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Case No. A 107100 COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT, DIVISION FOUR
ON APPEAL AFTER JUDGMENT ENTERED BY THE HONORABLE APPELLANT'S OPENING BRIEF
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TABLE OF AUTHORITIES
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Marin County Superior Court that declines to enforce a contractual liquidated damage provision already adjudicated to be reasonable and enforceable in a prior action between these same parties. The trial court misapplied statutory and case law governing this provision and sua sponte rewrote the underlying contract to immunize the defendant from any future liability for breaching a contract he admits having breached well over 200 times, has been adjudicated to have breached 137 times, and which he vows to continue to breach indefinitely in the future.1
1986, defendant Gerald Armstrong ("Armstrong") and plaintiff Church of Scientology International ("CSI") entered into a settlement agreement ("the 1This appeal is related to, and has been consolidated with, Church of 2Citations to "Exs, Tab____ " herein refer to the Exhibits in support of 1 |
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Agreement"), Exs Tab 1, pursuant to which Armstrong received $800,000, dismissed certain legal claims, and agreed, inter alia, to strict confidentiality, to forego public mention of Scientology and its leadership, and to avoid voluntarily assisting or participating in litigation against Scientology churches. Id., at ¶7D, pg. no. 6-7. The Agreement provided for liquidated damages for each breach of the contract committed by Armstrong. Id. at pg. no. 8.
Armstrong openly breached the Agreement. In February 1992, CSI sued Armstrong for breaching a settlement agreement on multiple occasions. Exs., Tab 2, Complaint. CSI alleged, inter alia, that Armstrong breached various provisions of the Agreement, including paragraph 7(D), which states in pertinent part:
Exs., Tab 2, pg. no. 6-8, (emphasis supplied).
pursuant to the terms of paragraph 7(D), and injunctive relief to preclude Armstrong from committing additional breaches. Armstrong cross- complained, challenging the validity of the Agreement on a number of grounds, including specifically that the liquidated damages provision of paragraph 7(D) was unreasonable and unenforceable. Exs., Tab 3, ¶31, [pg. no. 43.] Thomas, presiding, granted CSI's motion for summary judgment against Armstrong, upheld the validity of the Agreement, and awarded CSI $300,000 in liquidated damages ($50,000 for each of six specified breaches). Judge Thomas' order specifically considered and rejected Armstrong's challenge to the liquidated damages provision of the Agreement: 3
Exs., Tab 4, [pg. 82, ln. 19 - pg. 83, ln. 13.]
directly or indirectly any of the following":
Exs., Tab 5, pg. 92.
damages and an order of permanent injunction were entered against Armstrong. Exs., Tab 6. Armstrong was unswayed. Indeed, he was so brazen in violating the obligations he undertook in exchange for $800,000 and the obligations against further breaches imposed by the permanent injunction issued by Judge Thomas that he even appeared in public and on television and radio to attack Scientology and its leadership, announcing that he was violating the court order by doing so.
proceedings before Judge Thomas for violating the permanent injunction. Exs., Tabs 8 and 10. To avoid the jail sentences imposed for his contempt convictions, Armstrong fled to Canada, from where he committed the breaches that spawned the instant action, Exs., Tab 15, Answer of Gerry Armstrong, ¶15, [pg. no. 224, ln. 8-10], and publicly defamed Judge Thomas by alleging that he had either been bribed or extorted by CSI. To avoid paying the damages imposed against him by Judge Thomas, Armstrong filed for bankruptcy, after either spending or "giving away" the $800,000 he received in the settlement. Id. [pg. no. 222, ln. 26-27.] 5
dismissed by this Court on December 23, 1997, on the basis of the fugitive disentitlement doctrine. Exs., Tab. 8
dissuaded Armstrong from his contumacious breaches, and his flight to Canada afforded him the opportunity to avoid jail and continue his simultaneous contractual breaches and violations of the permanent injunction. On April 2, 2002, CSI filed this action for breach of contract against Armstrong, seeking recovery under the liquidated damages provision of the Agreement for 201 additional breaches of the Agreement. Exs., Tab 14. In his answer, Armstrong admitted all 201 breaches saying that he did so "at the will of God." Id. [pg. no. 223 at ln. 6-7.] Armstrong further stated that he would continue to breach the Agreement because, in his view, the permanent injunction was "illegal, unconstitutional, greatly stupid, impossible to perform, anti-public policy, anti-American, anti- religion, diabolical, insane and clearly unenforceable," and because, by issuing the injunction, Judge Thomas "abetted ...illegal blackmail." Id. [pg. no. 223, ln. 24 - pg. 224, ln. 5.]
Duryee. On that day, the trial court first heard argument on, and took under submission, CSI's motion in limine to preclude Armstrong from 6
relitigating the validity and enforceability of the Agreement. The court then invited opening statements from counsel. Exs., Tab 16, Reporter's Transcript of Proceedings, April 9, 2004, pg. 25, Exs. pg. no. 320 (hereinafter ("RT__"). In the midst of Armstrong's counsel's opening statement, Judge Duryee interjected that she would consolidate the damages trial in this action with Armstrong's sentencing for his third contempt conviction arising from his defiance of Judge Thomas' permanent injunction. RT 44, p. 339.
on Armstrong's 131 breaches of contract that CSI sought to pursue on the grounds that: (1) Armstrong admitted the breaches; (2) the enforceability of the provisions of the Agreement previously had been litigated to judgment; and (3) nothing alleged in Armstrong's counsel's opening statements amounted to a defense. RT 49, p. 344. After a brief recess, the trial court announced its conclusion that Armstrong's affirmative defenses this breach of contract action were both precluded by res judicata and, in any event, were without merit:
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RT 56 [pg. no. 359.]
entitled to recover damages in the same amount that Armstrong had received as consideration eighteen years earlier, when the contract was executed. Id. Since Armstrong previously had been assessed damages of $300,000 by Judge Thomas — which he never paid, having declared bankruptcy — the trial court limited the liquidated damages to $500,000, which it characterized not as compensation, but as "punishment."
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RT 56-57 [pg. no. 350-351].
amount of $500,000. The trial court also ordered that the time Armstrong would have, but never, served on all three contempt convictions would be deemed served. RT 62, p. 356.
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