Subject: Grady Ward's Reply to cult Opposition to Motion to Rescind (FRCivP 60(b))
From: grady@gradyward.com (Grady Ward)
Date: Sat, 26 Jun 1999 17:03:47 GMT

Here is my Reply filed and served Friday, June 25, 1999.

I will put up the *entire* Reply, including full exhibits, after I finished switching web providers in a few days.

For more information on this motion, including the original moving papers and RTC's complete Opposition, see my web page www.gradyward.com --> my work --> legal

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA

RELIGIOUS TECHNOLOGY CENTER,
a Scientology Corporation,

                        Plaintiff,

           v.

GRADY WARD, an individual,

                        Defendant.

)
)
)
CASE NO. C-96-20207-RMW (EAI)

REPLY TO PLAINTIFF'S OPPOSITION TO NOTICE OF RESCISSION
UNDER FRCIVP 60(b)


DATE: 
TIME:  
CTRM:  Hon. Jeremy Fogel


TABLE OF AUTHORITIES AND CONTENTS

Cases

Arata v. Nu Skin Intern. Inc., 96 F.3d 1265 (9th Cir. [Cal.] 1996)	
1

Badie v. Bank of America, 67 Cal. App. 4th 779; 79 Cal. Rptr. 2d 273 
(1998)	4

Bliss v California Cooperative Producers (1947) 30 Cal 2d 240, 181 
P2d 369	3

Bradley v. Chiron Corp., 136 F.3d 1317 (Fed. Cir. [Cal.] 1998)	12

Broadcort v. Summa Medical Corp., 972 F.2d 1183 (10th Cir. 1992);	
10

Carma Developers (Cal.), Inc. v. Marathon Development California, 
Inc. (1992) 2 Cal. 4th 342 [6 Cal.Rptr.2d 467, 826 P.2d 710]	3

CBS, Inc. v. Merrick, 716 F.2d 1292 (9th Cir. [Cal.] 1983)	7

Creamette v. Merlin, 289 F.2d 569 (9th Cir. 1961)	1

Dorothy T. Coughlin v. Trans World Airlines, Inc., 847 F.2d 1432 
(9th Cir. 1988)	4

Gonsalves v Associacao Protectora Uniao Madeirense (1945) 70 CA2d 
150, 160 P2d 595	8

Graves v. United States, 150 U.S 118, 121 (1893)	11

In re Hunter, 66 F.3d 1002 (9th Cir. 1995)	2

In re Intermagnetics, 926 F.2d 912 [**10] (9th Cir. 1991)	8

In re Quintex Entertainment, Inc., 950 F.2d 1492 (9th Cir. [Cal.] 
1991)	3

Kern v. Levolor Lorentzen, Inc., 899 F.2d 772, 777 (9th Cir. 1990).	
4

Kern v. Tenneco Oil Co., 840 F.2d 730 (9th Cir. 1988)	2

Landscape Properties, Inc. v. Vogel, 46 F.3d 1416 (8th Cir. 1995).	
8

Lazar v. Hertz Corp. (1983) 143 Cal. App. 3d 128, 141, 191 Cal. 
Rptr. 849	4

Locke v. Warner Bros., Inc., 57 Cal. App. 4th 354; 66 Cal. Rptr. 2d 
921 (1997)	7

Loop Bldg. Co. v De Coo (1929) 97 Cal App 354, 275 P 881	4

Los Angeles Equestrian Ctr., Inc. v. City of Los Angeles, 17 Cal. 
App. 4th 432, 447 (1993)	3

Ogden Martin Systems, Inc. v. San Bernardino County, California, 932 
F.2d 1284 (9th Cir. 1991)	3

Olympic Sports Products v. Universal Athletic Sales Co., 760 F.2d 
910, 912-13 (9th Cir. 1985), cert. denied, 474 U.S. 1060, 88 L. Ed. 
2d 780, 106 S. Ct. 804 (1986)	3

Padula v Superior Court of Los Angeles County (1965, 2nd Dist) 235 
Cal App 2d 567, 45 Cal Rptr 500	6

Piantadosi v Loew's, Inc. (1943, CA9 Cal) 137 F2d 534, 59 USPQ 174	
11

Sierra Pacific Ind. v. Lyng, 866 F.2d 1099 (9th Cir. 1989)	1

Tanner v Title Ins. & Trust Co. (1942) 20 Cal 2d 814, 129 P2d 383	
4

Taylor v. Johnston, 15 Cal. 3rd 130; 123 Cal. Rptr. 641 (1975).	5

Triangle Capital Corp. v I.M.C. Management Corp. (1989, DC Mass) 127 
FRD 444	5

Uforma/Shelby Bus. Forms v NLRB (1997, CA6) 111 F3d 1284	10

United Commercial Ins. Service, Inc., v. Paymaster Corp., 962 F.2d 
853, cert. denied, Paymaster Corp. v. American Bankers Ins. Co. of 
Florida, 113 S.Ct. 660, 506 U.S. 1022, 121 L.Ed.2d 585 (9th Cir. 
[Cal.] 1992)	3

Vulcan Hart Corp. v. NLRB, 718 F.2d 269, 277 (8th Cir. 1983);	10

Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal. 4th 1	7

Westlake Property Owners Assn. v Thousand Oaks (1990, CA9 Cal) 915 
F2d 1301	12

Wyle v. R.J. Reynolds Indus., Inc., 709 F.2d 585, 589 (9th Cir. 
1983)	8

Statutes

Cal Civ Code § 45a	8

Cal. Civ. Code § 1689	3

Rules

F.R.E. 408	9

F.R.Civ.P. 56(e)	10

F.R.Civ.P. 60(b)(3), (b)(5) and (b)(6)	1

Treatises

Jack Weinstein & Margaret Berger, Weinstein's Evidence P 408, at 
408-32 [**35] to 33 (1991)	10



JURISDICTION P. 1

I. The District Court Retained Original Jurisdiction    P. 1

II. The District Court May "Entertain" A Motion Under FRCivP 60(b)
P. 1

III. RTC's Fraud On The Court Has An Independent Basis Of 
Jurisdiction    P. 1

IV. Judicial Economy and Substantial Justice Should Govern    P. 2

MERITS OF CLAIM    P. 2

I. California Law Governs Settlement: Fraud, Implied Covenant, 
Breach, Rescission and Defamation    P. 2

II. Claims for Relief: FRCivP 60(b)(3), (b)(5), (b)(6), and Fraud on 
the Court    P. 5

III. Facts Not Controverted and Inferences that may be Drawn    P. 
10

CONCLUSION    P. 11



JURISDICTION

I. The District Court Retained Original Jurisdiction

The District Court explicitly retained jurisdiction over the 
settlement agreement (Decl. Grady Ward, Ex. B, Order at p. 2) and 
explicitly referenced and included the Order within the Final 
Judgment and Permanent Injunction (Id., Final Judgment at p. 1).1



II. The District Court May "Entertain" A Motion Under FRCivP 60(b)

It is true that the District Court cannot yet set aside the judgment 
until the issue of the settlement agreement is remanded by the Court 
of Appeals. The court, however, may evaluate the motion and 
opposition and indicate it would "entertain" an order to grant
relief under FRCivP 60(b). If this were to happen then Grady Ward 
would move the Court of Appeals to remand the matter for such 
disposition by the District Court.

This would have the judicial economy of saving the Court of Appeals 
panel from spending time writing a moot opinion; it would also be 
fair for Grady Ward since the evidence for the breach of contract 
and fraud on the court by RTC is uncontroverted and overwhelming. 
This procedure was endorsed by the Ninth Circuit in Creamette v. 
Merlin, 289 F.2d 569 (9th Cir. 1961). See also Sierra Pacific Ind. 
v. Lyng, 866 F.2d 1099 (9th Cir. 1989) quoting Scott v. Younger, 739 
F.2d at 1466.



III. RTC's Fraud On The Court Has An Independent Basis Of 
Jurisdiction

As will be detailed below, Grady Ward is asking for relief under 
either of FRCivP 60(b)(3), (b)(5) or (b)(6) . He has also submitted 
evidence of, and alleges, fraud on the court by RTC and its attorney 
Samuel D. Rosen. "Fraud on the court" has a separate, independent
ancillary jurisdiction beyond the FRCivP 60(b) claims.2

Thus, rather than bifurcate the issues, it may lead to judicial 
economy for the District Court to evaluate all the claims and 
defenses together.



IV. Judicial Economy and Substantial Justice Should Govern

"The general jurisdictional rule [of 60(b)], however, does not rest
on a statute and should not be employed to defeat the purpose of it, 
which is to reduce "paper shuffling" or otherwise defeat its very
purpose." Kern v. Tenneco Oil Co., 840 F.2d 730 (9th Cir. 1988) (The
general rule "is not a creature of statute and is not absolute in
character.") Stein v. Wood, 127 F.3d 1187 (9th Cir. 1997).



MERITS OF CLAIM

I. California Law Governs Settlement: Fraud, Implied Covenant, 
Breach, Rescission and Defamation

RTC's Opposition alleges that the facts sworn by Robert S. Minton 
(Grady Ward Ex. C, D) , even if true, do not breach any obligation 
by RTC pursuant to the settlement contract. (Oppos. p. 6 at n7) and 
they also claim that the factual behavior subsequent to the making 
of the settlement contract cannot evidence fraud in the making of 
the contract (Oppos. p. 6:1-2). Both of these statements are false.

Settlements are interpreted as any other contract under California 
law.3  The District Court is bound to accept the interpretation of 
California law according the California Supreme Court.4 The 
settlement agreement is an executory contract since there are 
continuing obligations to each other - some express, some implied 
(Grady Ward Ex. A, B). Those obligations are the consideration whose 
failure to mutually perform constitutes a failure of consideration.5

According to the California Supreme Court in 1992: "To reiterate,
the covenant of good faith and fair dealing applies to all contracts 
in California. Breach of a specific contractual provision is not 
necessary to establish breach of the covenant." (Carma Developers
(Cal.), Inc. v. Marathon Development California, [**12] Inc. (1992) 
2 Cal. 4th 342, 373 [6 Cal.Rptr.2d 467, 826 P.2d 710].

As any other party to a California contract, RTC is bound by the 
covenant of good faith and fair dealing. Contrary to RTC claims, 
they need not breach any specific provision to breach the implied 
covenant.6 (Also see Carma supra)

The implied covenant can be breached in a variety of ways. It can be 
breached for simply hindering performance by the other party.7 Or 
for frustrating the other party's rights to the benefit of the 
contract.  Or to "recapture opportunities forgone" in making the
contract.8

No scienter needs to be shown to establish a breach, only that the 
conduct is objectively unreasonable.9

A material breach of a contract - whether of the implied covenant or 
an express one - entitles rescission in California.10 And in 
California only the clear intent to materially breach a contract 
entitles rescission. Actual damage need not be proved.11

Upon material breach, the District Court has the authority to vacate 
a court-approved settlement agreement.12 A breach is material if "a
reasonable man would attach importance to its existence or 
non-existence in determining his choice of action in the transaction 
in question."13

And it is an absolute certainty that Grady Ward would have never 
entered into settlement negotiations with RTC if he knew how they 
were to attempt to prevent his performance by, for example, trying 
to get him fired from his sole job, and to otherwise hurt him 
regardless of the agreed settlement provisions such as, for example, 
that there would be no finding or admission of liability.



II. Claims for Relief: FRCivP 60(b)(3), (b)(5), (b)(6), and Fraud on 
the Court.

The facts as described in the Declarations of Robert S. Minton, 
Stacy Brooks, and Lawrence Wollersheim (Grady Ward, Ex. C, D, E, F) 
and the admissions of Mike Rinder and Samuel D. Rosen (Grady Ward, 
Ex. G, J), entitles Grady Ward to relief from judgment under both 
the "other misconduct of the adverse party" provision of (b)(3) and,
those facts coupled with the pattern of misconduct by RTC as 
evidenced in Grady Ward, Ex. H and J, also entitles him to relief 
under the fraud aspect of (b)(3).

Relief should also be available under (b)(5) as to "it is no longer
equitable that the judgment should have prospective application,"
since the District Court has broad powers to adjust equities14, and 
finally, as an independent action for fraud on the court.

The specific acts of RTC entitling Grady Ward to relief under breach 
of contract, rescission, fraud, and fraud on the court are as 
follows:  On July 13, 1998 Mike Rinder representing Church of 
Scientology International and Marty Rathbun a member of the board 
and representative of the plaintiff RTC (Grady Ward Ex. P) met with 
a person with whom Grady Ward had a book contract with, Robert S. 
Minton, and demanded that Mr. Minton unilaterally and unjustifiably 
breach that contract with Grady Ward. (Grady Ward, Ex. C at p. 2). 
RTC knew that this was wrong since they even promised to indemnify 
and defend at their expense any breach of contract suit that Grady 
Ward might bring for this unwarranted breach. (Id.)

Just two months earlier, RTC had participated in the settlement 
negotiations leading to the Final Judgment and Order. (Grady Ward, 
Ex. A) They of course knew about Grady Ward's book contract and 
expected $10,000 payment plus $200 a month required to be paid to 
RTC (Id, p. 2). They of course also knew of Grady Ward's precarious 
financial straits, since they had earlier challenged his Ch. 7 
bankruptcy discharged on January 24, 1998 and had unsuccessfully 
challenged his IFP status multiple times with the court (Grady Ward 
Ex. I p. 1, Ex. L).

RTC's demand of Robert S. Minton to financially hurt Grady Ward and 
to prevent him from making his required payments under contract, as 
well as attempting to prevent Grady Ward from realizing a 
justifiable expectation of the settlement which explicitly discussed 
the book deal, is a breach of the implied covenant, since by 
hindering Grady Ward's earnings they imperil Grady Ward's power as a 
litigant proceeding in forma pauperis (Grady Ward, Ex. L) to fulfill 
his financial obligations under the settlement.

While RTC's schemes were evolving Grady Ward was faithfully 
fulfilling his obligation to the settlement agreement by making 
monthly payments (Grady Ward Ex. M) and finding work in his field, 
computer science.

Then without any provocation, RTC earlier this year in March, 
through its board member Rathbun, tried to have Grady Ward fired 
without cause and to otherwise financially deprive him of support 
(Grady Ward, Ex. D, E, F). These attempts to deprive Grady Ward of 
income were admitted in the Opposition (Grady Ward, Ex. G ¶¶ 8, 10). 
They in fact succeeded in their harm to Grady Ward (Decl. Grady Ward 
¶ 18)

To aid RTC's scheme to deprive Grady Ward of income to fulfill his 
obligations and feed his family, Marty Rathbun called him a 
"convicted copyright infringer." (Grady Ward, Ex. D, E, F). Marty
Rathbun knew that this was false since he helped to approve by 
telephone the settlement agreement the preceding year in which a 
material term was there would be no mention of liability in the 
consent decree (Grady Ward, Ex. A p. 5). "The Court: "We are going
to have a judgment with nothing said?" Hogan: "Right." The Court:
"... Mr. Ward is not being asked to admit liability. There is simply
nothing going to be said about it one way or the other."

Yet after agreeing to this provision - without which Grady Ward 
would have broken off negotiations forthwith - RTC breached the 
implied covenant of reasonable expectation that Grady Ward would be 
free of such calumny and to "recapture" the opportunity to
wrongfully label Grady Ward as an "copyright infringer" that they
solemnly gave up at the negotiating table.15

Besides materially breaching the implied covenant in the above 
slander, the issuance of an earlier similarly libelous press release 
(Grady Ward Ex. K) so soon on the heels of the Final Judgment and 
Order evidences that RTC never intended to honor its implied 
covenant not to harass Grady Ward through imputations of liability 
or to hurt him financially. This constitutes fraud in the 
inception.16 Such fraud can be inferred after the act.17

Using the phrase "convicted copyright infringer" also falsely
imputed that Grady Ward was a criminal. This is a slander per se.18 
Grady Ward does not have to show damages. It is presumed.

Finally - and worst of all - RTC abetted by its attorney and officer 
of the court Samuel D. Rosen, demanded that Grady Ward must be 
terminated unless he dropped his pending appeal of the settlement 
negotiations in the Ninth Circuit Court of Appeals (Grady Ward, Ex. 
D, E, F). This demand so befouls the basic right of a person to 
access the courts - especially of a person they knew was a pauper 
that RTC doesn't even pretend to contradict it in their 
Opposition.19 



"'Fraud upon the court' should, we believe, embrace only that
species of fraud which does or attempts to, defile the court itself, 
or is a fraud perpetrated by officers of the court so that the 
judicial machinery can not perform in the usual manner its impartial 
task of adjudging cases that are presented for adjudication. 
Tampering with the administration of justice in the manner 
indisputably shown here involves far more than an injury to a single 
litigant. It is a wrong against the institutions set up to protect 
and safeguard the public, institutions in which fraud cannot 
complacently be tolerated consistently with the good order of 
society." In re Intermagnetics, 926 F.2d 912 [**10] (9th Cir. 1991).



Since the serious allegation of fraud upon the court is not 
controverted in any way by the Opposition, the court may, rather 
than grant rescission and restore this case to the docket, get rid 
of it once and for all by simply vacating the judgment, then 
dismissing it outright.20

Grady Ward and his family have been hurt with years of unpaid 
litigation; RTC would be appropriately punished for its on-going 
despicable behavior, and perhaps most importantly, the RTC v. Ward 
case would cease to be a burden to the Court. 



Even after getting caught red-handed in their on-going scheme to 
ruin Grady Ward as RTC tries to ruin all "enemies" of Scientology,
RTC and its attorneys show absolutely no remorse. The deceit is 
ingrained. For example, Helena K. Kobrin - signing as Thomas R. 
Hogan - fraudulently questioned (Grady Ward Ex. I p. 4 at fn 6) the 
authenticity of the RTC demand letter to the Ninth Circuit in April, 
1999 (See attached to Grady Ward Ex. D). She did not know at the 
time that Robert S. Minton had physical evidence - including a cover 
letter in Mike Rinder's own handwriting to authenticate it (Id.). 
She thought she could get away with misleading the Ninth Circuit 
panel.

Following Helena Kobrin's disingenuous evasion, Mike Rinder on June 
6, 1999 - literally seeing the handwriting on the wall - admits to 
authoring the letter, albeit with a twisted and incredible 
explanation that Robert S. Minton asked RTC to draft an agreement in 
which F.A.C.T.Net and Minton could suffer a $1,000,000 penalty if 
Minton gave assistance to a particular list of people most of whom 
had nothing whatsoever to do with F.A.C.T.Net as a webmaster or as 
anything else. (Grady Ward Ex. G ¶ 10). This convoluted explanation 
is thoroughly debunked in Grady Ward Ex. E nor is it a defense to 
RTC's breach in any event.

Another example of RTC's guilty mind is the sprinkling throughout the 
briefs, declarations and letters that, since their wrong-doing was 
done as part of settlement talk in an unrelated case, then that 
wrong-doing is not admissible. This is totally false. F.R.E. 408 only 
says that "...is not admissible to prove liability for or invalidity
of the claim or its amount." and is not a cloak or general privilege
to unrelated unlawful activity.21

III. Facts Not Controverted and Inferences that may be Drawn

"[A]n adverse party may not rest upon the mere allegations or
denials of the adverse party's pleading, but the adverse party's 
response, by affidavits or as otherwise provided in this rule, must 
set forth specific facts showing that there is a genuine issue for 
trial. If the adverse party does not so respond, summary judgment, 
if appropriate, shall be entered against the adverse party." (FRCivP
56(e))

After examining the admissible evidence, it is clear that RTC offers 
no facts at all to controvert the specific facts described in Grady 
Ward's sworn exhibits (Grady Ward Ex. C, D, E, F). In fact, looking 
at the Opposition exhibits of Helena Kobrin, after moving to strike 
the false, unauthenticated and irrelevant hearsay contained in 
virtually all of them, we get to two (2) declarations (Grady Ward, 
Ex. G, J) which might have some bearing on the facts alleged by 
Grady Ward, since the declarants Samuel D. Rosen and Mike Rinder 
were participants in the breaching and fraudulent acts described 
with particularity; Helena Kobrin, of course, having absolutely no 
personal knowledge of relevant events.

Nowhere in either declaration (Grady Ward, Ex. G, J) does either 
Rinder and Rosen deny calling Grady Ward a "convicted copyright
infringer" in pursuit of their scheme to hurt Grady Ward in the eyes
of his employers; nowhere does Rosen or Rinder deny22 trying to have 
Grady Ward fired even though they knew Grady Ward was IFP and had an 
on-going obligation to pay RTC (Grady Ward, Ex. B, L); finally, 
nowhere does Rosen or Rinder deny demanding that Grady Ward be fired 
unless he drops his appeal with the Ninth Circuit Court of Appeals. 
Nowhere. Not even half-hearted denials of the specific facts Grady 
Ward has adduced; RTC has failed to raise a single genuine issue of 
fact in opposition to Grady Ward's motion.23

Even more damning is that Marty Rathbun - the sole actual 
representative of the plaintiff, RTC - is a missing material party 
witness. He does not offer a declaration and there is absolutely no 
explanation for his absence from such a crucial paper as this 
Opposition. "[I]f a party has it peculiarly within his power to
produce witnesses whose testimony would elucidate the transaction, 
the fact that he does not do it creates the presumption that the 
testimony, if produced, would be unfavorable." (Graves v. United
States, 150 U.S 118, 121 (1893))



CONCLUSION

The evidence is overwhelming - what is not admitted is 
uncontroverted - that RTC has breached the settlement agreement 
multiple times and is acting in aggravated bad faith toward both 
Grady Ward and the court.

The stronger the court believes that encouraging settlement is a 
strong public policy, the more certain that this particular 
settlement agreement should be vacated and the case tried on its 
merits or simply dismissed. No litigant will choose to settle if 
they believe that they can be abused with impunity following 
settlement with no hope of redress from the courts.

And the uncontroverted fraud on the court is something that must be 
addressed if the public retain confidence in our system of 
justice.24

"Although the courts well recognize the public as well as private
interest in the finality of settlements, as for all contracts a 
settlement will not be enforced if it is tainted by fraud or another 
condition that warrants its rescission." Bradley v. Chiron Corp.,
136 F.3d 1317 (Fed. Cir. [Cal.] 1998).

I ask the District Court to entertain my request to vacate the Final 
Judgment and Order and either restore the case to the docket or to 
finally and justifiably dismiss it outright.



					Respectfully submitted,



DATED: June 24, 1999			
______________________________________

GRADY WARD

Defendant in pro per, in forma pauperis

1       "If District Court explicitly retains jurisdiction over
settlement agreement, or incorporates terms of agreement in its 
dismissal order, then breach of agreement would be violation of 
order, and ancillary jurisdiction to enforce order would exist."
Arata v. Nu Skin Intern. Inc., 96 F.3d 1265 (9th Cir. [Cal.] 1996)

2       "If Kalt had brought this action within one year of the
filing the satisfaction of judgment, he could have proceeded by a 
Rule 60(b)(3) motion, and jurisdiction would lie as part of the 
original action. If Kalt had alleged fraud upon the court, the court 
could have asserted ancillary jurisdiction because that doctrine is 
available to a court to "vindicate its authority, and effectuate its
decrees." Kokkonen, 114 S. Ct. at 1676; see also Valerio v. Boise
Cascade Corp., 645 F.2d 699, 700 (9th Cir.) (District Court had 
jurisdiction over plaintiffs' claims of fraud on the court), cert. 
denied, 454 U.S. 1126, 71 L. Ed. 2d 113, 102 S. Ct. 976 (1981)." In
re Hunter, 66 F.3d 1002 (9th Cir. 1995)

3        "Construction and enforcement of settlement agreements are
governed by local law which apply to interpretation of contracts 
generally, even if underlying cause of action is federal." United
Commercial Ins. Service, Inc., v. Paymaster Corp., 962 F.2d 853, 
cert. denied, Paymaster Corp. v. American Bankers Ins. Co. of 
Florida, 113 S.Ct. 660, 506 U.S. 1022, 121 L.Ed.2d 585 (9th Cir. 
[Cal.] 1992) See also, Adams v. Johns-Manville Corp., 876 F.2d 702 
(9th Cir. [Cal.] 1989); In re Quintex Entertainment, Inc., 950 F.2d 
1492 (9th Cir. [Cal.] 1991).

4       "When reviewing issues of state law, we are "bound to follow
the decisions of a state's highest court in interpreting that 
state's law." Olympic Sports Products v. Universal Athletic Sales
Co., 760 F.2d 910, 912-13 (9th Cir. 1985), cert. denied, 474 U.S. 
1060, 88 L. Ed. 2d 780, 106 S. Ct. 804 (1986) (citing Aydin Corp. v. 
Loral Corp., 718 F.2d 897, 904 (9th Cir. 1983)). If no ruling 
[*1289] exists from the highest court of the state, we must follow 
intermediate appellate decisions unless "convinced by other
persuasive data that the highest court of the state would decide 
otherwise." West v. American Tel. & Tel. Co., 311 U.S. 223, 237, 85
L. Ed. 139, 61 S. Ct. 179 (1940)." Ogden Martin Systems, Inc. v. San
Bernardino County, California, 932 F.2d 1284 (9th Cir. 1991)

5       "In all executory contracts the several obligations of the
parties constitute to each, reciprocally the consideration of the 
contract; and a failure to perform is either a partial or total 
failure of consideration within the meaning of this section. [Cal. 
Civ. Code § 1689]" Richter v Union Land & Stock Co. (1900) 129 Cal
367, 62 P 39.; Mulborn v Montezuma Improv. Co. (1924) 69 Cal App 
621, 232 P 162.; Lasher v Faw (1930) 209 Cal 726, 289 P 821.; Bliss 
v California Cooperative Producers (1947) 30 Cal 2d 240, 181 P2d 
369.

6        "The covenant is implied . . . to prevent a contracting
party from engaging in conduct which (while not technically 
transgressing the express covenant) frustrates the other party's 
rights of the benefits of the contract." Los Angeles Equestrian
Ctr., Inc. v. City of Los Angeles, 17 Cal. App. 4th 432, 447 (1993)

7       "Every contract contains implied covenant on part of each
party not to prevent or hinder performance by other party." Tanner v
Title Ins. & Trust Co. (1942) 20 Cal 2d 814, 129 P2d 383;

Under California law, every contract includes a covenant of good 
faith and fair dealing, which requires that neither party 'do 
anything which will deprive the other of the benefits of the 
agreement.' Kern v. Levolor Lorentzen, Inc., 899 F.2d 772, 777 (9th 
Cir. 1990).

8       "[A]nd that, conversely, breach of the covenant occurs when
the discretionary power is used to "recapture opportunities
foregone" when the contract was entered into. (Burton, Breach of
Contract and the Common Law Duty to Perform in Good Faith (1980) 94 
Harv.L.Rev. 369, 373, [fn34] fn. omitted, 387; Carma Developers 
(Cal.), Inc. v. Marathon Development California, Inc., supra, 2 Cal. 
4th at p. 372.) Badie v. Bank of America, 67 Cal. App. 4th 779; 79 
Cal. Rptr. 2d 273 (1998)

9       "The essence of the good faith covenant is objectively
reasonable conduct." "The covenant of good faith can be breached for
objectively unreasonable conduct, regardless of the actor's motive."
Lazar v. Hertz Corp. (1983) 143 Cal. App. 3d 128, 141, 191 Cal. 
Rptr. 849.

10      "It is axiomatic that a material breach of an agreement
warrants rescission. See Federal Deposit Ins. Corp. v. Air Florida 
Sys., Inc., 822 F.2d 833, 840 (9th Cir. 1987)." Dorothy T. Coughlin
v. Trans World Airlines, Inc., 847 F.2d 1432 (9th Cir. 1988); Cal 
Civ Code § 1689:  "When party to a contract may rescind ... (b) A
party to a contract may rescind the contract in the following cases: 
(1) If the consent of the party rescinding, or of any party jointly
contracting with him, was given by mistake, or obtained through 
duress, menace, fraud, or undue influence, exercised by or with the 
connivance of the party as to whom he rescinds, or of any other 
party to the contract jointly interested with such party.; (2) If 
the consideration for the obligation of the rescinding party fails, 
in whole or in part, through the fault of the party as to whom he 
rescinds."

11       "A refusal or failure of a party to perform his part of the
contract, or a clear intention to violate it, or the annexation of 
an unwarranted condition, gives the other party the right to 
rescind." Loop Bldg. Co. v De Coo (1929) 97 Cal App 354, 275 P 881.

12      "District Court had authority under Rule 60(b) to vacate
court-approved settlement agreement whereby parties had resolved 
litigation arising out of alleged breach of purchase and sale 
agreements where plaintiff claimed that defendant had engaged in 
fraudulent conduct and deliberate misrepresentations which, if 
proven, would entitle plaintiff to relief pursuant to Rule 60(b)(3), 
and it also alleged that defendant had materially breached 
settlement agreement which, if proven, would entitle plaintiff to 
relief pursuant to Rule 60(b)(6)." Triangle Capital Corp. v I.M.C.
Management Corp. (1989, DC Mass) 127 FRD 444.

13       Earl v. Saks & Co., 36 Cal. 2d 602 quoted with extensive 
commentary on material breaches in the California Supreme Court 
decision in Taylor v. Johnston, 15 Cal. 3rd 130; 123 Cal. Rptr. 641 
(1975).

14      "In action to rescind contract, trial court, in exercising
its equity jurisdiction, has power to adjudicate all rights between 
parties, within subject of litigation, and to adjust equities 
between them." Padula v Superior Court of Los Angeles County (1965,
2nd Dist) 235 Cal App 2d 567, 45 Cal Rptr 500.

15      "In sum, the covenant is implied as a supplement to the
express contractual covenants, to prevent a contracting party from 
engaging in conduct that frustrates the other party's rights to the 
benefits of the agreement. [Citation.]" Waller v. Truck Ins.
Exchange, Inc. (1995) 11 Cal. 4th 1

16      "Party may rescind contract if there was fraud in the
inception or if there was a substantial breach." CBS, Inc. v.
Merrick, 716 F.2d 1292 (9th Cir. [Cal.] 1983)

17      "Fraudulent intent must often be established by
circumstantial evidence, and may be "inferred from such
circumstances as defendant's . . . failure even to attempt 
performance, . . ." (Tenzer v. Superscope, Inc., supra, 39 Cal. 3d
at p. 30.)" Locke v. Warner Bros., Inc., 57 Cal. App. 4th 354; 66
Cal. Rptr. 2d 921 (1997)

18      "A libel which is defamatory of the plaintiff without the
necessity of explanatory matter, such as an inducement, innuendo or 
other extrinsic fact, is said to be a libel on its face." Cal Civ
Code § 45a (1999); "A writing referring to the director of a lodge
as "King of criminals" and a beast is libelous per se." Gonsalves v
Associacao Protectora Uniao Madeirense (1945) 70 CA2d 150, 160 P2d 
595.; "Damages to a person's reputation, fame, and credit are
presumed to result from the publication of a libel per se." Bohan v
Record Pub. Co. (1905) 1 CA 429, 82 P 634.

19      "Fraud on the court, though not easily defined, can be
characterized as a scheme to interfere with the judicial machinery 
performing the task of impartial adjudication, as by preventing 
[**13] the opposing party from fairly presenting his case or 
defense." Landscape Properties, Inc. v. Vogel, 46 F.3d 1416 (8th
Cir. 1995). 

20      "When a party has perpetrated a fraud upon the court, the
court possesses inherent authority to dismiss the party's action."
Wyle v. R.J. Reynolds Indus., Inc., 709 F.2d 585, 589 (9th Cir. 
1983)

21      "Rule 408 only bars admission of evidence relating to
settlement discussions if that evidence is offered to prove 
"liability for or invalidity of the claim or its amount." Here, the
evidence related to an entirely different claim -- the evidence was 
not admitted to prove the validity or amount of the "claim under
negotiation."" Vulcan Hart Corp. v. NLRB, 718 F.2d 269, 277 (8th
Cir. 1983); see also 2 Jack Weinstein & Margaret Berger, Weinstein's 
Evidence P 408, at 408-32 [**35] to 33 (1991) ("Where the settlement
negotiations and terms explain and are a part of another dispute 
they must often be admitted if the trier is to understand the 
case."). Thus, Rule 408 did not bar this evidence because it related
to settlement discussions that involved a different claim than the 
one at issue in the current trial." Broadcort v. Summa Medical
Corp., 972 F.2d 1183 (10th Cir. 1992); "Rule did not bar evidence
that management threatened, during negotiations intended to resolve 
grievance, to terminate employees if union pursued its grievance, 
since evidence was not offered to prove validity of grievance, but 
of alleged threats in retaliation for protected activity."
Uforma/Shelby Bus. Forms v NLRB (1997, CA6) 111 F3d 1284, 155 BNA 
LRRM 2001, 133 CCH LC P 11802, 46 Fed Rules Evid Serv 1498, 1997 FED 
App 141P.)

22 	In fact, Rinder admits to authoring the letter and twice 
demanding that Grady Ward be terminated (Grady Ward, Ex. G ¶¶ 8, 10)

23       "[M]ere denials, unaccompanied by any facts which would be
admissible in evidence at hearing, are not sufficient to raise 
genuine issue of fact. Piantadosi v Loew's, Inc. (1943, CA9 Cal) 137 
F2d 534, 59 USPQ 174.

24      "Even if court does not have jurisdiction over underlying
action, it may have jurisdiction to determine whether parties have 
abused judicial system and whether sanctions are appropriate to 
remedy such abuse." Westlake Property Owners Assn. v Thousand Oaks
(1990, CA9 Cal) 915 F2d 1301.



i

REPLY TO PLAINTIFF'S OPPOSITION TO

NOTICE OF RESCISSION UNDER FRCIVP 60(b)

CASE NO. C-96-20207-RMW (EAI)








IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA



RELIGIOUS TECHNOLOGY CENTER,

a Scientology Corporation,

                        Plaintiff,

                        v.

GRADY WARD, an individual,



	            Defendant.


)

CASE NO. C-96-20207-RMW (EAI)



DECLARATION OF GRADY WARD IN SUPPORT OF REPLY TO PLAINTIFF'S
OPPOSITION TO NOTICE OF RESCISSION UNDER FRCIVP 60(b)


DATE:
TIME:
CTRM: Hon. Jeremy Fogel

I, Grady Ward, hereby declare:


1. I am the defendant in the above captioned action and have personal 
knowledge of the fact herein presented. If called to testify thereto, 
I could and would be competently able to do so.

2. Exhibit A is a true and correct copy of the settlement 
negotiations of May 12, 1998;

3. Exhibit B is a true and correct copy of the Judge Fogel's Order 
and Final Judgment of September 15, 1998;

4. Exhibit C is a true and correct copy of the Declaration of Robert 
S. Minton of November 12, 1998 in which he relates how RTC's Marty 
Rathbun and Mike Rinder demanded that Robert S. Minton breach a 
contract with Grady Ward;

5. Exhibit D is a true and correct copy of the Declaration of Robert 
S. Minton of April 5, 1999 in which he describes (a) RTC's slander 
per se of Grady Ward; (b) RTC's demand that Grady Ward be not given 
any further funds; and (c) RTC's demand that Grady Ward must drop his 
appeal in the Ninth Circuit Court of Appeals or be terminated. This 
exhibit also contains the letter and handwritten cover of 
Scientology's Mike Rinder physically evidencing Robert S. Minton's 
testimony;

6. Exhibit E is a true and correct copy of the Declaration of Stacy 
Brooks corroborating the account of (a) RTC's slander per se of Grady 
Ward; (b) RTC's demand that Grady Ward be not given any further 
funds; and (c) RTC's demand that Grady Ward must drop his appeal in 
the Ninth Circuit Court of Appeals or be terminated;

7. Exhibit F is a true and correct copy of the Declaration of 
Lawrence Wollersheim corroborating the account of (a) RTC's slander 
per se of Grady Ward; (b) RTC's demand that Grady Ward be not given 
any further funds; and (c) RTC's demand that Grady Ward must drop his 
appeal in the Ninth Circuit Court of Appeals or be terminated;

8. Exhibit G is a true and correct copy of the Declaration of Mike 
Rinder of June 6, 1999 in which he admits creating the letter to 
Minton and admits that RTC has on multiple occasions demanded that 
Grady Ward be terminated;

9. Exhibit H is a true and correct copy of the Declaration of Rubye 
K. Ward and the Humboldt Bank of Arcata, California describing 
illegal acts perpetrated against them and RTC's admission that it was 
its own agents who were the perpetrators;

10. Exhibit I is a true and correct copy of a pleading submitted by 
RTC attorney Helena Kobrin (signed under the name of Thomas R. Hogan) 
in which she falsely disclaims the authenticity of the demand letter 
later admitted by Mike Rinder's declaration. This exhibit also 
evidences that RTC was well aware that Grady Ward was proceeding IFP 
and had limited means;

11. Exhibit J is a true and correct copy of the Declaration of RTC 
attorney Samuel D. Rosen in which he does not deny his participation 
of his fraud upon the court;

12. Exhibit K is a true and correct copy of RTC's press release of 
September 18, 1998, immediately following the filing of Judge Fogel's 
Order and Final Judgment;

13. Exhibit L is a true and correct copy of the findings of District 
Judge Whyte, District Judge Fogel and the Ninth Circuit court of 
Appeals that Grady Ward was properly proceeding in forma pauperis.

14. Exhibit M is a true and correct copy of Grady Ward's payments to 
RTC as required by the settlement agreement;

15. Exhibit N is a true and correct copy of Grady Ward's letter of 
rescission and offer of restitution;

16. Exhibit O is a true and correct copy of Grady Ward's response to 
attorney Rosen's acknowledgment of Grady Ward's rescission letter;

17. Exhibit P is a true and correct copy of RTC's admission that 
Marty Rathbun is a member of the board and a senior, experienced RTC 
representative;

18. As of May 1, 1999 and almost immediately following the slander 
per se and interference with my employment and access to the courts 
by RTC's Rathbun, CSI's Rinder, and attorney Samuel D. Rosen, I was 
constructively terminated from my position as webmaster of 
F.A.C.T.Net, Inc. I have not yet found new employment to replace my 
income from that work nor have I been paid the $300.00 that accrued 
from that work for F.A.C.T.Net, Inc. during May, 1999.


I declare under penalty of perjury under the laws of the United 
States of America that the foregoing is true and correct. Executed 
this 24th day of June, 1999, at Arcata, California.



______________________________________

GRADY WARD

1 

REPLY TO PLAINTIFF'S OPPOSITION TO
NOTICE OF RESCISSION UNDER FRCIVP 60(b)
CASE NO. C-96-20207-RMW (EAI)

-- Grady Ward grady@gradyward.com http://www.gradyward.com/ (707) 826-7712 174E E007 35C4 511B 7DB7 D782 A32E A234 *Verified* PGP signature *required* to authenticate message

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