Free Response to Motion - District Court of Arizona - Arizona

Robert M. Frisbee #018779 FRISBEE & BOSTOCK, PLC 2 1747 Morten Ave. E. Suite 108 Phoenix, Arizona 85020 3 Phone: (602) 354-3689 [email protected] 4 Attorneys for Defendant Greg Hancock
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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA MERITAGE CORPORATION, a Maryland corporation Plaintiff, vs. ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

NO. CIV 04-0384-PHX-ROS

DECLARATION OF EILEEN CARLSON EXHIBIT A TO RESPONSE CARLSON MOTION IN LIMINE

GREG HANCOCK, an individual; RICK HANCOCK, an individual; and 12 RICK HANCOCK HOMES, L.L.C., an Arizona Corporation,
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Defendants.
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I, Eileen Carlson, do declare and state as follows:
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1. I reside in Scottsdale, Arizona, and am a licensed realtor in the State of Arizona.
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2. From 1992 to January, 2003 I worked for Greg Hancock as a salesperson with his
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various companies, including Watt-Hancock, Beazer, Hancock Communities and
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Meritage/Hancock Communities.
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3. I own approximately 800 shares of stock in Meritage Corporation, a publicly
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traded stock.
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4. I received a notification from Meritage that it was holding its 2008 annual meeting
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of stockholders on May 15, 2008, at the Scottsdale Marriott near Meritage's headquarters.
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5. I decided to attend the meeting because:
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a. My Meritage stock had gone from a high of over $100/share to a low of
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$7/share early this year, and at the time of the meeting it was about $17/share; I do not like
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what has been happening with my investment. b. I heard rumors several years ago that a lawsuit existed between Meritage and Greg Hancock, and I learned that it was still going on; I wanted to ask various questions of Meritage executives about the lawsuit. 6. Before going to the meeting I conversed with Greg Hancock, who I know personally very well, and who I believe to be a truthful and honorable man. 7. Before talking with Greg I thoroughly reviewed my own Meritage materials and also checked Meritage's website, and many of its filings with the SEC to see if there was anything about the lawsuit; I found nothing. 8. CEO Steven Hilton presided over the stockholders meeting; when the time came for questions by stockholders, I asked the following questions (quoted verbatim, as nearly as I can remember) of Hilton and received the following answers: Q. "Why are you suing Greg Hancock, the former president of your most successful division, and why isn't the suit mentioned anywhere in any Meritage materials?" A. "Well, Hancock violated his non-compete, and it's really a private matter." Q. "How can it be a private matter if it has a court filing number?" A. "Well, I'm not quite sure of the details." Q. "You recently announced a write-down of $25 million in a development in Florida and the stock went down. I understand you think you're going to win $44 million in the lawsuit, so why haven't you announced that so the stock can go up?" A. "Well, nothing's ever sure in a lawsuit." Q. "Why did you have to hire an expert for $200,000 to establish your damages claim when your CFO, Larry Seay, couldn't do it?" A. "Well, these are all real technical questions and I'm going to refer you for any more questions to Tim White, our General Counsel. You can talk to him after we're through here."
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8. I then went to talk to Tim White to ask him the same or similar questions; I started out by saying, "When I talked to Greg Hancock about . . ." White interrupted me and said, "I don't want to hear about anything Greg Hancock has to say because it's all a lie. He's a blowhard, he's crazy, and he's a liar." 9. I asked White what he expected to get out of the lawsuit; he said that Meritage would probably get nothing. 10. White said that he had warned Meritage about Hancock before the purchase, and that Greg had a history of suing, mentioning Beazer and Larry Canarelli; I later learned that was a lie, and that Beazer and Canarelli had sued Greg, not the reverse. 11. White said Meritage wanted to get out of the suit, but "Greg won't let us." That is also a lie, since Meritage is the plaintiff and all it has to do is dismiss the suit if it really wants out of it. 12. White also said, "We've won all of the motions and hearings thus far in the suit because the judge hates Greg Hancock." 13. I also asked White why the suit wasn't mentioned anywhere in any Meritage documents, and he said, like Hilton had, that the suit wasn't a public record; that, too, is a lie. 14. I make this declaration because I believe what Meritage is doing in this lawsuit is morally wrong, a breach of its duty to its shareholders, and a breach of public trust by a publicly traded corporation. I declare, upon the penalties of perjury and the risk of sanctions, that the above is true and correct to the best of my knowledge. Executed this 16th day of June, 2008.

_____________________________________ Eileen Carlson

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