood, 392 F.3d 410 (10th Cir. 2004) this court held that under Colorado law as predicated by the Federal Court of Appeals, a party who has pled guilt to a crime in state court is collaterally estopped from re-litigating elements of that crime in subsequent civil proceedings. Further, although a party against whom a issue preclusion is invoked must be a party, or in privity with a party, to prior adjudication, issue preclusion can be invoked by any third party. (Citing to the Restatement (Second) of Judgments § 29. Park Lake Resources v. U.S. Dept. Of Agriculture, 378 F.Ed 1132 (10th Cir. 2004).

Issue preclusion requires a showing that: (1) the issue previously decided is identical with the one presented in the action in question; (2) the prior action was fully adjudicated on the merits; (3) a party against whom the doctrine is invoked was a party, or in privity with a party to the prior adjudication; and (4) the party against whom the doctrine is raised had a full and fair opportunity to litigate the action issue and a prior action. Adams v. Kinder-Morgan, Inc., 340 F.3d 1083 (10th Cir. 2003).

In the present case Lloyds had every opportunity to fully and fairly litigate the issue of the appropriate conversion rate both in the Louisiana Court and the Texas Court, did so litigate the conversion rate issue, and both courts ruled in opposite to the position taken by Lloyd's in this case. This gives rise to two problems. First, that while an exception to the law of the case doctrine is that only a ”“controlling authority‘â€(tm) change of law gives rise as an exception to the law of the case doctrine, and while Defendants concede that neither the Louisiana District Court nor the Texas District Court are binding precedent upon the Utah District Court judge, because the decisions were binding against Lloyds under the doctrine of res judicata and issue preclusion, those decisions were binding authority which the District Court below should have used as an *9 exception to the law of the case doctrine. They are not binding precedent over the court, but they were binding authority over the particular party in this case. As such, the doctrine of issue preclusion should have been applied. The trial court in this case treated the doctrine of res judicata as though it were a discretionary doctrine to be applied at her will or whim. She stated she declined to apply them[FN1].

FN1. The trial court stated in its decision of March 7, 2005 decision: ” “The cases relied upon by the Harmsens were issued after the court issued its March 17, 2003 judgments against Stephen Harmsen and Kelly Harmsen.Moreover, the decisions cited by the Harmsens (from other districts) have no precedential value in this court. In particular, the court declines to follow The Society of Lloyd's v Tufts, Civ. Action No. 03-2316 (E.D. La. July 27, 2004), because the court offered no reasoning for its holding and applied different law. As for the case of The Society of Lloyd's v Sanderson, Case No. 3:03CV0373 (N.D. Ind.), the court is not willing to rely upon that as authority to support the Harmsen's argument that the exchange rate is $1.51. Specifically, based on sworn testimony from Nicholas Demery, it appears that Lloyds mistakenly agreed to an exchange rate of $1.51 due solely to a miscommunication between Mr. Demery and another Lloyds employee. ( See Decl of Nicholas Demery „17, attached as Ex. H to Pl./s Mem. In Opp'n. The Abramson case the trial court ignored without explanation.

This counsel could find no authority in which issue preclusion was a discretionary doctrine, applicable by District Court when and if they choose to do so. Rather, the doctrine of issue preclusion appears to be an absolute rule of law which, if all of the factors are met as set forth in the Kinder-Morgan case, the court must apply.

The Abramson case is a case on all fours with the instant case and should have precluded Lloyds from re-litigating the issue at all. ( See issue of parol evidence rule infra).

Further, Harmsens filed supplemental authority, The Society of Lloyd's v. Ray M. Sanderson, supra, in which Sanderson moved for summary judgment against Lloyds on the issue of conversion rate. ( Applnt. Appdx. 383-428). Specifically the issue of issue preclusion was addressed in the context of credit notes being used to pay off the Lloyd's R&R indebtedness. (See *10 Eg Affidavit of Dianne K. McCormick, ( Applnt. Appdx. 412-417). Sanderson quoted paragraph eighteen of the Equitas Contract in his affidavit in support of summary judgment, ( Applnt. Appdx. 393) and based his cross motion for summary judgment thereon. ( Applnt. Appdx. 391). Thereafter The Society of Lloyd's accepted Sanderson's argument in notice of judgment and stipulation for dismissal with prejudice was entered thereon. ( Applnt. Appdx. 385). Based upon these three authorities it is clear the proper conversion rate has been previously litigated in district courts across this country with the issue found against Lloyds.

Second, to rule that the law of the case doctrine now allows a contrary result, as the District Court did in this case, is to call into question the integrity of the judiciary. To ignore clause 18 of the Equitas Contract is in direct contravention to the judicial estoppel cases, by allowing The Society of Lloyd's to blow hot on the Equitas Contract when they are trying to enforce it against Harmsen, and to blow cold when Harmsen is trying to enforce a provision against them, is to double injure such integrity. (See judicial estoppel argument, infra).

This court should rule that the doctrine of issue preclusion is not discretionary, and that the trial court below was mandated to apply it. Accordingly, both rulings would be adverse to Lloyds, and the Defendants should have the right to, under either Abramson or Tufts estop The Society of Lloyd's from maintaining it's position in this case that the proper conversion rate was on the day the credit notes were tendered.

II. THE COURT ERRED IN REFUSING TO STRIKE THE AFFIDAVIT OF NICHOLAS P. DEMERY AS BEING IN VIOLATION OF THE PAROL EVIDENCE RULE.

In the present case, The Society of Lloyd's submitted the statement of their English solicitor, Demery, to the effect that the words written in clause 18 of the Equitas Contract were *11 not what they appeared to on their face. For purposes of the Utah Parol Evidence Rule, under Utah law, the integrity of a written contract is maintained by applying a rebuttable presumption that a writing which, on its face, appears to be an integrated agreement, is what it appears to be. (Citing the Restatement ”“second‘â€(tm) of Contracts, §209(3). Becker v HSA/Wexford Bancgroup, L. L. C., 157 F.Supp. 2d 1243 (D.Utah 2001).[FN2] As this Court has stated, under Colorado law, if a provision in the contract is unambiguous, the ”“parol evidence rule‘â€(tm) bars admission of any extrinsic evidence that contradicts of modifies the unambiguous provision. Electrical Distributors Inc v SFR, Inc., 166 F.3d 1074 (10th Cir. 1999). The parol evidence rule is a rule of substantive law. Id. Utah employs a two-step process in interpreting contracts, under which a Court first determines whether the agreement is integrated and then decides whether there are any ambiguities in it. In Re: Armstrong, 292 B.R. 678 (10th Cir. BAP, Utah, 2003). An integrated contract is one where the parties thereto adopt a writing or writings as the final and complete expression of their agreement. Naimie v Cytozyme Laboratories Inc., 174 F.3d 1104 (10th Cir. Utah, 1999). The parol evidence rule requires a district court to exclude extraneous evidence that varies or contradicts terms of a unified contract. Horizon Holdings, LC v Genmar Holdings, Inc., 244 F.Supp.2d 1250 (D.Kan. 2003).

FN2. Written by Judge Campbell, the trial judge below.

In the present case, the affidavit of Mr. Demery is submitted to add to, contradict, or vary the facial meaning of clause 18 of the Equitas Contract. Otherwise it is superfluous. The Court below should have granted the Motion to Strike the Affidavit of Nicholas P. Demery in that his explanation seeks to add to, vary or contradict a final writing to which the parties have assented (in this case the assent is a fiction, but a fiction nonetheless to which this Court has previously *12 bound the Harmsens). To hold that Lloyds, having already lost on the conversion rate issue in the Abramson court, can now come in to submit evidence of its English attorney as to explain the meaning of clause 18 to an American court, is to violate the parol evidence rule head on (it should be noted the parol evidence rule was derived from English law, and is not a creation of American law itself).

This Court has previously held and applied the parol evidence rule precluding such evidence. The lower court made no finding that clause 18 was ambiguous but, nevertheless, consulted the testimony of Demery in interpreting it. This she should have not done. This Court should find that the Affidavit of Nicolas P. Demery, insofar as it goes to explain clause 18 of the Equitas Contract, should be stricken in its entirety.[FN3]

FN3. According to Lloyd's Memorandum in Opposition to the Berger group's conversion rate motion in the Western District of Ohio court, civil action # 1:04-cv-094, in front of the Honorable Judge Beckwith, Lloyd's argued that ”“Mr. Demery is conversant with the R&R plan in Lloyd's efforts to effectuate its English judgment against recalcitrant Names in the United States...‘â€(tm) Indeed, Mr. Demery advises ”“N[one] of the documents associated with the R&R plan prescribes any formula for conversion of pounds into dollars for the Equitas premium or other purposes. See Appellant's Appendix 517-518. Interestingly, in this case, Demery states ”“The reason for clause 18 of the Equitas contract is that the Equitas premium was calculated in English pounds Sterling. However some of the Names had liabilities in U.S. and/or Canadian dollars, which were to be covered by the Equitas premium. Thus, as an exchange rate was used, based on the prevailing rate at the time (1996) for these U.S. and Canadian liabilities to be converted from U.S. or Canadian dollars to English pounds Sterling‘â€(tm). The whole liability for which judgment was entered in the original case was Equitas premium assessments. Mr. Demery's comments appear to be nothing more than double talk, he tells one court one thing and this court another.

III. THE COURT ERRED IN REFUSING TO JUDICIALLY ESTOP THE SOCIETY OF LLOYDS FROM ASSERTING THAT CLAUSE 18 OF THE EQUITAS CONTRACT DID NOT APPLY TO THE CONVERSION RATE APPLICABLE TO THE HARMSENS JUDGMENTS.

The Harmsen's urged the trial court to apply the doctrine of judicial estoppel inasmuch as *13 the court had, in it's decision on Summary Judgment, bound the Defendants to the Equitas Contract clause by clause, term by term, including, but not limited to, the ”“Pay Now Sue Later‘â€(tm) clause, Conclusive Evidence Clause, and the Forum Selection clause. It is only, therefore, just and appropriate, that the Plaintiff be bound by paragraph 18 of the Equitas Contract which establishes the exchange rate at $1.51 per pound.

The doctrine of judicial estoppel, sometimes referred to as the doctrine of preclusion of inconsistent positions, is invoked to prevent a party from changing its position over the course of judicial proceedings when such positional changes have an adverse impact on the judicial process. See 1B Moor's Federal Practice „ .405[8], at 238-42 (2d Ed. 1998). ”“The policies underlying preclusion of inconsistent positions are ”“general consideration [s] of the orderly administration of justice and regard for the dignity of judicial proceedings' ‘â€(tm) Arizona v. Shamrock Foods Co., 729 F. 2d. 1208, 1215 (9th Cir. 1984), cert denied, 469 U.S. 1197, 105 S.Ct. 980, 83 L.Ed.2d 982 (1985) (citations omitted). Judicial estoppel is ”“intended to protect against a litigant playing ”“fast and loose with the courts.' ‘â€(tm) Rockwell International Corp. V Hanford Atomic Metal trades Council, 851 F.2d 1208, 1210 (9th Cir. 1988) (citations omitted). Because it is intended to protect the integrity of the judicial process, it is an equitable doctrine invoked by a court at its discretion.

... Judicial estoppel is most commonly applied to bar a party from making a factual assertion in a legal proceeding which directly contradicts an earlier assertion made in the same proceeding or a prior one. See generally Note, Judicial Estoppel: The Refurbishing of a Judicial Shield, 55 Geo.Wash.L.Rev. 409, 410-12 (1987); Comment, Precluding Inconsistent Statements: The Doctrine of Judicial Estoppel, 80 Nw.U.L.Rev. 1244 (1986).

Russell v Rolfs, 893 F.2d 1033, 1037 (9th Cir. 1990). This Court, the Tenth Circuit has rejected the doctrine of judicial estoppel. See, United States v. 49.01 Acres of Land, More or Less, 802 F.2d 387 (10th Cir. 1986). The Court of Appeals does not recognize judicial estoppel. McGuire v. Continental Airlines, Inc., 210 F.3d 1141 (10th Cir. 2000).

However, subsequent to the McGuire decision the Supreme Court has recognized the doctrine of judicial estoppel in two cases. In *14 Pegram v. Herdrich, 530 U.S. 211, 120 S.Ct. 2143, 147 L.Ed. 2d 164 (2000) the U. S. Supreme Court held that the doctrine of judicial estoppel generally prevents a party from prevailing on one phrase of a case on an argument and then relying on contradictory arguments to prevail in another phase. More recently, in New Hampshire v. Maine, 532 U.S. 121 S.Ct. 1808, 149 L.Ed. 2d 968 (2001) Reh. Den. 533 U.S. 968, 122 S. Ct. 10, 150 L.Ed. 2d 793, the Court specifically adopted the issue of judicial estoppel holding that‘â€(tm) under the doctrine of judicial estoppel where a party assumes a certain position of legal proceeding, and succeeds in maintaining that position, he may not thereafter, simply because his interests have changed, assume a contrary position, especially if it be to the prejudice of the party who acquiesced in the position formally taken by him.‘â€(tm) Id. at 749, 1814, (citing Davis v Wakelee, 156 U.S. 680, 689, 15 S.Ct. 555, 39 L.Ed. 578 (1895)), ”“Judicial estoppel‘â€(tm) generally prevents a party from prevailing in one phase of a case in an argument and then relying on a contradictory argument to prevail in another phase. The purpose of judicial estoppel is to protect the integrity of the judicial process by prohibiting parties from deliberately changing positions according to the exigencies of the moment. Id.

Although additional considerations may inform the doctrine's application in specific factual contexts, several factors typically in from the decision whether to apply the doctrine of judicial estoppel in a particular case: whether the party's later position is ”“clearly inconsistent‘â€(tm) with its earlier position, whether the party has succeeded in persuading a court to accept that party's earlier position, so that judicial acceptance of an inconsistent position in a later proceeding would create the perception that either the first or second court was misled, and whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped. Id. at 749-750, 1814-15.

*15 Accordingly, this Court should now recognize the doctrine of judicial estoppel as does the Supreme Court. In applying the factors identified by the Supreme Court it is clearly inconsistent for Lloyd's of London to argue that it is not bound by the same Equitas Contract that it bound the Harmsens to. The lower court bound Harmsens, clause by clause, sentence by sentence to an Equitas Contract which they did not even sign. Harmsens were bound to the Equitas Contract and that binding was accepted by this Appellant Court on appeal[FN4].

FN4. And this Court sustained application of those clauses in its decision, and explained them in Tenth Cir. Appeal no. 03-4082, pages 9-11.

To allow Lloyds to now wiggle out from being equally bound by the terms of it's own same contract, gives the appearance that the court below was misled, because the party is ”“playing fast and loose‘â€(tm) with the judicial system. It leaves any innocent observer with an opinion that the court lacks integrity because the two decisions are both internally inconsistent and intellectually dishonest. Accordingly, the court below should have invoked the document of judicial estoppel to prevent Lloyds from arguing the law of the case doctrine to wiggle out from being bound by it's own terms of the Equitas Contract.

This Court should now recognize the doctrine of judicial estoppel and adopt and apply same. Failure to do so in this case seriously draws into question impartiality and fairness of our court system[FN5].

FN5. See the discussion in 10th Cir. Decision in the underlying case, No. 03-4082, about whether the English court system afforded the Names due process, pages 18-21.

IV. THE COURT ERRED IN APPLYING THE LAW OF THE CASE DOCTRINE IN REFUSING TO CONSIDER THE HARMSEN'S CONVERSION RATE ARGUMENTS, AS WELL AS SET ASIDE THE JUDGMENT UNDER RULE 60(b).

*16 The lower court applied the law of the case doctrine to preclude consideration of clause 18 of the Equitas Contract as the appropriate conversion rate for these credit notes and, applying such, chose to apply the Uniform Foreign Money Judgments Act to the credit notes despite the fact that they are clearly not money. The court did this ignoring principles of both judicial estoppel and collateral estoppel, and considering the Affidavit of Nicholas P. Demery in violation of the parol evidence rule, all of which have been discussed previously.

The law of the case doctrine is first mentioned in Messinger v Anderson, 225 U.S. 436, 32 S.Ct. 739 (1912) wherein the court stated that ”“[t]he phrase, ”“law of the case‘â€(tm) as applied to the effect of previous orders on the later action of the court rendering them in the same case, merely expresses the practice of courts generally to refuse to reopen that which has been decided, not to limit their power. (Citations omitted). Id at 740. As elucidated by the Tenth Circuit in Concrete Works v City of Denver, 321 F.3d 950 (10th Cir. 2003), although the law of the case doctrine does not implicate courts jurisdiction, district courts authority to deviate from law of the case is circumscribed by three ”“exceptionally narrow exceptions‘â€(tm): (1) when evidence in subsequent trial is substantially different, (2) when controlling authority has subsequently made contrary decision of law applicable to issues, or (3) when the decision was clearly erroneous and would work manifest injustice. Defendants argues below two of these three issues.

First, as set forth previously in this counsel's collateral estoppel section, there was controlling authority contrary to the decision of Judge Campbell. That controlling authority was the Abramson, Tusks, and Sanderson's cases which were binding upon Lloyds under res judicata principles. Such binding decisions should have been treated as binding authority by the court below. They were not. Rather Judge Campbell seemed to indicate that res judicata, or *17 specifically issue preclusion, was a doctrine that was discretionary for her to apply or not apply at her whim. Harmsens maintain this was an error as a matter of law and a specific exception to the law of the case doctrine also.

Furthermore, the decision as originally elucidated to apply the Uniform Foreign Money Judgment Act, to this non-money form of payment, i.e. credit notes, would work manifest injustice. First, the credit notes denote a debt owed by Lloyds back in 1999. To now award them the difference in conversion rate that has arisen between 1999 and 2005, is to grant them an unjust benefit, a windfall for no reason. The credit notes themselves delete all interest back to 1999. Granting Lloyds the conversion rate change which has taken place since 1999 up until 2005 in converting the credit notes, which are denominated in dollars, to English pounds reflected by this Court's judgment, is to take away much of the effect much of what the district court in New York did in the credit note case.

Specifically, these were offsetting judgments. A judgment for a debt owed by Lloyds to members of the class reflected by the credit notes was to be offset against any judgments by those members for monies they owed Lloyds, same to be effective as of 1999, not 2005.

The enunciated rationales for the law of the case doctrine are compelling; the doctrine is ”“based on sound public policy that litigation should come to an end and is designed to bring about quick resolution of disputes by preventing continued re-argument of issues already decided, Gage v General Motors Corp., 796 F.2d 345, 349 (10th Cir. 1986) (Citations omitted), so avoiding both a wasteful expenditure of resources by courts and litigating parties and a gradual undermining of the public confidence in the judiciary- in short, Dickens Jardyce v Jardyce Syndrome. McIlarvy v Kerr McGee Coal Corp, 204 F.3d 1031 (10th Cir. 2000). The promotion of judicial economy - a *18 primary concern underlying the law of the case doctrine - requires that litigants be encouraged to present all available claims and defenses at the earliest opportunity. Id. The doctrine is, however, ”“only a rule of practice in the courts and not a limit on their power‘â€(tm). Id.

In the present case, to apply the law of the case doctrine, assuming arguenndo that the Utah Foreign Money Judgment Act actually applies to something like a credit note, is to work a manifest injustice. None of the principles promoted by the law of the case doctrine are applicable here. You are not preserving judicial integrity when you apply the law of the case doctrine to allow Lloyds to apply its Equitas Contract document, clause by clause, term by term, to the Harmsens on the underlying liability and then turn around and wiggle out from application of clause 18 of the Equitas Contract against Lloyds. In fact, you are doing just the opposite. You are undermining the integrity of the judiciary. That is why courts created the judicial estoppel and collateral estoppel doctrines.

This Court will not be preserving judicial economy because, in fact, earlier courts have already decided that clause 18 of the Equitas Contract applies to Lloyds in determining the correct conversion amount in its suits against Names. Nevertheless, that issue is being re-litigated before this Court. The principle of collateral estoppel should have provided the preservation of judicial economy, but was ignored by the court below. Again, the policy of the law of the case doctrine is not being promoted in this case. The law of the case ” “doctrine posits that when a court decides upon a rule of law, that decision should continue to govern the same issue in subsequent stages of the same case‘â€(tm). Arizona v California, 460 U.S. 605, 618, 103 S.Ct. 1382, 75 L.Ed.2d 318 1983. The doctrine has particular relevance following a remand order issued by an appellate court ”“[W]hen a case is appealed and remanded the decision of the appellate court establishes the law of *19 the case and ordinarily will be followed by both the trial court on remand and the appellate court and any subsequent appeal. (Citations omitted). Huffman v Saul Holdings Ltd. Partnership, 262 F.3d 1128 (10th Cir. 2001) at 1132. In U.S. v Smart, 393 F.3d 767 (8th Cir. 2005) the court held that they were not bound to follow the law of the case doctrine when the earlier panel opinion contains a clear error on a point of law and works a manifest injustice. Citing Little Earth of United Tribes, Inc. V United States Dep't of Housing & Urban Dev., 807 F.2d 1433, 1441 (8th Cir. 1986)(law-of doctrine does not apply when prior decision is clearly erroneous and works a manifest injustice). See also Jdanok v Gliddon Co., 327 F.2d 944, 952-53 (2nd Cir.)(Good sense exception to the law of the case doctrine includes ”“clear conviction of error on a point of law that is certain to recur‘â€(tm).), cert. denied 377 U.S. 934, 84 S.Ct. 1338, 12 L.Ed.2d 298 1964). Exceptions to the law of the case doctrine exists when (1) new and substantially different evidence emerges in the subsequent trial; (2) controlling authority has been rendered that is contrary to the previous decision; or (3) earlier ruling was clearly erroneous and would work manifest injustice if implemented. Schiavo Xrel Shindler v Schiavo, 403 F.3d 1289 (11th Cir. 2005). See also Jackson v State of Alabama State Tenure Corn'n, 405 F.3d 1276 (11th Cir. 2005).

That is precisely the issue here. Two other courts have already held completely different results on the issue of the conversion rate. The Louisiana Court applied the rule of law that the proper rate of conversion is as of the date the complaint is filed, and the Abramson court ruled specifically that the Equitas Contract provision of $1.51 applies. That decision was, in essence, accepted by Lloyds in the Sanderson case as the proper conversion rate.

Now, in the Harmsen case, a recalcitrant Name who has long fought against Lloyds all the way through prior appeal, and even paid by means of credit notes rather than cash, Lloyds strives *20 to assert the Uniform Foreign Money Judgments Act and tries to gain a windfall by having the conversion rate be applicable in 2005 against an offsetting debt it owed arising in 1999. On what rational basis would we apply this? How would the integrity of the courts be preserved by showing to any innocent observer that a plaintiff can bind a party to a contract throughout its case and obtain a United States judgment thereon, but then turn around and not be bound by other provisions of the same contract itself? How is the preservation of judicial economy and scarce resources preserved by ignoring the doctrine of issue preclusion and res judicata? The underlying rationales for the law of the case doctrine simply do not apply to the fact pattern before this Court and the trial court below erred in applying the law of the case doctrine as a matter of law.

Alternatively, should this Court rule that the law of case doctrine applies, the judgment should be set aside under F.R.C.P. Rule 60b(6). The only case this counsel could find in which a Rule 60b(6) motion was ultimately granted was Liljeberg Health Services Acquisition Corp, 486 U.S. 847, 108 S.Ct. 2194, 100 L.Ed.2d 855 (1988) in which the court set aside a judgment under Rule 60b entered by a judge who should have recused himself from the matter for a conflict of interest which would give the appearance of impropriety. Similarly, in this case, an appearance of impropriety is created by this judge who grants the ultimate judgment on the merits based on the Equitas Contract against the Harmsens, then refuses to apply clause 18 of the Equitas Contract as to the conversion rate.

V. THE COURT ERRED IN RULING THAT THE UTAH FOREIGN MONEY CLAIMS ACT APPLIED TO CREDIT NOTES WHICH ARE NOT MONEY.

The judgment incorporated the Utah Uniform Foreign Money Judgment Claims Act, U.C. A. §§78-22b 108(6) and 78-22b-111(1). Section 78-22b-108 provides as follows:

”“(6)A judgment substantially in the following form complies with *21 Subsection (1): IT IS ADJUDGED AND ORDERED that the Defendant (insert name) pay to Plaintiff (insert name) the sum of (insert amount in the foreign money) plus interest on that sum at the rate of (insert rate - see Section 78-22b-110) percent a year or, at the option of the judgment debtor, the number of United States dollars as will purchase the (insert name of foreign money) with interest due, at a bank-offered spot rate at or near the close of business on the banking day next before the day of payment, together with assessed costs of (insert amount) United States dollars.‘â€(tm)

U.C. A. §78-22b-111 provides:

”“Enforcement of Foreign Judgments.

(1)With respect to a foreign-money claim, recovery of prejudgment interest and the rate of interest to be applied in the action or distribution proceeding are matters of the substantive law governing the right to recovery under the conflict of laws rules of this state.‘â€(tm) (2).

In the instance case, the Defendants did not pay by money. They tendered credit notes which, are valued in terms of U.S. dollars, but they are not money. Credit notes cannot be cashed at a bank. They cannot be taken to the bank to buy money at the spot rate. These credit notes, unlike money, can only be redeemed through Lloyds.

Finally, the credit notes revert back and delete any and all interest back to July 1, 1999 and are, accordingly, more akin to offsetting judgments.

To give Lloyds the benefit of the declination of the dollar against the pound since 1999 in converting these two judgments against each other, is to give Lloyds an unjust benefit against Harmsens. The credit notes are simply not money and the uniform money judgments act does not apply and that provision of the judgment is inapplicable in its entirety. Even if it were applicable, ”“a satisfaction or partial payment made upon a foreign judgment, on proof thereof, must be credited against the amount of foreign money specified in the judgment, notwithstanding the entry of judgment in this state‘â€(tm).

*22 It is Harmsens contention that, by virtue of the credit notes, the judge should simply have offset those effective as of July 1, 1999, the effect of being a foreign judgment offset, and should not have applied the conversion rate as of the date of tender. Anything else is to accomplish an inequitable result. The conversion rate to be applied should have been as specified in clause 18 of the Equitas contract and the Uniform Foreign Money Judgments Act should have had no application whatsoever. The court erred as a matter of law.

CONCLUSION

For the foregoing reasons, this Court should reverse the court below and remand the matter back to the court to enter an offsetting judgment against Lloyd's judgment as of July 1, 1999 using, as the conversion rate, either the conversion rate in effect as of the date of the complaint as set forth in Tufts, or the contract rate as specified in Abramson of $1.51. The Plaintiff should be judicially estopped from arguing the Equitas Contract does not apply, and collaterally estopped from re-litigating issues previously decided against it. This Court should further rule that the credit notes are not money and, accordingly, the Uniform Foreign Money Judgments Act does not come into play. Appellants should be awarded their costs on appeal.

STATEMENT OF ORAL ARGUMENT

Oral argument would be helpful in that this matter presents numerous matters of first impression, as well as a request that this Court finally recognize the doctrine of judicial estoppel based on new Supreme Court precedence. The determination of whether these credit notes fall within the purview of the Uniform Money Judgments Act as well as the scope of the application of the doctrine of collateral estoppel, i.e. is it discretionary or not, are all issues of first impression to be determined by this Court.

Appendix not available.