Ashenden et al, Brief of March 22, 2000
Nos. 99-3195, 99-4064, 00-1066 and 00-1371
IN THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT
______________________________________________________________________________
The Society of Lloyd's, ) Appeal from the United States District Court
) for the Northern District of Illinois
Plaintiff - Appellee
)
) No. 98 C 5335
v.
)
) Hon. Harry D. Leinenweber
James F. Ashenden et al. (No. 99-3195) ) United States District Judge
) Judge Presiding
Defendants - Appellants
______________________________________________________________________________
The Society of Lloyd's, )
) Appeals from the United States District Court
Plaintiff - Appellee
) for the Northern District of Illinois
)
v.
) No. 99 C 2651
)
Eugene G. Callahan et al. (No. 99-4064) ) Hon. Harry D. Leinenweber
Henry D. Paschen, Jr. (No. 00-1066) ) United States District Judge
Patrick Collins (No. 00-1371) ) Judge Presiding
)
Defendants - Appellants
)

_____________________________________________________________________________

__________

BRIEF OF APPELLANTS AND JOINT APPENDIX
in Nos. 99-4064, 00-1066 and 00-1371

__________

Counsel for Appellants:
Theodore W. Grippo, Jr.
Robert Bennett Pembroke & Brown
357 East Chicago Avenue 422 North Northwest Highway, Suite 150
Chicago, Illinois 60611 Park Ridge, Illinois 60068
(312) 503-8430 (847) 696-0060
March 22, 2000

 

(2) Table of Contents

I. Brief of Appellants

Page
Disclosure Statements
preceding
Table of Authorities
ii
Jurisdictional Statement
1
Issues Presented for Review
6
Statement of the Case
7
Statement of Facts
8
Summary of Argument
10
Argument
11
Conclusion
20
Certificates of Compliance and Service

II. Joint Appendix

Tab No.
1. Transcript of oral ruling, October 29, 1999
2. Minute order of October 29, 1999
3. Judgment of November 16, 1999 (Applies to case no. 99-4064, appellants Callahan, Calvello, Danloe, J., Danloe, P., Flesvig, Hart, Rinella, Schornack, B., Schornack J., and Sills.)
4. Judgment of December 9, 1999 (Applies to case no. 00-1066, appellant Paschen)
5. Judgment of February 8, 2000 (Applies to case no. 00-1371, appellant Collins)

(3) Table of Authorities

The appellants herein adopt the Table of Authorities of the appellants in Society of Lloyd's v. Ashenden, No. 99-3195, now pending in this court and with which these appeals have been consolidated, and add the following:

Cases
Page
Carter v. Stanton, 405 U.S. 669, 92 S. Ct. 1232, 31 L. Ed. 2d 569 (1972), on remand, 350 F. Supp. 1337 (S. D. Ind.), vacated on other grounds, 416 U.S. 918, 94 S. Ct. 1916, 40 L. Ed. 2d 277
18
Forseth v. Village of Sussex, 199 F.3d 363 (7th Cir. 2000)
11
Northern Indiana Gun & Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449 (7th Cir. 1993)
14, 19
Thomason v. Nachtreib, 888 F.2d 1202 (7th Cir. 1989)
11, 16

Rules
Fed. R. Civ. Pro. 12(c)
11
"After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings. If on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56."
Fed. R. Ev. 201(a) and (b)
15
"(a) Scope of rule. This rule governs only judicial notice of adjudicative facts.
(b) Kinds of facts. A judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned."

(4) Jurisdictional Statement
Case no. 99-4064 (Callahan, Calvello, Danloe P., Danloe J., Flesvig, Hart, Rinella Schornack, B., Schornack, J., Sills)

(A). Jurisdiction in the United States District Court. The United States District Court had jurisdiction pursuant to 28 U.S.C. 1332(a)(2) in that the plaintiff, The Society of Lloyd's, is a citizen of a foreign state, being a corporation incorporated under the laws of England and having its principal place of business in London, England; and each of the defendants who are appealing herein is a citizen of Illinois. The amounts in controversy between the plaintiff and each of the defendants who are appealing herein (exclusive of interest and costs) exceed $75,000.00 and are as follows (in U.K. and approximate equivalents in U.S.$):

Name of Appellant
Amount in Controversy
Approximate US$ Equivalent
(1) Eugene Gerrard Callahan
344,799.17
$551,678.00
(2) John Thomas Calvello
342,598.78
$548,157.00
(3) John Charles Danloe
541,159.69
$865,854.00
(4) Patricia Ann Danloe
181,742.83
$290,788.00
(5) Robert Douglas Flesvig
182,816.49
$292,506.00
(6) Harry James Hart
417,356.50
$667,769.00
(7) Richard Anthony Rinella
88,817.44
$142,107.00
(8) Barbara Lelli Schornack
157,034.62
$251,254.00
(9) John James Schornack
168,996.25
$270,394.00
(10) Stephen Hartwell Sills
133,510.63
$213,616.00

(The district court lacked jurisdiction as to one of the defendants in the case below because the amount in controversy between the plaintiff and that defendant was less than the minimum jurisdictional amount under 28 U.S.C. 1332(a), and no other basis for federal jurisdiction existed or was pleaded. That defendant was, however, voluntarily dismissed by the plaintiff on October 29, 1999.)

(B). Jurisdiction in the Court of Appeals. This court has jurisdiction pursuant to 28 U.S.C. 1291 in that this is an appeal from a final decision of the United States District Court for the Northern District of Illinois disposing of all of the claims between the plaintiff, the Society of Lloyd's, and each of the defendants who are appealing herein; and the district court entered a judgment pursuant to Fed. R. Civ. P 54(b) finding that there is no just reason for delay. On October 29, 1999, the district court granted plaintiff Society of Lloyd's motion for judgment on the pleadings as to each of the persons bringing this appeal, and others. On November 16, 1999 the district court entered final judgment against each of the persons bringing this appeal, and others, and made the findings pursuant to Rule 54(b) as stated above. There were seven other defendants in the original action. The judgment of November 16, 1999, however, disposed of all of the claims between the plaintiff and the persons bringing this appeal. On November 16, 1999, following the entry of the judgment, the persons bringing this appeal filed their notice of appeal.

On December 15, 1999 this court issued an order indicating that a preliminary review of the short record indicated that the order appealed from might not be a final appealable judgment within the meaning of 28 U.S.C. 1291, and requiring both appellants and appellee to file a memorandum stating why the appeal should not be dismissed for want of jurisdiction. On January 3, 2000 the appellants and appellees filed a Joint Jurisdictional Memorandum.

On consideration of that Joint Jurisdictional Memorandum this court, on January 21, 2000, ordered that the appeal proceed, and consolidated it with Society of Lloyd's v. Ashenden, No. 99-3195, which had been filed previously and Society of Lloyd's v. Paschen, No. 00-1066, which had been filed subsequently.

(C). Filing dates. On October 29, 1999, the district court entered an order granting Lloyd's motion for judgment on the pleadings against the appellants herein. On November 16, 1999, the district court entered judgment against the appellants herein, and made findings pursuant to Rule 54(b) of the Federal Rules of Civil Procedure that there were no just reasons for delay of appeal. On November 16, 1999 appellants filed their Notice of Appeal.

(D). Remaining Claims. This appeal was from a judgment that disposed of all of these parties' claims. Following the entry of judgment, the appellee, the Society of Lloyd's, filed a motion for a declaration that certain Citations to Discover Assets which it had filed on April 23, 1999 and claimed to have served on certain of the appellants herein, were valid and effective. This motion was within the district court's remaining jurisdiction because it was in aid of execution. The district court took that motion as a response to a motion these appellants had filed on May 3, 1999 asking that the Citations be stricken, a motion which the court had entered and continued, but had not ruled upon at the time the judgment was rendered in the action for recognition of the judgment. Following further briefing by the parties, the court on January 14, 2000 denied the motion to strike the Citations. An appeal from that order was filed on February 11, 2000. It bears number 00-1430 in this court.

Case no. 00-1066
(Paschen)

(A). Jurisdiction in the United States District Court. The United States District Court had jurisdiction pursuant to 28 U.S.C. 1332(a)(2) in that the plaintiff, The Society of Lloyd's is a citizen of a foreign state, being a corporation incorporated under the laws of England and having its principal place of business in London, England; and the defendant who is appealing herein is a citizen of a State. The amount in controversy between the plaintiff and the defendant who is appealing herein (exclusive of interest and costs) exceeds $75,000.00 and is (in U.K.) 562,993.28 (and approximate equivalent in U.S.$) $900,789.00.

(B). Jurisdiction in the Court of Appeals. This court has jurisdiction pursuant to 28 U.S.C. 1291 in that this is an appeal from a final decision of the United States District Court for the Northern District of Illinois disposing of all of the claims between the plaintiff, the Society of Lloyd's, and Henry D. Paschen, Jr., and the district court entered a judgment pursuant to Fed. R. Civ. P 54(b) finding that there is no just reason for delay. On October 29, 1999, the district court granted plaintiff Society of Lloyd's motion for judgment on the pleadings as to certain other defendants in the case below. On December 9, 1999 the district court entered final judgment against this defendant for the reasons stated in the October 29, 1999 ruling, and made the findings pursuant to Rule 54(b) as stated above.

(C). Filing dates. On December 9, 1999, the district court entered an order granting Lloyd's motion for judgment on the pleadings against the appellant herein, and entered judgment, making findings pursuant to Rule 54(b) of the Federal Rules of Civil Procedure that there were no just reasons for delay of appeal. On January 7, 2000 appellant filed his Notice of Appeal.

(D). Remaining Claims. Lloyd's post-judgment motion with respect to the Citations to Discover Assets, discussed above in part (D) of the Jurisdictional Statement in case no. 99-4064, was also directed at this appellant, and he is one of the appellants from the district court's ruling on that motion.

Case no. 00-1371
(Collins)

(A). Jurisdiction in the United States District Court. The United States District Court had jurisdiction pursuant to 28 U.S.C. 1332(a)(2) in that the plaintiff, The Society of Lloyd's, is a citizen of a foreign state, being a corporation incorporated under the laws of England and having its principal place of business in London, England; and the defendant-appellant is a citizen of the State of Illinois. The amount in controversy between the plaintiff and this defendant (exclusive of interest and costs) exceeds $75,000.00 and is (in U.K.) 271,856.76 (and approximate equivalent in U.S.$) $433,000.

(B). Jurisdiction in the Court of Appeals. This court has jurisdiction pursuant to 28 U.S.C. 1291 in that this is an appeal from a final decision of the United States District Court for the Northern District of Illinois disposing of one of the claims between the plaintiff and this defendant, and the district court entered a judgment pursuant to Fed. R. Civ. P 54(b) finding that there is no just reason for delay. On October 29, 1999, the district court granted plaintiff Society of Lloyd's motion for judgment on the pleadings as to certain other defendants in the case below. On February 8, 2000 the district court entered judgment against this defendant, for the reasons given in its October 29, 1999 decision, and made the findings pursuant to Rule 54(b) as stated above.

(C). Filing dates. On February 8, 2000 the district court entered an order granting Lloyd's motion for judgment on the pleadings against the appellant herein, and entered judgment, making findings pursuant to Rule 54(b) of the Federal Rules of Civil Procedure that there were no just reasons for delay of appeal. On February 9, 2000 appellant filed his Notice of Appeal.

(D). Remaining Claims. Patrick Collins was the only defendant to file a Counterclaim against Lloyd's. See, R. (99-4064) 32 ("Answer, Affirmative Defenses and Counterclaim of Patrick Collins.") On February 16, 2000, the district court entered an order dismissing the counterclaim. On March 16, 2000 Collins filed a Notice of Appeal from that order. That appeal has been assigned no. 00-1702.

(5) Issues Presented For Review

The appellants herein adopt the Issues Presented For Review of the appellants in Society of Lloyd's v. Ashenden, No. 99-3195, now pending in this court and with which these appeals have been consolidated, and add the following:

(D) Lloyd's filed a motion for judgment on the pleadings which relied on matters not only outside the pleadings but outside the record of this case, relying on the entire record of the Ashenden case. The additional issue raised by this appeal is whether the district court erred in not converting the motion for judgment on the pleadings to a motion for summary judgment as required by Rule 12(c), and thus depriving these appellants of the opportunity to make a record in this case.

(6) Statement of the Case

The appellants herein adopt the Statement of the Case of the appellants in Society of Lloyd's v. Ashenden, No. 99-3195, now pending in this court and with which these appeals have been consolidated, and add the following:

On the day the district court released its Memorandum Opinion and Order in the Ashenden case Lloyd's filed an action against seventeen additional defendants, including all of the appellants herein, seeking enforcement of judgments against them which had been rendered by the same court in England as rendered the judgments against the Ashendens, and on the same legal grounds. R. (99-4064) 1-1*(ftnote 1). The case was originally assigned to Judge Nordberg by the random assignment system, but was reassigned to Judge Leinenweber as a related case to the Ashenden case.

Following the filing of Answers and Affirmative Defenses by these appellants, R. (99-4064) 24 - 37, 67, Lloyd's moved for judgment on the pleadings against them. R. (99-4064) 47. The Memorandum filed in support of the motion stated that Lloyd's was relying on the entire record of the Ashenden case. R. (99-4064) 47.

The defendants objected to Lloyd's motion on the basis that the pleadings in this case were insufficient grounds on which to render judgment and Lloyd's had relied on materials outside the pleadings. They asked that the motion be converted to one for summary judgment and that Lloyd's be required to file the evidence it wished to rely on, and that they be allowed to take of limited discovery and file responses. R. (99-4064) 56. The objection was overruled and judgment on the pleadings was granted. R. (99-4064) 60*(ftnote 2). These appeals followed.

(7) Statement of Facts

The appellants herein adopt the Statement of Facts of the appellants in Society of Lloyd's v. Ashenden, No. 99-3195, now pending in this court and with which these appeals have been consolidated, and add the following:

These appellants were deprived of the opportunity to make the factual record they wished to make. The appellants' insistence on their right to make a factual record of their own in this case is not for purpose of delay, or to assert an abstract right that has no practical consequences. It is because they believe that had they been allowed to make a record, they would have won the case. The importance of their right to make a record derives directly from the way in which the district court decided the Ashenden case. In Ashenden, Lloyd's had insisted that the Names had had all the process that was due them in England. The district court disagreed, finding that the hearings in England were not meaningful, and turned to Mathews v. Eldridge for the test to determine whether this set of circumstances constituted a deprivation of due process.

The defendants in this case maintained that certain facts assumed to be true by the district court when it performed that weighing test were actually false, and asked to take discovery and present evidence concerning them*(ftnote 3). The negation of any or all of these factual assumptions would likely have caused the district court to come to a different conclusion. The facts that the district court assumed and which the defendants offered to disprove, were:

  • that the "pay now, sue later" and the "conclusive evidence clauses contributed to the success of Lloyd's Reconstruction and Renewal Plan ("R & R");
  • that a further opportunity existed for the Names to discover the basis of, and challenge the amount of, the Equitas Premium Amount claimed of them by Lloyd's*(ftnote 4).

Both of these facts go into the mix of factors weighed under Mathews v. Eldridge, the first going to "exigent circumstances" and the second to "adequate remedy." Naturally, in facing an action seeking recognition of the same kinds of judgments which were recognized in Ashenden, these appellants focussed their attention on the weakest links in the district court's chain of reasoning, as the appellants in Ashenden do in their appellate brief. That is the nature of litigation, and that is the risk Lloyd's took by dividing its case into two separate actions. The district court's refusal to convert the motion to a motion for summary judgment deprived these appellants of the opportunity to make the record they believe would have convinced the district court that its assumptions were wrong.

In addition, while all of these appellants were Names at Lloyd's during the relevant period, and while judgment in England against all of these appellants was predicated upon the same General Undertaking and same Equitas Reinsurance Contract which formed the basis of the judgments against the Ashendens, the individual circumstances of their recruitment into Lloyd's, their syndicate participations, and their loss experience differed. Their individual circumstances might have caused the district court to weigh the case in the Mathews v. Eldridge balance differently as to one or more of them. This opportunity was also denied them.

(8) Summary of Argument

The appellants herein adopt the Summary of Argument of the appellants in Society of Lloyd's v. Ashenden, No. 99-3195, now pending in this court and with which these appeals have been consolidated, and add the following:

In its motion for judgment on the pleadings Lloyd's cited and relied upon numerous facts which were not only not contained within the pleadings of this case, but were not even in the record of this case. Apart from the bare allegations in the pleadings that it had judgments in certain amounts against these appellants, Lloyd's relied entirely on the record of the Ashenden case, which had already gone to judgment. Because of this, the court should have converted the motion to one for summary judgment. By not doing so, the court deprived these appellants of the ability to make the record they wished to make and bound them to the record of a case in which they were not parties. The consolidation of these appeals with the Ashenden appeal does not cure this error because these defendants would have enlarged upon the record made in the Ashenden case, based on what they had learned about the district court's erroneous factual assumptions, from its judgment and its denial of the Ashendens' motion to alter or amend judgment.

(9) Argument

The appellants herein adopt the Argument of the appellants in Society of Lloyd's v. Ashenden, No. 99-3195, now pending in this court and with which these appeals have been consolidated, and add the following:

Standard of Review This court reviews a district court's decision to grant judgment on the pleadings de novo. Forseth v. Village of Sussex, 199 F.3d 363, 368 (7th Cir. 2000). Such a judgment should be upheld only "if it appears beyond doubt that the [non-movant] cannot prove any facts that would support his claim for relief." Thomason v. Nachtreib, 888 F.2d 1202, 1204 (7th Cir. 1989).

Introduction

Rule 12(c) of the Federal Rules of Civil Procedure requires that motions for judgment on the pleadings which present to the court matters outside the pleadings be converted to motions for summary judgment, stating:

If, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such motion by Rule 56.

As is shown in greater detail below, Lloyd's presented to the court, and the court accepted, matters not only outside the pleadings, but matters from the record of the case of Society of Lloyd's v. Ashenden, which were outside the record of this case. The district court nevertheless declined to convert the motion to one for summary judgment because it found that (1) "defendants do not identify any relevant factual differences between this case and Ashenden," and (2) "the defendants have not identified any specific factual issues which could be the subject of discovery." App. 1 (Trans. of Oct. 29, 1999) at 5 - 6.

The record shows the opposite to be the case. The defendants identified with specificity the key factual issues as to which they proposed to take discovery, as is explained in detail below.

The defendants had another reason why judgment on the pleadings should not be granted, which the district court never addressed: the fact that judgment on the pleadings would leave them without a record on which to appeal, given that the Ashenden case was a separate case which had already gone to judgment before this case was filed.

A. Because Lloyd's, in its motion for judgment on the pleadings, presented matters outside the pleadings and outside the record, the district court should have converted the motion to one for summary judgment and allowed the defendants to make a record of their own.

Lloyd's, taking advantage of the Federal Rules' liberal "notice pleading" standards, as it had every right to do, filed what amounted to seventeen separate complaints in one case, seeking recognition and enforcement of seventeen judgments entered in England against seventeen defendants*(ftnote 5). The complaints, virtually identical as to all defendants except as to name and amount, allege only the bare facts of jurisdiction and venue, the enforceability of the General Undertaking, notice and service of the English lawsuit, defendants' appearance through an English solicitor, the holding of hearings, and entry of judgment against them. Attached as exhibits to the Complaint are, for each defendant, the following, and nothing more: the General Undertaking signed by the defendant, and the one-sentence judgment rendered against the defendant by the court in England. R. (99-4064) 1-1 (Lloyd's "Filing of Foreign Money Judgments by Judgment Creditor"). All of the appellants filed Answers and Affirmative Defenses alleging that the judgments in England were rendered under procedures that denied them due process, and were violative of public policy. R. (99-4064) 24 through 37, and R. (00-1066) 67. There are no exhibits attached to the defendants' Answers and Affirmative Defenses. Id. On a motion for judgment on the pleadings, the two exhibits filed by Lloyd's were the only documents apart from the pleadings the court could consider. "The pleadings include the complaint, the answer, and any written instruments attached as exhibits." Fed. R. Civ. P. 10(c). Lloyd's implicitly admitted that the pleadings were not enough upon which to predicate judgment against the defendants. In its Memorandum in Support of Motion for Judgment on the Pleadings, Lloyd's stated that it relied on this court's decision in Ashenden, and "[a]ccordingly, Lloyd's incorporates all previous summary judgment briefs and exhibits submitted in the Ashenden case into this Motion for Judgment on the Pleadings." R. (99-4064) 47 (Lloyd's "Mem. in Supp. of Mot. for Judgmt. on the Pleadings" at 3.)

Among the matters presented or argued by Lloyd's in its Memorandum in Support of Motion for Judgment on the Pleadings which are contained neither in the pleadings nor even in the record of this case are (limiting this discussion only to the most important of them):

  • that the defendants were not barred from pursuing fraud claims against Lloyd's in an English case like Society of Lloyd's v. Jaffray (Id. at 4, 11);
  • that the courts in England provided the defendants with due process (Id. at 6-8);
  • the terms of the Equitas contract (Id. at 8-10);
  • that the English courts' enforcement of the "pay now, sue later clause" was a matter of "contract and statutory law" (Id. at 8);
  • quotations from English decisions against the defendants (Id. at 9-10).

The request by Lloyd's that the court consider other materials, even if those materials had been on file in this case, should have been refused in the first instance. As this court stated in Northern Indiana Gun & Outdoor Shows v. City of South Bend, 163 F.3d 449, 453 (7th Cir. 1993) "[t]he record contains many more documents, including additional motions, memoranda in support of motions, and excerpts from deposition testimony supporting those motions. This information, which is not part of the pleadings, is clearly outside the scope of Rule 12(c)." This would have led to the denial of the motion for judgment on the pleadings.

Since the proffered "extraneous" material was not refused, as an alternative, the court should have converted the motion to one for summary judgment and required Lloyd's to file in this case the evidence it sought to rely on. This would have led to the defendants' having a right to "present all material made pertinent to such motion by Rule 56," as Rule 12(c) puts it.

In Northern Indiana Gun this court also cited the mandatory rule that the consideration of such evidence requires conversion to a motion for summary judgment:

Although [movant] encourages us through its brief and during oral arguments to consider facts outside the pleadings, we will not do so. On a motion for judgment on the pleadings, if the court does not exclude matters outside the pleadings from its consideration, it should convert the Rule 12(c) motion into a Rule 56 motion for summary judgment. Northern Indiana Gun, 163 F.3d at 453.

Lloyd's admission that matters outside the pleadings were being relied upon, under the applicable rule and standards in the precedents, required that the motion be converted to one for summary judgment, if it were not to be denied outright.

Lloyd's was allowed to leap over another barrier to the court's considering this evidence in ruling on the motion for judgment on the pleadings -- the fact that the evidence was from another case. Lloyd's requested that the court take "judicial notice" of it. R. (99-4064) 47 (Lloyd's "Mem. in Supp. of Mot. for Judgmt. on the Pleadings" at 5.)

Clearly these are not matters of which a court can take judicial notice. Rule 201 of the Federal Rules of Evidence provides, in relevant part, that:

(a) Scope of rule. This rule governs only judicial notice of adjudicative facts.
(b) Kinds of facts. A judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.

Some of the matters of which Lloyd's asked this court to take judicial notice are not adjudicative facts at all, e.g., points of English law, which are governed instead by Rule 44.1 of the Federal Rules of Civil Procedure; the remainder fail to meet the test of part (b) of Rule 201 in that they are neither generally known within the Northern District of Illinois, nor capable of accurate and ready determination by resort to sources whose accuracy cannot be questioned. The district court addressed this problem by stating that "the defendants admit all of the key factual allegations in their answers" App. 1 (Transcript of Oct. 29, 1999) at 6, and referring to list of those "key factual allegations," which is nothing more that a selective recital of parts of the pleadings. Id. at 3.

Even without Lloyd's tacit admission that it needed evidentiary support outside the pleadings and outside the record of this case, it is obvious that the pleadings did not contain all the "key factual allegations" and that the district court could not render a judgment on the pleadings in this case without considering the extra materials Lloyd's asked it to consider. Indeed, some of these additional materials are recited in the introduction to the court's ruling. Id. at 3. Without such extra material the court could never hold, as it must in a pure 12(c) ruling, that "it appears beyond doubt that the [non-movant] cannot prove any facts that would support his claim for relief." Thomason, 888 F.2d at 1204.

A look at the holding in Ashenden shows clearly that in that case the court considered matters outside the pleadings in that case, and had to have done so in this case. Following are some of them (again limiting this discussion to the most important):

  • the history and structure of Lloyd's (Ashenden, 1999 WL 284775, (April 23, 1999) at 15);
  • the financial losses at Lloyd's in the late 1980's and early 1990's (Id. at 16);
  • the Lloyd's Reconstruction and Renewal Plan (Id.);
  • the test cases brought in England (Id. at 16-17);
  • the Ashendens' experience at Lloyd's (Id. at 17);
  • the terms of the Equitas Contract (Id. at 18);
  • the analysis of the Mathews v. Eldridge factors in light of the factual matrix of the case (Id. at 20-21).

In Ashenden the parties filed thousands of pages of exhibits, numerous affidavits prepared by English attorneys, and hundreds of pages of briefs explicating all of it. Just as there is no way the court could have decided Ashenden without reference to matters outside the pleadings, there is no way the court could have done so in this case.

Understanding that the defendants wished to take discovery and offer evidence on key points that underpin the Ashenden decision, district court stated "the proper forum for challenging this court's Ashenden decision is the Seventh Circuit rather than this action." App. 1 (Trans. of Oct. 29, 1999) at 5. That is true for the Ashendens, but these defendants were not parties to the Ashenden case, and for them, the proper forum was the district court.

B. Because constitutional rights were implicated, and because the defendants in this case showed clearly and specifically the kind of record they proposed to make, and how it would enlarge on the record of the Ashenden case, the district court should have allowed them the opportunity to make that record.

The district court's alternative basis for granting judgment on the pleadings was to describe the Ashenden case and this case as "virtually identical." App. 1 (Trans. of Oct. 29, 1999) at 5*(ftnote 6). But if they were, it was only because the court required them to be so by barring the defendants from making a record in this case.

Lloyd's had basically two options for the handling of the cases against the nineteen Names it wished to sue for recognition of the English judgments. It could have sued them all in one action, or it could have, as it did, file a "test case" first and if it won, file new cases thereafter. By choosing the "test case" method Lloyd's avoided putting all its eggs in one basket, but at the same time opened itself to the risk that in a subsequent case different evidence would be filed, with a possibly different result. This was Lloyd's choice entirely. Having chosen the "test case" method, Lloyd's should not have been permitted to bar the second group of defendants from having their chance to prove their case, and equally importantly, to create a record upon which to predicate an appeal if the judgment were to go against them and they wished to appeal. It is precisely for this reason that the requirement of Rule 12(c) exists. For good reason the rule is mandatory, not discretionary. Carter v. Stanton, 405 U.S. 669, 92 S. Ct. 1232, 31 L. Ed. 2d 569 (1972), on remand, 350 F. Supp. 1337 (S. D. Ind.), vacated on other grounds, 416 U.S. 918, 94 S. Ct. 1916, 40 L. Ed. 2d 277.


The defendants in this case made very specific requests of the district court. They asked the court to allow limited discovery and stated what that inquiry would cover. Because the point is so important this part of their request is quoted in full here:

***

Defendants are prepared to show, and offer to prove, the following. among other things:

  • That clause 5.5 ("pay now, sue later") of the Equitas Contract was unlikely to have contributed to the success of Reconstruction & Renewal because its terms were not disclosed to the Names in the Settlement Offer Document or any of the related documents sent to Names who were considering R & R; that in fact it was mis-described in the Settlement Offer Document as being "broadly equivalent to the 'pay now, sue later' provision in the current form of managing agent's agreement," (Ashenden Ex. 21, "Settlement Offer Document" App. 5, "Reinsurance Contract, p.4) which was in fact a much more benign form of "pay now, sue later" clause because it included the requirement of an independent auditor's review. (Ashenden Ex. 22, "Standard Form Members' Agent's Agreement (including Standard Form Managing Agent's Agreement, clause 7));
  • That clause 5.10 ("conclusive evidence") of the Equitas Contract was unlikely to have contributed to the success of Reconstruction & Renewal because neither its terms, nor any summary or reference to it is contained in the Settlement Offer Document or any of the related documents sent to the Names who were considering R & R (Ashenden Ex. 21, "Settlement Offer Document").
  • That there is no further procedure available to them in English courts to discover the basis of, or to challenge the amount of the calculation of, the Equitas Premium amount, notwithstanding the theoretical availability of a fraud action, pursuant to which that amount might, if they prevailed be awarded to them as part of their damages, because the Equitas Premium judgment is, as Lloyd's admits in its Complaint, "final, conclusive and fully enforceable in England." Complaint, ¶29.

***

R. (99-4064) 56 (Defs. "Mem. in Opp. to Lloyd's Mot. for Judgment on the Pleadings") at 8-9. These are the factual issues the defendants raised which the district court described as "[not] specific" and "vague." App. 1 (Trans. of Oct. 29, 1999) at 5. It is hard to imagine how much more specific they could have been.

This is a case in which the defendants claim they were deprived of the constitutional right of due process. Northern Indiana Gun was also a case in which constitutional rights were implicated, and in that case this court said "[b]ecause this case involved freedom of expression, we are even more hesitant than usual to decide the claims presented without providing the parties an opportunity to develop the record." Northern Indiana Gun, 163 F.3d at 452. This court should likewise decline to affirm a judgment on the pleadings where the non-moving parties were not afforded an opportunity to develop the record, and they claim a constitutional right has been violated.

The fact that this appeal is now consolidated with the Ashenden appeal does not cure the deprivation effected by the district court's having treated the cases as "identical." While these appellants can point to the Ashenden record for information about the history and structure of Lloyd's, and circumstances that led to the entry of judgments in England against them, there remain two gaps that are not filled by the record in Ashenden: First, there is the evidence described above which the defendants were not permitted to present to the court. Second, none of these defendants were afforded the opportunity to explain the circumstances of their recruitment into Lloyd's to the district court, facts which might have weighed differently in the court's Mathews v. Eldridge analysis if the court had known of them.

The district court was rightly concerned with judicial economy. It stated that it felt the defendants' argument "misses the point of reassignment, which is to avoid the duplication of effort associated with having to litigate the same case twice." App. 1 (Trans. of Oct. 29, 1999) at 6. But the risk of litigating the same case twice was created by Lloyd's in the first instance, which chose to sue two defendants, wait for judgment, then sue seventeen more.

The record shows that the defendants were not trying to "litigate the same case twice." All they asked of Lloyd's was that it file evidence in this case so there would be a record. R. (99-4064) 56 (Defs. "Opp. to Lloyd's Mot. for Judgmt. on the Pleadings") at 1. For their part, they made it clear that they wished to do something different, that is, to file additional evidence that the defendants had not filed in the Ashenden case, evidence which became relevant by virtue of the way the district court framed its decision in Ashenden. Id. at 7. That is not litigating the same case twice.

Nor was the court's characterization of it as "little more than an attempt to delay" a fair one. App. 1 (Trans. of Oct. 29, 1999) at 6. Ashenden went from filing to judgment in eight months; this case went from filing to judgment in six months. The two-month difference, even if it could be ascribed to the greater complexity of a summary judgment case, is hardly a material delay when such large sums of money are at stake (approximately $5.5 million for these 12 appellants) and a serious claim of violation of due process is made.

(10) Conclusion

For the foregoing reasons, the Appellants respectfully pray that the judgment of the district court be reversed, and that the case be remanded to the district court with instructions to enter summary judgment for the Appellants and against Lloyd's, or in the alternative, to hold a factual hearing, with the right to present witnesses and submit evidence, on the existence of exigent circumstances and adequate post-deprivation remedy.

Dated: March 22, 2000 Respectfully submitted,
  ____________________________
  One of Appellants' Attorneys
   
Counsel for Appellants  
  Theodore W. Grippo, Jr.
Robert Bennett Pembroke & Brown
357 East Chicago Avenue 422 N. Northwest Highway - Suite 150
Chicago, Illinois 60611 Park Ridge, Illinois 60068
(312) 503-8430 (847) 696-0060

Footnotes:

1. Because three separate Records were filed in connection with these appeals, references in this Brief to the Record will include the cas number stamped on the cover of the Record being referred to.

2. Judgment was not granted at that time against appellants Patrick Collins (because he had filed a petition in bankruptcy) or Henry Paschen (because the courts had granted his motion to dismiss for want of proper venue). Subsequently, however, Mr. Paschen withdrew his objection to venue and judgment was entered against him on december 9, 1999. On Lloyd's motion in the bankruptcy court, the automatic stay was modified as to Mr. Collins to allow the case against him to proceed to judgment and any appeals therefrom. Judgment was obtained against him on February 8, 2000. These two defendants appeals were then consolidated with the earlier appeals of the Ashendens and Callhan et al.

3. These appellants do not, of course, acknowledge that the Ashenden record supports the district court's assumptions. In the Ashenden brief, which they adopt, it is argued that the record in that case clearly shows that the district court's assumptions were wrong, and is, in fact, full of evidence that those assumptions could not be true. See, Ashenden, Brf. of Appellants at 23-24, 26-30.

4. For the district court's statement of its belief in the facts, see, Ashenden, Brf. of Appellants, App. 5 (Trans. of Aug. 18, 1999) at 4 (the clauses contirbuted to the success of R & R); and App. 3 (Mem. Op. of Apr. 22, 1999) at 17, 20 (existence further opportunity to discover the basis of and challenge the amount claimed). For the defendants' offer to disprove these facts, see, R. (99-4064) 56 (Defs.' "Mem. in Opp. to Lloyd's Mot. for Judgmt. on the Pleadings") at 8-9.

5. Only thirteen judgments were sought in the motion, defendant Berkos having filed a petition in bankruptcy, defendant Geist having never been served, and defendants Cahan and Paschen being the subjects of pending motions to dismiss at the time.

6. The district court went further, and attempted to put this description in the mouths of the defendants themselves, citing from their motion to have the case reassigned from the judge to whom it had been randomly assigned to the judge who had heard the Ashenden case. But the defendants never described the cases as "virtually identical". They were described as "related" and "involving substantially the same issues of fact and law," and "growing out of the same transaction or occurrence." App. 1 (trans. of Oct. 29, 1999) at 5.

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