NASA International Continues to Squabble with Lloyd's

The lawsuit brought against NASA International by dpMann, a group of underwriters from Lloyd's of London, continues to lumber through the courts in the U.S. Southern District of New York. Most recently, NASA attorneys filed a motion on June 17 to dismiss the case, which a NASA spokesperson expects will be ruled on by mid-August.

The case was brought on because of an ad that NASA ran mistakenly mentioning the insurance. "The advertising department did not read the policy and know of the limitation on disclosure. Knowing the insurance was in place, they thought it was something they could say," a NASA spokesperson said.

Additionally, before any lawsuit was filed, the two parties were required to go through arbitration in England, the spokesperson said. Instead, the case was filed December 10, 1999 in the U.S. District Court of New York.

According to the complaint, NASA advertised its insurance through Lloyd's of London despite having signed confidentiality agreements. Further, the advertising wrongfully claimed that Lloyd's insured NASA's customers' accounts, when NASA's insurance only provided coverage under confiscation and credit insurance policies.

The confiscation policy insured against confiscation, expropriation, nationalization and deprivation for NASA's physical property in Costa Rica, while the credit insurance policy insured NASA's own funds up to $1 million against risks of insolvency on the bank's part and exchange transfer and embargo.

This refutes NASA's advertisements that said NASA's clients' accounts were covered, as well as statements that allegedly appeared on NASA's own "Frequently Asked Questions" section of the company's website, which read "Your money is also insured with Lloyd's of London."

In two separate letters from September 1999, the underwriters' law firm wrote to NASA International requesting the company cease and desist the use of the Lloyd's name in NASA's advertising, and informed the company that the insurance had been cancelled for breach of contract. Print ads from November 1999 still included a reference to insurance from Lloyd's, prompting further legal action by the underwriter.

"When the problem was brought to the attention of NASA in late September 1999, the ads and web sites were all changed," the NASA spokesperson explained. "I know that Mr. O'Neil's (who represents dpMann) letters on the point were dated September 3rd and 7th, but they were sent by courier (Fed Ex or DHL) to P.O. boxes and so were not received until late September."

Attorneys for dpMann would not comment on the suit.

On the one hand, while it seems clear that NASA violated the "no advertisement" clause in their policy, it is less clear whether NASA incorrectly advertised just what Lloyd's insurance coverage included. In any event, the company's accounts were actually covered under the Lloyd's policy, and those accounts included deposits from NASA's customers. Chalk it up to another opportunity for lawyers to quibble over semantics.

Plus, at least one NASA official continues to be amazed that "with all of the sportsbooks using references to Lloyd's in their ads, only NASA, which actually bought the insurance, has been sued."

Could more lawsuits be in the offing?

Click here to view a copy of the Lloyd's/NASA complaint.