======== Newsgroups: alt.religion.scientology Subject: Re: Beating the cult like a gong From: hkhenson@netcom.com (Keith Henson) Date: Sat, 19 Apr 1997 04:56:02 GMT This certainly provides a wealth of questions one might be inclined to ask Mr. Miscavige next week. In fact, this is such a nice piece of work that I am inclined to file it in my case as well. [The section symbol was replace with SS to keep things purely ASCII.] Keith Henson IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 95-K-2143 RELIGIOUS TECHNOLOGY CENTER, a California non-profit corporation, and BRIDGE PUBLICATIONS, INC., a California non-profit corporation, Plaintiffs, v. F.A.C.T.NET, INC., a Colorado corporation; LAWRENCE WOLLERSHEIM, an individual; and ROBERT PENNY, an individual, Defendants. _________________________________________________________________ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT'S MOTIONS TO AMEND THE SCHEDULING ORDER HEREIN AND TO COMPEL THE DEPOSITION OF DAVID MISCAVIGE _________________________________________________________________ INTRODUCTION In opposing Defendants' desire to conduct discovery regarding the legitimacy of RTC's and BPI's alleged title to the copyrights and trade secrets at issue (which, in turn, will determine RTC's and BPI's capacity to bring this action), Plaintiffs offer little more than a conclusory statement that such title cannot be questioned or attacked beyond its ultimate source in the Judgment of Final Distribution in the Estate of L. Ron Hubbard. As authority, Plaintiffs cite Heiser v. Super. Ct. (1979) 88 Cal.App.3d 276, 278, for the proposition that a judgment in a probate proceeding is conclusive against "the whole world" and, once final, cannot be challenged by anyone, at any time, in any forum, for any reason. Plaintiffs' reliance on Heiser is misplaced. The correct construction of the expression cited by Plaintiffs is set forth in Estate of Loring (1946) 29 Cal.2d 423, as follows: "In Martinovich v. Marsicano, [1902] 137 Cal. 354, 70 P. 459, upon which the [respondents] also rely, a judgment creditor of a devisee secured a lien upon that devisee's share of the estate before the decree of distribution. This court held that the subsequent distribution of that share to the devisee did not discharge the creditor's lien. It was pointed out that `The expression in some of (the) cases to the effect that under the notice for distribution the whole world is brought before the court, and that every person entitled to assert a claim against the estate must present the same, or lose his right thereto, is to be construed in connection with the authority of the court over the subject-matter before it. The court has jurisdiction to distribute only the estate of which the decedent was possessed at the time of his death, and it is only a claim against that estate, or for some portion of it, for which it can make provision in its decree. As it can exercise this jurisdiction over only the persons to whom the estate is to be distributed, it is only these persons who can be affected by the notice or required to give it any attention.' 137 Cal. at page 359, 70 P. at page 461. Thus, none of these cases support the [respondents'] position, but merely emphasize that, as this court said in In re Burdick, [1896] 112 Cal. 387, 393, 44 P. 734, 735, `The decree of distribution is conclusive only as to the succession or testamentary rights.'" In fact, contrary to Plaintiffs' assertions, the conclusive effect of an order for final distribution in a California probate proceeding is further limited by both federal and state law. The federal Copyright Act of 1909 contains "will- bumping" provisions that, with respect to certain copyrights, override a will's dispositive provisions and instead vest ownership in statutory successors. In addition, state law limitations not only allow inquiry into matters not passed on or approved by a probate court (including the assignments and agreements by which RTC allegedly acquired title to the assets in question), but also permit an order for final distribution to be set aside and the probate reopened upon findings of fraud, breach of fiduciary duty, material misrepresentation, conspiracy, conversion, and concealment. Alternatively, if a court finds that property was wrongfully acquired, the court may impose a constructive trust upon such property and order that distribution be made to the rightful owners. As demonstrated below, the discovery sought by Defendants is necessary and proper to explore numerous contradictions and discrepancies in the series of transactions by which RTC allegedly acquired the copyrights and trade secrets at issue. Only by means of such discovery can Defendants ascertain whether or not RTC has the capacity to bring this action. STATEMENT OF FACTS The following "Statement of Facts" is based on Defendants' information and belief: 1. L. Ron Hubbard ("Decedent") died on January 24, 1986, a resident of the State of California, County of San Luis Obispo. Decedent was survived by Mary Sue Hubbard, his wife of over thirty years, and five of his six children, namely, Diana Meredith DeWolf Hubbard Ryan, Mary Suzette Rochelle Hubbard, Arthur Ronald Conway Hubbard, Lafayette Ronald Hubbard, Jr. (also known as L. Ron Hubbard, Jr., Nibs Hubbard, and Ronald DeWolf), and Katherine May Hubbard Gillespie. Decedent was predeceased by his son, Quentin Hubbard. It was common knowledge, then and now, that Decedent had a daughter from a nonmarital relationship, namely, Alexis Hollister, who also survived Decedent. 2. On February 5, 1986, Norman F. Starkey ("Starkey") filed a Petition for Probate of Will, for Letters Testamentary, and for Authorization to Administer Under the Independent Administration of Estates Act with full authority ("Petition for Probate") and a Petition for Letters of Special Administration with the Superior Court of California, County of San Luis Obispo (the "Probate Court"), in Case No. 20885, the Estate of L. Ron Hubbard, also known as Lafayette Ronald Hubbard (the "Estate"). 3. On February 5, 1986, the Probate Court approved the appointment of Starkey as Special Administrator of the Estate and issued the Order Appointing Special Administrator and the Letters of Special Administration, with general powers and with special powers to continue the operation of any business owned in whole or in part by the Estate. The nature of Starkey's activities as Special Administrator and the date that Starkey was discharged as Special Administrator are unknown to Defendants. 4. Decedent's will dated January 23, 1986 (the "Will"), was admitted to probate by Minute Order on February 18, 1986. On that date, the Probate Court also approved the appointment of Starkey as Executor of the Will and issued the Order Appointing Executor and Authorizing Independent Administration of Estate with full authority and the Letters Testamentary. 5. The terms of the Will included the following: a. Decedent expressly disinherited his son, Lafayette Ronald Hubbard, Jr., and his predeceased son, Quentin Hubbard, and their issue. In Article Seventh, Decedent stated: "Further, I have intentionally omitted to provide herein for ALEXIS HOLLISTER, who may pretend to be my heir, but in fact is not and never has been my heir." Decedent's daughter, Katherine May Hubbard Gillespie, was not disinherited in the Will, although she had been disinherited in at least two prior wills. b. The Will was a "pour-over" will. It passed Decedent's estate to an inter vivos trust, called the "Author's Family Trust-B," established on January 23, 1986, pursuant to a Trust Agreement by and between Decedent, as Trustor, and Starkey, as Trustee (the "Family Trust"). In Article Fifth, Decedent, referring to the Family Trust, stated: "I have also provided therein for certain benefits for my wife." c. Article Third recites Decedent's intention "to dispose of all property, whether real, personal or mixed, of whatsoever kind and character . . ." d. In Article Sixth, Decedent gives to the Trustee of the Family Trust, among other things, his "entire right, title, and interest in the nineteen (19) year period of extended copyright protection and in all copyright rights provided thereby in all copyrightable works written or created by me and/or assigned to me prior to January 1, 1978 . . ." and his "entire right, title, and interest in the right or ability to renew, or to file renewal claims for, all copyrights on or in all copyrightable works written or created by me and/or assigned to me prior to January 1, 1978." e. In Article Ninth, Decedent nominated Starkey as Executor. 6. Starkey, as Executor, filed his Report of Executor on Waiver of Accounting; for Allowance of Attorney's Fees for Ordinary Services and Petition for Final Distribution on December 15, 1988 ("Executor's Report and Petition for Final Distribution"), in which he represented under penalty of perjury, among other things, that: a. No preliminary distributions had been made; b. The whole of the Estate consisted of Decedent's separate property; and c. The Estate should be distributed to Starkey, as Trustee of the Family Trust, in accordance with the terms of the Will. Starkey, as Executor, prayed for an order from the Probate Court that, among other things, "[a]ll the acts and proceedings of petitioner as executor" be confirmed and approved and the Estate be distributed to Starkey, as Trustee of the Family Trust. (Emphasis added.) Notice was given only to Starkey, as Executor and as Trustee of the Family Trust. 7. On January 3, 1989, the Probate Court entered its Judgment of Final Distribution. The Court found, among other things, that: a. All of the allegations of the Executor's Report and Petition for Final Distribution were true; and b. The Estate consisted entirely of Decedent's separate property. In its order, the Probate Court approved "all acts of the executor relating to the matters in the petition and report" and ordered the distribution of the Estate to Starkey, as Trustee of the Family Trust. (Emphasis added.) 8. The date that Starkey was discharged as Executor is unknown to Defendants. ARGUMENTS "WILL BUMPING" PROVISIONS OF 1909 COPYRIGHT ACT OVERRIDE WILL TO VEST TITLE IN STATUTORY SUCCESSORS A. Summary of Law. 9. Approximately ______________ of the copyrights at issue here are subject to the Copyright Act of 1909, SS 23, 35 Stat. 1075 (1909) (the "1909 Act"). The 1909 Act governs copyrights to works created prior to January 1, 1978. Works created on or after that date are subject to the Copyright Act of 1976, 17 U.S.C. SS 101 et seq. (1978) (the "1976 Act"). 10. The 1909 Act provides an initial term of protection of 28 years from the date of a particular work's publication. At the end of the initial term, the author, if then living, or the author's successors as determined by the 1909 Act, are entitled to renew the copyright for a second term of protection lasting another 28 years, plus 19 additional years added by the 1976 Act. 11. If an author survives the initial term under the 1909 Act, then, absent a prior transfer of the renewal rights, he or she is the only person entitled to renew the copyright and thereafter may convey the copyright free of restrictions. However, if the author conveys the renewal rights during the initial term and lives into the renewal period, then the author is bound by that conveyance and cannot exercise the renewal rights. Fred Fisher Music Publishing Co. v. M. Witmark & Sons (1943) 318 U.S. 643. Nonetheless, if a court finds that a particular conveyance was executed "under oppressive circumstances," it may refuse to enforce the conveyance. Id. 12. On the other hand, if an author dies before the renewal period, the author's conveyance of the copyright or renewal rights, whether inter vivos or testamentary, is sharply curtailed under the 1909 Act. Notwithstanding any terms to the contrary in the instrument of transfer or will or other testamentary document, such conveyance is effective only as to the remainder of the initial term; the renewal rights and the enjoyment of the second term of protection belong exclusively to the then living successors determined by the 1909 Act. Miller Music Co. v. Charles N. Daniels, Inc. (1960) 362 U.S. 373. Similarly, if an author assigns a copyright during the author's lifetime, but the work is not actually published until after the author's death, the author is treated as having assigned the copyright for the initial term only; renewal rights and second- term protection are owned by the statutory successors. Bartok v. Boosey & Hawkes, Inc. (2d Cir. 1975) 523 F.2d 941. 13. Under the 1909 Act, the owners of the renewal rights to a copyright are determined at the commencement of the renewal period. Section 24 provides that the renewal rights belong to: ". . . the author of such work, if still living, or the widow, widower, or children of the author, if the author be not living, or if such author, widow, widower, or children be not living, then the author's executors, or in the absence of a will, his next of kin . . ." 14. The widow, widower and children of the author constitute a single class of successors. DeSylva v. Ballentine (1956) 351 U.S. 570. A child born out of wedlock is counted as a member of the class, providing that such child is treated as an heir under the relevant state's intestacy law. Id. If fewer than all members of a successor class exercise their renewal rights, the renewal is valid and inures to the benefit of all. Silverman v. Sunrise Pictures Corp. (2d Cir. 1923) 290 F. 804. If an author dies testate during the initial term, leaving no surviving spouse or children, then the only person who may renew the copyright is the executor of the author's estate and not the next of kin. Fox Film Corp. v. Knowles (1923) 261 U.S. 326. However, if no one is then acting as executor, the next of kin may exercise the renewal rights; if the copyright is not renewed by the next of kin, then the work falls into the public domain. Silverman v. Sunrise Pictures Corp. (2d Cir. 1923) 290 F. 804; Capano Music v. Myers Music, Inc. (S.D.N.Y. 1985) 605 F. Supp. 692. 15. Although a third party may acquire the renewal rights to a particular work from the apparent statutory successors during the initial term, the assignment of such rights likely will be deemed valid only if the conveyance was supported by adequate consideration, the assignors received full disclosure of their legal rights by independent counsel, and there is no evidence of fraud, undue influence, overreaching or other "oppressive circumstances." Nevins, 69-70; fn.80 (referring to the invalidation of one such conveyance where no consideration was paid). 16. If rights to a work protected under either the 1909 Act or the 1976 Act are transferred by an author during his or her lifetime on or after January 1, 1978, then, during specified periods, the author's statutory successors may extinguish the transferee's interest in the work through the exercise of a right of termination. 1976 Act 203(a) and 304(c). However, no rights of termination apply to transfers made by will. B. Application. 17. Due to the "will-bumping" provisions of the Copyright Act of 1909, Defendants believe that title to approximately _____________ of the copyrights at issue may not have been vested in RTC at the time of the events that gave rise to this action. 18. As demonstrated above, the renewal rights to all copyrights subject to the 1909 Act in their initial term at the time of Decedent's death did not pass under Decedent's Will, nor could such renewal rights or any interest in the second term have been licensed to RTC by Starkey, as Executor, in the License Agreement, dated September 17, 1987. Rather, these rights belonged to such of Mary Sue Hubbard and Decedent's children who were living at the commencement of the renewal period for each particular copyright. If any one of the successor class exercised the renewal rights, then such exercise was deemed to have been made on behalf of all of them and inured to the benefit of all of them, including Decedent's son, Lafayette Ronald Hubbard, Jr., if he was then living, regardless of Decedent's disinheritance of him in the Will. Similarly, if Alexis Hollister, reputed to be Decedent's out-of-wedlock daughter, was living at the time of any such renewal period, then she also could have exercised such right and shared in the royalties and other proceeds, despite Decedent's disinheritance of her (provided that the requisite parent/child relationship could be established under the California Uniform Parentage Act, commencing with Family C. Section 7600). 19. Although it is possible that Starkey, as Executor or Trustee, or RTC obtained assignments of the renewal rights from Decedent's family, including Alexis Hollister, the circumstances and terms of such assignments must be examined to ascertain whether valid conveyances were made. On the other hand, if no member of the successor class exercised the renewal rights, leaving Starkey, if he was then serving as Executor, to exercise such rights, then inquiry must be made as to whether the family was unduly influenced, coerced, misled or threatened to prevent their exercise of such rights. 20. Defendants seek information through proper discovery relating to the copyrights subject to the 1909 Act and any purported conveyance of such copyrights and/or the renewal rights to such copyrights. David Miscavige, who held senior positions at Author Services, Inc., the organization responsible for managing Decedent's literary and business affairs, from 1982 to early 1987, has unique percipient knowledge relevant to these copyrights, and should be required to submit to deposition. Furthermore, Defendants seek to take the depositions of Starkey, in his capacities of Executor of the Will and Trustee of the Family Trust, and Mary Sue Hubbard and Decedent's children, including Alexis Hollister, as members of the successor class under the 1909 Act, each of whom is likely to possess unique percipient knowledge relating to these issues. INCONSISTENCIES, DISCREPANCIES AND UNORTHODOX ACTIONS OF EXECUTOR GIVE RISE TO INFERENCES OF POSSIBLE FRAUD AND/OR OTHER MISCONDUCT 21. Testimony and an objective examination of documents relating to the inter vivos and testamentary transfers by which RTC purportedly acquired title to the assets at issue give rise to inferences of possible fraud and/or other misconduct. Defendants are entitled to test, through proper discovery, whether RTC obtained its alleged title through legitimate means, or whether the assets at issue equitably belong to others. A. Judgment of Final Distribution Does Not Bar Further Proceedings. 22. Plaintiffs argue that the Judgment of Final Distribution in the Estate conclusively established title to all property passing from Decedent, but they disregard important limitations. An order for final distribution in a California probate proceeding merely passes whatever title the decedent had at death; it does not determine that the decedent had any title to the property distributed (Shelton v. Vance (1951) 106 Cal.App.2d 194; Romagnolo v. Romagnolo (1964) 230 Cal.App.2d 315), unless title to such property was specifically adjudicated (Prob. C. SS 9860 (formerly SS 851.5)). An order for final distribution is binding on all interested parties only as to the matters that it determines. Stevens v. Torregano (1961) 192 Cal.App.2d 105. Such order is not conclusive as to contracts or conveyances made by distributees to others. Kingsbury v. Ross (1933) 217 Cal. 484. Even after an order for distribution becomes final, a court may exercise its equitable powers to set aside such order and reopen the probate upon proof of extrinsic or collateral fraud and breach of duty arising from a fiduciary or confidential relationship. Estate of Sanders (1985) 40 Cal.3d 607 (e.g., executor substituted himself as primary beneficiary in new will, concealed from decedent's family which will was submitted for probate, and misrepresented to decedent's family that there was no need for them to become involved in settlement of estate). Alternatively, even when fraud is discovered many years after the decedent's death and the close of probate, the delayed accrual rule permits a court to exercise its equitable powers to impose a constructive trust upon assets fraudulently obtained and order distribution to the rightful owners. Parson v. Tickner (1995) 31 Cal.App.4th 1513 (noting that a cause of action for fraud accrues upon the discovery of facts constituting the fraud, at which time the three-year limitations period begins to run). 23. Here, neither the alleged inter vivos transfers to RTC, nor the assignments and agreements by which Starkey, as Executor or Trustee, conveyed property to RTC, nor the concurrences in such inter vivos and testamentary transfers allegedly made by Decedent's heirs and beneficiaries and the Church of Spiritual Technology ("CST") were encompassed by the Judgment of Final Distribution, which expressly approved "all acts of the executor relating to the matters in the petition and report." Because none of the transfers to RTC or alleged subsequent concurrences by Decedent's heirs and beneficiaries and CST were included in the Executor's Report and Petition for Final Distribution, none of those matters was rendered conclusive by the Judgment of Final Distribution; consequently, they remain open to inquiry and challenge by Defendants and other interested parties. Furthermore, testimony and objective evidence of inconsistencies, discrepancies and unorthodox actions by Starkey, as Executor and Trustee, by Dr. Gene Denk, Decedent's personal physician, by Sherman Lenske, Decedent's estate planning attorney, and by other Scientologists suggest a reasonable inference of extrinsic or collateral fraud, breach of duty arising from a fiduciary or confidential relationship, conversion, concealment, conspiracy, material misrepresentation and/or other misconduct, any and all of which affect the propriety of RTC's alleged title. B. Inter Vivos Transfers. 24. RTC alleges that it acquired the United States rights, including rights to trade secrets but excluding copyrights, relating to the "Advanced Technology" from Decedent through a document dated May 16, 1982, entitled "Assignment Agreement (LRH/RTC)--(Advanced Technology-U.S.)," and an Addendum thereto, bearing an effective date of January 19, 1982. Decedent's signature was purportedly acknowledged before David Miscavige, a notary public and senior executive in the Scientology organizations. However, the authenticity of Decedent's signatures on the Assignment and the Addendum is placed in doubt by the following evidence: a. Attached hereto is a copy of the Declaration of a former Scientology member, Diana Voegeding, that, during the early 1980s, Mr. Miscavige routinely obtained signatures in his notary book from Decedent for later use, and that Mr. Miscavige often did not actually witness Decedent's signature on documents. b. Attached hereto is a copy of the Declaration of another former Scientology member, Gerald Armstrong, dated August 12, 1983. In Paragraph 3, Mr. Armstrong declares that it was common practice for Scientology members to forge Decedent's signature on "letters, contracts, legal documents and inscriptions in books." One purpose for these forgeries was to conceal Decedent's whereabouts. For example, Scientology members in Clearwater, Florida, habitually signed Decedent's name to documents sent to other Scientologists to conceal the fact that Decedent was no longer in that location. c. Attached hereto is a copy of a Declaration from a Questioned Documents Examiner, ___________________, questioning the authenticity of Decedent's signature on the Assignment. d. The following objective discrepancies appear from the dates of the Assignment and the Addendum: (1) The Assignment's notarial acknowledgment states that Decedent signed the Assignment on May 10, 1982, but the Assignment is dated six days later; (2) The Addendum, bearing an effective date of January 19, 1982, pre-dates the Assignment by several months; and (3) Another document purporting to convey rights to the Advanced Technology from RTC to others, dated January 1, 1982, also pre-dates the Assignment by several months. e. Finally, David Miscavige's notary license expired several years ago. Yet, he has not submitted his notary books to the Los Angeles County Recorder as required under California law, nor has he responded to subpoenas to produce the notary books by other defendants in other actions brought by RTC. 25. A certificate of acknowledgment of a writing is prima facie evidence of the facts recited in the acknowledgment and of the genuineness of the signature of the person who purportedly signed the writing. Evid. C. SS 1451. This is a rebuttable presumption affecting the burden of producing evidence. Evid. C. SS 601-02 & 1450. The effect of such a presumption is to "require the trier of fact to assume the existence of the presumed fact unless and until evidence is introduced which would support a finding of its nonexistence, in which case the trier of fact shall determine the existence or nonexistence of the presumed fact from the evidence and without regard to the presumption. Nothing in this section shall be construed to prevent the drawing of any inference that may be appropriate." Evid. C. SS 604. 26. Defendants seek evidence with which to rebut the presumption of the facts recited in the certificate of acknowledgment on the Assignment and of the genuineness of Decedent's signature thereto. As the notary in this transaction, David Miscavige likely possesses unique percipient knowledge relevant to these issues. Accordingly, Defendants believe that the deposition of David Miscavige is necessary and proper in this case. C. Execution of Decedent's Will. 27. The circumstances surrounding Decedent's purported execution of the Will raise questions as to whether Decedent was the victim of fraud or undue influence or lacked testamentary capacity at the time of such execution, any of which would invalidate the will and affect RTC's purported title. 28. Evidence tending to show undue influence and/or fraud include (1) the existence of a confidential relationship between the testator and the person(s) allegedly exerting undue influence; (2) propensity to be unduly influenced from old age, senility, mental infirmity and the like; (3) execution of testamentary documents unduly benefitting the person(s) allegedly exerting undue influence; (4) unnatural testamentary provisions; (5) testamentary provisions apparently at odds with testator's stated intentions; (6) close relationship with person(s) allegedly exerting undue influence and opportunity for such exercise; (7) participation by primary beneficiaries in procuring execution of testamentary instruments; and (8) vulnerable state of mind because of isolation, loneliness, etc. Estate of Graves (1927) 202 Cal. 258; Estate of Mann (1986) 184 Cal.App.3d 169; Estate of Sarabia (1990) 221 Cal.App.3d 599; Estate of Yale (1931) 214 Cal. 115. Evidence of a lack of testamentary capacity includes general mental incompetence (e.g., testator's inability to understand the nature of the testamentary act or the nature and situation of his or her property and the inability to recall the natural objects of the testator's bounty) and the existence of a mental disorder (e.g., symptoms include hallucinations or delusions which lead the testator to devise his or her property in a way that he or she otherwise would not). Estate of Mann (1986) 184 Cal.App.3d 169; Estate of Smith (1926) 200 Cal. 152. 29. Several of the factors described in the immediately preceding paragraph are present in this case: a. Decedent had been living in extreme isolation for several years prior to his death. (He had been separated from Mary Sue Hubbard for many years.) Only "trusted" Scientologists knew his whereabouts and how to communicate with him. Declaration of Gerald Armstrong, dated August 12, 1983. b. Decedent had contact only with Scientologists, and Scientologists have unduly benefitted from the Estate. c. The dispositive provisions of the Will and the Family Trust are contradictory. In Article Fifth of the Will, Decedent, referring to the Family Trust, stated: "I have also provided therein for certain benefits for my wife." This statement, made under penalty of perjury and witnessed, is consistent with Decedent's prior stated intentions about Mary Sue Hubbard under penalty of perjury in his Declaration, dated May 15, 1983: "Although we are presently apart, we remain husband and wife. She is fully supported by me, and she, unlike DeWolf, is fully provided for in my Will." However, these two statements made by Decedent are contradicted by the following statement made by Starkey, as Trustee of the Family Trust, as "Assignor," in a document entitled "Assignment and Assumption (RTC)," dated November 29, 1993: "The agreement by and between Assignor and L. Ron Hubbard, dated January 23, 1986, establishing Author's Family Trust-B, requires distribution to [Church of Spiritual Technology] of all assets held in trust by Assignor." (Emphasis added.) The obvious inference is that the Family Trust contained no provisions for Mary Sue Hubbard, despite Decedent's previously stated intentions. It seems unnatural for Decedent to disinherit Mary Sue Hubbard, whom he fully supported during his lifetime. d. The estate plan does not conform to Decedent's intent as described by Decedent's estate planning attorney, Sherman Lenske. In Paragraph 3 of Mr. Lenske's Declaration dated November 12, 1995, he states that he "represented Mr. L. Ron Hubbard in all aspects of estate planning from the time he engaged me as his attorney in approximately April 1981 until his death on January 24, 1986, and also represented the Executor of his Estate through the probate of his Will, which was concluded in January 1989. All of the documents effectuating the estate plan were drafted either by me or under my supervision, at the direction of Mr. Hubbard." Later, in Paragraph 10 of the Declaration, Mr. Lenske states: "As one part of Mr. Hubbard's estate planning, he directed that his U.S. rights to the Advanced Technology, exclusive of copyrights, be conveyed to RTC at that time [referring to the time of the May 16, 1982 Assignment] and the remainder would be transferred to RTC following his death. The first part of this objective was accomplished in May 1982 when Mr. Hubbard signed the Advanced Technology Assignment, and the remainder was accomplished on November 30, 1988 when Norman F. Starkey, as Executor of the Will of L. Ron Hubbard, assigned the remainder of Mr. Hubbard's rights to the Advanced Technology, other than the copyrights, to RTC." Assuming that Mr. Lenske's description of Decedent's testamentary intent is accurate, it appears that Decedent's intent to benefit RTC was fixed as far back as 1982. One wonders why, then, Mr. Lenske drafted Decedent's estate plan so that all of Decedent's assets would pass through probate (thereby incurring unnecessary court costs, probate referee's fees, attorneys' fees, etc.) to a trust (strangely named the "Author's Family Trust-B" although containing no provisions for Decedent's family) that required distribution of all trust assets to CST. Moreover, one wonders why Mr. Lenske waited until Decedent was suffering from his last illness (indeed, on the brink of death) before having the documents executed. e. There are significant differences between Decedent's initials and handwriting on the Will dated January 23, 1986, and a document purported to be a prior will of Decedent, dated May 10, 1982. Specifically, on both documents, a line has been typed, with the initials "L.R.H." typed underneath the line, in the lower, right corner of every page. On both documents, initials have been written in the lower, right corner on every page, but these initials differ greatly between the two documents. In the 1982 document, the written initials extend far beneath the line and over the typed initials, while in the 1986 document, the written initials never extend beneath the line on the first 11 pages, except for the initials on pages 3 and 9, which barely extend beneath the line. Further, the initials that appear on pages 12 and 13 of the 1986 document (the signature pages for the testator and the witnesses, respectively) were clearly not written by the same hand that wrote the initials on the previous 11 pages. Finally, the testator's signatures on the two documents do not appear to have been written by the same hand. Unfortunately, Defendants cannot compare the dispositive provisions of the two documents because a blank page has been substituted in Defendants' copy of the 1982 document for page 3, where such provisions appear. f. Attached hereto is a copy of the Certificate of Death, Coroner Case Information Sheet (Supplementary Report), Coroner's Investigation Report, Sheriff's Office Supplementary Report, Coroner Case Information Sheet, Certificate of Religious Belief, and Post-Mortem Examination documents. These documents reveal the following information: According to Decedent's personal physician, Dr. Gene Denk, who had lived with Decedent for the past two years, Decedent had displayed signs of Dysphrasia for eight days before he died and had suffered a stroke about seven days before he died. Decedent's Will and the Family Trust were dated January 23, 1986, the day before he died. Although Decedent was found dead at approximately 8:00 p.m. on January 24, 1986, the death was not reported until a funeral chapel was contacted at 7:30 a.m. the next morning. The excuse offered for the delay by Dr. Denk and Earle Cooley, an attorney, who seem to be the only persons present at Decedent's home when the funeral chapel was contacted, was that "they wanted to get the will together and expedite the procedures for cremation of Mr. Hubbard's remains." Upon hearing the date of the Will and Dr. Denk's report of the Decedent's clinical history, Jon Hines, the Chief Deputy Coroner, immediately questioned whether Decedent had been in sound mind at the time he signed the Will since Decedent's clinical history indicated possible neurological problems. Mr. Hines later compared the 1986 Will with a copy of Decedent's 1982 will and the 1983 codicil thereto, and remarked in his report that "The contents of the 1982 Will were basically the same as the most recent Will." The post-mortem examination revealed 10 recent needle marks in the Decedent's gluteal area. Precluded from performing an autopsy on the basis of Decedent's religious beliefs set forth in a witnessed document entitled "Certificate of Religious Belief," dated January 20, 1986, a toxicology examination was conducted instead. 30. Plaintiffs allege that title passed to RTC either through the May 16, 1982 Assignment and the Addendum thereto, or if not, then pursuant to an exclusive License Agreement, dated September 17, 1987, a document entitled "Advanced Technology Covenant-Estate/RTC," dated November 30, 1988, and a document entitled "Addendum to Advanced Technology Covenant-Estate/RTC," dated May 13, 1991," executed by Starkey, as Executor or as Trustee of the Family Trust. However, if the Will was procured by fraud or undue influence, or is invalid due to Decedent's lack of testamentary capacity, then Starkey's actions as Executor and as Trustee must be reexamined by a California probate court. Defendants believe that such examination will conclude that Starkey lacked the authority to transfer assets to RTC, thereby defeating RTC's claims to title. 31. In light of the reasonable questions raised by the foregoing as to the validity of the Will, Defendants believe that it is necessary and proper to take the depositions of Norman F. Starkey, Sherman Lenske, Mary Sue Hubbard, each of the surviving descendants' of L. Ron Hubbard, Earle Cooley, Dr. Gene Denk, David Miscavige (as head of RTC and CST at the time of Decedent's death), Patrick D. Broeker and Anne M. Broeker (as witnesses to both the 1982 Will and the 1986 Will), Stephen J. Pfauth (as witness to the 1986 Will), and the fourth witness to the 1986 Will whose name Defendants have not yet ascertained, to inquire into the circumstances of Decedent's death, execution of the Will, Decedent's testamentary intent, and mental and physical health. D. Probate of Decedent's Will. 32. Even in the absence of a timely action, proof of extrinsic fraud or breach of duty arising from a fiduciary or confidential relationship warrants a court's exercise of its equitable powers to set aside orders and decrees in probate proceedings. Estate of Sanders (1985) 40 Cal.3d 607. The Sanders court noted that "[t]he courts are particularly likely to grant relief from a judgment where there has been a violation of a special or fiduciary relationship." Id. at 615. "The fiduciary relationship carries a duty of full disclosure, and application of the discovery rule `prevents the fiduciary from obtaining immunity for an initial breach of duty by a subsequent breach of the obligation of disclosure.'" Parsons v. Tickner (1995) 31 Cal.App.4th 1513, 1526 (citing Neel v. Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal.3d 176, 189). 33. As demonstrated below, testimony and objective evidence of inconsistencies, discrepancies and unorthodox actions by Starkey, as Executor and Trustee, by CST, as a charitable organization and the only beneficiary of the Family Trust, and by RTC suggest possible extrinsic or collateral fraud, breach of duty arising from a fiduciary or confidential relationship, conversion, concealment, conspiracy, material misrepresentation and/or other misconduct, any and all of which affect the propriety of RTC's alleged title. (1) Noncompliance With Notice Requirements Violates Due Process and Deprives Probate Court of Jurisdiction. 34. If an order made by a probate court is based upon defective notice, then such order exceeds the probate court's jurisdiction and is open to collateral attack. Mennonite Bd. of Missions v. Adams (1983) 462 U.S. 791; Tulsa Prof. Collection Services, Inc. v. Pope (1988) 485 U.S. 478; Estate of Jenanyan (1982) 31 Cal.3d 703. In Decedent's Estate, proper notice required not only compliance with former Probate Code SS 328 (applicable in 1986), requiring that each heir of the testator, among others, receive notice of the hearing on the Petition for Probate, but also with constitutional minimum due process standards intended to ensure that no one is deprived of property without due process of law. To satisfy such minimum due process standards, notice must also be served upon each interested person (including heirs, beneficiaries and potential claimants) whose whereabouts are known or reasonably ascertainable. Mullane v. Central Hanover Bank & Trust Co. (1950) 339 U.S. 306; Tulsa Prof. Collection Services, Inc. v. Pope (1988) 485 U.S. 478; Mennonite Bd. of Missions v. Adams (1983) 462 U.S. 791. Such notice may be made by personal service or by mail to a residence or mailing address, or, if a person entitled to notice cannot be found, to the county seat of the county where the probate proceeding is pending. Former Prob. C. SS 328. 35. The following objective facts suggest that notice may not have been properly given in the Estate, possibly leaving the Judgment of Final Distribution open to attack: a. Starkey signed the Petition for Probate under penalty of perjury, declaring that "the foregoing is true and correct." Starkey's declaration applied to Item 8 of the Petition for Probate, which consists of a statement that "Listed in attachment 8 are the names, relationships, ages, and residence or mailing addresses of all persons mentioned in decedent's will and codicils, whether living or deceased, . . ." (Emphasis added.) However, Alexis Hollister, commonly known to be Decedent's out-of-wedlock daughter and prominently mentioned in the disinheritance clause of the Will, is not listed in attachment 8 of the Petition for Probate. The obvious inference is that Alexis Hollister did not receive notice of the probate proceedings due to Starkey's active concealment. b. In the Coroner's Investigation Report, Jon Hines, the Chief Deputy Coroner, wrote that Earle Cooley, Decedent's attorney, informed him that Norman F. Starkey was named as Executor in the Will and that Starkey's address was "1404 N. Catalina St., Hollywood, CA." As evidenced in attachment 8 to the Petition for Probate, Starkey served notice upon three of Decedent's children at his own address--1404 No. Catalina, Los Angeles, CA 90029. c. Starkey served notice upon Mary Sue Hubbard at P.O. Box 85130, Los Angeles, CA 90072. Oddly, service upon one of Decedent's daughters, Katherine May Hubbard Gillespie (who had been disinherited in at least two of Decedent's prior wills), was made "in care of" the same post office box. (2) Mary Sue Hubbard's Possible Equitable Ownership in Assets Now Held by RTC. 36. As noted above, Article Third of the Will recites Decedent's intention "to dispose of all property, whether real, personal or mixed, of whatsoever kind and character . . ." Noticeably absent is a statement regarding the community property, quasi-community property and/or separate property character of the Estate, or the existence of a marital or premarital property agreement. Such a statement typically appears in a married testator's will, especially when, as here, the marriage was of long duration and the value of the Estate, appraised as of January 24, 1986, exceeded $26,300,000. 37. Although the language of Article Third of the Will does not preclude the existence of community property, Starkey, as Executor, alleged to the Probate Court in Paragraph 11 of the Executor's Report and Petition for Final Distribution that "The whole of the estate is decedent's separate property." The Probate Court found accordingly in its Judgment of Final Distribution. 38. One wonders how the entire Estate was determined to be Decedent's separate property, whether Mary Sue Hubbard was consulted in that determination, and whether Mary Sue Hubbard was advised by independent counsel as to the possible existence of community property or quasi-community property. If the Estate actually consisted in whole or in part of community property or quasi-community property, then Decedent did not have the power to convey Mary Sue Hubbard's one-half interest therein, and such property was improperly included as Estate property. Consequently, Mary Sue Hubbard may be the equitable owner of a portion of the property now claimed by RTC. 39. One also wonders whether Mary Sue Hubbard was advised by independent counsel of her right to "recapture" one- half of any quasi-community property transferred by Decedent without her consent during his lifetime. Prob. C. SS 102. If, for example, any of the assets conveyed pursuant to the May 16, 1982 Assignment and the Addendum thereto was quasi-community property, then Mary Sue Hubbard may be the equitable owner of a portion of such property. 40. Finally, it is clear from Article Fifth of the Will and from Decedent's Declaration dated May 15, 1983, that Decedent intended to provide for Mary Sue Hubbard. But, according to Starkey, the terms of the Family Trust directed that the entire trust estate was to be distributed to CST instead. Although Mary Sue Hubbard was married to Decedent at the time that he executed the Will, she may have been able to prevail in claiming the share of a pretermitted spouse under Probate Code SS 6560. That section awards an intestate share to a surviving spouse who was not married to a decedent at the time Decedent executed a will and who was not provided for in the will through oversight, accident, inadvertence or mistake. Whether or not Mary Sue Hubbard was aware of her rights and what representations may have been made to her on this subject remain unknown, but it is possible that she may be the equitable owner of up to one-half of Decedent's separate property. (3) Starkey, as Executor, Concealed From the Probate Court the Assignment of Estate Assets to RTC to Avoid Court Inquiry. 41. Probate Code SS 1020.1 (operative July 1, 1988) provides that, the court, prior to distribution of any estate property to any assignee or transferee of any beneficiary pursuant to the beneficiary's agreement, request or instructions, may "inquire into the consideration . . . and into the circumstances surrounding the execution of such assignment, transfer, agreement, request or instructions and if it finds that the fees, charges or consideration paid . . . is grossly unreasonable or that any such assignment, transfer, agreement, request or instructions was obtained by duress, fraud or undue influence it may refuse to make distribution pursuant thereto except upon such terms as it deems just and equitable." 42. Despite the terms of the Will directing distribution of all Estate property to the Family Trust, Starkey, as Executor, purportedly gave RTC all foreign rights in the Advanced Technology by a document entitled "Advanced Technology Covenant--Estate/RTC," dated November 30, 1988, as modified by an Addendum thereto, dated May 13, 1991. However, Starkey failed to disclose this assignment to the Probate Court prior to the conveyance, as required by Probate Code SS 1020.1. Nor did he make any such disclosure in the Executor's Report and Petition for Final Distribution. In fact, he alleged that "[n]o preliminary distributions have been made," leaving the Probate Court with the impression that all assets of the Estate were still in his possession. He continued the pretense by praying that all estate assets be distributed to himself, as Trustee of the Family Trust, and even listed such assets for the Probate Court as though all such assets still belonged to the Estate. The obvious inference is that Starkey did not want this conveyance to be examined too closely. (4) Starkey, as Executor, Failed to Provide CST With Notice of Assignment and Notice of Executor's Report and Petition for Final Distribution. 43. Probate Code SS 10532 (operative July 1, 1988) requires the personal representative to give Notice of Proposed Action to interested persons prior to entering into any contract that by its terms will not be fully performed within two years. Such Notice must set forth the material terms of the contract and identify the persons involved in the contract, so that an interested person has an opportunity to object to the proposed contract. Prob. C. SS 10585. Probate Code SS 1208 (operative July 1, 1988) provides that, if the personal representative and the trustee are the same person, then notice shall be given to the beneficiaries of the trust instead of the trustee. 44. There is no indication that Starkey, as Executor, complied with Probate Code SS 1208 and 10532. In fact, in Paragraph 23 of the Declaration of Sherman Lenske, dated November 12, 1995, Mr. Lenske asserts that "[t]he exclusive copyright license and the assignment of November 30, 1988 were confirmed by the primary beneficiary of Mr. Hubbard's estate, Church of Spiritual Technology (CST), after the estate was distributed." (Emphasis added.) Furthermore, Starkey failed to provide CST with notice of the hearing on the Executor's Report and Petition for Final Distribution. According to the Notice of Hearing, filed December 15, 1988, notice was served only upon Starkey himself, as Executor and as Trustee of the Family Trust. Again, one may draw the inference that Starkey wanted to accomplish his purposes without inquiry from anyone. (5) CST's Joining in Assignment of Assets to RTC Constitutes a Breach of Charitable Trust. 45. As stated in the immediately preceding paragraph, CST confirmed the assignment of all the assets of the Estate to RTC. In doing so, CST breached its trust to use all assets received by it for the persons and purposes for which it was formed, and likely jeopardized its tax-exempt status, as well. See San Diego Council, Boy Scouts of America v. City of Escondido (1971) 14 Cal.App.3d 189. Standing to enforce a California charitable trust generally belongs to the California Attorney General, but "[t]here is no rule or policy against supplementing the Attorney General's power of enforcement by allowing other responsible individuals to sue in behalf of the charity. The administration of charitable trusts stands only to benefit if in addition to the Attorney General other suitable means of enforcement are available." Id. at 195. 46. If CST's affirmance of the assignment of assets to RTC was in violation of its charitable purposes, then it is possible that CST is the equitable owner of the assets in dispute. (6) Discrepancy Between Law and Motion Calendar and Judgment of Final Distribution. 47. The Law and Motion Calendar for January 3, 1989, notes that the Executor's Report and Petition for Final Distribution was heard before Judge William R. Fredman. However, the Judgment of Final Distribution states that such hearing occurred before the Honorable Barry Hammer, Judge Presiding. Here, again, is an unexplained discrepancy. CONCLUSION For the foregoing reasons, the discovery sought by Defendants is necessary and proper to explore numerous contradictions, discrepancies and unorthodox actions of the various parties involved in the series of transactions by which RTC and/or BPI allegedly acquired the alleged copyrights and trade secrets at issue. Only by means of such discovery can Defendants ascertain whether or not RTC and BPI have the capacity to bring this action. Dated this ___ day of April, 1997 Respectfully submitted, MUSICK, PEELER & GARRETT LLP By: Graham E. Berry One Wilshire Boulevard Suite 2100 Los Angeles, CA 90017