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Contact: Jeffrey C. Peterson September 15, 1998


U.S. Court Gives Go-ahead for Fraud Case Against Lloyd's

Los Angeles, CA A recent California State trial court ruling brings Lloyd's one step closer to facing for the first time a trial in a U.S. court to defend securities fraud and common law fraud charges leveled by its investors, known as "Names."

On September 1, 1998 Judge Dzintra Janavs in Los Angeles Superior Court denied Lloyd's motion to dismiss West vs. Lloyd's (case no. BC111313) on grounds of forum non conveniens. Judge Janavs stated in her 5-page decision that: "It is undisputed that (absent the forum selection clause), Lloyd's has the burden of proof to establish that California is not a convenient forum. It has failed to do so."

Judge Janavs clarified why the case had to be kept in California courts and not sent to England when she reiterated the view of the California Appellate Court that: "Indeed, it appears that California law would not be applied in England, and appellants would be deprived of all their rights under that statutory scheme were this action to be tried there." Janavs amplified her point by stating that: "There certainly are more obstacles to plaintiff's obtaining a fair trial in England than here because of the limitations in pretrial discovery. Additionally, serious issues with respect to fairness are raised by the retroactive immunity policies that apparently may apply to Lloyd's."

In her ruling, Judge Janavs also rebutted Lloyd's argument that a previous Appellate Court ruling which upheld Names' right to retain California jurisdiction to address their allegations of securities fraud did not apply to Names' claims of common law fraud. On this issue, Janavs wrote: "Convenience and efficiency demand that if the overriding consideration is California's policy of protecting its investors and seeing its securities laws enforced, that all of the causes of action should be tried here and such factors as may favor England are outweighed by California's interest in protecting the plaintiffs."

Earlier this year, the California Supreme Court declined to review an Appellate Court ruling that denied Lloyd's contention that the West case should be dismissed and the plaintiffs sent to England for trial under English law. The California Court of Appeal, Second District, held that contractual provisions Lloyd's included in Names' underwriting agreements for 1987 and later years specifying English jurisdiction and law for addressing disputes were void. The Appellate Court's October 23, 1997 ruling stated: "Appellants contend that the forum selection clause violates California's fundamental public policy against waivers of the protections afforded by its securities laws, and that the clause it therefore void. We agree, and reverse the judgment."

David West and his two daughters, Deborah and Susan, are also plaintiffs in a case against Lloyd's U.S. attorneys, West vs. LeBoeuf (case no. BC146083). This case has also overcome all of Lloyd's pre-trial motions to dismiss, and is currently proceeding though discovery in Los Angeles Superior Court. Defendants LeBoeuf Lamb Greene & MacRae have been attorneys for Lloyd's insurance underwriters in the United States since 1969.

Two additional cases against LeBoeuf, Allf vs. LeBoeuf and Abeles vs. LeBoeuf, were filed in California State court and have now been consolidated with West vs. LeBoeuf. These combined cases have approximately 300 plaintiffs who were all Names allegedly defrauded by Lloyd's and LeBoeuf.

"270 members of our organization are plaintiffs on the Allf and Abeles cases that parallel West vs. LeBoeuf," said Jeffrey C. Peterson, Executive Director of the American Names Association. "Plaintiffs in the West, Allf, and Abeles cases allege that LeBoeuf aided and abetted Lloyd's in defrauding U.S. Names of hundreds of millions of dollars by, among other things, failing to disclose to its clients (Names in the Society of Lloyd's, among others) its knowledge in the early 1980's of huge asbestos and pollution clean-up claims that were already incurred but not reported on the accounts of many of Lloyd's syndicates," Peterson said.


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