Filed 10/19/05 Church of Scientology v. Superior Court CA1/4

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FOUR

In a petition for writ of certiorari, the Church of Scientology International (CSI)

seeks an order compelling the trial court to reinstate sentences imposed upon Gerald

Armstrong in earlier contempt proceedings. We grant the petition in part.

I. FACTUAL BACKGROUND

In December 1986, the parties entered into a settlement agreement under which

CSI paid Armstrong, a former Church member, $800,000 in exchange for his dismissal of

claims against CSI. In addition, pursuant to paragraph 7.D. of the agreement, Armstrong

agreed to maintain confidentiality concerning his experiences with CSI and not to publish

orally or in writing any information about his experiences with or knowledge of CSI and

its affiliated individuals and organizations. Paragraph 7.D. also contained a liquidated

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damages provision under which Armstrong agreed that CSI was entitled to liquidated

damages in the amount of $50,000 for each breach of the agreement.¹

In February 1992, CSI filed a complaint against Armstrong alleging that he

breached the settlement agreement by assisting counsel for other litigants against CSI and

providing declarations in their cases describing his experiences with CSI. On October

17, 1995, the court granted CSI’s motion for summary adjudication on four causes of

action, concluding that Armstrong breached the settlement agreement entitling CSI to

liquidated damages. The court found that Armstrong waived his First Amendment rights

by signing the settlement agreement and rejected various challenges to the liquidated

damages provision. The court also enjoined Armstrong from voluntarily assisting anyone

other than a governmental entity engaged in litigation against CSI or defending a claim

against it; facilitating the creation, publication, broadcast or writing of any work referring

to CSI; or discussing CSI with anyone other than an immediate family member or his

attorney. The court thereafter entered a judgment against Armstrong in the amount of

$321,923—$300,000 in liquidated damages plus $21,923 in interest. In addition, the

¹ Paragraph 7.D. provides in relevant part: “Plaintiff [Armstrong] agrees never to
create or publish or attempt to publish, and/or assist another to create for publication by
means of magazine, article, book or other similar form, any writing or to broadcast or to
assist another to create, write, film or video tape or audio tape any show, program or
movie, or to grant interviews or discuss with others, concerning their experiences with
the Church of Scientology, or concerning their personal or indirectly acquired knowledge
or information concerning the Church of Scientology, L. Ron Hubbard or any of the
organizations, individuals and entities listed in Paragraph 1 above. Plaintiff further
agrees that he will maintain strict confidentiality and silence with respect to his
experiences with the Church of Scientology and any knowledge or information he may
have concerning the Church of Scientology, L. Ron Hubbard, or any of the organizations,
individuals and entities listed in Paragraph 1 above. . . . Plaintiff agrees that if the terms
of this paragraph are breached by him, that CSI and the other Releasees would be entitled
to liquidated damages in the amount of $50,000 for each such breach. All monies received
to induce or in payment for a breach of this Agreement, or any part thereof, shall
be held in a constructive trust pending the outcome of any litigation over said breach.
The amount of liquidated damages herein is an estimate of the damages that each party
would suffer in the event this Agreement is breached. The reasonableness of the amount
of such damages [is] hereto acknowledged by Plaintiff.”

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court awarded CSI costs of $334,671.75. This court dismissed Armstrong’s appeal from

that judgment.

On June 5, 1997, the court found Armstrong in contempt of its order enjoining him

from assisting others in litigation against CSI. The court fined Armstrong $1,000 and

ordered that he be confined in the county jail for a period not to exceed 48 hours.

Armstrong did not appear at the hearing in the contempt proceedings and did not file any

opposition or evidence. The court entered a second order of contempt on February 20,

1998, finding that Armstrong violated the injunction in 13 separate incidents between

September 2, 1997 and November 26, 1997, including disseminating a documentary work

about CSI on the Internet. The court fined Armstrong $200 for each violation for a total

of $2,600 and ordered that he be confined a total of 26 days in the county jail. Again,

Armstrong failed to appear at the contempt proceedings. A third order to show cause re

contempt proceeding was issued in December 2000. Armstrong filed an opposition to the

court’s order to show cause but did not appear at the hearing. In his opposition,

Armstrong admitted that he had violated the injunction but argued that he signed the

settlement agreement under duress and that the injunction was unlawful. Armstrong

further averred that he was living in British Columbia, Canada. At the hearing on

January 17, 2001, the court found that the injunction was valid and that Armstrong

violated it by making 131 postings on the Internet violating one or more provisions of the

injunction, that he spoke in violation of the order at a public gathering in Florida on

December 5, 1999, and that he gave a radio interview on December 10, 1999 that violated

the injunction. The court noted that there were two outstanding warrants for Armstrong

which resulted from the two previous contempt proceedings and deferred imposition of

punishment on the present contempt pending Armstrong’s apprehension.

On April 2, 2002, CSI filed another action for breach of contract against

Armstrong again seeking to recover liquidated damages for Armstrong’s breaches of the

settlement agreement. CSI alleged 201 breaches of paragraph 7.D. of the agreement

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requiring Armstrong to maintain confidentiality about CSI and sought liquidated damages

in the sum of $10,050,000. Armstrong answered the complaint and admitted that he had

breached paragraph 7.D. of the agreement more than 200 times. He alleged that the

provisions of paragraph 7.D. of the agreement were illegal, unconstitutional and

unenforceable and raised numerous affirmative defenses including unconscionability of

the agreement and invalidity of the liquidated damages provision.

On April 9, 2004, the case was called for trial. At the outset, the court heard CSI’s

motion in limine to preclude Armstrong from introducing any evidence of defenses to the

action on the grounds of collateral estoppel and res judicata. CSI argued that the 131

breaches of the agreement for which it sought recovery had already been determined to

violate the agreement and the injunction. The court took the motion in limine under

submission and the parties proceeded with opening statements.

After presentation of opening statements, the court granted the motion in limine,

finding that 131 breaches of the agreement did occur, and that “these defenses” had been

previously litigated. The court, however, found that it would be unconscionable to

“punish” Armstrong with liquidated damages in excess of the $800,000 he received as a

benefit under the settlement agreement. Noting that Armstrong had previously been

“sanctioned” in the sum of $300,000, the court entered judgment for CSI in the amount of

$500,000.

During the course of the proceedings, the court, with the agreement of the parties,

consolidated the sentencing hearing on the third contempt proceeding with the trial on

CSI’s current complaint. With respect to the contempt, the court discharged the previous

bench warrants on the contempt citations of June 5, 1997 and February 20, 1998 and

ordered that the jail time imposed on the citations be deemed served. On the third

contempt citation, the court sentenced Armstrong to five days in jail and imposed a fine

of $1,000 which was ordered “concurrent with the judgment.” The court further ordered

that the jail time was deemed served by Armstrong’s appearance in court.

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II. DISCUSSION

CSI petitions for a writ of certiorari to address the court’s order on the contempt

proceedings against Armstrong. As CSI acknowledges, the court’s order in the

contempt proceedings is final and conclusive and is not an appealable order. (Code Civ.

Proc., § 1222; Butler v. Butler (1967) 255 Cal.App.2d 132, 135-136.) The court’s order,

therefore, may be reviewed only upon certiorari if it is in excess of the court’s

jurisdiction. (Taylor v. Superior Court (1942) 20 Cal.2d 244, 246.) CSI has standing to

seek such review. (Id. at p. 247 [since petitioner is person for whose protection the

injunction was granted, he is a party beneficially interested in the ruling complained of

within the meaning of Code Civ. Proc., § 1069].)

CSI is correct that the trial court had no jurisdiction to alter the sentences imposed

in the first two contempt proceedings. “[J]udgments and orders of a court or judge made

in cases of contempt are final and conclusive ([Code Civ. Proc.,] § 1222), and the court or

judge retains no jurisdiction to alter a completed judicial act.” (County of Lake v.

Superior Court (1977) 67 Cal.App.3d 815, 818.) Nor is there evidence to support

Armstrong’s claim that what occurred was actually a remission of punishment. No

motion or request to remit was made at the hearing; the court merely announced its

intention to “discharge the jail and the . . . contempt punishment[] with the entry of the

judgment of $500,000.” After brief arguments from counsel, the court issued its order

that the contempts were “deemed served.” In any event, there were no circumstances in

the record justifying a remission of the sentences. “In unusual cases, even though a

contempt judgment is sustained, if the violation was the result of an honest mistake of

law, and compliance is ultimately obtained [italics added], either the trial or appellate

court may grant a remission of punishment [italics omitted].” (8 Witkin, Cal. Procedure

(4th ed. 1997) Enforcement of Judgment, § 347, p. 355; see City of Vernon v. Superior

Court (1952) 39 Cal.2d 839, 842-843.) Although Armstrong offers many arguments to

support his position his sentences should have been remitted—for example, that his

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violations of the agreement were expressions of his religious beliefs—he has not argued

or shown that in violating the injunction he operated under an honest mistake of law.

And, Armstrong makes no claim that he has complied, or will ever comply, with the

injunction. Indeed, he repeated at oral argument his position that compliance is “literally

impossible.” We conclude therefore that the court’s judgment here discharging the bench

warrants on the contempt citations of June 5, 1997 and February 20, 1998 and deeming

the sentences served was in error.

Armstrong makes several arguments challenging the validity of the contempt

orders. He contends that the first contempt order was improper because he was within his

rights to submit a declaration in a CSI litigation matter despite the contract prohibiting

him from doing so because he was reporting a crime to the court. He urges that the

second and third contempt orders violate his First Amendment right to the free exercise

of his religion. Armstrong, however, is foreclosed from challenging the merits of the

contempt orders in this writ proceeding. The contempt orders are final. (Code Civ.

Proc., § 1222.)

CSI asserts that the court erred in its sentencing of Armstrong on the third

contempt citation. The court sentenced Armstrong to five days in jail and fined him

$1,000 concurrent with the judgment in the breach of contract action. The court deemed

the jail time served by Armstrong’s appearance in court. While the court had the

discretion to determine the sentence on the basis of the evidence and within the scope of

Code of Civil Procedure section 1218 (see 6 Witkin & Epstein, Cal. Criminal Law (3d ed.

2000) Criminal Judgment, § 155, p. 183), its linking of the compensatory damages of the

contract action with the contempt fine was in error (see In re Wales (1957) 153

Cal.App.2d 117, 119 [“a contempt proceeding is not a civil action, either at law or in

equity, but is a separate proceeding of a criminal nature [citations] notwithstanding the

recognized practice to prosecute the contempt in the cause or proceeding out of which it

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arose . . . .”]; Bailey v. Superior Court (1956) 142 Cal.App.2d 47, 54 [court erred in

awarding compensatory damages in contempt action]). The court simply had no

authority to order the fine in the contempt proceeding “concurrent” with the judgment in

the civil action.

III. DISPOSITION

The petition for writ of certiorari is granted in part. The trial court is directed to

reinstate the sentences previously imposed on Armstrong for the contempt citations of

June 5, 1997 and February 20, 1998 and to reinstate the fine on the third contempt

citation. The parties are to bear their own costs.