CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiff, vs. GERALD ARMSTRONG, Defendant.

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Case  No. CV 021632 Consolidated with Cases Nos. 152229 and 157680 DEFENDANT GERRY ARMSTRONG’S NOTICE OF MOTION AND MOTION TO SET AN EVIDENTIARY HEARING PURSUANT TO C.C.C. § 1670.5 ON THE UNCONSCIONABILITY OF PLAINTIFF SCIENTOLOGY’S CONTRACT; TO STAY SCIENTOLOGY’S MOTION TO REINSTATE JAIL SENTENCES AGAINST ARMSTRONG AND ISSUE WARRANT FOR HIS ARREST;  AND TO STAY ALL OTHER ACTIONS AGAINST DEFENDANT UNTIL AFTER THIS COURT’S DETERMINATION OF UNCONSCIONABILITY FOLLOWING SUCH HEARING; DECLARATION OF GERRY ARMSTRONG IN SUPPORT Date:   October 5, 2007 Time:  9:00 a.m. Department L

TO PLAINTIFF CHURCH OF SCIENTOLOGY INTERNATIONAL AND ITS ATTORNEY OF RECORD:

PLEASE TAKE NOTICE that on October 5, 2007, at 9:00 a.m. in Department L of this Court, located at 3501 Civic Center Drive, San Rafael CA, 94903, defendant Gerry Armstrong (“Armstrong”) will move this Court to set an evidentiary hearing pursuant to California Civil Code Section 1670.5(b) as to the commercial setting, purpose and effect of the contract that plaintiff Church

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of Scientology International (“Scientology”) seeks to enforce against Armstrong in this case and its consolidated cases to determine the contract’s unconscionability; to stay Scientology’s motion to reinstate jail sentences against him and to issue warrants for his arrest; and to stay any other actions by Scientology against him in this Court until after such an evidentiary hearing has been held and this Court has made such a determination. Armstrong’s motion is made upon the grounds that the Marin Superior Court has already rendered a determination of unconscionability as to two of the contract’s clauses; that Scientology has voluntarily dismissed its appeal of that determination; that Armstrong has claimed and is claiming to this Court that certain other clauses of Scientology’s contract are unconscionable; and that Armstrong is entitled to such an evidentiary hearing as a matter of law. This motion is based upon this notice, the memorandum of points and authorities, the declaration of Gerry Armstrong in support of opposition to motion to reinstate sentences and issue warrant, and in support of motion to set evidentiary hearing pursuant to C.C.C. § 1670.5 (“GA Dec”) and the exhibits thereto (“GA Dec, Ex. __”) all served and filed herewith, the record in this consolidated case, the record on appeal in this case, and such other matters as may properly be brought before the Court.

Dated:  August 30, 2007

Respectfully submitted,    Gerry Armstrong

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MEMORANDUM OF POINTS AND AUTHORITIES

At trial on April 9, 2004, this Court stated:

MR. ARMSTRONG RECEIVED A BENEFIT UNDER THE SETTLEMENT AGREEMENT OF $800,000. AND I THINK IT WOULD BE UNCONSCIONABLE TO PUNISH HIM BEYOND WHAT THE BENEFIT WAS THAT WAS CONFERRED TO HIM.

GA Dec, 2:11-19, Ex. B, 56:20-23

On May 20, 2004 this Court issued an order, which became the judgment in the case, and which states in pertinent part:

After hearing opening statements of the parties, taking judicial notice of the various pleadings and papers on file in the consolidated actions Church of Scientology International v. Armstrong, Case No. 152229 and Church of Scientology International v. Armstrong, Case No. 157680, the Court made the following ruling:

Mr. Armstrong received a benefit under the settlement agreement of $800,000. It would be unconscionable to punish him beyond what the benefit was that was conferred to him. Armstrong was previously sanctioned in the sum of $300,000.

GA Dec, 2:21-3-5, Ex. C.

Scientology appealed from this judgment, filed an opening brief, and Armstrong filed a respondent’s brief. (GA Dec. 3:25-4:6, Ex. F) He argued that Scientology’s remedy was to avail itself of the remedy provided by C.C.C. § 1670.5 and demonstrate, through the presentation of evidence as to the contract’s commercial setting, purpose, and effect that the contractual clause this Court adjudged unconscionable was actually conscionable. As a party, Armstrong also had, and has, a right to be afforded a reasonable opportunity to present evidence as to the contract’s commercial setting, purpose, and effect, and he requested such opportunity, and requests it now.

California Civil Code §1670.5, is the governing law in this case, and very clear:

(a) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of
any unconscionable clause as to avoid any unconscionable result.
(b) When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the court in making the determination.

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There is no doubt whatsoever that Judge Duryee found the contract or its

clauses unconscionable. The essence of and reason for her judgment is unconscionability. The reason she gave for her judgment, in 2004, as unconscionability applied to the contract’s liquidated damages provision, was that, in this case, liquidated damages to Scientology beyond what Scientology had given Armstrong in settlement of his lawsuit and other claims against Scientology, in 1986, would be unconscionable. In this case, Scientology was seeking liquidated damages 20 times the monetary amount given to Armstrong to settle his claims up to December 1986. [  ]

Judge Duryee linked what she meant by unconscionability to the liquidated

damages’ unreasonableness.

The Court: Well, liquidated damages have to be reasonable. I think it's unreasonable to go beyond the amount that was paid to Mr. Armstrong. Exs.16:351.

Judge Duryee acted, as provided by CCC §1670.5, to limit the application

of Scientology’s unconscionable liquidated damages clause as to avoid the unconscionable result of Armstrong being assessed monetary damages for millions or trillions of dollars or more, lawsuit after lawsuit, for the rest of his life.

Scientology obviously does not like Judge Duryee’s emphatic judgment

that its “contract,” by which it had hounded Armstrong around the world, bankrupted him and threatened him for 18 years, is unconscionable. Indeed, Scientology should be very concerned, because Judge Duryee’s judgment not only ends Scientology’s drive for judicial enforcement, but exposes all of what Scientology and its beneficiaries, such as attorney Wilson, have done to enforce the unconscionable “contract” or otherwise unconscionably shudder Armstrong into silence. But Scientology is not going about undoing Judge Duryee’s judgment that its “contract” is unconscionable in the way prescribed by law.

Since it appeared to Judge Duryee that the contract not only may be

unconscionable but is unconscionable, and Scientology desires to invalidate that judgment of unconscionability, Scientology must avail itself of the evidentiary hearing
that it is to be afforded by CCC §1670.5. Scientology must present evidence of the circumstances at the time the “contract” was made that demonstrate that its unconscionable clauses were not then unconscionable. Armstrong must be afforded such an evidentiary hearing to demonstrate that the unconscionable clauses that Judge Duryee found to be unconscionable were indeed unconscionable at the time the “contract” was made.

CCC §1670.5 requires that to challenge the judgment of unconscionability

Scientology must present evidence as to the commercial setting at the time the “contract” was made, its purpose and effect. The time when Judge Thomas, years later, signed his summary adjudication orders finding the unconscionable “contract” “reasonable” and“enforceable” is not relevant to the determination of the reasonableness or

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unconscionability of the “contract” at the time it was made, except as an effect of the unconscionable “contract.” Obviously, to assist the Court in determining the effect of Scientology’s unconscionable contract, there exists now 18 years of evidence of that effect, which includes Judge Thomas’ actions and orders enforcing that unconscionable “contract.” Thus a later judgment of unconscionability as to the “contract” must be an automatic exception to the application of collateral estoppel and res judicata to Judge Thomas’ judgment. Scientology, citing Hong v. Somerset, 161 Cal. App. 3d 111 (1984) admits as much.

Moreover, the reasonableness of a liquidated damages provision is determined as of the date of the execution of the contract, not at the time of the breach, and certainly not at the time of a subsequent judgment finding breach.

AOB, 15

Scientology is attempting to improperly avoid submitting to an evidentiary hearing on the circumstances at the time the “contract” was made, which is Scientology’s“remedy” provided by law, by getting this Court to overrule the Marin Court’s judgment of unconscionability. This Court cannot overrule the judgment of unconscionability, however, because this Court is not the trier of fact as to the circumstances at the time the“contract” was made, concerning which no evidence has yet been adduced because there has been no hearing.

As afforded by CCC §1670.5, Armstrong himself requests and hereby submits to an evidentiary hearing on the “contract’s” commercial setting, purpose, and effect to aid the trial court in making any determination that remains to be made as to the “contract’s” unconscionability. From the day in 1986 when he was pressured and deceived into
signing Scientology’s unconscionable “contract” Armstrong has considered that“contract” unconscionable. From the day in 1992 when Scientology served on him its first lawsuit to enforce its unconscionable “contract” Armstrong has sought an evidentiary hearing, indeed a trial, on the circumstances at the time the “contract” was made in order to demonstrate its unconscionability. From the days in 1995 when Judge Thomas made his summary adjudication rulings denying Armstrong a trial on the circumstances at the time the unconscionable “contract was made” Armstrong has protested that the denial of the trial that he sought was improper. From the day that this Court improperly dismissed Armstrong’s appeal from Judge Thomas’ denial of the trial Armstrong sought Armstrong has protested that improper dismissal. Judge Duryee’s unconscionability judgment has proven Armstrong right, and CCC §1670.5 now gives him, and Scientology, the evidentiary hearing, or trial, that he was previously improperly denied.

GA Dec Ex F, pp 31-35

On September 2, 2005, Scientology submitted to the Court of Appeal a request for dismissal of its appeal, and on September 8, 2005, the Court of Appeal issued an order dismissing the appeal. (GA Dec 4:12-16)

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On September 16, 2005, Armstrong wrote to Scientology attorney Kendrick Moxon, attorney of record herein and in Scientology’s appeal and writ petition, and requested his client’s agreement to the setting of a C.C.C. §1670.5 evidentiary hearing in this Court on the commercial setting, purpose and effect of Scientology’s contract. (GA Dec 4:17-21, Ex. G)

Finally, because of your voluntary dismissal of your appeal of Judge Duryee’s judgment I would like to work out with you a format and timetable for a hearing or hearings in the Marin Court to resolve certain issues that have been ripened by that dismissal. The legal authority and guidelines for the immediate hearing I seek are provided by C.C.C.§1670.5, which, as you know, I quote in my respondent’s brief and argue is the governing law in the case.
[…]

As I stated in my brief, your client’s remedy by statute was not to try to get the

Court of Appeal to overturn the judgment of unconscionability, a course you have now abandoned with your appeal dismissal. Your client’s remedy was to avail itself of the evidentiary hearing that your client is afforded by C.C.C. §1670.5, obviously in the Marin Superior Court, as to your contract’s commercial setting, purpose, and effect. If the Court had adjudged your contract unconscionable after such a full hearing, that would be the
time for you to appeal. Your client actually appealed the unconscionability judgment prematurely in order to avoid the statutory evidentiary hearing. You and your client then chose to dismiss the appeal, hoping again to perhaps be able to avoid rather than avail yourselves of such a hearing. The Court of Appeal should have reached that result or remedy, as California’s Unconscionable Contract Statute is very clear, if you had not dismissed the appeal and I had prevailed.

Just as your client, upon the appearance to the court that your contract is unconscionable, is to be afforded an evidentiary hearing as to the contract’s commercial setting, purpose, and effect, so am I, the other party, to be afforded such a hearing. As you know, I requested the Court of Appeal in my respondent’s brief to order an evidentiary hearing in accordance with C.C.C. §1670.5, and with your dismissal of your appeal the opportunity for the Appellate Court to order the Marin Court to afford me such a hearing is also gone. My remedy now is to go directly to the Marin Court and request the Court to set an evidentiary hearing, and I would like your client to either join in my request for a hearing, since you have to be there anyway, or to at least not oppose my request.

As you know, I have had no reasonable opportunity to request an evidentiary hearing of the Marin Court because of your appeal of the unconscionability judgment and the long unexplained delay in my lawyer Ford Greene’s receipt of the judgment from the Court or Mr. Wilson, which immediately preceded the appeal. Following the April 9, 2004 trial, Mr. Wilson and Mr. Greene engaged in a number of weeks of back-and-forth over the form of the orders to incorporate the rulings Judge Duryee made at trial. Because
Mr. Wilson and Mr. Greene were unable to agree on the language of the orders, Judge Duryee herself wrote the two orders, which were entered on May 20. 

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Mr. Wilson received the two orders, but Mr. Greene did not receive either of them, however, and continued to communicate with Mr. Wilson to try to reach an agreement on the language for the two proposed orders. In fact, as late as July 8, 2004, Mr. Wilson forwarded to Mr. Greene another proposed judgment for Mr. Greene’s approval as to form. Mr. Greene only learned from Mr. Wilson about Judge Duryee’s May 20 orders on July 12, on which date Mr. Greene went to the Marin Courthouse and obtained copies of those orders. On July 15 your client, who along with its lawyers had possessed the orders for almost two months, filed its notice of appeal and its petition for writ of mandate or certiorari.

Thus I have never had an opportunity to request the Marin Court to set the evidentiary hearing that I am to be afforded pursuant to C.C.C. §1670.5, and with your dismissal of your appeal I will now do so. I am sure your client wished that my right to such an evidentiary hearing had been dismissed or lost along with your appeal, but the dismissal actually makes the need for a full hearing more acute. With your voluntary dismissal, you have accepted Judge Duryee’s judgment, and you have accepted that where it conflicts with Judge Thomas’ judgment, Judge Duryee’s judgment rules. You have acknowledged that unconscionability trumps res judicata and collateral estoppel, which of course unconscionability must.

You have also accepted with your voluntary dismissal of your appeal that liquidated damages in your client’s contract are punishment, which of course they are. As I already stated in my respondent’s brief in the appeal, your client argued in its opening brief, perhaps crafted by Mr. Wilson, that because the law does not permit liquidated damages to be punishment, the punishment that your client’s liquidated damages clause subjects me to cannot be punishment; otherwise the liquidated damages would be punishment, which liquidated damages cannot by law be.

The trial court erred in confusing cumulative judgments exceeding $800,000 with punishment because, as a matter of law, liquidated damages are not and cannot be punishment. The trial court also had no authority to limit CSI's recovery under the liquidated damages provision by characterizing it as "unconscionable." A reasonable, enforceable liquidated damages provision is, by definition, not unconscionable.

There is now a final judgment, which you have accepted, that says that the liquidated damages provision is unconscionable. Therefore the provision is, as your client says, not reasonable and not enforceable. The judgment states moreover that the monetary sanctions your client has been attempting to obtain against me, which your client and its lawyers have been calling liquidated damages, is actually punishment. Since liquidated damages may not by law, as your client also says, be punishment, the“liquidated damages provision” is unlawful and cannot lawfully be enforced.

Although Judge Duryee did not state in her judgment that punishing me up to $500,000 was unconscionable, she also did not state that it was not unconscionable. The

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judgment simply states that punishing me beyond $500,000 was unconscionable. I am claiming that all of the punishment your client has been calling liquidated damages, from the first dollar through the last impossibillion dollars, is unconscionable. I shall now do whatever I can to be afforded, as provided in C.C.C. §1670.5, a reasonable opportunity to present evidence as to the contract’s commercial setting, purpose, and effect to aid the Marin Court in making the determination that the contract is, as your client has attempted to enforce it, and is still obviously actively attempting to enforce it, in all ways unconscionable.

There has never been a hearing on the commercial setting, purpose, and effect of the contract, and it is sorely needed in this litigation war your client, and you, are waging on me. Your client and its lawyers have gone to criminal lengths to prevent me from getting a fair hearing or trial. Yet, absent a fair, conscionable settlement, a fair hearing or trial is about the best thing I could work for to give either me or your multitudinous client peace. It will give me peace, because I’ve been fighting for a fair hearing for something over sixteen years, just to get that fair hearing. By its refusal to be fair and give me a fair hearing, of course, your client is saying, as it has always said, that it doesn’t want peace. It wants to war on me and get its satisfaction by punishing me.

I am not kidding myself that I’m a lawyer, and I know that I have been blessed far beyond my severe limitations and resourcelessness in lasting against your client and its lawyer army in the legal arena this long. I know that to prosecute my claims against your client I will need a lot of help, and even to proceed with the C.C.C. §1670.5 evidentiary hearing I really will need a lawyer. I’m going to do what I can to involve lawyers in my situation and claims, and I hope that your client’s dismissal of its appeal and the effects of the dismissal, some of which effects I’ve touched on in this letter, will make my legal situation and claims much more fetching. In the meantime, you have to deal with me, so I want to tell you that I’m available should your client or you wish to discuss dismissal of your writ petition, or the setting of a C.C.C. §1670.5 hearing in the Marin Court, or even about settling this war once and for all.

I have not addressed in this letter a number of issues that exist between your client and me, such as religious liberty, the constitutional guarantees for which also completely bar your client from doing what it's doing to punish me, and the obvious malicious prosecution cause of action that has matured with your voluntary dismissal of the appeal. Clearly your client and its lawyers and I have many things to discuss in order to bring an uncataclysmic end to your long war on me. For now, I would like your client to take the simple steps I have suggested in this letter, which, with your dismissal of your appeal, I believe your client and you must take.

[…]

Agree to a C.C.C. §1670.5 evidentiary hearing in the Marin Superior Court on the commercial setting, purpose, and effect of your contract.(GA Dec Ex. G, 12-16)

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Scientology’s attorneys have not responded to Armstrong’s letter requesting their client agree to the setting of a C.C.C. §1670.5 hearing. (GA Dec 4:24,25)

From the time (July 12, 2004) Armstrong learned of this Court’s May 20, 2004 judgment until Scientology filed its notice of appeal from the judgment (July 15, 2004) he and his attorney had only three days to request that this Court afford Armstrong the reasonable opportunity C.C.C. §1670.5 mandates that he be afforded to present evidence as to the contract’s commercial setting, purpose, and effect.

On January 12, 2006, the Court of Appeal issued its remittitur issued in Scientology’s voluntarily dismissed appeal. (GA Dec 4:26-5-2, Ex. H)

On August 7, 2007, Scientology filed its motion to have this Court reinstate sentences against Armstrong and issue a warrant for arrest . Armstrong is filing an opposition to Scientology’s motion at this time, and he incorporates that opposition into this motion. Since Scientology waited over a year and a half to file its motion after remittitur issued, it really cannot complain that Armstrong waited too long to file this motion.

Armstrong, of course, is a Canadian citizen living in Canada, not an attorney, in propria persona, and in forma pauperis. He has never therefore had the reasonable opportunity mandated by C.C.C. §1670.5. He believes that if this Court sets an evidentiary hearing in compliance with C.C.C. §1670.5 he will be able to retain an attorney to represent him at such a hearing. He requests that he be able to attend the hearing, if any, on this motion to set a C.C.C. §1670.5 evidentiary hearing, by CourtCall. He will undertake to physically attend the evidentiary hearing once set.  (GA Dec 6:3-9)

CONCLUSION

Armstrong has a statutory right, both by this Court’s judgment now that Scientology has dismissed its appeal, and by his own claim to this Court, to an opportunity to present evidence as to the unconscionability of Scientology’s contract.  Scientology has two choices:  submit to an evidentiary hearing provided by C.C.C. §1670.5 on the contract’s unconscionability; or, acknowledge that the contractual clauses it seeks to enforce are unconscionable and stop all enforcement actions. Clearly, Scientology has acted to prevent Armstrong from receiving a fair hearing all these years because it knows that the contract clauses it is enforcing are unconscionable.  Scientology must not be permitted to continue to deny Armstrong a fair hearing, because such denial would be unconscionable.

Armstrong therefore asks this Court to grant him an evidentiary hearing in compliance with C.C.C. §1670.5, to deny or stay Scientology’s motion to reinstate sentences and issue a warrant, 

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and to stay any collection actions by Scientology or any other punishment against him until after such an evidentiary hearing has been held.  

Dated:  August 30, 2007

Respectfully submitted,    Gerry Armstrong

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PROOF OF SERVICE

I am over the age of eighteen years and am not a party to the within action. My business address is #2-46298 Yale Road, Chilliwack, B.C. V2P 2P6 Canada

I served the following document:

DEFENDANT GERRY ARMSTRONG’S NOTICE OF MOTION AND MOTION TO SET AN EVIDENTIARY HEARING PURSUANT TO C.C.C. § 1670.5 ON THE UNCONSCIONABILITY OF PLAINTIFF SCIENTOLOGY’S CONTRACT; TO STAY SCIENTOLOGY’S MOTION TO REINSTATE JAIL SENTENCES AGAINST ARMSTRONG AND ISSUE WARRANT FOR HIS ARREST; AND TO STAY ALL OTHER ACTIONS AGAINST DEFENDANT UNTIL AFTER THIS COURT’S DETERMINATION OF UNCONSCIONABILITY FOLLOWING SUCH HEARING; DECLARATION OF GERRY ARMSTRONG IN SUPPORT

on the following person on the date set forth below, by UPS Overnight Courier to the addressee below:

Kendrick L. Moxon, Esquire
Moxon & Kobrin
3055 Wilshire Blvd., Suite 900
Los Angeles, CA 90010

and by e-mail to: kmoxon@earthlink.net

I declare under penalty of perjury under the laws of California, the United States and Canada that the above is true and correct.

Executed on August 30, 2007 at Chilliwack, B.C., Canada.

_________________
Caroline Letkeman