Society of Lloyd's v. Richard A. Reinhart, Society of Lloyd's v. Grant R. Caldwell, David L. Gillette, James R. Kruse, Edward W. Muir, and Kent B. Petersen, Society of Lloyd's v. Stephen M. Harmsen Kelly C. Harmsen, Society of Lloyd's v. Wallace R. Bennett

This consolidated appeal involves the Plaintiff-Appellee Lloyd's of London's request for the court's recognition and enforcement of money judgments issued by the High Court of Justice, Queen's Bench Division, London, England, in its favor against each of the defendants. Lloyd's obtained money judgments in England against each of the six New Mexicans (the "New Mexico Names") and the nine Utahns (the "Utah Names") (collectively, the "Names") in connection with underwriting obligations. Lloyd's then brought actions in the United States District Court for the Districts of New Mexico and Utah seeking recognition of these judgments as final and enforceable, entitled to full faith and credit in New Mexico and Utah, respectively. Each federal district court granted summary judgment in favor of Lloyd's. Of the Utah Names, one defendant reached a settlement with Lloyd's, leaving eight in this litigation. Five of the six New Mexico Names reached settlements with Lloyd's. We have consolidated these cases for disposition on appeal.

On appeal, the New Mexico Name raises several arguments. First, he argues that the English judgment deprived him of due process under New Mexico's Uniform Foreign Money-Judgment Recognition Act. Second, the New Mexico Name maintains that the English judgment stemmed from an action that is repugnant to New Mexico's public policy as the judgment: (a) violates New Mexico's securities laws; (b) is based on unconscionable contracts; (c) stems from adhesion contracts; (d) comprises unlawful cognovit notes, (e) is based on illusory contacts; and (f) violates the New Mexico Unfair Practices Act.

The Utah Names offer similar arguments. They contend that the district court cannot enforce the English judgments under Utah law, because the English system of jurisprudence is incompatible with American standards of due process, and that they did not receive an opportunity for a full and fair trial. The defendants also maintain that the English judgments conflict with Utah public policy. One Utah Name questions whether diversity jurisdiction exists, and also challenges the enforcement of the English judgments as violative of Utah securities laws. Two Utah Names also contend that the district court's approval of the English post-judgment interest of eight percent per annum was incorrect.

We hold that the Utah and New Mexico Names received due process under the English system of jurisprudence and that, in the thirty-two days of hearing before English trial and appellate courts, they received an opportunity for a full and fair trial. As to the New Mexico Name, specifically, the English legal proceedings provided ample due process pursuant to New Mexico's Uniform Foreign Money-Judgment Recognition Act. We also hold that the Lloyd's judgments are not repugnant to New Mexico's public policy.

As to the Utah Names, we hold that the English proceedings satisfied Utah's due process requirements and the English judgments do not conflict with Utah's public policy. We also affirm the district court's denial of a motion for discovery and a motion to certify questions of law to the Utah Supreme Court. We hold that the parties in this case are diverse, and that enforcement of the English judgments does not violate Utah's securities laws. Finally, we reverse the district court's determination that Lloyd's English judgments should accrue interest at the English post-judgment interest rate.

Numerous courts have summarized the basic facts applicable to the underlying litigation, and these facts are not in dispute. See Soc'y of Lloyd's v. Ashenden, 233 F.3d 473 (7th Cir.2000); Haynsworth v. The Corp., 121 F.3d 956 (5th Cir.1997); Allen v. Lloyd's of London, 94 F.3d 923 (4th Cir.1996); Soc'y of Lloyd's v. Webb, 156 F.Supp.2d 632 (N.D.Tex.2001). We shall summarize the pertinent facts here, borrowing heavily from the detailed and well-reasoned Webb decision.

Lloyd's is not an insurer, but rather is the regulator of an insurance market located in London. Through Parliamentary Acts, specifically the Lloyd's Acts of 1871-1982, Parliament created Lloyd's and authorized it to regulate the English insurance market. Individual and corporate members of Lloyd's known as "Names" underwrite insurance. The New Mexico defendants and Utah defendants became Names in the Lloyd's market between the late 1970's and late 1980's.

The Names underwrite insurance by forming groups known as syndicates. Names are passive investors in the sophisticated scheme, but along with potential profits they may incur substantial personal and direct liability with respect to a portion of a syndicate's risk in the Lloyd's market. The liability of each Name is several rather than joint. As a condition of becoming members of Lloyd's, Names enter into agreements governing their membership in Lloyd's and their underwriting in the Lloyd's market. At issue here is the General Undertaking Agreement, which obligated the New Mexico and Utah Names, and all other Names, to comply with the Parliamentary Acts under which Lloyd's was created and to submit any dispute arising out of their memberships or underwriting at Lloyd's to the English courts for resolution pursuant to English law. Each Name "irrevocably agree[d] that the courts of England [had] exclusive jurisdiction to settle any dispute" arising out of the underwriting of insurance business, and agreed that such "[p]roceedings brought in the English courts [were] conclusive and binding upon any party and may be enforced in the courts of any other jurisdiction." Case No. 02-2301, Aplts' App. vol. I, at 43 (General Undertaking Agreement).

By the early 1980's, which is about the time that Lloyd's solicited the Utah and New Mexico Names,

Lloyds knew that it had problems with rising asbestos and toxic tort claims. The syndicates' reserves were inadequate to handle these rising claims and a committee known as the Asbestos Working Party was formed to gather information about the breadth of the problem. The problem was described as "the largest phenomenon that has ever hit the casualty insurance industry" and "the most significant legal and loss cost issue in the history of the industry." Information about these claims was not published in the marketplace, was omitted from the audit instructions, and was not published in Lloyds financial statements for the year. Although a letter was prepared that provided the necessary disclosures to the Names, it was merely placed in a file and never distributed to the intended Names. Simultaneously, Lloyds was campaigning in Parliament for passage of the Lloyds Act of 1982 which granted Lloyds and its governing body extraordinary bylaw-making powers and immunity. In exchange, Lloyds committed to providing better quality information to prospective Names. This promise was not fulfilled and Lloyds admitted to Parliament that it had not kept its promise. "The Council of Lloyds very much regrets that the undertaking to implement the recommendations... within 2 years of the Royal Assent has not been kept."

Webb, 156 F.Supp.2d at 635 (emphasis supplied) (internal citations omitted).

According to former Name and lead plaintiff in the fraud action against Lloyd's, Sir Peter Jaffray, "[t]he only way they could keep going was to suppress the asbestos information, cook the books to ensure they were still showing profits and go after new investors." Case No. 02-2301, Aplts' App. vol. I, at 84 (Combined Mem. in Opp. to Summ. Judgment and in Support of Motion in Alt. for Discovery under Rule 56(c), Ex. 1 at 3 (Lloyd's of London 1688 — ?, TIME Feb. 21, 2002)). Further,

[d]uring the five years that Lloyds failed to improve information disseminated to prospective Names, approximately 10,000 new Names had joined Lloyds, most of whom were U.S. investors.

Webb, 156 F.Supp.2d at 635. The New Mexico and Utah Names contend that the Lloyd's representative emphasized Lloyd's long history of profitability, its exclusive and selective members, its program of annual audits, and that the risk of "unlimited liability" had been of little consequence in Lloyd's three-hundred-year history. See Case No. 02-2301, Aplts' App. vol. I, at 276-320 (Mem. in Opp. to Summ. Judgment, exs. 3-8 (Affids. from Utah Names)).

For the years of account 1988 through 1992, Lloyds suffered losses in excess of <<PoundsSterling>>8 billion (these were reported in 1991-1995). Once the Names' inquiries into the cause for the losses began, they concluded that Lloyds had been guilty of serious negligence and/or fraud....

The Names eventually filed suits in numerous cities across the United States claiming fraud against Lloyds in connection with their recruitment as investors, their placement on high-risk syndicates and their continuing to underwrite at Lloyds. In each of the cases Lloyds moved to dismiss based on a forum selection (the forum being in England) and choice of law (the law being English) clauses contained in the General Undertaking (i.e., a contract) that the Names had signed. In each of the cases filed, the courts of appeals enforced the forum selection and choice of law clauses.

Webb, 156 F.Supp.2d at 635-36 (internal citations omitted).

Apparently, the New Mexico Name and several Utah Names were parties to one of these suits, Richards v. Lloyd's of London, 135 F.3d 1289 (9th Cir.1998). The Richards complaint indicates that all but Utah Names Stephen and Kelly Harmsen and were plaintiffs. See Case Nos. 03-4064, -4082, -4094, -4193, Aple's Supl.App. vol. I, doc. 3 at 43-49.

The Richards litigation addressed and rejected the Names' contention that "their disputes with Lloyd's should be litigated in the United States despite contract clauses binding the parties to proceed in England under English law." Richards, 135 F.3d at 1292. The Ninth Circuit held that to invalidate the choice of law provisions in the Lloyd's General Undertaking Agreement would result in an "unbounded" reach of the United States securities laws, and would hamper international commerce. Id. at 1293. Moreover, the court stated that "[t]he Names have recourse against [Lloyd's] for fraud, breach of fiduciary duty, or negligent misrepresentation." Id. at 1296.1

We reached a similar conclusion in Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953, 958 (10th Cir.1992). We rejected the plaintiff Name's contentions and held that

English law does not preclude [the Name] from pursuing an action for fraud and we agree with the Defendants that the Lloyd's Act does not grant statutory immunity for such claims. We have been shown nothing to suggest that an English court would not be fair, and in fact, our courts have long recognized that the courts of England are fair and neutral forums.

Id. (internal citations omitted). As such, trial proceeded in England. Following trial,

the English courts found Lloyds guilty of negligence with respect to their Names and awarded the Names damages totaling <<PoundsSterling>>1 billion. Pursuant to the Lloyds' Act of 1982, however, the Lloyds' Council enacted a by-law that caused the funds awarded to the Names to be frozen. The Lloyds' Council placed Lloyds as trustee of the trust funds. The appellate court of England upheld Lloyds' right to freeze the funds and appoint Lloyds as trustee under the Lloyds Act of 1982.

Because the losses were widely spread throughout the various syndicates, Lloyds developed a reorganization program in 1995-96 called Reconstruction and Renewal ("R & R"). This was a mandatory plan of reinsurance of all years of account prior to 1993 into one reinsurance company called Equitas Reinsurance Ltd. The available syndicate assets were <<PoundsSterling>>9.9 billion; yet the premium needed for the reinsurance (by December 31, 1995) was <<PoundsSterling>>14.7 billion....

Webb, 156 F.Supp.2d at 636 (internal citations omitted).

In implementing the reorganization plan, Lloyd's required each Name to become a party to the Equitas reinsurance contract through an appointed, substituted agent, who signed the contract on behalf of the Name. The Equitas contract contained a "pay now, sue later" clause that precluded Names from asserting claims they might have against Lloyd's or others as a set-off or counterclaim to their Equitas Premium. The Equitas contract also contained a "conclusive evidence" clause, which provided that, in the absence of manifest error, Lloyd's determination of a Name's Equitas premium was conclusive:

The Equitas premium was mandatory and each Name was required to pay Equitas the amount shown on his statement. If, however, the Name signed the settlement agreement included in the R & R package, the Name would be awarded a credit, which would result in a reduction in the amount he paid in.

Id.

The New Mexico and Utah Names were Names who neither signed the settlement agreement nor paid the assessment. When they did not pay, Lloyd's used its by-law powers from the Lloyd's Act of 1982 to appoint a Substitute Agent. This Substitute Agent was instructed to sign the Equitas contract on behalf of the Names who refused to sign the Equitas settlement. Next, Lloyd's began suing these non-settling Names. Lloyd's paid Equitas the premium allegedly owed by the non-settling Names and received an assignment for the premium in exchange. In late 1996, Lloyd's then sued the New Mexico and Utah Names (and all remaining non-settling Names) for the amounts paid on their behalf.

Lloyd's served a writ of summons on each of the New Mexico and Utah Names, notifying them of the commencement of the English action against them. Each of the Names filed an Acknowledgment of Service of Writ of Summons through their solicitors of record. Through the filing of the Acknowledgment, each Name appeared in the English Court and notified Lloyd's of his or her intent to contest the claim. Although other Names actively defended in the English litigation, the New Mexico and Utah Names did not submit a notice of intention to defend, nor did they contest Lloyd's claims.

Those Names who did defend presented common objections and defenses. They alleged that Lloyd's lacked the regulatory authority to pursue certain aspects of the reorganization program, that they were entitled to rescind based on fraud in the inducement of their underwriting at Lloyd's, that they were entitled to litigate these claims of fraud, and that they were not bound by the Equitas reinsurance contract's "pay now, sue later" and "conclusive evidence" clauses. The English court found in favor of Lloyd's and entered judgment against each of the defendants. See Webb, 156 F.Supp.2d at 636 (citing English cases).

Specifically, the court found that the "pay now, sue later" clause was enforceable and the Names could not assert a fraud claim as a set-off to the Equitas premium due. At the trial level, several hearings were held regarding the premium amounts and the trial court concluded that Lloyd's produced sufficient documents justifying the premiums it claimed. Subsequently, each Name had the opportunity to present evidence that the calculation of the premium was "manifest error" pursuant to the Equitas contract. The court ruled against the Names with respect to the "manifest error" claims. See Webb, 156 F.Supp.2d at 636.

The English court did find, however, that Lloyd's could be sued for fraud damages and that the Names were free to pursue separate fraud claims against Lloyd's. Approximately two-hundred non-settling Names brought a fraud case in England against Lloyd's titled Jaffray v. The Society of Lloyds. The Honorable Justice Cresswell of the High Court of Justice of England and Wales issued a 635-page decision in the Jaffray litigation in November 2000 dismissing sample Names' claims for deceit and fraudulent misrepresentation after a trial spanning nineteen weeks. See 2000 WL 1629463 (Q.B. 3 Nov. 3, 2000), aff'd, Ct.App. Civ. Div. 26 July 2002.

In October 1999, while the Jaffray case was pending, the court issued an order requiring any Names wishing to bring a fraud claim against Lloyd's to join the Jaffray action. Lloyd's sent a copy of a statement regarding the terms of the Order to every Name who had not accepted Lloyd's Reconstruction and Renewal settlement offer, including each of the New Mexico and Utah Names. See Case No. 03-4002, vol. V, doc. 95 at 3. Neither the Utah Names nor the New Mexico Name gave notice that they reserved the right to advance such allegations or otherwise become parties to the Jaffray litigation.

The English judgments against the Names were affirmed on appeal. All appeals from the entry of the English judgments have been exhausted. Following these rulings, the English Court entered individual judgments in favor of Lloyd's against each of the New Mexico and Utah Names.2 On March 8, 2002 Lloyd's filed this action to collect on the judgments.

The Names raise two overarching arguments regarding the errors of the New Mexico and Utah district courts: (1) the courts erred when they determined that the English proceedings provided due process to the Names; and (2) the courts erred when they found that the English cause of action did not violate the public policy of either New Mexico or Utah. They also challenge the district courts' denial of other motions, and two Utah Names challenge the calculation of post-judgment interest.

At the outset, we note that the Names' two principal arguments have been raised unsuccessfully in various federal and state courts, by defendants from several states.3 Although we affirm the grant of summary judgment to Lloyd's for largely the same reasons as our sister circuits, our analyses of the defenses brought by the New Mexico and Utah Names are slightly different because of the defenses the Names assert. Furthermore, Utah, unlike the states whose law was applied by each court that has addressed the issue, has not adopted the Uniform Foreign Money-Judgment Recognition Act. Although the decisions of the other courts are highly persuasive, we must detour slightly as we apply Utah's comity analysis to the assertions of the Utah Names. Although we empathize with the losses that the New Mexico Name and Utah Names have incurred, and we appreciate the sincerity of their arguments, and we find many of Lloyd's acts to be distinctly distasteful, the agreements the Names signed and the applicable law require that we must affirm the thorough and well-reasoned orders of the district courts, with one slight exception.

We review the district court's grant or denial of summary judgment de novo, applying the standard applied by the district court pursuant to Federal Rule of Civil Procedure 56(c). Qwest Corp. v. City of Santa Fe, New Mexico, 380 F.3d 1258, 1264 (10th Cir.2004). "Summary judgment is appropriate if `there is no genuine issue as to any material fact and [ ] the moving party is entitled to judgment as a matter of law.' We view the evidence in a light most favorable to the non-moving party." Id. (quoting Fed.R.Civ.P. 56(c)).

The New Mexico Name contends that the district court erred when it failed to consider the procedures the English courts actually employed, and instead relied on the general proposition that the English courts are fair and neutral. The New Mexico Name also asserts that the enforcement of the English judgments violates New Mexico public policy. Applying New Mexico law, we hold that the district court appropriately assessed the English judicial system and no violation of due process or New Mexico public policy occurred.

1. Due Process concerns were met.

The New Mexico Name claims the district court failed to appreciate how its enforcement of the English judgment deprived him of his due process rights. While the Full Faith and Credit Clause applies to the recognition and enforcement of judgments among sister states, it does not apply to judgments rendered in foreign countries. Allstate Ins. Co. v. Hague, 449 U.S. 302, 322 n. 4, 101 S.Ct. 633, 66 L.Ed.2d 521 (1981) (Stevens, J., concurring in the judgment) ("The Full Faith and Credit Clause, of course, was inapplicable ... because the law of a foreign nation, rather than of a sister State, was at issue...."). The parties cite no federal statute applicable to the enforcement of foreign court money judgments in U.S. courts, nor any applicable treaty. Instead, the recognition and enforcement of foreign judgments are governed by state law. See Seetransport Wiking Trader Schiffarhtsgesellschaft MBH & Co., Kommanditgesellschaft v. Navimpex Centrala Navala, 989 F.2d 572, 582 (2d Cir.1993) ("We note that ... the recognition of foreign judgments is governed by state law."); see Restatement (Third) of the Foreign Relations Law of the United States § 481 cmt. a (1987).

New Mexico has adopted the Uniform Foreign Money-Judgment Recognition Act. See N.M. STAT. ANN. §§ 39-4B-1 to 39-4B-9 (1978). Pursuant to the Act, "[a] foreign judgment is not conclusive" if

the judgment was rendered under a system that does not provide impartial tribunals or procedures compatible with the requirements of due process of law;

and it "need not be recognized if:"

(1) the defendant in the proceedings in the foreign court did not receive notice of the proceedings in sufficient time to enable him to defend;

(2) the judgment was obtained by fraud;

(3) the cause of action on which the judgment is based is repugnant to the public policy of this state....

N.M. Stat. Ann. § 39-4B-5 (emphasis supplied).

The New Mexico Name contends that the New Mexico district court conflated the widely recognized general fairness of the English system, with this particular judgment, which, in his view, conflicts with his constitutional due process rights. Specifically, the New Mexico Name objects to (1) the English Courts' enforcement of the "pay-now, sue-later" clause, which prohibited him from raising certain defenses and counterclaims during the English action; (2) the "conclusive evidence" clause, because it renders the amount of the assessment determined by Lloyd's conclusive absent manifest error, and thereby fails to meet due process requirements; and (3) the fact that the cumulative effect of both these clauses is that the New Mexico Name could not receive a pre-deprivation hearing, could not obtain discovery as to the amount of Lloyd's claim, and could not challenge Lloyd's calculation of the amount due.

As to whether the contested clauses, taken separately or together, amounted to a forfeit of the Name's due process rights, "[t]he question is not whether Lloyd's accorded due process to the names, but whether the English courts did.... Stated differently, the courts held that the names had waived their procedural rights in advance...." Ashenden, 233 F.3d at 479 (emphasis supplied). Waiver of procedural rights in advance is clearly permitted, see e.g., D.H. Overmyer Co. v. Frick Co., 405 U.S. 174, 185, 92 S.Ct. 775, 31 L.Ed.2d 124 (1972) ("The due process rights to notice and hearing prior to a civil judgment are subject to waiver."). Moreover, given the New Mexico Name'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.'" Turner, 303 F.3d at 331 n. 20 (quoting British Midland Airways Ltd. v. Int'l Travel Inc., 497 F.2d 869, 871 (9th Cir.1974) (internal quotation marks omitted)).

Although the New Mexico Name would prefer to have us focus on this particular judgment, rather than the English system, at this stage of these matters, we are not permitted to do so. See N.M. Stat. Ann. § 39-4B-5 (indicating that to determine "conclusive[ness]" of a "foreign judgment," a court examines the foreign country's "system" and whether it maintains "procedures compatible with the requirements of due process of law"). The procedures the English courts afford need not be identical to ours, they must only be compatible in that they do not offend the notion of basic fairness. See Turner, 303 F.3d at 331 ("the courts of England are fair and neutral forums") (footnoted citation omitted); Hilton v. Guyot, 159 U.S. 113, 205, 16 S.Ct. 139, 40 L.Ed. 95 (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 impeaching the foreign judgment."); Uniform Foreign-Money Judgments Recognition Act § 4 cmt. ("[A] mere difference in the procedural system is not a sufficient basis for non-recognition. A case of serious injustice must be involved.");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.").

And when we look to the basic fairness of the system, the answer is clear: "[O]ur courts have long recognized that the courts of England are fair and neutral forums." Riley, 969 F.2d at 958 (collecting cases); see also Haynsworth, 121 F.3d at 967 ("This is particularly so in the case of England, a forum that American courts repeatedly have recognized to be fair and impartial."). The Seventh Circuit similarly lauded the English system's regard for due process in its highly persuasive opinion involving nearly identical claims:

Any suggestion that [the English] system of courts does not provide impartial tribunals or procedures compatible with the requirements of due process of law borders on the risible. [T]he courts of England are fair and neutral forums. The origins of our concept of due process of law are English .... and the English courts ... are highly regarded for impartiality, professionalism, and scrupulous regard for procedural rights.

Ashenden, 233 F.3d at 476 (internal citations and quotations omitted).

We agree with the Seventh Circuit's reasoning and hold that given the structure of the English system, which is substantially similar to our own, the New Mexico Name's suggestion that the English court system does not provide tribunals compatible with due process is untenable. See also Webb, 156 F.Supp.2d. at 640.

2. New Mexico's Public Policies were not violated.

The New Mexico Name also challenges the enforcement of the English judgments as a violation of New Mexico's public policy. First, he argues that Lloyd's violated the New Mexico Securities Act through its solicitation of unregistered securities and by making fraudulent representations. Second, he asserts that the Equitas contract is both procedurally and substantively unconscionable. Third, the New Mexico Name contends that the Equitas contract amounts to a contract of adhesion. Fourth, he asserts the Equitas contract is a "cognovit note," which both violates New Mexico public policy and New Mexico law. Fifth, he maintains that the Equitas contract is illusory. Finally, he contends the New Mexico Unfair Practices Act bars recognition of the Equitas contract.

Even if we assume the shaky premises of these assertions to be true (that Lloyd's made material misrepresentations and those misrepresentations would allow rescission under New Mexico law), we reject each of these claims for one overriding reason: English law as applied here does not violate New Mexico's public policy. As we iterate throughout the opinion, "[t]he view that every foreign forum's remedies must duplicate those available under American law would render all forum selection clauses worthless...." Haynsworth, 121 F.3d at 969; see also Riley, 969 F.2d at 958.

Furthermore, we reiterate that we must focus on the "cause of action" and the "claim for relief" underlying the English Judgment, not the differences in the bodies of law, because slight differences between England's and New Mexico's laws do not trigger the public policy exception. N.M. Stat. Ann § 39-4B-5(b)(3); see Turner, 303 F.3d at 332-33. Neither a breach of contract action nor a claim for money damages is repugnant to New Mexico public policy.

a. The State Agreement trumps the New Mexico Securities Act.

The New Mexico Name emphasizes that the New Mexico Securities Act embodies a public policy to protect New Mexico, and New Mexicans, and that the contract on which Lloyd's sued violated the state securities act. He relies heavily upon the declaration of Michael J. Vargon, Deputy Director of the Securities Division in the New Mexico Department of Regulation and Licensing. In an affidavit, Mr. Vargon states that after receiving various complaints from New Mexicans regarding Lloyd's solicitations to become Names, the Division concluded that the interest in the Names program was an investment contract and therefore a security, subject to the New Mexico Securities Act. Lloyd's failed to register these securities, and furthermore, "the information available to the Division strongly suggest[ed] fraud and misrepresentation in the inducement and continuing misrepresentation made to Names...." Case No. 02-2301, Aplts' App. vol. I, at 325.

In response, Lloyd's points to the July 1996 State Agreement between Lloyd's and participating state securities regulators, including the Acting Director of the New Mexico Securities Division. The State Agreement recognizes that "certain State Securities Regulators have asserted the activities of Lloyd's... fall within the scope of their regulatory jurisdiction" and that "the activities of Lloyd's may have violated laws subject to their enforcement authority." Id. vol. II, at 747. The State Agreement also indicates that "Lloyd's denies it has violated any U.S. laws and denies it is subject to the jurisdiction of the States Securities Regulators with regard to the issues raised." Id.

The State Agreement appears to have been a necessary precursor to the enactment of the Reconstruction and Renewal plan. Under the State Agreement, Lloyd's promised to allocate credits to qualified State Names, in exchange for which the State Securities Regulators agreed to take steps necessary to terminate all proceedings and investigations pending against Lloyd's. In addition, the State Securities Regulators agreed not to "assist any private person or entity who seeks to pursue any action against Lloyd's...." Id. vol. II, at 757. Because the Acting Director of the New Mexico Securities Division is a signatory to the State Agreement, and Mr. Vargon's declaration conflicts with the State Agreement, we reject the New Mexico Name's assertions based upon it. Furthermore, the New Mexico Name offers no explanation for this anomaly.

Moreover, as explained above, the New Mexico Name agreed in the General Undertaking Agreement that English law, not New Mexico law, would govern any disputes between Lloyd's and him. The choice of law and choice of forum clause are not at issue in this litigation, and to enforce the New Mexico securities laws in this context would be inappropriate. See Riley, 969 F.2d at 958 (approving forum selection clause of General Undertaking Agreement); Richards, 135 F.3d at 1292 (holding the same as to the majority of the defendant Names in this case).

b. The English Judgments were not based on an unconscionable contract.

Next, the New Mexico Name invites us to examine the underlying contractual dispute through his contention that the Equitas contract is both procedurally and substantively unconscionable under New Mexico law. Procedural unconscionability is determined "by examining the circumstances surrounding the contract formation, including the particular party's ability to understand the terms of the contact and the relative bargaining power of the parties." Guthmann v. LaVida Llena, 103 N.M. 506, 709 P.2d 675, 679 (1985). "Factors to be considered include the use of sharp practices or high pressure tactics and the relative education, sophistication or wealth of the parties, as well as the relative scarcity of the subject matter of the contract." Id.

The New Mexico Name is a highly sophisticated investor who had to pass a "means" test and was required to post large sums of money as security for the unlimited liability that he knowingly undertook. Unquestionably Lloyd's presented no high pressure tactics: each Name was afforded the opportunity to read the General Undertaking Agreement in its entirety, and to fully understand the implications of its terms. See id. at 680. The Equitas contract was not a new investment decision; it was the implementation of specific provisions to address the unlimited l