Sun World, Inc. v. Lizarazu Olivarria

144 F.R.D. 384, 24 Fed. R. Serv. 3d 1408, 1992 U.S. Dist. LEXIS 20847, 1992 WL 308339
District Court, E.D. California·Decided May 26, 1992·No. No. CV-F-91-269-REC·Published·Cited by 17 cases

Opinion

OPINION RE: ORDER STRIKING DEFENDANT’S ANSWER, DISMISSING DEFENDANT’S COUNTERCLAIM, AND ENTERING DEFAULT JUDGMENT FOR PLAINTIFF

COYLE, Chief Judge.

On May 18, 1992, this court held an evidentiary hearing regarding defendant Gas-par Lizarazu Olivarria’s (hereinafter “Lizarazu”) alleged fraud on the court. Argument was also heard regarding plaintiff Sun World’s request for the entry of default judgment as a sanction for the alleged fraud. The court now enters its opinion regarding its May 20, 1992, order striking Lizarazu’s answer, dismissing his counterclaim, and entering default judgment for Sun World as set forth herein.

[386]*386I. Background

In 1986 and 1987 Sun World and Lizarazu entered into two contracts through which Sun World became the exclusive marketing agent for grapes grown by Lizarazu. In contemplation of a third agreement, characterized as a joint venture, Sun World advanced large sums of money and grapevines to Lizarazu. The joint venture was never signed. Lizarazu, however, failed to return the monies or grapevines that had been advanced to him. Sun World subsequently filed this suit on May 30, 1991, seeking restitution.

On June 14, 1991, Sun World filed an application for a right to attach order and seeking the issuance of a writ of attachment. Lizarazu opposed this application on July 8, 1991,1 asserting,

an arrangement was made to terminate the relationship between SUN WORLD and LIZARAZU. On or about February 28, 1991, Ahumada, on behalf of SUN WORLD, and LIZARAZU, entered into an agreement entitled “Notice of Termination.” (Lizarazu Declaration, Exhibit “E”.)2 Under the Notice of Termination, there is a complete termination of the relationship between SUN WORLD and LIZARAZU. As a result of the termination, all claims were waived by SUN WORLD and by LIZARAZU. (Lizarazu Declaration 15:26-16:8.)

Opp. 12:25-13:5. In his opposition Lizarazu further argued,

It should be noted as a threshold matter, that, in the Notice of Termination (Lizarazu Declaration, Exhibit “E”), the parties agreed to terminate the joint venture. Also as part of that Notice of Termination, the parties consented to a mutual release of all claims. This document was signed by both the Defendant, and Michael Ahumada, a representative of Plaintiff. Accordingly, to the extent that this Court grants legal effect to this document, it clearly states on its face that Plaintiff has released Defendant from all claims relating to the joint venture. Thus, Plaintiff cannot now contend that it has any actionable claims arising out of the joint venture or that such claims would have “probably validity” for purposes of the issuance of a Writ of Attachment.”

Opp. 24:20-25:4. In his declaration Lizarazu swears,

After many discussions between myself and Ahumada concerning the relationship between SUN WORLD and myself, an arrangement was made to terminate the relationship between SUN WORLD, and myself. On or about February 28, 1991, Ahumada, on behalf of SUN WORLD, and myself, entered into an agreement entitled “Notice of Termination.” A true and accurate copy of the Notice of Termination is attached to this Declaration and incorporated by reference as Exhibit “E.” Under the Notice of Termination, there is a complete termination of the relationship between SUN WORLD, and myself. As a result of the termination, all claims were waived by SUN WORLD and myself.

Deck 15:26-16:8.

The Notice of Termination purports to (1) establish that the proposed joint venture agreement was not consummated, but that Sun World would nonetheless forgive the monies advanced to Lizarazu; (2) terminate the 1986 and 1987 marketing agreements; (3) authorize Lizarazu to use Sun World’s tradename “Superior Seedless;” and (4) mutually release both parties from all claims against the other.

[387]*387On July 30, 1991, this court determined that it had personal jurisdiction over Lizarazu and granted Sun World’s application for a right to attach order and issued a writ of attachment. The court also ordered Lizarazu to show that the Notice of Termination was not a fraud and show cause why the sanction of default judgment should not be imposed.

In response to the court’s order to show cause Lizarazu re-submitted the Notice of Termination and a second declaration wherein he swore,

On February 27,1991, Ahumada presented me with the same Notice of Termination which had been presented to me in July, 1990. When Ahumada gave me the same Notice of Termination form, I became angry. I told him that I was tired of his lies and SUN WORLD’S lies. I told him that I would call my attorney and that we would bring suit against SUN WORLD in Mexico. Ahumada told me to calm down and asked me what did I want in order to terminate the relationship. Ahumada told me to wait and not to call my attorney because he would like to get this matter completely resolved. Ahumada asked me what it would take to resolve the issues and problems between SUN WORLD and myself. I wrote out by hand the things that I would be willing to agree to. I wrote out the items that I wanted on a piece of yellow paper and gave the paper to Ahumada. At the end of my discussion with Ahumada on February 27, 1991, Ahumada left with the yellow sheet of paper that I had filled out by hand.
The next day, on February 28,1991, Ahumada returned with the Notice of Termination with a new first page. Ahumada had the first page typed up to reflect the items which I had requested in my handwritten notes. I do not know how Ahumada had the first page prepared or where it was typed. When Ahumada brought me the Notice of Termination with the new first page, he also returned to me the handwritten notes which I had provided to him. Ahumada and I signed two originals of the Notice of Termination. I kept one original, and Ahumada kept the other original. The Notice of Termination which I agreed to and which was prepared by Ahumada is attached to this Declaration as Exhibit “A.”
It is my understanding that SUN WORLD has alleged that the Notice of Termination attached to this Declaration is a forgery. The document is not a forgery. I did not forge Ahumada’s signature. I did not type up or have anyone else type up the first page. I gave my handwritten notes to Ahumada informing him of the items that I would be willing to agree to. He took those handwritten notes and brought back to me the Notice of Termination with a new first page.

Decl. 3:5-4:11.

Lizarazu filed his answer and counterclaim on August 26, 1991. Neither the answer nor the counterclaim expressly refer to the Notice of Termination. Nonetheless, his fourth affirmative defense evidences Lizarazu’s intent to proceed with his Notice of Termination theory. This defense provides, “defendant alleges that plaintiff has intentionally relinquished and waived all rights it may have had to institute an action for the alleged wrongdoings complained of.” Ans. 11:9-12. See also footnote 1, supra.

Lizarazu’s sworn response to Sun World's interrogatory No. 61 further demonstrates his continued reliance on the Notice of Termination. No.

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Sun World, Inc. v. Lizarazu Olivarria, 144 F.R.D. 384, 24 Fed. R. Serv. 3d 1408, 1992 U.S. Dist. LEXIS 20847, 1992 WL 308339 (E.D. Cal. 1992).

144 F.R.D. 384 (Sun World, Inc. v. Lizarazu Olivarria) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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