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9. Plaintiffs Peter and Shirley Diamond are
entitled to recover their lost income, including loss
of profits from ETS, and increased expenses, arising
from defendants' fraud and breach of their agreement
with plaintiffs.
In the pretrial order, FIG denied all of the plaintiffs'
allegations, including the foregoing, and alleged, inter alia,
that the Diamonds were not entitled to recover any damages on
account of claims against FIG that properly belonged to DCI.
Proceedings Before and Rulings
By the District Court
Imposition of Sanctions
At the conclusion of the pretrial discovery period in the
Farmers lawsuit, the plaintiffs filed a motion (motion for
sanctions) in which they alleged that FIG had committed various
discovery abuses and requested that the District Court enter
sanctions against FIG by striking FIG's amended answer and
counterclaims, entering a judgment in favor of the plaintiffs,
and awarding attorneys' fees and costs to the plaintiffs. On
September 9, 1986, the District Court issued an order (order)
granting the plaintiffs' motion for sanctions and indicating that
it would enter a default judgment in favor of the plaintiffs
following an evidentiary hearing (damages hearing) to determine
the amount of damages that they suffered.
Damages Hearing
On October 21 and 22, 1986, the District Court held a
damages hearing at which the plaintiffs presented evidence with
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