TEXARKANA, Ark. -- Claim IQ Inc. is petitioning the Arkansas Supreme Court to order a state circuit court to cease what the company calls improper exercise of jurisdiction and dismiss the defendant without prejudice from the Colossus class action.

Claim IQ argues that the Miller County lower court is exercising its jurisdiction in violation of the Due Process Clause of the U.S. Constitution, the Constitution of the State of Arkansas and the Arkansas Rules of Civil Procedure concerning service of process.

The appeal follows Miller County Judge Kirk Johnson's order that denied defense motions regarding sufficient service of process.

Shortly after the lawsuit began, the defendants, identified as "non-settling," filed their technical motions, arguing that they were not properly served due to lack of court seal, wrong court division listed, improper agent served, or not served in a timely manner.

Judge Johnson denied their motions by stating they consented to jurisdiction and waived their arguments by seeking affirmative relief regarding a proposed settlement and by filing a motion for protective order.

At the same time, Judge Johnson granted the plaintiffs' request to sever a handful of defendants. USAA, ANPAC, GEICO, Claim IQ Inc. and Computer Science Corporation will continue in a separate litigation with named plaintiffs Jerry Crandall, Erlinda Soto and James Brasham.

Previously, Judge Johnson stated the "obvious reason" for his decisions is that defendants who have motions denied will "appeal any decision not favorable to them." Thus, he believes the severance is necessary to keep the litigation moving.

The defendants believe these actions are only because they refuse to settle.

"The plaintiffs maintain that separating the 'misbehaving' dilatory defendants into a time out group will help them settle the Hensley case with the supposedly well-behaved defendants," the ANPAC defendants state.

Within its petition to the higher court of Arkansas, Claim IQ argues that it was not timely served with the lawsuit. The First Amended Complaint filed on Feb. 11, 2005, named Claim IQ as a defendant but a summons was not issued for that complaint.

It was not until Nov. 2, 2005, almost nine months later, that a summons was issued for the Fifth Amended Complaint, far surpassing the Arkansas rule that provides a 120-day time limit on service.

According to the petition, "after the expiration of the 120 days the court loses jurisdiction over any defendant who has not been served."

Complicating the argument are two removals to federal court and two extensions of time for service, which the defendant maintains that the plaintiffs still failed to provide timely service.

Claim IQ is seeking a stay of the Hensley and Basham proceedings pending the higher court's review and ruling. The defendant argues that it "has been forced to defend this matter for three years, despite the Circuit Court lacking jurisdiction."

Claim IQ is represented by Arkadelphia attorney Rodney P. Moore of the Wright, Berry, Hughes, and Moore law firm and Chicago attorney Scott T. Schutte of Howrey LLP.

Case No 2005-59-3

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