Marsh, Lloyds Names Continue Legal Battle

Plaintiffs in the suit include over 100 Lloyds members from the United Kingdom and the United States who participated in syndicates that insured or reinsured U.S. policyholders for asbestos-related risks from 1977 to the present.

The plaintiffs responded on Oct. 5 with their own memorandum of law in opposition to Marshs motion to dismiss. The memorandum states, in part, that the statute of limitations argument is not relevant because in New York, it "starts to run on the date of discovery" and the suit was filed less than two years after the facts "about the defendants fraud" became known.

The motion to dismiss will be heard by Judge Charles Edward Ramos on Nov. 29.

In the motion to dismiss, Marsh said: "The discovery period applicable to fraud claims upon which plaintiffs likely will relywhich allows a plaintiff two years to file a claim from the time a person of ordinary intelligence would have been on notice of itcannot save plaintiffs claims here."

The motion said that the "purported evidence" used as the basis of the plaintiffs allegations is not new and therefore "plaintiffs belated claims" and "allegations of nondisclosure" should be dismissed because they are time-barred.

"[S]tatutes of limitations were designed precisely to preclude stale, afterthought claims like those brought here," the motion said.

In another ground for dismissal, Marsh said that the case "does not belong in a U.S. court."

"[T]his is a dispute concerning the complex and often esoteric Lloyds of London insurance market," the Marsh motion said. "It involves transactions and communications that took place in Lloyds exclusively with Lloyds brokers, all of whom are English, as American brokers were excluded from Lloyds."

Lloyds Names have brought at least 13 cases in the United States over the past decade, the Marsh motion said. "In virtually every case, the Names have lost on the merits, or have been sent to England to litigate. Assertions that English courts do not provide due process have been rejected, including by New York courts."

Further, the Marsh motion stated that normal rules of forum selection dictate "that this case be litigated, if at all, in England."

The plaintiffs memorandum made in opposition to Marshs motion to dismiss charges that Marsh allegedly failed to reveal to Lloyds underwriters the "disastrous picture" of Johns Manvilles own internal projections of its asbestos liabilities.

Instead, the memorandum said, Marsh "fed the [Lloyds] underwriters a story" about Johns Manvilles declining asbestos exposure.

"The suppressed information was inescapably crucial to the underwriters decisions," the memorandum said. "In fact, had these underwriters known of J-Ms financial position or the amount of outstanding asbestos risk, they would not have written the policies." (In 1982, Johns Manville sought bankruptcy protection because of the number of asbestos claims filed against the company.)

"[The defendants] concocted a dirty scheme and held it secret for many years while the insurers on whom they dumped these losses blamed each other," the memorandum said.

The situation might have gone undiscovered had it not been for the efforts of an investigative journalist, Elizabeth Luessenhop, the memorandum said.

In 1996-1997, Ms. Luessenhop "learned startling facts about [Johns Manvilles] dire projections, defendants total control over the loss information and presentations to the London insurers, and defendants control over the statistical analysis of claims," the plaintiffs memorandum said.

"Instead of being intermediaries to convey information, defendants became manipulators and suppressors of information," the memorandum continued. "Detecting the fraud required candid assistance from J-M insiders."

As such, the memorandum indicated, it was only Ms. Luessenhops investigation of the Johns Manville case that brought the alleged fraud to light.

The memorandum went on to say that the statute of limitations did not begin running until 1998 when the plaintiffs first learned about "the defendants fraud" from Ms. Luessenhop, who is not a party to the lawsuit against Marsh. (The case against Marsh was first filed in late 1999.)

In answer to the issue of where the case should be heard, the plaintiffs argue, in part, that "the cause of action arose in New York because it is based on the fraudulent scheme" allegedly developed and implemented from Marshs New York headquarters.

In addition to Marsh & McLennan, other defendants named in the suit are Marsh Inc., Guy Carpenter & Co. Inc., C.T. Bowring & Co. Ltd., Winchester Bowring, and Sedgwick Group plc. (which Marsh acquired in 1998).

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, October 29, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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