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A Lloyds TSB bank sign is displayed outside a bank branch opposite the Lloyd's Building, the home of the insurance institution Lloyd's of London on Sept. 25, 2008, in London, England. (Matt Cardy/Getty Images)
Just a month ago, Richard A. Tropp, an investor who had been taken to the cleaners by Lloyd’s of London, filed a petition on his behalf and others that were in the same predicament for a writ of certiorari with the Supreme Court of the United States, after having been denied redress by lower U.S. courts and also having exhausted all legal venues in the United Kingdom.
In a petition for a writ of certiorari, an appellant asks a higher court to review the decision of a lower court if the lower court, for example, had not based its decision on all relevant facts or refused to take all facts under consideration. Should the higher court agree to accept the case, it permits the writ of certiorari to be heard.
Tropp contends in the petition that a decision was rendered under a foreign court system, in this case the United Kingdom, “which does not provide impartial tribunals or procedures compatible with the requirements of due process of law,” and that the decision should be rescinded because “the cause of action on which the judgment is based is repugnant to the public policy of this state.” On a side note, the petition is published on the Institutional Risk Analytics (IRA) website.
In summary, Richard Tropp’s appeal to the United States Court of Appeals for the Second Circuit, demanding redress for gross injustice, was dismissed on grounds that he failed to make a valid case almost a year ago on July 19, 2010.
“Finding no merit in Tropp’s remaining arguments, we hereby AFFIRM the district court’s judgment,” concluded the court in the last paragraph when rendering its decision.
Experts suggest that it would have been in Tropp’s best interest to file for bankruptcy, given that he did not have the wherewithal to pay Lloyd’s bill, which was also handed down by a U.K. court decision. But that is beside the point, as he continues to seek redress through legal venues.
This man, and the many others who lost the shirts off their backs, consider themselves a quarry who had been duped into becoming a member of the Lloyd’s of London group. Lloyd’s went into a frenetic membership drive in 1974, expecting significant losses from claims of exposure to asbestos in U.S. buildings. Needless to say, Lloyd’s didn’t tell the world about this pending disaster.
All available documentation indicates that Lloyd’s committed fraud knowingly by hauling in new members without advising of probable events that conceivably could be its death knell.
Trying to cover all bases, in 1986, Lloyd’s required all members to sign on the dotted line of an agreement indicating that they could not file a case against Lloyd’s in a foreign court, as it was well aware that the U.K. courts would not hear a fraud case.
“The case of Tropp v. the Corporation of Lloyds is troubling not only because it implies that thousands of investors in the Lloyd’s insurance market have no contractual rights enforceable at law in the courts of England and Wales, but also because of what it says more broadly about the state of the law in Britain,” according to the article “UK Country Risk: Is Lloyd’s of London Too Big to Sue?” by the IRA team on the Advisor Perspective website.
Cautioning Investors
“We see the true risk to Lloyd’s as winning this US litigation. Then every American investor and fiduciary will be on notice that they may have no effective legal protection for any investment made in the Corporation of Lloyds,” states the IRA article.
In 1993, Lloyd’s became a self-regulatory agency, which is similar to that of a sovereign state. It developed a new business plan that addressed regulatory issues after members who had lost a great deal of wealth from claims they had to cover during the 1980s criticized Lloyd’s lax environment, which had only minimal oversight.
The Tropp petition details the litigation processes in the U.K. when it comes to Lloyd’s of London.
The U.K. court decreed that Lloyd’s regulations were unassailable and preempt any existing English law, and has acted upon this assumption since the early 1990s.
“The U.K. courts held that under a provision of the Lloyd’s Act of 1982, Lloyd’s was immune from all damages claims, absent proof that it had acted in bad faith amounting to fraud,” accused the petition.
In effect, anyone unlucky enough to have invested in Lloyd’s was legally responsible for claims occurring during their lifetime and up to 80 years.
