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IN THE SUPERIOR COURT OF APPEAL OF THE STATE OF CALIFORNIA

IN AND FOR THE COUNTY OF MARIN

HONORABLE GARY W. THOMAS, PRESIDING DEPARTMENT 1

 

CHURCH OF SCIENTOLOGY INTERNATIONAL,
Plaintiff,
vs.
GERALD ARMSTRONG, ET AL.,
Defendants.

No. 157680

REPORTERS/' TRANSCRIPT OF PROCEEDINGS

January 27, 1995

APPEARANCES:

For the Plaintiff:	Andrew Wilson Laurie Bartilson Attorneys at Law
For the Defendant:	Ford Greene Attorneys at Law

REPORTED BY: JANICE M. KNETZGER, CSR#4434

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January 27, 1995

P R O C E E D I N G S

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THE COURT: The Church of Scientology versus Gerald Armstrong, et al.

MR. GREENE: Ford Greene for defendants.

MR. WILSON: Andrew Wilson and Laurie Bartilson.

THE COURT: I don't encourage these daily occurrences in this case.

What do you say about this matter, Mr. Green?

MR. GREENE: The comments that I have are somewhat extended.

THE COURT: Go ahead.

MR. GREENE: They are as follows:

First of all, with respect to your tentative ruling as to the enforceability of the liquidated damages provisions, your tentative ruling did not take into consideration the reasonability of the liquidated damages provisions at the time that Armstrong entered into the Settlement Agreement.

Specifically, what the Court -- at least in the tentative ruling did not consider -- was the issue with respect to Armstrong's lack of consent. There were two areas where that lack of consent was manifested.

THE COURT: I read the transcript. He was asked

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specifically a great number of questions regarding settlement. He agreed to it, knew the conditions. He was bound by it. He was asked whether there was something he wanted clarified. He did not want it clarified.

MR. GREENE: That's correct.

And that was in reliance on the representations of his attorney Michael Flynn who had specifically told Armstrong that the provision requiring a $50,000 liquidated damages hit any time he mentioned the Church of Scientology was, quote, "not worth the paper on which it was written", close quote.

THE COURT: He might have some claim against Mr. Flynn. That's a different matter.

MR. GREENE: Well, this goes to Armstrong's ability to consent.

The issue of consent is heightened because what he was waiving were First Amendment rights, Constitutional rights.

In order for his consent to be effective, it had be known, it had be intelligent. It had to be voluntary. If he was specifically misinformed as to material provisions of the agreement, that test of Constitutional voluntrainess was not adequately met.

In addition, not only was there the problem with respect to the representations made by Flynn to Armstrong on the enforceability or lack of enforceability

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of the provisions, but there is also the question of Flynn's own conflict of interest.

That conflict of interest took two forms.

One form it took was the fact that he was involved in settling his own litigation against Armstrong or against Scientology -- as well as representing some 15 people who also were involved in litigation against Scientology, all in the same agreement.

So under those kinds of circumstances, there had to be a lot greater protections then there were because of the dual conflicts intrinsic to the manner of Flynn's representation.

In addition to that, Flynn did not advise Armstrong that he had engaged in separate side negotiations with Scientology counsel in furtherance of the Scientology's objective of overturning Judge Breckenridge's decision by engineering a lack of opposition to the appeal by Armstrong.

Flynn talks to Scientology lawyers and enters into a stipulation that if there is going to be any kind of retrial, if the non-opposed appeal is successful, the damages to Armstrong will not exceed one dollar over the jurisdictional minimum for superior court.

And in addition to that, that Scientology will indemnify Flynn who, in turn, will indemnify Armstrong. Armstrong was never advised of this.

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If Armstrong had been advised of this, Armstrong would have been on notice that there would have been more activity involved than his lawyer simply telling him in response to his questions regarding the enforceability of $50,000 liquidated damages hits; that they were not enforceable and weren't worth the paper on which they were written.

Those issues are not addressed by the Court in its tentative ruling.

My assertion that in order for Armstrong's waivers to be valid, it was a Constitutional standard, not just an ordinary waiver, but the kind of waiver that's required by the Court in a criminal case.

For example, when a criminal defendant is pleading guilty is changing his or her plea, that waiver of the right to counsel and against self-incrimination has got to be intelligent knowing and voluntary is based on the ITT versus Duely case 214 C.A. 3d 307 at 319 where Duely states that when there is a waiver of First Amendment rights -- which unquestionably is what is at issue here -- that waiver has got to be intelligent knowing and voluntary.

The other issue going to the unreasonableness of the circumstances at the time the parties entered into the agreement with respect to --

THE COURT: All this is in your papers. Is

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there something else?

MR. GREENE: That's not. The Constitutional waiver part is not in my papers. Indeed, the aspects having to do with Flynn.

THE COURT: You're alleging something new which are not in your papers which are not appropriate for argument here.

MR. GREENE: Well, since the Court did not address those factual issues and concluded that Armstrong had not raised any question of fact as to whether or not he effectively consented to a waiver of his Constitutional rights, those specific things I believe needed to be addressed because the Court did not address those.

And also, in the context which I will get to later with respect to the interview with American Lawyer where the Court indicated that Armstrong -- his testimony was not credible because he asserted that he had already -- that he did not speak about any matters other than what were covered in the Breckenridge decision to the American Lawyer reporter and then later admitted in deposition that he didn't even recall discussing the decision with the American Lawyer reporter.

He did not assert that in his papers.

In light of the fact that they focused on Armstrong -- on the mistaken allegation in opposition to the motion for Summary Judgment that Armstrong says that

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when he talked to Bill Horn, it wasn't anything other than Breckenridge when he didn't assert that in his papers.

Given the gravity of the situation and in an abundance of caution, it's incumbent upon me to call the Court's attention to matters that I believe are central and that the Court did not address in its tentative ruling.

THE COURT: Any response that you wish to make?

MR. WILSON: Very briefly.

MR. GREENE: Your Honor, just --

THE COURT: Just a moment.

MR. GREENE: I want to make sure the Court's not cutting me off.

MR. WILSON: I understand Mr. Greene may not be finished.

MR. GREENE: Right.

THE COURT: He is right now.

MR. WILSON: Good.

THE COURT: Any response?

MR. WILSON: Briefly.

I think all of the stuff is in the papers.

As you indicated, you read the transcript. His consent was freely given.

He's raised these issues before the Court in Los Angeles. The Judge didn't buy it. The Court of Appeal didn't buy it.

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Your tentative ruling I think was very comprehensive on it. I think there is no reason to change the tentative.

I think what Mr. Greene is arguing -- I think he's been watching the O.J. trial and he's arguing that Mr. Armstrong had mental arthritis and couldn't consent to the settlement.

The only thing I want to -- I'd like you to take another look at the cause of action you didn't grant Summary Judgment on. I don't want to be greedy, but I'm going to be.

If you look at the separate statement -- it's fact number nine. The paragraph that's at issue provides -- I'm going to paraphrase it.

That plaintiff understands that the non-disclosure provisions apply to any documents defined in Exhibit A and they apply that he wouldn't disclose the substance of his complaint on file in the action referred to then.

It goes on including documents, tapes, films, et cetera, and that the declaration that we're hanging our hat on here which appears as part of Exhibit A to the evidence says that he is authenticating true and correct copies of reporter's transcript in that action.

He is authenticating documents that relate to the substance of his complaint.

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For that reason, I believe the Summary Judgment is appropriate on that cause of action as well.

Finally, with respect to the sanctions that you granted -- as I said I'm going to be greedy -- I think they need to be higher. I think Mr. Armstrong just hasn't got the message.

I think that Ms. Bartilson had to come up here and appear. We had to spend attorney's fees on this.

I request that the sanctions be in the amount of $3,000.

I'll respond to whatever Mr. Greene has to say.

THE COURT: Any response to the request for sanctions of $3,000?

MR. GREENE: Yes, your Honor.

I think that under the circumstances that that would be excessive. I'm not going to repeat the arguments that were made on the exparte application that were before you yesterday.

I will, however, incorporate all of those arguments now.

I think that there certainly is no question but that with respect to late filed papers, Mr. Armstrong has gotten the message that papers cannot be filed late willi nilly without any application to the Court.

Under the circumstances, I think $700 is

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plenty in order to have Mr. Armstrong understand.

THE COURT: With regard to this case, it's obvious from the very terms, the agreement was to buy silence.

Your client got some half a million dollars more or less for it and he got advice from not one but two attorneys. He stated on the record that the agreement was made of his own free will and you have argued that Mr. Armstrong did not have the benefit of active counsel.

When you look at the statements of Mr. Armstrong, there is no showing of duress whatsoever it looks like and I find that Mr. Armstrong carefully weighed the options, the benefits of the settlement as opposed to the detriment and giving up of certain rights he has. One of them is the requirement of silence.

There is no showing of any duress. It shows that Mr. Armstrong by his own declarations carefully weighed his options. He did not do something against his will. He did not succumb to the other persons.

With regard to the matter, there is no reason to change my tentative ruling.

With regard to the complaint made by the plaintiff here involving the 11th cause of action -- I'm relying upon the papers on this motion for Summary Adjudication of the issues -- the papers do not sufficiently address Paragraph D --

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MR. GREENE: 7-D.

THE COURT: -- so I did not grant it.

With regard to the fourth and sixth cause of action, I granted that as set forth in my tentative ruling which becomes the final ruling and denied it as to the 11th cause of action.

With regard to the motion to strike, I have granted the motion to strike. As I've indicated, the papers were filed some six days late.

There was no attempt made by you Mr. Greene or anyone connected with you to obtain permission of the Court to file late papers which, from the checking in my file, I previously granted to you or considered the filed late papers that were just perhaps one or two days late --

MR. GREENE: Yes.

THE COURT: -- and granted it upon some minor sanction.

With regard to the amount of $700, I think it is reasonable when one considers the time consumed and the fact that when we're talking about six days late, you knew that it was more than we're talking about, an our or two hours or one day possibly late.

Finding that to be in bad faith, therefore, the sanctions are granted as prayed but the amount of $3,000 is not the amount.

The amount of $700 should be payable within

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20 days.

MR. GREENE: All right.

I apologize to the Court for allowing those papers to be filed late and do recognize and appreciate the Court's comments with respect to leeway that's been provided in the past.

One thing I want to point out that Armstrong's defense privilege was not addressed at all in the Court's tentative ruling.

THE COURT: It was definitely with regard to the matter and I decided and weighed whether there was any duress and whether he had sufficient counsel advice with regard to the matter and .I found that he had.

He, obviously, was your client and from a reading of his own declarations an intelligent person and at the time he advised the Court that he had given this agreement, it was made under his own free will.

A person coming from the background of Mr. Armstrong, that means something.

I thank you. You prepare the order.

MR. WILSON: A housekeeping matter.

Will the declarations that were stricken --

Can they be returned so that they are not in the court file --

THE COURT: Yes, they can be.

MR. WILSON: -- or put in the circular file?

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THE COURT: Take the originals out. Those documents that I struck.

MR. WILSON: When you consolidated these two cases, you may recall you had previously ordered that Mr. Benz be the discovery referee for the case. That was here before they were consolidated.

There is currently pending a motion before Mr. Benz relating to discovery on the consolidated case.

Mr. Greene said because there was no formal order appointing Mr. Benz in the latter case that he's not going to be appearing before Mr. Benz on a motion as to which he filed opposition.

THE COURT: Yes. He so appointed with regard to the consolidated case.

MR. WILSON: Thank you.

MR. GREENE: With respect to that, Your Honor, for the record, on behalf of Mr. Armstrong I object to that appointment --

THE COURT: The record may so reflect.

MR. GREENE: -- and object to further payment of his fees.

THE COURT: Yes.

MR. WILSON: Thank you, Your Honor. Sorry we have taken so much of your time this week.

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(Whereupon, the matter calendared for this date concluded.)