ANDREW H. WILSON, ESQ., SBN 63209
WILSON CAMPILONGO LLP
475 Gate Five Road, Suite 212
Sausalito, CA 94965-1475
Telephone: (415) 289-7100
Facsimile: (415) 289-7110

Attorneys for Plaintiff,
CHURCH OF SCIENTOLOGY INTERNATIONAL

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF MARIN

Plaintiff, Church of Scientology International ("Plaintiff" or “Church”), submits the following settlement conference statement pursuant to Local Rule §1.22:

STATEMENT OF THE CASE

This is an action for breach of contract arising out of a Mutual Release of All Claims and Settlement Agreement ("Agreement") by which Plaintiff and Armstrong settled the then extensive litigation and gave mutual releases of known and unknown claims.

STATEMENT OF FACTS

On December 6, 1986, Church and Armstrong entered into a Mutual Release of All Claims and Settlement Agreementt ("Agreement) in the case entitled Church of Scientology International

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v. Armstrong, Case No. C 420153. In consideration, Armstrong made various covenants, including the following contained in paragraph 7(D) of the Agreement:

Plaintiff 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 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 or entities listed in Paragraph 1 above. . . . Plaintiff agrees that if the terms of this paragraph are breached by him, that CSI and the other Releases would be entitled to liquidated damages in the amount of $50,000 for each such breach.

Several years later, Plaintiff filed a breach of contract action against Armstrong which was finally determined in this Court in the case entitled Church of Scientology International v. Armstrong, Case Nos. 152229 and 157680 (Consolidated Action). ¹

In the Consolidated Action, Plaintiff sought liquidated damages pursuant to the terms of the Agreement, as well as injunctive relief to prevent any future breaches of the Agreement by Armstrong, including breaches of paragraph 7(D) of the Agreement. Armstrong, represented by counsel, cross-complained against Plaintiff in the Consolidated Action challenging the validity of the Agreement on a number of grounds, including violation of the First Amendment, illegality and duress.

On October 17, 1995, following a motion for summary adjudication of issues brought by the Church against Armstrong, this Court entered an Order of Permanent Injunction in the Consolidated Action adjudicating the following:

"1. Plaintiff and defendant freely and voluntarily entered into a Mutual Release of

¹ The Church originally filed this action in this Court. Armstrong successfully sought a change of venue to Los Angeles County. However, after the Church=s motion for preliminary injunction was granted, Armstrong consented to a transfer of the action to Marin County, where a Final Judgment of Permanent Injunction was entered by the Hon Gary Thomas.

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All Claims and Settlement Agreement in December, 1986.

2. Plaintiff performed all of its obligations pursuant to the Agreement.

3. Defendant Armstrong received substantial consideration for the promises which he made in the Agreement.

4. Since 1990, defendant Armstrong has repeatedly breached paragraphs 7(D) . . .

9. Defendant Armstrong has reiterated numerous times that he intends to continue breaching the Agreement unless he is ordered by the Court to cease and desist . . .

10. Plaintiff's legal remedies are inadequate insofar as the scope of the relief ordered below is concerned . . .

Accordingly, the Court finds that entry of a permanent injunction in this action is necessary in this action because pecuniary compensation could not afford the Church adequate relief, and the restraint is necessary in order to prevent a multiplicity of actions for breach of contract."

Thereafter, the court permanently enjoined Armstrong from "doing directly or indirectly any of the following":

"Facilitating in any manner the creation, publication, broadcast, writing, filming, audio recording, video recording, electronic recording or reproduction of any kind of any book, article, film, television program, radio program, treatment, declaration, screenplay or other literary, artistic or documentary work of any kind which discusses, refers to or mentions Scientology, the Church and/or any of the Beneficiaries (which includes Plaintiff herein, CSI);

5. Discussing with anyone, not a member of Armstrong's immediate family or his attorney, Scientology, the Church, and/or any of the Beneficiaries (including CSI)"

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FACTUAL AND LEGAL CONTENTIONS IN DISPUTE

Armstrong does not dispute the execution of the Agreement, that he received substantial

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consideration for his promises, nor does he dispute that he has breached the agreement on thousands of occasions since the Agreement was entered into. Most significantly, Armstrong does not dispute, and in fact admits in his Answer, that he committed the 201 breaches of the Agreement upon which the complaint is predicated.

Armstrong contends that the Agreement was not entered into Armstrong's own free will but was procured by fraud and duress. Armstrong contends that the Agreement is unenforceable and that the Orders entered by the Hon. Gary W. Thomas enforcing the Agreement, including the injunction entered against Armstrong and the contempt citation against Armstrong for his violation of the injections, were the result of a criminal conspiracy between the Church, its attorneys and Judge Thomas.

CITATIONS TO SUPPORTING LEGAL AUTHORITIES

The following authorities support the proposition that Armstrong is collaterally estopped from raising any of his defenses:

Pinewood Investors v. City of Oxnard, 133 Cal.App.2d 3d 1030 (1982); Savage v. Pacific Gas & Electric Co. 21 Cal.App.4th 434 (1993). Weil & Brown, Civil Procedure Before Trial, Section 10:20, at p.10-7, Rutter Group (2003).

First N.B.S. Corp. v. Gabrielsen, 179 Cal.App.3d 1189, (1986); Teitelbaum Furs, Inc. v. Dominion Ins. Co., Ltd., 58 Cal.2d 601 (1962); Bernhard v. Bank of America, 19 Cal.2d 807 (1942); City of Los Angeles v. City of San Fernando, 14 Cal.3d 199 (1975); Henn v. Henn, 26 Cal.3d 323 (1980).)

HIGHEST PREVIOUS OFFER; LOWEST PREVIOUS DEMAND; BARRIERS TO SETTLEMENT

There have been no previous offers, and no previous demands. there have been no face to face settlement negotiations. The barriers to settlement are that Armstrong refuses to acknowledge

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any liability, refuses to and persists in maintaining his right to continue violating the Agreement in a wholesale fashion

I, the undersigned, declare:

I am employed in the County of Marin, State of California. I am over the age of 18 and not a party to the within action; my business address is 475 Gate 5 Road, Suite 212, Sausalito, California 94965.

On March 19, 2004, I served the foregoing document(s) described as follows:

CHURCH OF SCIENTOLOGY INTERNATIONAL'S MANDATORY SETTLEMENT CONFERENCE STATEMENT

on the interested parties in this action by placing true copies thereof enclosed in sealed envelopes addressed as stated on the attached service list, as follows:

          BY U.S. MAIL:

XX     BY FEDERAL EXPRESS OR OVERNIGHT COURIER

          BY HAND DELIVERY

Gerald Armstrong
1UP-45950 Alexander Avenue
Chilliwack, B.C. V2P 1L5
Canada

Executed on March 19, 2004, at Sausalito, California

XX      (State) I declare under penalty of perjury under the laws of the State of California that the above is
true and correct.

(Federal) I declare that I am employed in the office of a member of the bar of this Court at whose
direction the service was made.