Hughes Tool Co. v. Meier

• Decision Date: 28 March 1978
• Docket Number: No. C 71-72.,C 71-72.
• Citation: 489 F. Supp. 354
• Parties: HUGHES TOOL COMPANY (now Summa Corporation), Plaintiff, v. John H. MEIER et al., Defendant.
• Court: U.S. District Court — District of Utah

489 F. Supp. 354

HUGHES TOOL COMPANY (now Summa Corporation), Plaintiff, v. John H. MEIER et al., Defendant.

No. C 71-72.

United States District Court, D. Utah, C. D.

December 21, 1977.

On Motion to Set Aside Order for Accounting and Motion to Enter Final Judgment March 28, 1978.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Edward W. Clyde, Salt Lake City, Utah, James L. Wadsworth, Las Vegas, Nev., and D. Martin Cook, Los Angeles, Cal., for plaintiff.

Robert Wyshak and Lillian Wyshak, Los Angeles, Cal., for defendant John H. Meier.

C. Jeffrey Thompson, Salt Lake City, Utah, for defendant John R. Suckling.

MEMORANDUM OPINION IN LIEU OF FINDINGS OF FACT AND CONCLUSIONS OF LAW

Under Rule 52(a), F.R.C.P.

ALDON J. ANDERSON, District Judge.

Briefly, in the case in chief, the plaintiff seeks an accounting, claiming the defendant Meier, its trusted agent, breached that trust in handling the acquisition of certain mining claims, and diverted funds to his own use and that of others. Defendant denies the breach and claims a settlement agreement that he wants enforced.

In the course of moving the case to trial extensive domestic and foreign discovery has been had, and lengthy pretrial proceedings. Numerous motions have been filed, briefed, argued and ruled upon. An early attack was made upon the jurisdiction of the court over the defendants under the Utah long-arm statute. After hearing and argument the court denied the motion. An interlocutory appeal was taken to the Court of Appeals of the Tenth Circuit where the ruling of the trial court was affirmed. A stay of discovery was allowed because of the serious illness of the defendant Hatsis. A further delay was granted to enable the completion of the criminal prosecution of the defendant Meier under an indictment filed in Nevada for alleged tax fraud in connection with failure to report monies involved in the transactions under consideration in this case. This stay was terminated after Mr. Meier failed to appear for prosecution of the matter and his bail was forfeited. Time was given the parties to pursue a settlement effort that had been attempted, but without success. Defendant Meier filed a motion to stay proceedings on the theory that they were in the nature of criminal proceedings, and that in view of Meier's constitutional right to claim the Fifth Amendment as to all inquiries with respect to the matters at hand, and his absence from the United States, the trial could not proceed until the criminal prosecution was concluded. This was denied. An effort was made to appeal this to the Circuit Court by a Petition for Mandamus and then, it is understood, to the United States Supreme Court, but without success for defendant. The matter was further delayed to allow the defendant Suckling to seek clarification from the United States District Court for the Central District of California as to whether or not he was under the ban of its order enjoining him from testifying because of attorney-client privilege governing his relationship with Mr. Meier. This was resolved by a dismissal of the California case in which the order had been entered. This court determined that the presumptive facts about which he had conversations with Mr. Meier made out a prima facie case of conspiracy to commit a fraud or crime, and that under such circumstances, though Mr. Suckling may not have been aware of this at the time, the conversations with Mr. Meier would not be privileged. He was ordered to testify with respect to the same.

The defendant Meier filed a petition seeking enforcement of a claimed settlement agreement. Numerous motions were filed and argued on this matter. As a result an issue on the same appears in the pretrial order, and a non-jury trial of the claim of settlement was held October 20, 1976, and continuing to October 27, 1976. The court made its ruling denying enforcement of the claimed settlement agreement, stating its findings, and conclusions and order into the record. Immediately thereafter the trial of the case in chief took up, as above noted, on October 27, 1976.

By the time of trial settlements resulting in dismissals and defaults based upon service and failure to answer were accomplished as to all of the defendants, except John H. Meier and John R. Suckling. During trial, after he testified, counsel advised the court that the plaintiff and Suckling had reached a settlement of their differences and the case was dismissed as to him.

The hearing on the claim of fraud upon the court involved the resolution of a motion by plaintiff and defendant Meier, upon agreement with the court, to determine whether a fraud had been perpetrated upon the court in the filing of certain documents by the parties in the case in chief. The plaintiff asked that this determination be made with respect to Exhibits A and B attached to defendant Meier's motion dated November 10, 1976, and filed with the court on or about said date near the conclusion of the evidence of the case in chief. It asked for a change in the pretrial order and a continuance of the trial upon the affidavit of Mr. Wyshak that he hoped to show that the two affidavits of Mr. Hughes, filed in this case, assuring the court of his availability for deposition at the court's order, were forgeries. Exhibits A and B were filed by Mr. Wyshak in support of the motion. The defendant asked for the hearing to have the court determine upon the basis of evidence which his counsel thought was available in the form of exhibits and expert testimony to show that Mr. Hughes had not signed the affidavits referred to. A difficult trial of this matter ensued, with a number of witnesses, many exhibits and highly technical expert testimony. As observed above, a written opinion has been filed in that matter, as a result of which the court determined that the burden to establish the forgery of the Hughes affidavits had not been met. Consequently, they stand in the file for what they purport to be.

Jurisdiction and Venue

Jurisdiction was invoked under Title 28, United States Code, Sec. 1332. Plaintiff is and at the time the complaint was filed was a corporation incorporated under the laws of the State of Delaware, and had its principal place of business in the State of Texas. At the time the complaint was filed, defendant John H. Meier was a citizen of the State of New Mexico, and he was residing in Vancouver, British Columbia, Canada. Plaintiff proved more than $10,000 was in controversy. The court finds jurisdiction established.

Process was served on the defendants Meier and Suckling under Utah's long arm statute, U.C.A. Sec. 78-27-22, et seq., (Supp.1971). A motion to quash service and to dismiss was made by each of the said defendants, and denied by this court. That ruling was affirmed by the United States Court of Appeals (Tenth Circuit), in Hughes Tool Co. v. Meier, et al., 486 F.2d 593 (1973). Meier has argued this matter again in his post trial materials, but the ruling stands.

Defendant Meier contends there have been insufficient contacts with the State of Utah to subject him to in personam jurisdiction, and the court will deal with this question hereafter as an issue of law and an issue of fact.

Anthony G. Hatsis, Toledo Mining Company, Globe, Incorporated, and Charles W. Adams were named as defendants, but the action has been settled and dismissed as to them. Malaga Investments, Limited was never served. The rest of the named defendants have been served, but have defaulted. However, no default judgments have been entered against said other named defendants.

Plaintiff's Contentions

(a) That John H. Meier was plaintiff's agent in the acquisition for the plaintiff of mining properties in the State of Nevada; that defendant Meier abandoned his fiduciary duty to the plaintiff and, together with others, sold the mining claims to the plaintiff at increased prices and secretly participated in the redistribution of the money to and for the benefit of defendant Meier and others.

That plaintiff contends as a matter of law defendant Meier had a fiduciary duty to acquire the mining properties for the plaintiff at the lowest available price, and that as a matter of law he breached his fiduciary duty in permitting the properties to be acquired from the long-time owners thereof, in the names of strawmen sellers and in permitting the strawmen sellers to sell the same to the plaintiff at greatly inflated prices. Plaintiff contends that defendant Meier had a duty to account to the plaintiff for all of the monies paid for said properties by the plaintiff, except the real purchase price thereof, and the costs of the escrow and sale, and plaintiff, as a matter of law, will be entitled to a money judgment against defendant Meier for all such funds for which he does not properly account.

(b) That there were five mining claim sales transactions, which were consummated with plaintiff through defendant Meier, in Utah escrows, as follows:

(i) A sale on or about the 24th day of June, 1969, by Anthony G. Hatsis to plaintiff. The purchase price was $850,000, and the escrow agent was Continental Bank & Trust Co. of Salt Lake City, Utah.

(ii) A sale on or about the 15th day of May, 1969, wherein a corporation named CPLD Company was the named purchaser, and Anthony Bogdanich was the named seller. The purchase price was $2,900,000. The actual buyer was the plaintiff, and the $2,900,000 was paid into the escrow by the plaintiff, and in its name.

(iii) A sale on or about September 4, 1969, wherein Leon Belaustegui was named as the seller and plaintiff was named as the buyer. The sale price was $1,500,000.

(iv) A sale on or about October 20, 1969, wherein Leon Belaustegui and Sam Bida were named as sellers, and plaintiff was the buyer. The purchase price was $1,900,000.

(v) A sale on or about December 2, 1969, wherein Globe Minerals, Inc. was named as seller and plaintiff was named as buyer. The purchase price was $1,400,000.

(c) That except...