Opinion ID: 789742
Heading Depth: 3
Heading Rank: 4

Heading: Outstanding Issues Presented by Utah Name Mr. Bennett

Text: 112 Mr. Bennett maintains there is not complete diversity between the parties, and he challenges the district court's enforcement of the English judgments as a violation of Utah securities law. He also raises defenses we have previously rejected. We address each defense briefly. 113
114 Mr. Bennett contends that Lloyd's is not a corporation, but is rather more like an association, which adopts the citizenship of each of its syndicate investment members. Lloyd's and Equitas are merely agents for the syndicates, collecting cash calls from syndicate investor Names to pay off the liabilities arising from syndicate insurance policies. Bennett Rep. Br. at 5. Under this interpretation, Lloyd's attempt to claim federal diversity jurisdiction is a sham and there is no federal subject matter jurisdiction. Id. 115 We must reject Mr. Bennett's assertions. Early on, Lloyd's may have been a form of an unincorporated association, but under the Lloyd's Act of 1871, the company was incorporated. Although we agree that Lloyd's is not a corporation within the traditional sense of the word, see Ashenden v. Lloyd's of London, 934 F.Supp. 992, 998-99 (N.D.Ill.1996), there is no challenge to or question regarding Lloyd's place of incorporation (it is duly incorporated under the laws of England). Similarly it maintains its principal place of business in London, England. These facts are unchallenged, and comprise the weightiest part of our inquiry. See id. (noting that the most important consideration is Supreme Court precedent indicating that the citizenship of business entities must be determined by the simple fact of legal incorporation or the lack thereof, rather than the nature or attributes of the entity in question.). We thus hold that the jurisdiction is proper pursuant to 28 U.S.C. § 1332(a)(2). Equitas Reinsurance, Limited (the assignor of Lloyd's underlying claims against the Names) is also a duly incorporated English company formed under the laws of England, and Mr. Bennett's similar allegations against Equitas must also fail. 116
117 Mr. Bennett points to the Utah Securities Acts'anti-waiver provision as a bar to the enforcement of the English judgments. The anti-waiver provision declares that a condition, stipulation or provision binding a person acquiring a security to waive compliance with the chapter or rule hereunder is void. Utah Code Ann. § 61-22(9). 118 We note that the anti-waiver provisions of the Securities Acts of 1933 and 1934 are substantially the same as those found in the Utah statute. See 15 U.S.C. § 77n (1982) (Any condition, stipulation, or provision binding any person acquiring any security to waive compliance with any provision of this subchapter or of the rules and regulations of the Commission shall be void.); 15 U.S.C. § 78cc(a) (1982) (Any condition, stipulation, or provision binding any person to waive compliance with any provision of this chapter or of any rule or regulation thereunder, or of any rule of an exchange required thereby shall be void.). 119 The district court determined that our holding in Riley precluded enforcement of state as well as federal securities statutes. See Riley, 969 F.2d at 956. In Riley, the plaintiff claimed that Lloyd's engaged in the offer and sale of unregistered securities and made untrue statements of material fact and material omissions in connection with the sale of securities, violating both federal and Colorado's state securities laws. By enforcing the General Undertaking Agreement's forum selection clause requiring the application of English law, we did not deprive Mr. Riley of his day in court, but rather instructed Mr. Riley to structure his case differently than if proceeding in federal district court. Id. at 958. Thus, we cannot accept Mr. Bennett's contentions and note that, as in the Ninth Circuit's decision in Richards (litigation to which Mr. Bennett was a party), [w]e disagree with the dramatic assertion that the available English remedies are not adequate substitutes for the firm shields and finely honed swords provided by American securities law. Richards, 135 F.3d at 1296. 120
121 Mr. Bennett's remaining claims duplicate the Utah Names' arguments, or are without merit. For example, he challenges whether the General Undertaking Agreement can be binding upon him. He suggests that Lloyd's engaged in breaches of fiduciary duty, concealment and material misrepresentations because the General Undertaking does not warn a committing investor that he or she might later be made subject to an entirely different undertaking. Mr. Bennett also contends that the district court erred in its application of Hilton. For the reasons given above, we reject all of Mr. Bennett's defenses.