1 UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 01-10463 & No. 01-10773

THE SOCIETY OF LLOYD’S,

Plaintiff - Appellee,

VERSUS

PERCY R. TURNER,

Defendant - Appellant.

-------------------------

THE SOCIETY OF LLOYD’S,

Plaintiff - Appellee,

VERSUS

JAMES DUNCAN WEBB,

Defendant - Appellant.

Appeals from the United States District Court

For the Northern District of Texas

July 25, 2002

Before DUHÉ, BARKSDALE, and DENNIS, Circuit Judges.

DENNIS, Circuit Judge:

In these consolidated appeals, Percy Turner and Du ncan Webb

appeal from the district courts’ summary judgments in favor of the2

Society of Lloyd’s (Lloyd’s) recognizing the foreign judgments that

it had obtained against them in an English court to collect

underwritin g obligations owed by them as American members of

Lloyd’s insurance syndicates. We affirm.

I. FACTS AND PROCEDURAL HISTORY

Through a succession of Parliamentary Acts (the Lloyd’s Acts

1871-1982), the United Kingdom Parliament has authorized Lloyd’s to

regulate an English i nsurance market located in London, England.

Some of the background as to the nature and structure of Lloyd’s of

London was set forth in Haynsworth v. The Corporation

, 121 F.3d

956, 958-59 (5 th Cir. 1997), by this court:

. . . Lloyd’s is a 300-year-old market in which

individual and corporate underwriters known as "Names"

underwrite insurance. The Corporation of Lloyd’s, which

is also known as the Society of Lloyd’s, provides the

building and personnel necessary to the market’s

administrative operations. The Corporation is run by the

Council of Lloyd’s, which promulgates "Byelaws,"

regulates the market, and generally controls Lloyd’s

administrative functions.

Lloyd’s does not underwrite insurance; the Names do

so b y forming groups known as syndicates. Within each

syndicate, participating Names underwrite for their own

accounts and at their own risk. That is, as a matter of

E nglish law, Names’ liability is several rather than

joint, and individual Names are not responsible for the

unfulfilled obligations of others. Each syndicate is

managed and operated by a Managing Agent, who owes the

Names a cont r actual duty to conduct the syndicate’s

affairs with reasonable care. Syndicates have no l egal

existence or identity apart from the Names they comprise.

Names must become members of Lloyd’s in order to

participate in the mar k et. Prospective members are3

solicited and assisted in the process of joining by

Member’s Agents, whose duties to the Names are fiduciary

in nature. Names must pass a means test to ensure their

ability to meet their underwriting obligations, post

security (typically, a letter of credit), and personally

appear in London before a representative of the Council

of Lloyd’s to acknowledge their awareness of the various

risks and requirements of membership, and in particular

the fact that underwriting in the Lloyd's market subjects

them to unlimited personal liability.

Participation in the market also requires the

execution of a number of contracts and agreements, the

most important of which is the General Undertaking, the

standardized contract between Lloyd’s and the individual

Names. Names additionally must enter into a Member’s

Agent’s agreement, the contract that defines the

relationship between the Name and his chosen Me mber’s

Agent, and one or more Managing Agent’s agreements, which

define the relationships between the Name and the

Managing Agents of the syndic ates he wishes to join.

Under the present version of Lloyd’s Byelaws, e ach of

these agreements must contain clauses designating England

as the forum in which disputes are to be resolved and

choosing English law as the law governing such disputes.

In the late 1980s and early 1990s, Ll oyd’s underwriters

incurred billions of dollars of losses, due in large part to toxic

tort cases. Because of the enormity of the outstanding liabilities

and because of the Names’ inability to satisfy their underwriting

obligations, the very existence of Lloyd’s was threatened. To

ensure both the survival of the market and the payment of

policyh olders’ claims, as well as to protect the Names, Lloyd’s

devised the Reconstruction and Renewal (R&R) plan, which provided

reinsurance for all the Names’ pr e-1993 liabilities from an

independent company, Equitas Reinsurance Ltd. (“Equitas”). Equitas

was funded, in part, by the reinsurance premiums paid by the Names.1 Equitas Reinsurance Limited Contract, cl. 5.5.

2 Id. cl. 5.10.

3 All Names signed a General Undertaking in which they agreed to

“comply with the provisions of Lloyd’s Acts 1871-1982, any

subordinate legislation made thereunder,

. . . any

. . . requirement made or imposed by the Council [of Lloyd’s].” Pursuant

to Lloyd’s Acts 1982, Schedule 2, § (18)(b), Lloyd’s obtained the

power to appoint substitute agents when the Council deemed it

necessary. Through a series of bylaws and resolutions under this

Act, the Council was authorized to appoint a substitute agent on

behalf of Names specifically “to execute the Reinsurance Contract

for itself and on behalf of the Members in such form as the council

may direct.

. . .” Lloyd’s Byelaw No. 20 of 1983; Byelaw No. 82 of

1995; AUA9 Resolution of 1996.

4 Because one of the main goals of the R&R Plan was to allow the

Lloyd’s market to continue to function without being stalled by

litigation, the Equitas policy included two key provisions, both at

issue here. First, the contract contained a “pay now, sue later”

provision, which precluded the Names from claiming any set-offs to

the Equitas premium, except by way of a separate litigation after

the payment of the premium was made. 1 Second, the Equitas contract

contained a “conclusive evidence” claus e

, which provided that

Lloyd’s calculation of the premium owe d constituted “conclusive

evidence as between the Name and [Equitas] in the absence of

manifest error.” 2

According to Lloyd’s, 95% of the Names accepted the offer and

paid the reinsurance premium. The remaining 5%, including Turner

and Webb, refused to accept the offer and refused to pay. As

Lloyd’s was contractually authorized to do, 3 Lloyd’s appointed a

substitute agent for the non-accepting Names. The substitute agent4 Society of Lloyd’s v. Leighs & Others , (Q.B., Feb. 20, 1997).

5 Society of Lloyd’s v. Jaffra y , 2000 WL 1629463 (Q.B. Nov. 3,

2000).

5 signed and accepted the Equitas reinsurance contract on behalf of

the resistant Names.

Lloyd’s paid the Equitas premiums for those Names, and Equitas

assigned its right to collect the premiums to Lloyd’s. In late

1996, Lloyd’s brought collection proceedings in England against the

recalcitrant Names, including Turne r and Webb. Turner appeared

through counsel and participated in the English action. But Webb,

d espite notice and being made a party, elected not to answ er or

defend in the English litigation.

The lengthy litigation that followed in England took place in

a series of test cases. First, the English courts tried the L eighs

case 4 t o determine whether Lloyd’s was entitled to appoint

substitute agents to bind the non-settling Names to the R&R Plan,

to enforce the Equitas contact, and to collect the premiums. The

court found for Lloyd’s, but allowed the plaintiffs to pursue their

claims of fraudulent inducement against Lloyd’s in a separate

action. The English Court of Appeal upheld the trial court’s

decision, and leave to appeal was denied by the Judicial Committee

of the House of Lords, the English equivalent of the United States

Supreme Court.

The Names’ claims for fraud were brought all together in the

Jaffray action. 5 Despite notice of this action from Lloyd’s,6 Society of Lloyd’s v. Fraser & Ors

, (Q.B., Jan. 22 & Mar. 4,

1998).

6 neither Webb nor Turner joined in the Jaffray litigation. Although

the English courts found in favor of Lloyd’s, the English Court of

Appeal has granted permission to appeal, thus providing yet another

avenue of review for this claim.

Following these decisions, Lloyd’s sought summary judgment

against the Names for the Equitas premium amount in the Fraser

ligation. 6 In this litigation, the Names challenged Lloyd’s

c alculation of the reinsurance premium under the “conclusive

evidence” clause. In response, the Queen’s Bench Division held

several hearings, required Lloyd’s to produce numerous do cuments

regarding its calculation of the premium, and allowed the Names to

present arguments regarding manifest error in Lloyd’s calculation

of the premium. After lengthy review, the trial court ruled

against the Names on this claim, and the English Court of Appeal

denied leave to appeal.

The English court then entered summary judgment against Turner

in E ngland on March 11, 1998, holding him liable to Lloyd’s for

approxima tely ^ 71,000. As Webb had chosen not to participate in

any of the foregoing litigation, a default judgment against him had

been entered on June 27, 1997, in an amount of approximately

^ 66,000 . In May 2000, Lloyd’s sought recognition of the English

monetary judgments against Turner and Webb in separate divisions of

the Northern District of Te xas. In both cases, the Names sought7 Ramsey v. Henderson , 286 F.3d 264, 267 (5th Cir. 2002).

8 Fed. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett , 477

U.S. 317, 323 (1986).

9 Because the basis of this court’s jurisdiction is premised on

diversity, there is no dispute that Texas law applies to the

recognition of these judgments. B anque Libanaise Pour Le Commerce

7 summary judgment, asking for non-recognition of t he English

judgments, and, in both cases, Lloyd’s filed cross motions for

summary judgment, seeking recognition of the judgments. Both

district courts granted summary judgment in favor of Lloyd’s,

holding that the English judgments were enforceable under the Texas

Foreign Country M oney-Judgment Recognition Act. Webb and Turner

have both separately appealed and, because of the similarity of the

cases, we consolidated them for review.

II. ANALYSIS

A. Standard of Review

We review grants of summary judgment de n ovo, employing the

same standard as the district court. 7 Rule 56(c) of the Federal

Rules of Civil Procedure allows the court to enter summary judgment

in favor of the moving party only “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.” 8

B. Foreign Judgment Recognition 9v. Khreich , 915 F.2d 1000, 1003 (5th Cir. 1990).

1 0 Tex. Civ. Prac. & Rem. Code Ann. §§ 36.001-36.008 (Vernon

2000).

11 Id. §§ 36.0041, 36.0044.

12 Id. § 36.005(a)(1).

13 Id. § 36.005(b)(3).

8 The Uniform Foreign Country Money-Judgment Recognition Act has

been adopted by Texas and governs whether a judgment entered by a

foreig n nation will be recognized in this country. 1 0 Under this

Act, once a copy of a foreign judgment is filed with the clerk of

the court in the county of residence of the party against whom

recognition is sought, the party against whom recognition is sought

may contest the judgment’s recognition by filing a motion for nonrecognition, which Turner and Webb have done. 11 A court may refuse

to enforce a foreign judgment if certain provisions of § 36.005 of

the Civil Practice and Remedies Code are applicable. Relevant

here, “[a] foreign country judgment is not conclusive if

. . . the

judgmen t was rendered under a system that does not provide

impartial tribunals or procedures compatible with the requirements

of due process of law.” 12 Texas statutory law also provides a court

with the discretion not to enforce a foreign country judgment if

“the cause of action on which the judgment is based is repugnant to

the public policy of this state.” 13

1. Due Process14 Southw est Livestock & Trucking Co., Inc. v. Ramon , 169 F.3d

317, 321 (5th Cir. 1999).

15 Tex. Civ. Prac. & Rem. Code § 36.005(a)(1) (emphasis added);

Society of Lloyd’s v. Ashenden

, 233 F.3d 473, 477 (7th Cir. 2000) ;

Shwenke v. Texas

, 960 S.W.2d 227, 230 (Tex. App.–Corpu s Christi

1997, writ denied) (“When interpreting the intent and meaning of a

statute, the court focuses on, and will follow, the plain language

of the statute unless doing so leads to absurd and unintended

consequences.”); Ramon

, 169 F.3d at 321 (5th Cir. 1999) (employing

a plain language reading of the public policy provision of the

Texas Recognition Act); 1 Restatement (Third) of Foreign Relations

§ 482 cmt. b (1987) (“A court asked to recognize or enforce the

judgment of a foreign court must satisfy itself of the essential

fairness of the judicial system under which the judgment was

rendered.”); see also Bridgeway Corp. v. Citibank , 201 F.3d 134,

137-138, 142-44 (2d Cir. 2000) (refusing to enforce a Liberian

judgment because of “Liberia’s judicial system was in a state of

disarray and the provisions of the Constitution concerning the

judiciary were no longer followed”); Bank Melli Iran v. Pahlavi

, 58

F.3d 1406, 1410-13 (9th Cir. 1995) (concluding that after the Shah

of Iran was deposed, the Iranian judicial system did not afford

protections compatible with due process); K am-Tech Syst. Ltd. v.

Yarden

, 774 A.2d 644, 649-52 (N.J. Super. Ct. App. Div. 2001)

(concluding that the defendant “has provided us with no basis for

concluding that the civil justice system of the State of Israel can

in any way be considered lacking the attributes of due process.”).

9 As with all matters of statutory construction, we begin our

analysis of the Texas Recognition Act by considering the plain

language of the statute. 14 In that vein, we observe that the Texas

Recognition Act requires that the foreign judgment be “rendered

[only] under a system ” that provides impart ial tribunals and

procedures compatible with “due process of law.” 15 Moreover, as the

statute requires only the use of “procedures compatible wit h the

requirements of d ue process,” the foreign proceedings need not

comply with the traditional rigors of American due process to meet16 Id. § 36.005 (a)(1) (emphasis added); H ilton v. Guyot

, 159

U.S. 113 (1895) (“[W]e are not prepared to hold that the fact that

the [foreign] procedure

. . . differed from that of our own courts

is, of itself, a sufficient ground for i mpeaching the foreign

judgment.”); Ingersoll Milling Mach. Co. v. Granger

, 833 F.2d 680,

687 (7th Cir. 1987); Dart v. Balaam

, 953 S.W.2d 4 78, 480 (Tex.

App .-Fort Worth 1997, no pet.) (“This ground for nonrecognition

that requires impar tial tribunals and procedures compatible with

due process of law does not dictate that procedures be identical to

those in the United States”); Uniform Foreign-Money Judgments

Recognition Act § 4 cmt., U.L.A. (1986) (“[A] mere difference in

the procedural system is not a sufficient basis for nonrecognition. A case of serious injustice must be involved.”).

17 Ashenden

, 233 F.3d at 477 (citing Ingersoll

, 833 F.2d at 687-

88); 18B Charles Alan Wright et al., Federal Practice and Procedure

§ 4473 n.7 (2d ed. 2002)(quoting Ashenden , 233 F.3d at 477).

18 Id. at 476 (citations omitted).

19 Haynsworth v. The Corporation , 121 F.3d 956, 967 (5th Cir.

1997)

.

10 the requirements of enforceability under the statute. 16 This

provision has been “interpreted

. . . to mean that the foreign

procedures [must only be] ‘fundamentally fair’ and

. . . not offend

against ‘basic fairness.’” 17

“The origins of our concept of due process are English,

. . .

[and] United States courts which have inherited major portions of

their judicial traditions and procedure from the United Kingdom are

hardly in a position to call the Queen’s Bench a kangaroo court.” 18

This court, in particular, has noted that “England [is] a forum

that American courts repeatedly have recognized to be fair and

impartial.” 1 9 I n short, “[a]ny suggestion that th[e] [Englis h ]

system of courts does not provide impartial tribunals or procedures20 Ashenden

, 233 F.3d at 476 (citations omitted). Moreover,

given Webb’s utter failure to participate in any stage of any of

the English proceedings,“we not only look with skepticism, but we

flatly reject the due process complaint of a party who ‘was given,

and

. . . waived, the opportunity of making the adequate

presentation in the English Court.’” B ritish Midland Airways Ltd.

v. Int’l Travel Inc.

, 497 F.2d 869, 871 (9th Cir. 1974) (quoting

Somportex Ltd. v. Philadelphia Chewing Gum Corp.

, 453 F.2d 435, 441

(3d Cir. 1971)); see als o Dart , 953 S.W.2d at 480 (“Grounds for

nonrecognition may be waived if a party had the right to assert

that ground as an objection or defense in the foreign country court

but failed to do so.”).

21 Id.

22 Id. at 477. We need not speculate on the outcome of this case

had the Names presented some evidence that the proceedings in their

cases were “fundamentally unfair.” S ee, e.g.

, Banco Minero v.

Ross

, 172 S.W. 711 (1915) (a pre-Texas Recognition Act case

refusing to r ecognize a Mexican judgment because the Mexican

judgment was “a maze of words” that “appear[ed] to have been

rendered on no proof whatever”). Instead, the Names complain that

the special self-regulatory “Lloyd’s[-]created system deprived

[them] of due process.” “The key question, [however,] is not the

fairness of Lloyd’s measures but the fairness of the English court

in holding that Lloyd’s was authorized by its contract with the

[N]ames to appoint agents to negotiate a contract that would bind

the [N]ames without the [N]ames’ consent.” Ashenden , 233 F.3d at

480. Webb and Turner have provided no evidence that the English

court proceedings here were unfair. In fact, in evaluating the

Names’ claims, the English cou rts applied typical English law,

discussed “general freedom to contract out of the right of setoff,” and noted that the conclusive evidence clause is “not an

unusual type of clause.” Moreover, our colleagues from the Seventh

Circuit have already concluded that the particular English

proceedings of which Webb and Turner complain here do not run afoul

of th e due process provision of the Uniform Money-Judgement

Recognition Act. A shenden

, 2 33 F.3d at 478-82. We find their

reasoning to be persuasive and adopt it as our own.

11 compatible with the requirements of due process of law borders on

the risible.” 20 Because “the courts of England are fair and neutral

forums,” 21 the district courts did not err in recognizing the

judgments that Lloyd’s obtained there. 2223 Tex. Civ. Prac. & Rem. § 36.005. While the Appe llants’ due

process argument for non-enforcement of the English judgment is a

“mandatory” grounds for non-enforcement under subsection (a) of the

st atute, the public policy argument offered here falls under

subsection (b) of the statute, which grants the district judge the

“discretion” not to enfo rce the judgment if he finds that one of

the enumerated conditions are met. Although such a requirement

seems to mandate an abuse of discretion standard, B anque Libanaise

Pour Le Commerce v. Khreich , 915 F.2d 1000, 1004 (5th Cir. 1990),

we have previously employed a de novo review in this context.

Ramon

, 169 F.3d at 321 (reviewing de novo a district court’s

summary judgment decision under the public policy prong of the

Texas Recognition Act). As this court and the Supreme Court have

noted, however, “‘[l]ittle turns . . . on whether we label review

of this particular question abuse of discretion or de novo, for an

abuse of discretion does not mean a mi stake of law is beyond

appellate correction.” I d. at 321 n.3 (quoting Koon v. United

States , 518 U.S. 81, 100 (1996)).

24 Southwest Livestock & Truc king Co., Inc. v. Ramon , 169 F.3d

317, 319 (5th Cir. 1999).

12

2. Texas Public Policy

Turner and Webb also argue that the district courts erred in

enforcing the English judgments because they contravene the public

policy of Texas. Under the Uniform Foreign Money-Judgments

Recognition Act , “[a] foreign country judgment need not be

recognized if . . . the cause of action on which the judgment was

based is repugnant to the public policy of the state.” 23 To deny

enforcement of a foreign judgment based on a public policy

argument, the “level of contravention of Texas law has to be high.

. . .” 2425 Id. at 321 (quoting Tex. Civ. Prac . & Rem. Code Ann. §

36.005(b)(3)).

26 Id. at 321; see also Norkan Lodge Co. Ltd. v. Gillum , 587 F.

Supp. 1457, 1461 (N.D. Tex. 1984).

27 Ramon , 169 F.3d at 321.

28 Id. at 319.

29 Id.

13 In conducting our analysis, we again begin with the “the plain

language of the Texas Recognition Act” and note that it is “the

cause of action on which the judgment is based” which must be

contrary to Texas public policy before non-recognition is allowed. 25

In Southwest Livestock & Trucking Co., Inc. v. Ramon

, we stated

that “[t]his subsection of the Texas Recognition Act does not refer

to the judgment itself, but specifically to the ‘cause of action on

which the judgment is based.’ Thus, the fact that a judgment

offends Texas public policy does not, in and of itself, permit the

district court to refuse recognition of that judgment.” 26 R amon

involved a “Mexican judgment [that] was based on an action for

collection of a promissory note” with a 48% intere st rate. 2 7 T he

Mexican court ruled in favor of the creditor and ordered the debtor

to satisfy the debt and the 48% interest rate in full. 28 T he

district court, however, refused to recognize the judgment because

it violated Texas public policy. 29 T his court reversed, concluding

that the district court erred in failing to recognize the Mexican

judgment because the cause of action for collection on a promissory30 Id. at 323.

31 Wright v. Christian & Smith

, 950 S.W.2d 411, 412 (Tex. App.

- Houston [1st Dist.] 1997, no writ).

14 note did not offend Texas public policy. 30

Lloyd’s sued Webb and Turner f or breach of contract and

obtained a judgment in En gland on that cause of action. In

presenting their challenge here, Webb and Turner do not argue that

a cause of action for brea ch of contract is contrary to Texas

public policy, bu t instead claim that their particular judgments

are contrary to Texas’s breach of contract law because Lloyd’s

needed only to assert the existence o f a contract and the amount

owed, while Texas requires four elements to be established for a

breach of contract claim (i.e., (i) the existence of a contract,

(ii) proof of the plaintiff’s perfo rmance, (iii) evidence of the

defendant’s breach, and (iv) damages). 31 In short, the Appellants

argue that the English judgments should not be enforced because the

legal standards applied by the En glish courts are different from

the standards that the Texas courts would have applied, had Lloyd’s

brought its claim there.

Accepting the Appellants’ characterization of English breach

of contract law as true, the standard for non-recognition of a

foreign judgment under the Texas Act is whether the “cause of

action” is re pugnant to state public policy, not whether the

standards for evaluating that cause of action are the same or32 Hunt v. BP Exploration Co. , 492 F. Supp. 885, 901 (N.D. Tex.

1980).

33 See, e.g.

, Wright , 950 S.W.2d at 412; H ussong v. Schwan’s

Sales Enters., Inc.

, 896 S.W.2d 320, 326 (Tex. App.

- Houston [1st

Dist.] 1995, no writ).

34 D espite the clear language of the statute and this court’s

precedent, Webb and Turner also argue that the judgments in their

particular cases violate the Texas public policy on cognovit

judgments and on the non-waivable protections of consumers from

fra ud and noncompliance with Texas securities laws. These

arguments are without merit, as “[u]nder the Texas Recognition Act,

it is irrelevant that the [foreign] judgmen t itself contravened

Texas’s public policy. . . .” Ramon , 169 F.3d at 321.

15 similar in the foreign country. In other words,

[e]nforcement of a judgment of a foreign court based on

the law of the foreign jurisdiction does not offend the

p ublic policy of the forum simply because the b ody of

foreign law upon which the judgment is based is different

from the law of the forum or because the foreign law is

more favorable to the judgment creditor than the law of

the forum would have been had the original suit been

brought at the forum. The very idea of a law of conflicts

of law presupposes differences in the laws of v arious

jurisdictions and that different initial results may be

obtained depending upon w hether one body of law is

applied or another. 32

Because a breach-of-contract cause of action is not contrary to

Texas public policy, 33 the district courts did not err in rejecting

the claims of Webb and Turner and in recognizing the English

judgments. 34

III. CONCLUSION

For the foregoing reasons, the judgments of the district

courts are AFFIRMED.16