THE SOCIETY OF LLOYDS, Plaintiff
501 F.Supp.2d 248, 2007 WL 2280027 (D.Mass.)
Civil Action No. 2003-CV-10949-RCL.
COUNSEL: Mark A. Pogue Edwards & Angell, LLP, Providence, RI, for Plaintiff.
JUDGE: Lindsay, D.J.
Holdings: The District Court, Lindsay, J., adopted opinion of Joyce London Alexander, United States Magistrate Judge, which held that:
(1) underwriters claim that he was fraudulently induced to become an investor in English insurance market did not meet requirements of affirmative defense of fraud under the Act;
(2) judgments obtained in England were not unenforceable under the Act on ground that proceedings undertaken by the English courts did not comport with due process; and
(3) underwriter had notice of proceedings during which judgments were procured in English courts, as required for enforcement of the judgments pursuant to the Act.
[*1] Findings and recommendation ADOPTED by LINDSAY, D.J. on July 27, 2007.
FINDINGS AND RECOMMENDATION ON PLAINTIFF THE SOCIETY OF LLOYDS MOTION FOR
SUMMARY JUDGMENT AGAINST DEFENDANT JOHN MUNROE HAMILTON
The plaintiff, The Society of Lloyds (Lloyds), initiated the instant action against defendant, John Munroe Hamilton (Mr.Hamilton), in order to collect a monetary judgment entered against Mr. Hamilton and in favor of Lloyds in the courts of England. [FN1] Lloyds seeks to recover the amount of the English judgment pursuant to the Massachusetts Uniform Foreign Money-Judgment Recognition Act, Mass. Gen. Laws ch. 235, § 23A ( ) (the Recognition Act). Mr. Hamilton answered Lloyds Amended Complaint, and included eleven affirmative defenses thereto. Lloyds now moves for summary judgment against Mr. Hamilton pursuant to Rule 56 of the Federal Rules of Civil Procedure, asseverating that there are no genuine issues of material fact. [FN2] For the reasons articulated below, this Court FINDS that there are no genuine issues of material fact and, therefore, RECOMMENDS that Lloyds motion be ALLOWED and summary judgment be entered against Mr. Hamilton. [FN3]
Multiple Courts of Appeal have previously described Lloyds unique structure and operation. [FN4] The Fifth Circuit provides a thorough, yet brief and clear description:
Lloyds is a 300-year-old market in which individual and corporate underwriters known as Names underwrite insurance. The Corporation of Lloyds which is also known as the Society of Lloyds, provides the building and personnel necessary to the Markets administrative operations. The Corporation is run by the Council of Lloyds, which promulgates Byelaws, regulates the market, and generally controls Lloyds administrative functions.
Haynsworth v. The Corporation, 121 F.3d 956-958-59 (5th Cir.1997).
This and numerous other lawsuits stem from severe financial troubles experienced by Lloyds in the late 1980s and early 1990s. At that time, many Names incurred massive financial losses based largely on asbestos-related and other toxic tort claims. These losses threatened the future viability of the Lloyds market, and allegedly were aggravated by the inability of some Names to fulfill their underwriting obligations. In responding to this difficult situation, Lloyds created the Reconstruction and Renewal Plan (R & R), requiring all Names to reinsure any liabilities outstanding prior to 1993 with Equitas Reinsurance Ltd. (Equitas). The R & R plan further offered a Settlement Option for the Names. Those Names who rejected the Settlement Option were obligated to pay the entirety of their outstanding underwriting obligations, including the amount due to Equitas under the R & R. The implementation of this plan was upheld as within Lloyds regulatory authority by the English courts including that aspect of the R & R that mandated that Names purchase reinsurance from Equitas. See Society of Lloyds v. Lyons, Leighs & Wilkinson, (C.A. 31 July 1997); Society of Lloyds v. Turner, 303 F.3d 325, 327-28 (5th Cir.2002); The Society of Lloyds v. Mullin, 255 F.Supp.2d 468, 470 (E.D.Pa.2003).
[*2] Mr. Hamilton, as well as the other defendants in the instant action, did not accept the Settlement, refusing to pay the Equitas premium. Accordingly, Lloyds, through an assignment from Equitas, commenced a program of debt collection against Names, including Mr. Hamilton, who had not paid their Equitas premium in full. Lloyds commenced legal proceedings against Mr. Hamilton in the High Court of Justice, Queens Bench Division in London, England (the English Court). The English Court entered a judgment against Mr. Hamilton on March 11, 1998 in the amount of £ 164,414.63, plus interest (the English Judgment). It is the English Judgment upon which Lloyds now seeks recovery in this Court.
Standard of Review
Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c). See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In deciding a motion for summary judgment, all facts must be viewed and all reasonable inferences must be drawn in favor of the non-moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
The Recognition Act
Lloyds seeks to recover the amount of the English Judgment against Mr. Hamilton, £ 164,414.63 plus interest, pursuant to the Recognition Act. The Recognition Act permits enforcement of a final and conclusive foreign judgment unless a statutorily provided exception to recognition of the judgment exists. Mass. Gen. Laws. ch. 235, § 23A. As this District previously decided, federal courts sitting in diversity should use state law to measure the preclusive effect of a foreign countrys judgment, and thus Lloyds is correct in seeking enforcement pursuant to Massachusetts law. McCord v. Jet Spray Intl Corp., 874 F.Supp. 436, 438 (D.Mass.1994).
Hamiltons Affirmative Defenses
Hamilton asserts the following eleven affirmative defenses:
1. General denial of the allegations in the Amended Complaint;
2. Unclean hands;
3. Fraud, in that Lloyds perpetrated a scheme to pass its asbestos and pollution-related claims exposure to investors by inducing them, without full disclosure of financial liabilities, to become members of Lloyds;
4. The English Judgment is unenforceable because it was rendered under a system that did not provide procedures compatible with due process of law;
5. Lloyds defrauded the British Parliament in order to obtain certain legislative immunity from claims brought by Names;
6. The English Judgement obtained against Mr. Hamilton violated various federal and state laws of the United States;
7. Lloyds claim is barred because Mr. Hamilton did not have sufficient notice of the proceeding during which the English Judgements were procured;
[*3] 8. The English Judgment against Mr. Hamilton is barred due to lack of reciprocity;
9. Lack of good faith and fair dealing;
10. Lloyds claims against Mr. Hamilton are barred due to payments of amounts owed; and
11. Lloyds claims should be stayed pending appeal in the case of Everard, et al. v. The Society of Lloyds, Citation No.  EWHC 1890 (Ch).
As further detailed below, none of these defenses has merit.
Initially, Mr. Hamiltons second, sixth, eighth, ninth, tenth, and eleventh affirmative defenses are not permitted under the Recognition Act. As this District has recognized, the Recognition Act specifically limits the defenses that may be raised in an action to enforce a foreign judgment. McCord, 874 F.Supp. at 440. None of these affirmative defenses are enumerated in the Recognition Act. Further, as this Court stated in an earlier finding in the instant litigation, any concerns regarding the validity of the bylaws and other facts leading to the plaintiffs English claim should have been litigated in English courts pursuant to the General Undertaking. Findings and Recommendation On The Motion to Strike The Affirmative Defenses And To Dismiss The Counterclaims Of The Defendant Yumiko Honda (adopted in full by District Judge Lindsay). Finally, and of note, Mr. Hamiltons eleventh defense is also without merit for the simple fact that Mr. Hamilton is not a party to that proceeding.
Mr. Hamiltons third and fifth affirmative defenses fail because the fraud alleged in these affirmative defenses does not meet the requirements of fraud as contemplated by the Recognition Act. While the Recognition Act provides a defense if the foreign judgment is obtain by fraud, see Mass. Gen. Laws ch. 235, § 23A, the fraud must relate to matters other than issues that could have been litigated and must be fraud on the court. Mullin, 255 F.Supp.2d at 473 (citations omitted) (emphasis in original). Mr. Hamiltons allegations of fraud specifically stem from his contention that he was fraudulently induced to become a Name. See, e.g., Statement of John M. Hamilton Relative to Lloyds Request for Summary Judgment at p. 4 (I was accepted in 1984 at a time when there was full knowledge within Lloyds of the solvency problem. If this is not FRAUD I would like to know what is!) (emphasis in original). Not only should these defenses of fraud have been raised in England, they were. See Declaration of Nicholas P. Demery at ¶ 21; Jaffray & Ors v. Society of Lloyds, 2002 WL 1654876 (C.A. 26 July 2002). The Mullin court rejected exactly the same fraud defense. 225 F.Supp.2d at 473.
Mr. Hamiltons fourth affirmative defense has been ruled upon by numerous courts in this country. Not one has found that the proceedings undertaken by the English Courts during these Lloyds litigations have not comported with due process. See, e.g., Society of Lloyds v. Ashenden, 233 F.3d 473, 476 (7th Cir.2000) (Any suggestion that [the English] legal system of courts does not provide impartial tribunals or procedures compatible with the requirements of due process of law borders on the risible.); Society of Lloyds v. Webb, 156 F.Supp.2d 632, 642 (N.D.Tex.2001 (rejecting argument by Name in Lloyds collection action that English legal system is not fair and impartial; These numerous [English] proceedings cannot be said to be lacking in due process. The Names had ample opportunities for hearings and appeals and lawsuit ); Society of Lloyds v. Grace, 278 A.D.2d 169, 718 N.Y.S.2d 327, 328 (N.Y.App.Div.2000) (rejecting argument by Name in Lloyds collection action that English legal system is not fair and impartial; defendants were afforded notice and an opportunity to be heard in the underlying English action and, accordingly the basic requisites of due process were met.); Society of Lloyds v. Mullin, 255 F.Supp.2d at 473 (same); Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d at 958 (We have been shown nothing to suggest that an English court would not be fair, and in fact, other courts have long recognized that the courts of England are fair and neutral forums.).
[*4] Finally, Mr. Hamiltons seventh affirmative defense that he did not receive notice of the legal proceedings which culminated in the English Judgment is unfounded. Mr. Hamilton himself admits in his Answer to the Amended Complaint that he retained an English solicitor to represent him in the English action, thus acknowledging his notice of the English proceedings. See Answer to Amended Complaint at ¶ 21. Mr. Hamilton has submitted absolutely no evidence to contradict his own assertion.
As previously held by District Judge Lindsay,
The Names agree to comply with the provisions of the Lloyds Acts, as well as any bylaws, provisions, or regulations adopted pursuant to the legislative authority conferred by the Lloyds Acts. The Names further agree that any rights or obligations arising out of their membership shall be governed by and construed in accordance with the laws of England. General Undertaking § 2.1. Finally, the General Undertaking requires Names to submit to the jurisdiction of the courts of England for the resolution of any dispute relating to their participation in the Lloyds market.
The Society of Lloyds v. Paul Anthony Campbell-White, et al., No. 03-10950-RCL, slip op. at 3 (D. Mass. Aug 23, 2004) [PDF].
For the reasons articulated above, this Court FINDS that there are no genuine issues of material fact and, therefore, RECOMMENDS that the District Court ALLOW plaintiffs motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure.
FN1. Lloyds claims against the other defendants in this action have been resolved.
FN3. It should be noted that Mr. Hamilton, at one time represented by counsel during this litigation, has been acting pro se since August 19, 2004. While this Court takes appropriate count of Mr. Hamiltons pro se status, it is not insignificant that Mr. Hamilton failed to appear for the hearing on Lloyds initial motion for summary judgment, held July 28, 2005, as well as the hearing on the re-filed motion for summary judgment, held March 15, 2007. It should further be noted that it was Mr. Hamilton who requested the original hearing date on the re-filed motion, February 7, 2007, be rescheduled, eventually to March 15, 2007, due to a purported family emergency.
FN4. See, e.g., The Society of Lloyds v. Turner, 303 F.3d 325, 326-27 (5th Cir.2002); Lipcon v. Underwriters at Lloyds, London, 148 F.3d 1295. 1287-88 (11th Cir.1998); Richards v. Lloyds of London, 135 F.3d 1289, 1291-92 (9th Cir.1998); Allen v. Lloyds of London, 94 F.3d 923, 927-28 (4th Cir.1996).