Society of Lloyd's v. Mullin

Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
5-5-2004
Society of Lloyds v. Mullin
Precedential or Non-Precedential: Non-Precedential
Docket No. 03-2197
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Recommended Citation
"Society of Lloyds v. Mullin" (2004). 2004 Decisions. Paper 725.
http://digitalcommons.law.villanova.edu/thirdcircuit_2004/725
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NOT PRECEDENTIAL
IN THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 03-2197
THE SOCIETY OF LLOYD'S
v.
J. EDMUND MULLIN,
Appellant
_________________________________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
District Judge: The Honorable Cynthia M. Rufe
(D.C. No. 02-cv-01193)
_________________________________
Submitted under Third Circuit LAR 34.1
on March 25, 2004
Before: FUENTES, SMITH, and
JOHN R. GIBSON,* Circuit Judges
(Filed: May 5, 2004 )
______________________
OPINION OF THE COURT
_______________________
JOHN R. GIBSON, Circuit Judge.
*
The Honorable John R. Gibson, Senior Circuit Judge for the United States Court
of Appeals for the Eighth Circuit, sitting by designation.
J. Edmund Mullin appeals the district court's grant of summary judgment in favor
of Society of Lloyd's in an action brought by Lloyd's to enforce a final money judgment
against Mullin entered by the High Court of Justice, Queen's Bench Division, in London,
England. We affirm.
Lloyd's is not an insurer, but rather the regulator of an insurance market located in
London. The United Kingdom Parliament created Lloyd's through a succession of
Parliamentary Acts and charged it with the duty and authority to regulate those who
conduct insurance business in the Lloyd's market.
The only insurers in the Lloyd's market are underwriters known as "Names."
Names are grouped together to form "syndicates," which provide the actual insurance in
the market. Syndicates are controlled by a managing agent who is responsible for
attracting capital to insure the underwritten risks and supervising all underwriting
activities. Names are merely passive investors in the scheme, but incur personal and
direct liability with respect to a portion of a syndicate's risk in the Lloyd's market.
Mullin became a Name in the Lloyd's market on January 1, 1987. Like all other
Names, he was permitted to conduct insurance business in Lloyd's market only after
agreeing to Lloyd's regulatory jurisdiction. In particular, Mullin entered a General
Undertaking that obligated him to comply with the Parliamentary Acts under which
Lloyd's was created and to submit any dispute arising out of his membership or
underwriting at Lloyd's for resolution by English courts pursuant to English law.
Underwriting in the Lloyd's market has traditionally been a profitable venture, but
Names began to incur substantial losses in the late 1980s and early 1990s. Many Names
became unable or refused to satisfy their obligations to policyholders, and a significant
amount of litigation arose in the market. These developments threatened the viability of
the entire market.
Lloyd's addressed these problems by implementing the Reconstruction and
Renewal Plan in 1996. This plan had two parts: 1) it required each Name to purchase
reinsurance for underwriting obligations on 1992 and prior underwriting years of account
from a newly formed company, Equitas Reinsurance Ltd.; and 2) it made an offer of
settlement to each Name with liabilities on 1992 and prior underwriting years of account
to end litigation and assist Names in meeting their obligations. The Names were not
required to accept the settlement offer, but were required to pay their Equitas premium
and other outstanding underwriting obligations.
Two provisions of the mandatory Equitas agreement are particularly relevant here.
First, in what the parties refer to as a "pay now, sue later" provision, the agreement
precluded Names from bringing actions they might have had against Lloyd's as a set-off
or counterclaim to a suit brought by Lloyd's to enforce the Equitas premium. Second, the
agreement contained a "conclusive evidence" clause, which provided that Lloyd's
calculation of the Equitas premium was conclusive in the absence of manifest error.
Lloyd's calculated the Equitas premium owed by Mullin to be $571,891.30.
Mullin refused to pay. Lloyd's brought suit in the High Court of Justice, Queen's Bench
Division against Mullin and other Names for payment of the unpaid Equitas Premium
plus unpaid interest and costs. The English Court entered judgment in Lloyd's favor on
March 11, 1998.
Lloyd's then brought suit against Mullin in the United States District Court for the
Eastern District of Pennsylvania seeking recognition and enforcement of the English
judgment. On M arch 27, 2003, the district court granted Lloyd's motion for summary
judgment and issued a Memorandum recognizing the English judgment in the amount of
$571,891.30 plus interest in the amount of 8% from the date of judgment in accordance
with the Pennsylvania Uniform Foreign Monetary Judgment Recognition Act, 42 Pa.
Cons. Stat. §§ 22001-22009.
Our review of the grant of summary judgment is plenary, and we must view the
underlying facts in the light most favorable to the non-moving party. Ideal Dairy Farms,
Inc. v. John Labatt Ltd., 90 F.3d 737, 743 (3d Cir. 1996). Summary judgment is
appropriate only if we conclude 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).
Mullin first argues that the English judgment should not be recognized or enforced
because it is repugnant to Pennsylvania public policy. See 42 Pa. Cons. Stat. § 22004(3)
(foreign judgment need not be recognized if “the cause of action or claim for relief on
which the judgment is based is repugnant to the public policy of this Commonwealth”).
This argument essentially rests on Mullin’s allegation that Lloyd's made material
misrepresentations in its inducement of Mullin to become a Name in the Lloyd's market
by failing to disclose information about potential asbestos and toxic tort liability. Mullin
contends that Lloyd's material misrepresentations would allow him under Pennsylvania
law to rescind his membership in Lloyd's, and therefore compel a Pennsylvania court to
refuse to recognize the foreign judgment arising out of that membership.
Even if we assume the debatable premises of this argument to be true–namely, that
Lloyd's made material misrepresentations and that those misrepresentations would allow
rescission under Pennsylvania law–we conclude that summary judgment in favor of
Lloyd's is appropriate. The district court recognized that the relevant question is not
whether Lloyd's would obtain the same result in a court in Pennsylvania as it did in
England, but rather whether the "cause of action or claim for relief on which the
judgment is based is repugnant to the public policy of this Commonwealth." 42 Pa. Cons.
Stat. § 22004(3) (emphasis added). Because a cause of action for breach of contract is
certainly not repugnant to Pennsylvania public policy, we reject Mullin's argument for
non-recognition of the English judgment. See Society of Lloyd’s v. Turner, 303 F.3d
325, 331-33 (5th Cir. 2002) (affirming district court's grant of summary judgment
recognizing English judgment against Names despite Names’ argument that recognition
would contravene public policy).
Like his public policy argument, Mullin's due process argument ignores the
language of Pennsylvania's Recognition Act. He contends that the English court's
enforcement of the "pay now, sue later" and "conclusive evidence" clauses in the Equitas
contract amounts to a denial of due process because the clauses prevented Mullin from
raising certain defenses and otherwise deprived him of his right to be heard. However,
"due process" in 42 Pa Cons. Stat. § 22005 refers to the workings of the foreign judicial
system as a whole and not to the process accorded in the context of particular judgments.
The statute states: "A foreign judgment is not conclusive if: (1) the judgment was
rendered under a system which does not provide impartial tribunals or procedures
compatible with the requirements of due process of law. . . ." 42 Pa Cons. Stat. § 22005
(emphasis added); see also Society of Lloyd's v. Ashenden, 233 F.3d 473, 475-78 (7th
Cir. 2000) (emphasizing that under the Illinois Uniform Foreign Money-Judgment Act,
which uses same language as the Pennsylvania Recognition Act, the due process inquiry
must be conducted across the system as a whole and not in the context of specific
judgments). Thus, Mullin will succeed under this provision only by establishing that the
English legal system as a whole fails to provide due process rights. Clearly, he cannot
meet this burden. See id. at 477 ("It is true that no evidence was presented in the district
court on whether England has a civilized legal system, but that is because the question is
not open to doubt.").
We conclude that there is no genuine issue of material fact and therefore AFFIRM
the district court's grant of Lloyd's motion for summary judgment.