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PETER E. HEUSER, admitted pro hac vice ELIZABETH A. TEDESCO, admitted pro hac vice Kolisch Hartwell, P.C. 200 Pacific Building, 520 SW Yamhill Street Portland, OR 97204 Telephone: (503) 224-6655 Facsimile: (503) 295-6679 [email protected] [email protected] DANIEL R. MALINSKI (#005911) Burch & Cracchiolo, P.A. 702 East Osborn, Suite 200 Phoenix, Arizona 85014 Telephone: (602) 274-7611 Facsimile: (602) 234-0341 [email protected] Attorneys for Plaintiffs Richard G. Krauth and R.M. Wade & Co. IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Richard G. Krauth, an individual; and R.M. Wade & Co., an Oregon corporation, Plaintiffs, v. Phelps Dodge Corporation, a New York corporation; Phelps Dodge Bagdad Inc., a Delaware corporation; Phelps Dodge Chino Inc., a Delaware corporation; Phelps Dodge Morenci Inc., a Delaware corporation; Phelps Dodge Sierrita Inc., a Delaware corporation; Phelps Dodge Tyrone Inc., a Delaware corporation; and Phelps Dodge Miami Inc., a Delaware corporation, Defendants. REPLY IN SUPPORT OF PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT THAT NO PURPORTED SETTLEMENT AGREEMENT IS ENFORCEABLE No.04-544 PHX PGR

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TABLE OF CONTENTS INTRODUCTION AND SUMMARY OF ARGUMENT ..................................... 1 Rule 80(d) Applies To Void Any Purported Agreement ........................................ 2

II. LEGAL ARGUMENT.............................................................................................. 2

1. Analysis under the Erie doctrine plainly favors applying Rule 80(d) in federal court .............................................................................................................................. 2 2.Rule 80(d) applies here, where there is no issue of fact as to whether the existence of a settlement agreement is in dispute......................................................................... 5 B. The Arizona Statute Of Frauds Prevents The Formation Of Any Purported Agreement........................................................................................................................8 C. Because There Is No Question That Plaintiffs Never Signed The Draft Agreement, Neither Rule 80(d) Or The Statute Of Frauds Is Satisfied ............................................10 IV. CONCLUSION........................................................................................................11

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TABLE OF AUTHORITIES

Bishop v. Norell, 353 P.2d 1022 (Ariz. 1960) .................................................................. 10 Canyon Contracting Co. v. Tohono O'Odham Housing Authority, 172 Ariz. 389, 837 P.2d 750 (App. 1992)...................................................................................................3, 5 Gaspirini v. Center for Humanities, Inc., 518 U.S. 415 (1996)......................................... 2 Hackin v. Rupp, 9 Ariz. App. 354, 452 P.2d 519 (1969) ............................................... 4, 5 Hanna v. Plumer, 380 U.S. 460 ......................................................................................... 2 Hays v. Fisher, 161 Ariz. 159, 777 P.2d 222 (App. 1989)................................................. 7 In re Southwest Supermarkets, L.L.C., 315 B.R. 565 (Bankr. D. Ariz. 2004) ................... 4 Kohlrautz v. Oilmen Participation Corp., 441 F.3d 827 (9th Cir. 2006)....................... 2, 3 Landi v. Arkules, 172 Ariz. 126, 835 P.2d 458 (App. 1992).............................................. 4 Lyons Enterprises, Inc. v. Custer, 168 Ariz. 439, 814 P.2d 780 (App. 1991) ............... 5, 7 Mullins v. Southern Pacific Transportation Co., 174 Ariz. 540, 851 P.2d 839 (App. 1992) ..........................................................................................................................9, 10 U.S. v. Mondragon, 188 F.3d 516 (9th Cir. 1999) ............................................................. 4 Statutes A.R.S. § 44-101 ............................................................................................................1, 10 Rules Ariz R. Civ. P. 80(d)........................................................................................................... 3 D. Az. L.R. 83.7 ................................................................................................................. 3 Treatises Restatement (Second) of Conflict of Laws (1989) .............................................................. 4 Restatement (Second) of Contracts (1981)...................................................................9, 10

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I.

INTRODUCTION AND SUMMARY OF ARGUMENT The Phelps Dodge defendants' (collectively, "Phelps Dodge") Opposition to the

present motion, along with the briefing pertaining to Phelps Dodge's Motion for Summary Judgment Enforcing Settlement Agreement, bring out the myriad factual disputes and conflicting legal theories underlying its effort to enforce (1) what it purports are two oral patent license agreements, and (2) a final draft of the agreement based only on plaintiffs' counsel's statement that he "would have [his] clients ... sign the agreement." As previewed in plaintiffs' moving papers, the resolution of these issues could indeed heavily burden court resources and the time of a jury. But the law does not permit this result. Arizona Rule of Civil Procedure 80(d) and the Arizona statute of frauds render any purported settlement unenforceable, and there are no disputed issues of material fact as to whether they apply. Arizona Rule of Civil Procedure 80(d), a law directed foremost to contract formation, is applicable in federal courts under the Erie doctrine. Because even Phelps Dodge refers to this issue as "the disputed settlement," there can be no question as to whether the existence of an agreement is in dispute, and Rule 80(d) applies to render any purported agreement unenforceable. Likewise, both Arizona law and persuasive authority from other jurisdictions confirm that patent license agreements--particularly those containing covenants not to sue--are covered by the Arizona statute of frauds. Because there is undoubtedly no writing "signed by the party to be charged," any purported agreement would also be barred by the statute of frauds. A.R.S. § 44-101. These rules recognize that after-the-fact evidence and inference as to the existence and terms of oral agreements is inherently unreliable, creating complicated and burdensome issues of fact. Because Arizona law prohibits the enforcement of alleged agreements in such circumstances, plaintiffs ask the Court to grant its Motion for Summary Judgment that No Purported Settlement Agreement is Enforceable.

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II.

LEGAL ARGUMENT A. Rule 80(d) Applies To Void Any Purported Agreement 1. Analysis under the Erie doctrine plainly favors applying Rule 80(d) in federal court Phelps Dodge refers to, but does not actually analyze, the Erie doctrine in arguing

that Arizona Rule of Civil Procedure 80(d) should not be applied in federal court. Rather, Phelps Dodge asserts that because Rule 80(d) was promulgated as a rule of civil procedure, it must be procedural and not substantive in nature. Supreme Court decisions following Erie, however, have specifically noted that the analysis is not nearly this simple. See Hanna v. Plumer, 380 U.S. 460, 465-66 (1965) (holding that it is "clear that Erie-type problems [are] not to be solved by reference to any traditional or commonsense substance-procedure distinction"). In Gaspirini v. Center for Humanities, Inc., 518 U.S. 415, 426 (1996), the Supreme Court held that a New York rule of civil procedure controlling jury awards for excessiveness or inadequacy was applicable in federal court even though the Seventh Amendment requires that "no fact tried by a jury, shall be otherwise reexamined in any court of the United States." Id. at 418. The Court observed that because state rules can be both procedural and substantive, the operative question is whether federal courts can "give effect to the substantive thrust" of the state rule without "untoward alteration of the federal scheme for the trial and decision of civil cases." As the Ninth Circuit recently articulated, absent a valid and applicable federal rule, courts first look to the "outcome-determinative test" and then to the "interestbalancing test" to determine whether a state rule should apply in federal court. Kohlrautz v. Oilmen Participation Corp., 441 F.3d 827, 830-31 (9th Cir. 2006). The "outcome-determinitive test" is "guided by the twin aims of the Erie rule: discouragement of forum-shopping and avoidance of inequitable administration of the laws." Id. Accordingly, courts ask whether applying the state rule would "make so important a difference to the character or result of the litigation that failure to enforce it would unfairly discriminate against citizens of the forum State," and whether application
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of the rule would "have so important an effect upon the fortunes of one or both of the litigants that failure to enforce it would be likely to cause a plaintiff to choose the federal court." Id. (Citations omitted). Next, courts look to the "interest-balancing test," which "instructs federal courts to evaluate and balance the federal and state interests in deciding whether to apply the state or federal rule." Id. The two tests "are not mutually exclusive, but rather, complementary." Id. Here, there is no conflicting federal rule and these two tests should be applied. Although Phelps Dodge has asserted in its Reply in Support of its Motion for Summary Judgment that District of Arizona Local Rule 83.7 controls, that rule is directed to "Stipulations of Counsel" and requires a writing "signed by the attorney of record or by the unrepresented party."1 Unlike Rule 80(d), it does not contemplate requiring written settlement agreements and has never been applied to settlement agreements. See Canyon Contracting Co. v. Tohono O'Odham Housing Authority, 172 Ariz. 389, 391, 837 P.2d 750, 752 (App. 1992) (applying Rule 80(d) to determine a party's substantive right to enforce a settlement agreement). At most, these rules are overlapping to the extent they each require a stipulation between counsel to be written, but Local Rule 83.7 does not prevent the application of Rule 80(d). Turning to the outcome-determinative test, because the application of Rule 80(d) would dispose of the entire issue of a purported settlement, allowing the parties to proceed with the merits of the case, it will plainly be important to the "character or result" of the litigation. If Rule 80(d) were not applied, and contract formation was somehow not prevented by the Arizona statute of frauds, the parties would be forced to proceed to trial presenting conflicting evidence of the details of emails and telephone
1

Rule 80(d) provides that "[n]o agreement between parties or attorneys in any matter is binding if disputed, unless it is in writing, or made orally in open court, and entered in the minutes" while Local Rule 83.7, entitled "Stipulations of Counsel," provides that "[n]o agreement between parties or attorneys is binding, if disputed, unless it is in writing signed by the attorney of record or by the unrepresented party, or made orally in open court and on the record . . . ." Ariz R. Civ. P. 80(d); D. Az. L.R. 83.7 (emphasis added).
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conversations to a jury. If the jury finds for Phelps Dodge, this case would be over and plaintiffs would lose their opportunity to pursue Phelps Dodge for infringement of the patents-in-suit. Accordingly, enforcing or declining to enforce Rule 80(d) could quite literally determine the outcome of this action. Furthermore, applying Rule 80(d) would not favor forum-shopping where a party is unlikely to choose federal court knowing it could escape the application of Rule 80(d) before the case has developed to the point of settlement negotiations. In any case, forum-shopping could not have been a motivation here, where plaintiffs sought to litigate in their home forum of the Eastern District of California before Phelps Dodge successfully moved to dismiss that case for lack of personal jurisdiction, causing plaintiffs to re-file here where Phelps Dodge is based. The interest-balancing test also favors the application of Rule 80(d). Arizona has a strong interest in governing the formation of contracts within its borders. See Landi v. Arkules, 172 Ariz. 126, 130-31, 835 P.2d 458, 462-63 (App. 1992) (citing Restatement (Second) of Conflict of Laws §§ 6, 188 (1989)). In particular, Rule 80(d) was adopted to "prevent fraudulent claims of oral stipulations" and to promote judicial economy among Arizona courts by "reliev[ing] the court of the necessity of determining such disputes, which it can be said are often more perplexing than the case itself." See Hackin v. Rupp, 9 Ariz. App. 354, 452 P.2d 519, 521 (1969). There is likely no countervailing federal interest. Indeed, state and federal courts share an interest in the preservation of judicial resources. Accordingly, both the outcome-determinative and interest-balancing tests favor application of Rule 80(d). This analysis is in keeping with the result in U.S. v. Mondragon, Docket No. 9700700 (October 2, 1998), 2 where the District of Arizona applied Rule 80(d) to render a purported settlement agreement unenforceable. That unpublished opinion that was affirmed by the Ninth Circuit. U.S. v. Mondragon, 188 F.3d 516 (9th Cir. 1999).

2

Plaintiffs have requested a copy of the District of Arizona opinion, which is currently archived in California, and will submit a copy as soon as it is obtained. See In re Southwest Supermarkets, L.L.C., 315 B.R. 565, 572 n.17 (Bankr. D. Ariz. 2004) (noting that the citation of unpublished District of Arizona opinions is not prohibited).
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2. Rule 80(d) applies here, where there is no issue of fact as to whether the existence of a settlement agreement is in dispute Phelps Dodge argues that Rule 80(d) does not render what it purports to be the final settlement agreement unenforceable because the terms of that agreement are not in dispute. [Phelp's Dodge's Response Opposition to Plaintiff's Motion for Summary Judgment ("PD Opp.") at 7-9]. This argument fails to respond to several of plaintiffs' contentions relating to this rule. For one, Phelps Dodge neglects to address the effect of Rule 80(d) on the so-called "verbal agreements." As it concedes, the parties have "presented ... differing perspective[s] on these verbal agreements," including as to "the nature of the subject conversations" and whether "verbal agreements were ever reached." [Id. at 5]. Indeed, because both parties recognize that these purported agreements are "disputed" and are not "in writing," there are no issues of fact as to whether Rule 80(d) operates to render them unenforceable. Second, Phelps Dodge overlooks that Rule 80(d) was adopted to prevent disputes as to the existence, as well as simply the terms, of agreements between the parties. Hackin, 9 Ariz. App. At 355-56, 452 P.2d. at 520-21; Canyon, 172 Ariz. at 393, 837 P.2d at 754; Lyons Enterprises, Inc. v. Custer, 168 Ariz. 439, 441, 814 P.2d 780, 782 (App. 1991). Fundamentally, courts look to find "a genuine dispute over whether the parties entered into a final settlement agreement." Canyon, 172 Ariz. at 392, 750 P.2d at 753. There is undoubtedly such a dispute here. In its response to plaintiffs' Interrogatory No. 19, Phelps Dodge made the following admissions relating to whether the existence of a settlement agreement was disputed during the parties' negotiations: "...Heuser told Kittredge that if the Patent Office issued a favorable Office Action before the written settlement agreement was signed, the he thought his clients' position would be that all bets were off. In response to that statement, Kittredge said that defendants believed the Parties already had a binding settlement agreement." [Declaration of Elizabeth A. Tedesco in Support of Plaintiffs' Reply Supporting its Motion for Summary Judgment ("Tedesco Decl."), Exh. A at 7].

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"There was one subsequent conversation between Heuser and Kittredge in which they both acknowledged they would like to finalize the settlement documentation before the Patent Office issues an Office Action to avoid any dispute as to whether a binding settlement agreement already existed." [Id. at 8 (emphasis added)]. On October 20, 2005, "Heuser told Kittredge that the Patent Office had issued office actions allowing all of the claims in both cases and that the settlement was off. Kittredge informed Heuser that, as he had previously explained, defendants believed there was a binding settlement agreement. Heuser and Kittredge agreed that they wanted to resolve the issue of the disputed settlement before they proceeded with any other aspect of the case..." [Id. (emphasis added)]. In its Opposition, Phelps Dodge argues that "Plaintiffs cannot now be permitted to pretend that they openly disputed the existence of an agreement." [PD Opp. at 9]. But who is pretending? Phelps Dodge acknowledged express disagreement between its counsel Mark Kittredge and Peter Heuser, counsel for plaintiffs, as to whether the parties had formed a binding settlement agreement on three separate occasions. Phelps Dodge even refers to the issue as "the disputed settlement" and acknowledges that the parties discussed ways to avoid the "dispute as to whether a binding settlement agreement existed." In light of these admissions, the facts are clear that each party recognized such a dispute. Phelps Dodge tries to cloud the issue by arguing that Mr. Heuser's statement as to the contingency of plaintiffs' agreement was "ambiguous and equivocal." [PD Opp. at 8]. It further states that "Plaintiffs have not presented any evidence, nor have they even alleged, that they expressly followed up with either a verbal or written communication that actually stated an express intent not to be bound until a written agreement was signed." [Id.]. Phelps Dodge disregards the direct statements in Mr. Heuser's declaration that he told Mr. Kittredge on April 5, 2005 that "if the PTO does not reject all of the claims of the patents-in-suit, the settlement negotiations would change directions entirely," and told Mr. Kittredge on May 10, 2005 that if the Office Action was in any way favorable "this could entirely change the direction of the negotiation." [Declaration of Peter E. Heuser in Support of Plaintiffs' Summary Judgment Briefing
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("Heuser Decl.") at ¶¶ 12, 15]. Nonetheless, the key point is that whatever was said by Mr. Heuser to Mr. Kittredge regarding the contingency of plaintiffs' agreement undisputedly caused Mr. Kittredge to disagree with Mr. Heuser, while settlement negotiations were ongoing, as to whether a binding agreement had been formed. 3 For purposes of this Motion, such disagreement is itself an undisputed material fact. The parties likewise do not dispute that this disagreement occurred before any final draft of an agreement had been reached on October 12, 2005. [See Heuser Decl. at ¶¶ 12, 15 (stating that these conversations occurred on April 5, 2005 and May 10, 2005); Tedesco Decl., Exh A at 7 (Phelps Dodge interrogatory response stating that the conversation occurred in "late summer of 2005"), Exh. B (Kittredge Depo.) at 63:22-24 (stating that "late summer" includes "mid-July to August")]. This case is thus wholly unlike Hays v. Fisher, 161 Ariz. 159, 777 P.2d 222 (App. 1989), in which the existence of a settlement was contested only after counsel for the parties had agreed to every term of the agreement. See id. at 166, 777 P.2d at 229. Moreover, in Lyons Enterprises, Inc. v. Custer, 168 Ariz. 439, 814 P.2d 780 (App. 1991), even an "arguable basis" for the defendant's belief that their assent to a contract was contingent on a review of certain financing details was sufficient to apply Rule 80(d). Here, Phelps Dodge has confirmed that plaintiffs' counsel represented, at a minimum, that "if the Patent Office issued a favorable Office Action before the written agreement was signed, that [Mr. Heuser] thought his clients' position would be that all bets would be off." [Tedesco Decl., Exh. A at 7]. Although plaintiffs recall that Mr. Heuser's assertion of this contingency was more direct than that described in Phelps Dodge's discovery responses, even the statement Phelps Dodge describes is sufficient to
3

Phelps Dodge also points to Mr. Heuser's email that the attorneys had "put this case to bed" as creating an issue of fact relating to whether plaintiffs truly disputed the existence of a binding agreement. [PD Opp. at 2, 9]. Here too, Phelps Dodge willfully overlooks the evidence presented in Mr. Heuser's declaration that he made this statement to encourage amicable business relations between the parties but not to indicate that negotiations had concluded. [Heuser Decl. at ¶ 13]. Indeed, such negotiations continued for another five months.
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show that plaintiffs had an "arguable basis" for believing that their assent was conditioned on executing the agreement before receiving a favorable Office Action from the PTO. It is undisputed that plaintiffs conveyed at least that much before the terms of the agreement were reached. Because there is no material issue of fact as to whether the existence of a settlement agreement is disputed, Rule 80(d) applies as a matter of law. B. The Arizona Statute Of Frauds Prevents The Formation Of Any Purported Agreement

Phelps Dodge's arguments to avoid application of the Arizona statute of frauds are unavailing. First, Phelps Dodge argues that because "Plaintiffs' grant of a license occurred when the Plaintiffs and the Defendants agreed to the terms of the October written agreement," and the purported agreement does not "contemplate or require any further performance by either Plaintiffs or Defendants in order for the license to be operative," the statute of frauds does not apply. [PD Opp. at 10]. This assertion ignores the provisions relating to Phelps Dodge's obligation to pay for the license, plaintiffs' obligation to dismiss this lawsuit, and other concrete forms of "further performance" contemplated by the draft agreement. [See Heuser Decl., Exh. O]. Furthermore, this argument is entirely inconsistent with Mr. Kittredge's deposition testimony: Q: A: [W]hen did you understand the grant of the license would take place? We already had a license under the settlement agreement reached on January 12th. The license covered by the written document would take place when the written document got signed and then would replace with the merger clause of the January 12th agreement.

[Tedesco Decl., Exh. B at 26:13-20 (emphasis added)]. In his deposition, Mr. Kittredge was well aware that the written agreement would need at least to be signed before the license it described would take effect. As discussed below, any purported "oral" patent license is barred by the statute of frauds. Citing Arizona cases for the general proposition that oral contracts performable within a year are not invalidated by statute of frauds--a proposition with which plaintiffs agree--Phelps Dodge stridently argues that "Arizona case law is uniformly contrary to plaintiffs' position." [PD Opp. at 11]. Phelps Dodge can point to no Arizona
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authority, however, addressing whether a patent license agreement is covered by the statute of frauds. Indeed, the issue appears to be one of first impression in Arizona. Accordingly, plaintiffs looked to other jurisdictions for persuasive authority and found, overwhelmingly, that patent license agreements are within the statute of frauds. Rather than distinguish these cases on their facts, Phelps Dodge simply argues that they do not apply because they interpret other states' statutes of frauds, drawing a superficial distinction between agreements that cannot be formed within one year and agreements that "by their terms" cannot be performed within one year. The legal principle that oral contacts must be performable within a year is not unique to Arizona. Indeed, Phelps Dodge's Motion for Summary Judgment initially cited to the Restatement of Contracts, rather than to Arizona law, for the principle that a promise to refrain from exercising a right is performable within a year. [See PD Motion for Summary Judgment at 7 citing Restatement (Second) of Contracts § 130 (a covenant to refrain from exercising a right "is not within the one-year provision of the [statute of frauds], since the [seller's] death within one year will give the [buyer] the equivalent of full performance")]. In any case, a patent license agreement, with a covenant not to sue, is far more analogous to contract of a set duration than an agreement by an individual to do something or refrain from doing something for his or her "lifetime." In the latter case, the death of that individual means the contract is fully "performed." In the former case, the destruction of the object of the contract would "discharge" the parties' obligations, but does not bring the contract out of the statute of frauds. Arizona recognizes this distinction. In Mullins v. Southern Pacific Transportation Co., 174 Ariz. 540, 851 P.2d 839 (App. 1992), the court considered an oral employment contract lasting until the employee qualified for retirement benefits (at the age of 65). Contracts as set forth below. b. Discharge within a year. Any contract may be discharged by a subsequent agreement of the parties, and performance of any contracts may be excused by supervening events or by the exercise of a power to cancel granted by the contract. The possibility that such a discharge or
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In determining that the

statute of frauds covered such a contract, the court pointed to the Restatement of

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excuse may occur within a year is not a possibility that the contract will be "performed" within a year. This is so even though the excuse is articulated in the agreement. * * * Illustrations: 5. A orally promises to work for B, and B promises to employ A for five years at a stated salary. The promises are within the Statute of Frauds. Though the duties of both parties will be discharged if A dies within a year, the duties cannot be "performed" within a year. This conclusion is not affected by a term in the oral agreement that the employment shall terminate on A's death. Id. (citing Restatement of the Law (Second) of Contracts § 130, cmt. b, illus. 5 (1981). (Emphasis added). Even if Phelps Dodge's assertion that the patents-in-suit can be invalidated within a year were correct (although this would rarely, if ever, occur in practice), the invalidation (or "death") of the patents would be a supervening event discharging the parties' duties under the contract and not a "performance" of the contract. Id. Because the purported settlement agreement has a set duration, that is, for the life of the patents licensed, it is covered by the Arizona statute of frauds, and must be "in writing and signed by the party to be charged." A.R.S. § 44-101. C. Because There Is No Question That Plaintiffs Never Signed The Draft Agreement, Neither Rule 80(d) Or The Statute Of Frauds Is Satisfied

Phelps Dodge continues to mischaracterize plaintiffs' argument regarding whether Rule 80(d) and the statute of frauds is satisfied, stating that "[p]laintiffs' sole argument is that old-fashioned pen-and-ink signatures were not affixed to the document." [PD Opp. at 14]. Phelps Dodge further asserts that plaintiffs have not contradicted its case law stating that a "signature in electronic form cannot be denied legal effect." [Id. at 15]. But plaintiffs have no wish to dispute the statement in Bishop v. Norell, 353 P.2d 1022, 1025 (Ariz. 1960), cited by Phelps Dodge that "any known mode of impressing a name on paper" is a sufficient signature by "person to be charged" provided it is "done with the intention of signing." Plaintiffs agree that an electronic signature may be evidence a party's assent to the terms of an agreement if it was

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provided by the intended signatory and "done with intention of signing." But there is no such signature in this case. Phelps Dodge places much significance on the fact that the parties agreed to the terms of a final draft of an agreement. But it is undisputed that plaintiffs themselves neither signed that draft nor issued any electronic signature. Phelps Dodge appears to argue that Peter Heuser, counsel for plaintiffs, "electronically sign[ed]" the draft agreement when he emailed counsel for Phelps Dodge stating that his client would agree to a final revision and that, after that revision was made, he could then have his clients and the wife of the inventor sign the agreement. At the outset, plaintiffs' counsel was not an intended signatory of the agreement and so cannot have "signed" it at all. Moreover, when Mr. Heuser sent that email, the final revision had yet to be completed, so the draft Mr. Heuser purportedly approved was not a final version of the agreement. Finally, it is implausible to assert that the real intended signatories of the agreement, Richard Krauth, Nina Krauth and R.M. Wade & Co., intended for Mr. Heuser's email to constitute their own signatures. Because both Rule 80(d) and the Arizona statute of frauds require concrete written assent, and there is none here, any purported settlement agreement is unenforceable. IV. CONCLUSION

For the foregoing reasons, Plaintiffs respectfully request that the Court grant plaintiffs' Motion for Summary Judgment. Dated: May 18, 2006. By s/Elizabeth A. Tedesco PETER E. HEUSER ELIZABETH A. TEDESCO Kolisch Hartwell, P.C. 520 SW Yamhill Street, Suite 200 Portland, Oregon 97204 Telephone: 503-224-6655 Facsimile: 503-295-6679

DANIEL R. MALINSKI Burch & Cracchiolo, P.A. 702 East Osborn, Suite 200 Phoenix, Arizona 85014 Telephone: (602) 274-7611

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Certificate of Service I hereby certify that on May 18, 2006, I electronically transmitted the attached documents to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Terry E. Fenzl [email protected] C. Mark Kittredge [email protected] PERKINS COIE BROWN & BAIN, P.A. 2901 North Central Avenue Post Office Box 400 Phoenix, Arizona 85001-0400 Attorneys for Defendants. I hereby certify that on May 18, 2006, I served the attached document via First Class U.S. Mail to: The Honorable Paul G. Rosenblatt United States District Court Sandra Day O'Connor U.S. Courthouse, Suite 621 401 West Washington Street, SPC 56 Phoenix, Arizona 85003-2156 /s Elizabeth A. Tedesco

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Case 2:04-cv-00544-PGR

Document 94

Filed 05/18/2006

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