Free Response in Opposition to Motion - District Court of Arizona - Arizona

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Dan W. Goldfine (#018788) Adam Lang (#022545) SNELL & WILMER L.L.P. One Arizona Center 400 East Van Buren Street Phoenix, AZ 85004-2202 Telephone: (602) 382-6000 Facsimile: (602) 382-6070 [email protected] [email protected] Attorneys for Plaintiffs and Counterdefendants and Third Party Defendants and

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Grant Woods, Esq. (#006106) GRANT WOODS, P.C. 1726 North Seventh Street Phoenix, Arizona 85006 Telephone: (602) 258-2599 Facsimile: (602) 258-5070 [email protected] Attorneys for Plaintiffs and Counterdefendants and Third Party Defendants IN THE UNITED STATES DISTRICT COURT

14 FOR THE DISTRICT OF ARIZONA 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiffs, v. Ricky Lee Hancock and Brenda Hancock, husband and wife; Gregory S. Hancock and Linda Hancock, husband and wife, Rick Hancock Homes L.L.C., an Arizona limited liability company; RLH Development, L.L.C., an Arizona limited liability company; and J2H2, L.L.C., an Arizona limited liability company, Defendants. Meritage Homes Corporation, a Maryland Corporation, formerly d/b/a Meritage Corporation, Hancock-MTH Builders, Inc., an Arizona corporation, HancockMTH Communities, Inc., an Arizona corporation, and currently d/b/a Meritage Homes Construction, Inc., an Arizona corporation, and Meritage Homes of Arizona, Inc., an Arizona corporation, Case No. CV-04-0384-PHX-ROS PLAINTIFFS' (1) OBJECTIONS TO DEFENDANTS RICK AND BRENDA HANCOCK, RICK HANCOCK HOMES, INC., AND RLH DEVELOPMENT, INC.'S SEPARATE STATEMENT OF FACTS AND (2) CONTROVERTING STATEMENT OF FACTS

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Plaintiffs (collectively, "Meritage") submit their Objections to Defendants Rick and Brenda Hancock, Rick Hancock Homes, Inc., and RLH Development, Inc.'s (collectively, "Defendants") Statement of Facts ("RH SOF") in Support of Defendants' Motion for Summary Judgment ("Motion") and its Local Rule 56.1(b) controverting Statement of Facts ("CSOF")1: MERITAGES' OBJECTIONS TO DEFENDANTS' STATEMENT OF FACTS 1. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. It should be noted that the tense that Defendants employ reveals that the Defendants have not reviewed and updated their Statement of Facts from two years ago. Rick Hancock Homes was a "new" home building company in 2004. 2. For purposes of this Motion, Meritage does not object to Defendants'

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statement of fact in this paragraph. 3. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. 4. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. 5. Meritage controverts this paragraph. The use of "registered" in this

paragraph could be construed more broadly than in Paragraph 4, supra, to refer to the license. By the License Agreement's expressed terms, the licensors were Gregory Hancock, HC Builders, Inc., and Hancock Communities, L.L.C. ­ not Gregory Hancock alone. (See License Agreement, attached as Exhibit 4 to RH SOF, at p. 1.) The license is also not just for the use but for the "exclusive use" of Meritage. (See id. at ¶ 2.) Further, Meritage obtained a license for the exclusive use of the "Hancock Homes" and "Hancock Communities" marks, and "all variations of or derivations from such names. . . ." (See For the convenience of the Court and parties, Meritage uses one master set of exhibits for its Responses to Defendants' Motions for Summary Judgment.
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Agreement of Purchase and Sale of Assets ("Assets Agreement"), attached as Exhibit A hereto, at ¶ E.) 6. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. It should be noted that defendant Rick Hancock was the President of Hancock Builders, Inc. and authorized its sale to Meritage. (See License Agreement, Ex. 4 to RH SOF, at p. 7; see also Master Transaction Agreement ("MTA"), attached as Exhibit H hereto, at p. 52.) 7. Meritage controverts this paragraph. By the License Agreement's express

terms, the licensors were Gregory Hancock, HC Builders, Inc., and Hancock Communities, L.L.C. ­ not Gregory Hancock alone. (See License Agreement, Ex. 4 to RH SOF, at p. 1.) The license is also not just for the use but for the "exclusive use" of Meritage. (See id. at ¶ 2.) Further, Meritage obtained a license for the exclusive use of the "Hancock Homes" and "Hancock Communities" marks, and "all variations of or derivations from such names . . . ." (See Assets Agreement, Ex. A, at ¶ E.) 8. Meritage controverts this paragraph. By its express terms, paragraph 3.4 of

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the License Agreement only states that the "Licensee acknowledges Licensor's exclusive right, title and interest in and to the Licensed Marks." (See License Agreement, Ex. 4 to RH SOF, at ¶ 3.4.) "Licensor" is defined in the License Agreement to include Gregory Hancock, HC Builders, Inc., and Hancock Communities, L.L.C. ­ not Gregory Hancock alone. (See License Agreement, Ex. 4 to RH SOF, at p. 1.) Nevertheless, Meritage obtained a license for the exclusive use of the "Hancock Homes" and "Hancock Communities" marks, and "all variations of or derivations from such names . . . ." (See Assets Agreement, Ex. A, at ¶ E.) 9. Meritage controverts this paragraph. Defendants' statement of fact in this

paragraph is misleading. First, Meritage has the exclusive right to use the "Hancock" marks. (See License Agreement, Ex. 4 to RH SOF, at p. 1.) Secondly, the License Agreement and the Assets Agreement provide Meritage with a license for the exclusive use of the "Hancock Homes" and "Hancock Communities" marks, and "all variations of
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or derivations from such names . . . ." (See License Agreement, Ex. 4 to RH SOF, at p. 1; Assets Agreement, Ex. A, at ¶ E.) 10. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph as long as owner refers to owner of title. Meritage, however, was granted "a personal, exclusive, nontransferable, nonassignable license to use the Licensed Marks during the terms" of the License Agreement. (License Agreement, Ex. 4 to RH SOF, at ¶ 2.) 11. Meritage controverts this paragraph. The License Agreement expressly

provides that the terms of the License Agreement apply to "any and all subsidiaries of [Meritage] or affiliated business entities which are involved with [Meritage] . . . ." (License Agreement, Ex. 4 to RH SOF, at ¶ 9.) 12. Meritage controverts this paragraph. The License Agreement prescribes

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only two instances whereby the Licensors could terminate the agreement. First, the Licensors can terminate the agreement ­ with notice ­ "[i]n the event that all or a controlling interest in Licensee . . . is acquired by an unrelated third party . . . ." (See License Agreement, Ex. 4 to RH SOF, at ¶ 7.2.) Second, the Licensor can terminate the agreement ­ without notice ­ if Meritage breaches it or the MTA. (See id., at ¶ 7.3.) This Court has already dismissed with prejudice Greg Hancock's claims that Meritage breached either the License Agreement or the MTA. (See Order at 5 (Mar. 31, 2006); Order at 10 (Aug. 22, 2006).) The License Agreement does not provide Defendant with other alternatives for termination notwithstanding that its end-date is May 30, 2007. 13. Meritage controverts this paragraph. By its very terms, there must be an

actual breach of the License Agreement or the MTA before the Licensor can terminate the license. See Objections to Paragraph 12, supra. 14. Meritage controverts this paragraph. By its very terms, there must be an

actual breach of the License Agreement or the MTA before the Licensor can terminate the license. (See License Agreement, Ex. 4 to RH SOF, at ¶ 7.3.) This Court has already dismissed Greg Hancock's claims with prejudice that Meritage breached either the
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License Agreement or the MTA. (See Order at 5 (Mar. 31, 2006); Order at 10 (Aug. 22, 2006).) Since Meritage did not breach the License Agreement or MTA, Greg Hancock and the other Licensors were not entitled to terminate the agreement. (See License Agreement, Ex. 4 to RH SOF, at ¶ 7.1.) Thus, Exhibit 5 to RH SOF was a wrongful termination because Meritage had complied with the terms of the License Agreement. (See id.) 15. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. 16. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. Greg Hancock concedes that he quit without notice. (See November 21, 2006 Deposition of Greg Hancock ("Greg Hancock Depo."), attached as Exhibit R hereto, at 130:14-17.) 17. Meritage controverts this paragraph. The License Agreement was not

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revoked. See Objections to Paragraphs 12, 13, and 14, supra. 18. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. 19. Meritage controverts this paragraph. Defendants mischaracterize Larry

Seay's testimony. Seay explained that the carve-out in the agreement was intended to limit certain "land development" activities and specifically excluded "home development" and other real estate development activities. (See September 7, 2004 Deposition of Larry Seay ("Seay Depo."), attached as Exhibit J hereto, at 33:17 to 34:8.) 20. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. Meritage observes that Greg Hancock's land banking substantially aided the Defendants. (See September 26, 2006 Deposition of Ken Krause ("Krause Depo."), attached as Exhibit P hereto, at 109:1-4.) 21. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph.

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22.

Meritage controverts this paragraph. Rick Hancock was not terminated; his

employment was. (See November 18, 2004 Deposition of Steve Hilton ("Hilton Depo."), attached as Exhibit B hereto, at 121:17-22.) 23. Meritage controverts this paragraph. Meritage objects to this paragraph to

the extent that Defendant implies that Meritage was required to ask for permission for name and advertising changes. Nothing in the License Agreement obligates Meritage to seek or obtain the permission of Greg Hancock to alter its name or advertising. (See License Agreement, Ex. 4 to RH SOF, generally.) Also, the rebranding program did not begin until July 1, 2004. (See Greg Hancock Counterclaim at ¶¶ 43, 46, 48, and 61-63; June/July press release, attached as Exhibit BBB hereto, at RHH0143-RHH0147.) Otherwise, for purposes of this Motion, Meritage does not object to Defendants' statement of fact in this paragraph. 24. For purposes of this Motion, Meritage does not object to Defendants'

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statement of fact in this paragraph. 25. Meritage controverts this paragraph. The purported support for the assertion

is incorrectly cited. Exhibit 1 to RH SOF does not include Seay's deposition testimony but rather Rick Hancock's declaration. Seay's testimony does not support the assertion that the only purpose of the name change was that people would recognize that Meritage Homes are being built by a large national homebuilder. (See Seay Depo., Ex. J, at 83:17 to 84:23.) Further, Seay's full name is Larry Seay and not Larry Seay Hancock. Finally, this paragraph is also contraverted by the testimony of Steve Hilton who testified: We had a corporate goal to expose the Meritage Homes and the Meritage Corporation name and at the same time preserve the goodwill and integrity of our local brands, and we decided that we needed to preserve the Hancock Communities name, at the same time make the Meritage Homes name more prominent and that's exactly what we've done. (See Hilton Depo., Ex. B, at 29:19-25.) 26. Meritage controverts this paragraph. See Objections to Paragraph 25, supra.

Meritage notes that notwithstanding Rich Hancock's assertions to the contrary, his
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deposition transcript has been available since December 6, 2004. (See December 6, 2004 letter from Ivan K. Mathew acknowledging changes to Rick Hancock's deposition, attached as Exhibit CCC hereto.) Also, there is no evidence in the record that would support the assertion that Rick Hancock has personal knowledge of Meritage's motives after his employment at Meritage ended. 27. Meritage controverts this paragraph. Defendants seem incapable of quoting

their own witnesses accurately. Ms. Haas did not testify that Meritage abandoned the Hancock name; rather, she testified as follows: "At this Party, it was announced by Mr. Arneson that the company intended to phase out its use of the `Hancock' name to adopt a national branding concept under the Meritage name." (March 2, 2004 Declaration of Diane Haas, attached as Exhibit 7 to RH SOF, at ¶ 3.) All Jim Arneson stated was that Meritage was discussing changing the overall name of the business to Meritage and not abandoning its use of "Hancock Communities." (See November 8, 2004 Deposition of James Arneson (Vol I.) ("Arneson I Depo."), attached as Exhibit O hereto, at 90:20 to 91:14.) Steve Hilton's testimony also shows that Meritage had not definitively determined that they were even going to rebrand Hancock communities: Q. By Mr. Mathew: Approximately what date was that?

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A. Sometime in the spring, I want to say in April or May of this year. Q. I just want to be clear on this so my notes are clear. So the first time that the Meritage Corporation decided to change the Hancock Communities name to another name was in the spring of 2004? Mr. Goldfine: Form A. We had a corporate goal to expose the Meritage Homes and the Meritage Corporation name and at the same time preserve the goodwill and integrity of our local brands, and we decided that we needed to preserve the Hancock Communities name, at the same time make the Meritage Homes name more prominent and that's exactly what we've done. Q. Okay. So let me go back to my question. Could you read my question back please?

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(Record read.) Mr. Goldfine: Form Still A. Say the question again.

(Record read.) Mr. Goldine: Actually form and foundation. A. I would change my testimony. We didn't change the name, we added another name. We still have the Hancock Communities name. We're still using that name, as I mentioned, at Sundial ­ or Sundance, I'm sorry, and at Rancho Bella Vista. Q. So I just want to make sure that my notes are correct, Mr. Hilton. The first time that you decided to enhance or change, add to the Hancock Communities name ­ A. Q. A. Right. -- would have been the spring of 2004? That's Correct.

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(See Hilton Depo., Ex. B, at 29:10 to 30:19.) Further, Meritage continued to use the "Hancock" name and sold homes ­ over $117 million since July 1, 2004, under the Hancock name throughout metropolitan Phoenix consistent with the level they sold in the years prior to the License Agreement. (See Declaration of Roger Zetah in Support of Meritage's Opposition to Greg Hancock's Motion for Stay and Request for Relief from Operation of Order ("Zetah Decl."), attached as Exhibit C hereto, at ¶ 3; Various Income Statements ("Income Statements"), attached as Exhibit D hereto, at MER003209, MER003448, MER003776, MER005340, and MER005373) and continued to use the Hancock mark and extensively advertised and conducted sales of homes operating under the Hancock name. (See October 25, 2004 Deposition of Rick Hancock ("Rick Hancock Depo."), attached as Exhibit E hereto, at 118:10 to 120:13 and 161:15 to 162:4; Declaration of Larry Seay in Support of Meritage's Renewed Application for Temporary Restraining Order ("Seay Decl."), attached as Exhibit F hereto, at ¶¶ 7 and 9.) In fact, Meritage is currently still selling Hancock Communities Series homes at Rancho Bella

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Vista. (See February 21, 2007 Declaration of Scott Abel ("Abel Decl."), attached as Exhibit G hereto, at ¶ 11.) 28. Meritage controverts this paragraph. The declaration Defendants cite does

not support the assertion. (See September 23, 2004 Declaration of Thomas Wing ("Wing Decl."), attached as Exhibit 8 to RH SOF, at ¶¶ 4 and 5.) Wing testified that he learned in June, 2004, months after this lawsuit began, that Meritage intended to change its Division's name. (See id., at ¶ 6.) Further, Meritage continued to use the "Hancock" name and sold homes ­ over $117 million since July 1, 2004, under the Hancock name throughout metropolitan Phoenix consistent with the level they sold in the years previous to the License Agreement (see Zetah Decl., Ex. C, at ¶ 3; Income Statements, Ex. D, at MER003209, MER003448, MER003776, MER005340, and MER005373) and continued to use the Hancock mark and extensively advertised and conducted sales of homes operating under the Hancock name. (See Rick Hancock Depo., Ex. E, at 118:10 to 120:13 and 161:15 to 162:4; Seay Decl., Ex. F, at ¶¶ 7 and 9.) In fact, Meritage is still currently selling Hancock Communities Series homes at Rancho Bella Vista. (See Abel Decl., Ex. G, at ¶ 11.) 29. Meritage controverts this paragraph. Meritage changed the overall business

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name to Meritage but did not abandon the use of "Hancock Communities." (See Arneson I Depo., Ex. O, at 90:20 to 91:14; see also Objections to Paragraph 28, supra.) Further, Meritage objects to this paragraph because the purported testimony does not support Defendants' assertion that Meritage continues to run full page ads in the Arizona Republic announcing a name change from the Hancock Communities to Meritage. (See Declaration of Rick Hancock, Ex. 1 to RH SOF, at ¶ 12; see also Various Ads Placed in the Arizona Republic, attached as Exhibit QQQ hereto, at MER039200, MER039205, MER039206, MER039208, MER039209, MER039216, MER039217, MER039219, MER039221, MER039222, MER039224, MER039226, MER039228, MER039230, MER039232, MER039235, MER039238, MER039239, MER039241, MER039243

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(showing various advertisements touting the Hancock Communities Series from September 11, 2004, until as late as July 9, 2005). ) 30. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. The letter speaks for itself and refers only to the business entity's name. Meritage does, however, controvert Defendants' assertion that Meritage stopped using the Hancock name at that time. See Objections to Paragraph 28, supra. 31. Meritage controverts this paragraph. The reference to "the disclaimer" is

vague. The purported support only discusses the billboard erected in the Sundance Community. (See Seay Depo., Ex. J, at pp. 133-134.) Thus, this assertion is not properly supported as required by LRCiv. 56.1(a). Further, to the extent that Defendants imply that the disclaimer was effective, at least one customer testified that he could not even remember if the billboard at Sundance had a disclaimer. (See July 19, 2005 Declaration of Mario Atkins ("Atkins Decl."), attached as Exhibit PP hereto, at ¶ 13.) 32. Meritage controverts this paragraph to the extent that it suggests anymore

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than the single disclaimer on a single billboard. (See Seay Depo., Ex. J, at pp. 133-134.) See Objections to Paragraph 28, supra. 33. Meritage controverts this paragraph. Seay testified that there was a

disclaimer on one phone message at one particular point in time. (See Seay Depo., Ex. J, at 134:17-22.) Meritage points out the contrived nature of the telephone call in that it was made on a day and at a time controlled by Defendants. (See id. at 134:8-16, generally.) There is no evidence supporting the assertion that Rick Hancock Homes had disclaimers "on phone recordings used to receive customer inquiries from the billboard" as required by LRCiv. 56.1(a). Additionally, there is sufficient evidence demonstrating that the phone was not answered with a disclaimer when the call was not expected. (See November 18, 2004 Deposition of Jim Arneson (Vol. II) ("Arneson II Depo."), attached as Exhibit DDD hereto, at 9:19 to 10:22.)

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34.

For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. 35. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. 36. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. 37. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. There is no evidence in the record, however, that Mark Hancock Development Corporation is building similar homes in the immediate vicinity of Meritage developments and has billboards across the street from Meritage developments. Also, Hancock Development Corporation is doing business as Camelot Homes, eschewing the Hancock name. (See Seay Depo., Ex. J, at 142:25 to 143:8; see also ¶¶ 26-33 of the CSOF, infra.) In addition, there is no evidence in the record indicating that Greg Hancock, when he was President of the Hancock Communities Division of Meritage, or Rick Hancock, when he was Vice-President of the Hancock Communities Division of Meritage, took steps to enforce the Hancock trademark against the Mark Hancock Development Corporation. (See RH SOF at ¶¶ 15, 16, 21, and 22.) 38. For purposes of this Motion, Meritage does not object to Defendants'

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statement of fact in this paragraph. There is no evidence in the record, however, that Hancock Building Company, Inc. is building similar homes in the immediate vicinity of Meritage developments and has billboards across the street from Meritage developments. (See ¶¶ 26-33 of the CSOF, infra.) In addition, there is no evidence in the record indicating that Greg Hancock, when he was President of the Hancock Communities Division of Meritage, or Rick Hancock, when he was Vice-President of the Hancock Communities Division of Meritage, took steps to enforce the Hancock trademark against Hancock Building Company, Inc. (See RH SOF at ¶¶ 15, 16, 21, and 22.) 39. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. There is no evidence in the record, however, that
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Trevor Hancock Realty, Inc. is building similar homes in the immediate vicinity of Meritage developments and has billboards across the street from Meritage developments. (See ¶¶ 26-33 of the CSOF, infra.) In addition, there is no evidence in the record indicating that Greg Hancock, when he was President of the Hancock Communities Division of Meritage, or Rick Hancock, when he was Vice-President of the Hancock Communities Division of Meritage, took steps to enforce the Hancock trademark against Trevor Hancock Realty, Inc. (See RH SOF at ¶¶ 15, 16, 21, and 22.) 40. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. There is no evidence in the record, however, that Hancock Contracting, Inc. is building similar homes in the immediate vicinity of Meritage developments and has billboards across the street from Meritage developments. (See ¶¶ 26-33 of the CSOF, infra.) In addition, there is no evidence in the record indicating that Greg Hancock, when he was President of the Hancock Communities Division of Meritage, or Rick Hancock, when he was Vice-President of the Hancock Communities Division of Meritage, took steps to enforce the Hancock trademark against Hancock Contracting, Inc. (See RH SOF at ¶¶ 15, 16, 21, and 22.) 41. For purposes of this Motion, Meritage does not object to Defendants'

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statement of fact in this paragraph. There is no evidence in the record, however, that Hancock Materials, Inc. is building similar homes in the immediate vicinity of Meritage developments and has billboards across the street from Meritage developments. (See ¶¶ 26-33 of the CSOF, infra.) In addition, there is no evidence in the record indicating that Greg Hancock, when he was President of the Hancock Communities Division of Meritage, or Rick Hancock, when he was Vice-President of the Hancock Communities Division of Meritage, took steps to enforce the Hancock trademark against Hancock Materials, Inc. (See RH SOF at ¶¶ 15, 16, 21, and 22.) 42. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. There is no evidence in the record, however, that Charlie Hancock Building, Inc. is building similar homes in the immediate vicinity of
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Meritage developments and has billboards across the street from Meritage Developments. (See ¶¶ 26-33 of the CSOF, infra.) In addition, there is no evidence in the record indicating that Greg Hancock, when he was President of the Hancock Communities Division of Meritage, or Rick Hancock, when he was Vice-President of the Hancock Communities Division of Meritage, took steps to enforce the Hancock trademark against Charlie Hancock Building, Inc. (See RH SOF at ¶¶ 15, 16, 21, and 22.) 43. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. There is no evidence in the record, however, that John Hancock Real Estate Finance, Inc. is building similar homes in the immediate vicinity of Meritage developments and has billboards across the street from Meritage developments. (See ¶¶ 26-33 of the CSOF, infra.) In addition, there is no evidence in the record indicating that Greg Hancock, when he was President of the Hancock Communities Division of Meritage, or Rick Hancock, when he was Vice-President of the Hancock Communities Division of Meritage, took steps to enforce the Hancock trademark against the John Hancock Real Estate Finance, Inc. (See RH SOF at ¶¶ 15, 16, 21, and 22.) 44. For purposes of this Motion, Meritage does not object to Defendants'

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statement of fact in this paragraph. There is no evidence in the record, however, that John Hancock Realty Equities, Inc. is building similar homes in the immediate vicinity of Meritage developments and has billboards across the street from Meritage developments. (See ¶¶ 26-33 of the CSOF, infra.) In addition, there is no evidence in the record indicating that Greg Hancock, when he was President of the Hancock Communities Division of Meritage, or Rick Hancock, when he was Vice-President of the Hancock Communities Division of Meritage, took steps to enforce the Hancock trademark against John Hancock Realty Equities, Inc. (See RH SOF at ¶¶ 15, 16, 21, and 22.) 45. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. There is no evidence in the record, however, that John Hancock Leasing Corporation is building similar homes in the immediate vicinity of Meritage developments and has billboards across the street from Meritage developments.
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(See ¶¶ 26-33 of the CSOF, infra.) In addition, there is no evidence in the record indicating that Greg Hancock, when he was President of the Hancock Communities Division of Meritage, or Rick Hancock, when he was Vice-President of the Hancock Communities Division of Meritage, took steps to enforce the Hancock trademark against John Hancock Leasing Corporation. (See RH SOF at ¶¶ 15, 16, 21, and 22.) 46. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. There is no evidence in the record, however, that R.J. Hancock Construction, LLC is building similar homes in the immediate vicinity of Meritage developments and has billboards across the street from Meritage developments. (See ¶¶ 26-33 of the CSOF, infra.) In addition, there is no evidence in the record indicating that Greg Hancock, when he was President of the Hancock Communities Division of Meritage, or Rick Hancock, when he was Vice-President of the Hancock Communities Division of Meritage, took steps to enforce the Hancock trademark against R.J. Hancock Construction, LLC. (See RH SOF at ¶¶ 15, 16, 21, and 22.) 47. For purposes of this Motion, Meritage does not object to Defendants'

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statement of fact in this paragraph. There is no evidence in the record, however, that Hancock High Country Homes, LLC is building similar homes in the immediate vicinity of Meritage developments and does not have billboards across the street from Meritage developments. (See ¶¶ 26-33 of the CSOF, infra.) In addition, there is no evidence in the record indicating that Greg Hancock, when he was President of the Hancock Communities Division of Meritage, or Rick Hancock, when he was Vice-President of the Hancock Communities Division of Meritage, took steps to enforce the Hancock trademark against Hancock High Country Homes, LLC. (See RH SOF at ¶¶ 15, 16, 21, and 22.) 48. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. There is no evidence in the record, however, that Trevor Hancock Construction is building similar homes in the immediate vicinity of Meritage developments and has billboards across the street from Meritage developments. (See ¶¶ 26-33 of the CSOF, infra.) In addition, there is no evidence in the record
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indicating that Greg Hancock, when he was President of the Hancock Communities Division of Meritage, or Rick Hancock, when he was Vice-President of the Hancock Communities Division of Meritage, took steps to enforce the Hancock trademark against Trevor Hancock Construction. (See RH SOF at ¶¶ 15, 16, 21, and 22.) 49. Meritage controverts this paragraph. The website is for a home remodeler

based in Massachusetts and not a new home builder in Arizona. (See Hancock Builders.com Website, attached as Exhibit EEE hereto.) 50. Meritage controverts this paragraph. The website is not currently used by

an entity called Hancock Homes, and has not been used by them since 2005. Further, this Hancock Homes entity was based in Utah. (See Internet Archive Report for http://hancockhomesinc.com, attached as Exhibit FFF hereto (showing last use of December 29, 2005).) 51. Meritage controverts this paragraph. The website is for a reseller of

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manufactured homes and not a builder of new homes and markets itself as "South East Arizona's Premier Home Center." (See www.hancock1.com, attached as Exhibit GGG hereto.) 52. Meritage controverts this paragraph. The website is used by a reseller of

manufactured homes and not a builder of new homes and markets itself as "South East Arizona's Premier Home Center." (See www.hancock1.com, Ex. GGG.) 53. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. 54. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. 55. Meritage controverts this paragraph. Defendants mischaracterize Seay's

testimony in this paragraph. Seay testified that Meritage's concerns included: "[Meritage is] very concerned that, going forward that when Rick and/or Greg actually start building and marketing homes, that that will create confusion and, you know, will cause home buyers to think they're dealing with us instead of Rick and Greg Hancock, or vice versa;
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will cause concerns on warranty matters when homes are sold and people have potentially have [sic] problems or, you know, defective issues. They could call us instead of them . . . Well, we don't want people thinking that potential problems that Rick and Greg create could be confused with our homes [because] it could affect our reputation." (See Seay Depo., Ex. J, at 35:17 to 36:10.) 56. Meritage controverts this paragraph. The purported testimony does not

support in any way, shape, or form the characterization proffered by Defendants. Seay's testimony detailed Meritage's concern regarding potential confusion and potential damage to their reputation. (See Seay Depo., Ex. J, at 35:17 to 36:10.) Defendants' characterization of Seay's testimony is surprising considering defendant Rick Hancock's strong feelings regarding the value of a builder's reputation. (See Rick Hancock Depo., Ex. E, at 23:9 to 24:1.) 57. Meritage controverts this paragraph. The purported testimony does not

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support in any way, shape, or form the characterization proffered by Defendants. Defendants oversimplify Seay's testimony by stating that Meritage can respond to consumers incorrectly calling Meritage by telling them that Meritage did not build their home. Seay's testimony detailed Meritage's concern regarding potential confusion and potential damage to their reputation. (See Seay Depo., Ex. J, at 35:17 to 36:10.) Defendants characterization of Seay's testimony is surprising considering Defendant Rick Hancock's strong feelings regarding the value of builder's reputation regardless of who is responsible for the warranty work. (See Rick Hancock Depo., Ex. E, at 23:9 to 24:1 and 79:5-14.) 58. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. 59. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. 60. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph.
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61.

Meritage controverts this paragraph. Defendant Rick Hancock testified that

people buy homes on the basis of the builder's reputation. (See Rick Hancock Depo., Ex. E, at 79:5-14; Seay Depo., Ex. J, at 35:17 to 36:10.) 62. Meritage controverts this paragraph. Defendants provide no support for the

assertion as required by LRCiv 56.1(a). 63. Meritage controverts this paragraph. The sentence has no identifiable

subject. Meritage also controverts the assertion created by combining paragraphs 62 and 63 that consumers were not confused. (See CSOF, at ¶¶ 11-20, infra (evidence of consumer confusion).) 64. Meritage controverts this paragraph. The purported support for the factual

assertion does not, in fact, support the assertion. Defendants mischaracterize Seay's testimony. Seay testified in September of 2004, that he had no personal knowledge of lender confusion which does not equate with complete lender clarity. (See Seay Depo., Ex. J, at 37:4-8.) 65. Meritage controverts this paragraph. Don Kieffer, a subcontractor who

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transacts business both with Meritage and apparently with Rick and/or Greg Hancock was confused when he received an email from Tamara MacDonald. (See October 1, 2004, email from Don Kieffer ("Kieffer Email"), attached as Exhibit QQ hereto.) MacDonald, an employee of both Rick and Greg Hancock (see Rick Hancock Depo., Ex. E, at 112:1221), emailed Kieffer using the email address [email protected]. (See Kieffer Email, Ex. QQ.) In response to the email, Kieffer emailed Meritage employee Rachel Cantor because he confusingly believed that MacDonald's "hancockhomesaz.com" email was from Meritage. (See id.) Further, third-party defendant Scott Keeffe, Greg Hancock's college roommate, is currently the VicePresident of Sales and Marketing for D.R. Horton but was Meritage's Vice-President of Sales during the relevant period. He testified that in his "20 years in the home selling business I believe some home buyers/subcontractors were likely confused between `Rick Hancock Homes' and `Hancock Communities[.]'" (See June 9, 2006 Corrections to May
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9, 2006 Deposition of Scott Keeffe, attached as Exhibit RR hereto; see also Second Declaration of Scott Keeffe ("2nd Keeffe Decl."), attached as Exhibit OO hereto, at ¶¶ 1112.) 66. Meritage controverts this paragraph. Wing's declaration states that he

learned there would be no more Meritage projects using the Hancock Communities name. (See Wing Decl., Ex. 8 to RH SOF, at ¶ 6.) Wings' declaration underscores the confusion that exists, especially, considering that Meritage continued to use the Hancock Communities name. (See Wing Decl., Ex. 8 to RH SOF, at ¶ 6; see also Objections to Paragraph 28, supra ) Wing's testimony does not tend to prove the assertion when considering he has personally known Rick Hancock since 2000 and also knows that Meritage is not one of his customers. (See November 11, 2004 Deposition of Thomas Orville Wing, Jr., attached as Exhibit HHH hereto, at 10:21 to 11:24 and 16:22-23.) 67. Meritage controverts this paragraph. Ahern's September 21, 2004

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declaration does not support the assertion in Defendants' Statement of Fact in this paragraph. Instead, the declaration demonstrates that Rick Hancock disclosed to Ahern that he was not associated with Meritage or Hancock Communities. (See September 21, 2004 Declaration of John Ahern, Ex. 12 to RH SOF, at ¶ 3.) Implied in Ahern's declaration is that he would be confused but for Rick Hancock's disclosure clarifying the source of repayment for the loan he was seeking. (See Id.) Ahern also clarified in his deposition that he "can't speak for anyone else, I can only speak for myself" when asked if people could potentially be confused whether Rick Hancock Homes was affiliated with Meritage. (See November 9, 2004 Deposition of John Ahern ("Ahern Depo."), attached as Exhibit M hereto, at 16:6-12.) Further, Ahern's testimony does not tend to prove there was a lack of confusion when considering that Ahern was hoping to close a $10 million loan he had arranged for Rick Hancock Homes at the time the declaration was offered. (See id., at 17:9-14.) 68. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph to the extent it is limited to whether Kevin O'Donnell,
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and only Kevin O'Donnell, was confused. (See September 21, 2004 Declaration of Kevin O'Donnell, Ex. 11 to RH SOF, at ¶ 5.) The fact that O'Donnell was (and still may be) an investor in Rick Hancock Homes renders his testimony meaningless in this context. (See November 17, 2004 Deposition of Kevin O'Donnell ("O'Donnell Depo."), attached as Exhibit III hereto, at 22:22 to 23:5.) 69. Meritage controverts this paragraph. The purported support for the factual

assertion does not, in fact, support the assertion. Frakes' declaration does not say that "[t]itle companies know the difference between Hancock Communities and Rick Hancock Homes." (See September 22, 2004 Declaration of Michael D. Frakes ("Frakes Decl."), Ex. 13 to RH SOF, at ¶ 7.) It reads as follows: "I know which portion of Sundance's being developed by Meritage and I know which portions of Sundance are sought to be developed by Rick Hancock. I had no difficulty differentiating the two developers and their projects." (See Frakes Decl., Ex. 13 to RH SOF, at ¶ 7) (emphasis added). Further, Frakes' declaration was expressly made in his "personal capacity" and not as the head of a title company. (See Frakes Decl., Ex 13 to RH SOF, at ¶ 1.) Also, Frakes' declaration does not speak for the numerous title companies throughout the metropolitan Phoenix area. (See Frakes Decl., Ex. 13 to RH SOF, generally.) Finally, Frakes' testimony does not tend to prove that title companies know the difference between Hancock Communities and Rick Hancock Homes when considering that Frakes agreed to provide his declaration while he was at the offices of Rick Hancock Homes soliciting future title business from Rick Hancock Homes. (See November 17, 2004 Deposition of Michael D. Frakes ("Frakes Depo."), attached as Exhibit JJJ hereto, at 9:12-23.) Frakes' testimony becomes even more suspect considering his business relationship with Meritage ended less than three weeks before he agreed to offer the declaration. (See id., at 35:21 to 36:1.) 70. Meritage controverts this paragraph. Defendants have not accurately quoted

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from Exhibit 9 to Defendants' SOF. On letterhead that reads "Hancock Communities, a Meritage Company," it states: "Now, as part of a company-wide branding program, we will be changing our name to that of our parent company. Hancock Communities will
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now be known as Meritage Homes." (See Letter from Ron French, President, dated June 25, 2004, Ex. 9 to RH SOF.) Still, Meritage continued to use the "Hancock" name and sold homes ­ over $117 million since July 1, 2004, under the Hancock name throughout metropolitan Phoenix consistent with the level they sold in the years previous to the License Agreement (see Zetah Decl., Ex. C, at ¶ 3; Income Statements, Ex. D, at MER003209, MER003448, MER003776, MER005340, and MER005373) and continued to use the Hancock mark and extensively advertised and conducted sales of homes operating under the Hancock name. (See Rick Hancock Depo., Ex. E, at 118:10 to 120:13 and 161:15 to 162:4; Seay Decl., Ex. F, at ¶¶ 7 and 9; Abel Decl., Ex. G, at ¶¶ 5, 6, 9, 10, and 11.) In fact, Meritage is still currently selling Hancock Communities Series homes at Rancho Bella Vista. (See Abel Decl., Ex. G, at ¶ 11.) 71. Meritage controverts this paragraph. Defendant Rick Hancock agreed for an

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unlimited term not to "divulge or use Proprietary Information . . . [and] not accept any employment . . . that would involve the use or disclosure of Proprietary Information." (See May 30, 2001 Rick Hancock Letter Agreement ("RH Agreement"), attached as Exhibit KKK hereto, at ¶ 2; see also CSOF at ¶ 57.) Further, Ken Krause, Defendants CFO, answered in the affirmative when asked: "You agree that as a former officer of Meritage you had a fiduciary duty to keep and maintain any trade secrets and confidential business information that you obtained from Meritage while working at the company, correct?" (See Krause Depo., Ex. P, at 91:9-12.) 72. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph. 73. Meritage controverts this paragraph. Defendants misquoted Seay's

testimony in September of 2004 ­ testimony that was given before Rick Hancock Homes began operations ­ by omitting the first part of his answer. Seay's entire answer was "I would have to think about that. That was a while back. Today I can't think of any." (See Seay Depo., Ex. J, at 99-100.) Defendants also omitted Seay's later testimony in the same deposition when Seay expressed his concerns about consumer confusion and unfair
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competition. (See Seay Depo., Ex. J at 35:1-9 and 35:17 to 36:10; see also CSOF at ¶¶ 17 and 20, infra.) Subsequent to Seay's testimony, additional evidence shows that the Defendants competed unfairly. Specifically, Greg Hancock licensed the Hancock name to Rick Hancock so he could use it in selling identical homes rights across the street from Meritage in Sundance. (See Ahern Depo., Ex. M, at 18:21 to 19:17; Rick Hancock Depo., Ex. E, at 118:10 to 120:13, 165:21 to 167:1) Greg Hancock then sold Rick Hancock the land, provided land banking services, and provided that land to Rick Hancock Homes at a discounted price. (See February 23, 2006 Deposition of David Cornwall ("Cornwall Depo."), attached as Exhibit N hereto, at 19:10 to 20:18 and 22:13 to 23:19; Arneson I Depo., Ex. O, at 154:11 to 155:20; Krause Depo., Ex. P, at 109:1-4.) In January 2005, Greg Hancock provided substantial monies (more than $330,000) to Rick Hancock Homes. (See Checks, attached as Exhibit Q hereto, at RHH 13880; Krause Depo., Ex. P, at 130:6 to 135:5.) Greg Hancock was involved in the operations of Rick Hancock Homes. One such example is assistance that Greg Hancock provided Rick Hancock Homes at Sundance builders' meetings. (See Rick Hancock Depo., Ex. E, at 283:1 to 284:14.) Likewise, there is evidence that Greg Hancock officed at Rick Hancock Homes and attended Rick Hancock Homes sales meetings during which competition with Meritage was discussed after meetings. (See Krause Depo., Ex. P, at 102:13-19 and 115:4 to 119:2.) 74. Meritage controverts this paragraph. Defendants misquoted the questions

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and Seay's testimony by omitting portions of the question and answer. (See Seay Depo., Ex. J, at 110:7-18.) In fact, more than one question was pending which formed the basis of Meritage's objection, and remains objectionable because it is unclear which question Defendants wanted answered. (See id.) 75. Meritage controverts this paragraph. Defendants misquoted Seay's response

to this quoted question. Seay responded by saying "Again, we could have lumped those two together. I'm--" (Seay Depo., Ex. J, at 112:7-10.) Further, Defendant agreed to protect, not disclose, and not use Meritage's proprietary, confidential, or trade secret
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information. (See CSOF, at ¶¶ 57-59; Enter. Leasing Co. v. Ehmke, 191 Ariz. 141, 148, 3 P.3d 1064, 1068 (App. 1999) (trade secrets may consist of a compilation of information that is used or has the potential to be used in a business giving a competitive advantage over competitors who do not know of or use it).) 76. Meritage controverts this paragraph. The question quoted by Defendants

was objected to on form grounds and remains objectionable because it is not specific to geographic location or type of homes. (See Seay Depo., Ex. J, at 112.) For example, Rick Hancock could build homes in Alaska without misappropriating the trade secrets. Further, Defendant agreed to protect, not disclose, and not use Meritage's proprietary, confidential, or trade secret information. (See CSOF, at ¶¶ 57-59.) 77. Meritage controverts this paragraph. Again, it needs to be observed that

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Seay's deposition took place on September 7, 2004 before the Defendants started making sales. (See Purchase Contract and Escrow Instructions of Robert and Susan Aceves, attached as Exhibit MM hereto, at RHH2506-2542.) While not all of Defendants' purchasers have been interviewed or deposed, at least one consumer (Mario Atkins) entered into a purchase agreement with Rick Hancock Homes caused by his confusion between Rick Hancock Homes and Meritage/Hancock Communities. (See ¶¶ 11-20 of CSOF, infra; see also 2nd Keeffe Decl., Ex. OO, at ¶¶ 11and 12.) Finally, there is no way to identify specifically the contracts usurped by Defendants pursuant to the initial interest doctrine. (See, e.g., Brookfield Comm'ns v. West Coast Ent't Corp., 174 F.3d 1036, 1062 (9th Cir. 1999).) 78. Meritage controverts this paragraph. Defendants have egregiously

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misquoted Seay's September 7, 2004 testimony. Seay testified as follows "[o]ther than he's helping his -- potentially helping his brother violate his noncompete and using a name that we've spent hundreds of thousands of dollars advertising, or potentially going to use a name, and could obtain unjust enrichment from that, those would be the items that I would point to." (See Seay Depo., Ex. J, at 115:1-6.)

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79.

Meritage controverts this paragraph. Defendants have misquoted Seay's

September 7, 2004 testimony. Seay testified in response to a question about conversion that "I don't know; we have not done discovery. But again, it gets into being a former employee starting up a competing business. To the extent that he was utilizing information he might have taken, our, you know, proprietary data he may have possessed, then I believe that that would be an issue." (See Seay Depo., Ex. J, at 121:14-22; see e.g., PepsiCo v. Redmond, 54 F.3d 1262, 1269 (7th Cir. 1995); see also Bed Mart, Inc. v. Kelley, 202 Ariz. 370, 373, 45 P.3d 1219, 1222 (App. 2002) (exploring the applicability of the inevitable disclosure doctrine).) 80. Meritage controverts this paragraph. Defendant Rick Hancock concedes

that he had an agreement with Meritage. (See Defendant Hancock's SOF at ¶ 18; see also RH Agreement, Ex. KKK.) As part of this agreement, Defendant Rick Hancock agreed for an unlimited term not to "directly or indirectly: (a) induce or encourage or solicit any employee of [Meritage] to become employed by any competitor or potential competitor of [Meritage]." (See RH Agreement, Ex. KKK, at ¶ 5.) He also agreed for an unlimited term not to "divulge or use Proprietary Information . . . [and] not accept any employment . . . that would involve the use or disclosure of Proprietary Information." (See id., at ¶ 2.) Defendant Rick Hancock has solicited and engaged at least nine former Meritage employees working for Rick Hancock Homes, a competitor of Meritage, in violation of the non-solicitation provision. (See Rick Hancock Depo., Ex. E, at 110:25 to 113:9; CSOF at ¶ 61.) He has also accepted employment with Rick Hancock Homes, which will inevitably result in the use and/or disclosure of Meritage's proprietary information, which also violates his employment agreement. (See RH Agreement, Ex. KKK, at ¶¶ 1, 2, 4, and 5.) Defendants ignore these provisions and misconstrue Seay's testimony. 81. Meritage controverts this paragraph to the extent it incorporates paragraph

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80, supra. See Objections to Paragraph 80, supra. 82. Meritage controverts this paragraph. Defendants mischaracterize the

September 8, 2003 e-mail from Steve Hilton to John Landon. (See September 8, 2003
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email, Exhibit 15 to RH SOF.) In no way does the September 8, 2003 e-mail show that Hilton and Landon "agreed" to take steps to stop using Hancock name. (See id.) The email is nothing more than one corporate officer suggesting to another corporate officer a way in which to use a license that would terminate in May 2007. (See id.) Hilton testified consistently that "[Meritage] only [has] the license to the name for six years, so we need to create a smooth transition from the Hancock Communities name to the Meritage Homes name. . . . [we] [c]an't just flip the switch." (See Hilton Depo., Ex. B, at 178:1116) (emphasis added). As can be easily discerned from the email, Hilton was simply concerned with what to do when the license for the Hancock name ended and how to avoid wasting advertising dollars. Further, to the extent that Defendant implies that the emphasized portions of the September 8, 2003 email suggest that Defendant began to abandon the Hancock marks, Meritage objects. Meritage continued to use the "Hancock" name and sold homes ­ over $117 million since July 1, 2004, under the Hancock name throughout metropolitan Phoenix consistent with the level they sold in the years prior to the License Agreement (see Zetah Decl., Ex. C, at ¶ 3; Income Statements, Ex. D, at MER003209, MER003448, MER003776, MER005340, and MER005373) and continued to use the Hancock mark and extensively advertised and conducted sales of homes operating under the Hancock name. (See Rick Hancock Depo., Ex. E, at 118:10 to 120:13 and 161:15 to 162:4; Seay Decl., Ex. F, at ¶¶ 7 and 9.) In fact, Meritage is currently still selling Hancock Communities Series homes at Rancho Bella Vista. (See Abel Decl., Ex. G, at ¶ 11.) 83. Meritage controverts this paragraph. Defendants provide no support for the

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assertion as required by LRCiv 56.1(a). Even if this fact had been properly supported, the June 2004 Press Release states that the use of the Hancock name would be continuous. (See June/July press release, Ex. BBB, at RHH0143-RHH0147.) See also Objections to Paragraph 82, supra. 84. Meritage objects to this paragraph because Defendants provide no support

for the assertion as required by LRCiv 56.1(a). Even if this fact had been properly
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supported, Meritage objects because it can not determine what "this" is or what "name" is diminished. Assuming that Defendant Hancock is referring to name changes between Hancock Communities and Meritage/Hancock communities, Meritage controverts this assertion. See Objections to Paragraphs 82 and 83, supra. 85. For purposes of this Motion, Meritage does not object to Defendants'

statement of fact in this paragraph as it applies to Frakes and Frakes only, seeing a single billboard with a disclaimer. (See Frakes Depo., Ex. JJJ, at 17:3-7.) 86. Meritage controverts this fact. First, the purported support for the factual

assertion does not, in fact, support the assertion. Second, Larry Seay testified regarding the hard to see disclaimer after Meritage showed a photograph of the billboard containing the disclaimer. (See Seay Depo., Ex. J, at 134:1-3.) Third, the accusation, albeit untrue, baseless, and scurrilous, should be directed at Meritage's counsel rather than at Meritage. 87. For purposes of this Motion, Meritage does not object to Defendants'

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statement of fact in this paragraph. Meritage notes that the Hancock name was also used after 2003. Meritage continued to use the "Hancock" name and sold homes ­ over $117 million since July 1, 2004, under the Hancock name throughout metropolitan Phoenix consistent with the level they sold in the years previous to the License Agreement (see Zetah Decl., Ex. C, at ¶ 3; Income Statements, Ex. D, at MER003209, MER003448, MER003776, MER005340, and MER005373) and continued to use the Hancock mark and extensively advertised and conducted sales of homes operating under the Hancock name. (See Rick Hancock Depo., Ex. E, at 118:10 to 120:13 and 161:15 to 162:4; Seay Decl., Ex. F, at ¶¶ 7 and 9.) In fact, Meritage is currently still selling Hancock Communities Series homes at Rancho Bella Vista. (See Abel Decl., Ex. G, at ¶ 11.) 88. Meritage controverts this paragraph. The business units formerly known as

"Hancock Communities" were re-branded around July 1, 2004. (See June/July press release, Ex. BBB, at RHH0143-RHH0147.) But Meritage continued to use the "Hancock" name and sold homes ­ over $117 million since July 1, 2004, under the Hancock name throughout metropolitan Phoenix consistent with the level they sold in the years previous
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to the License Agreement (see Zetah Decl., Ex. C, at ¶ 3; Income Statements, Ex. D, at MER003209, MER003448, MER003776, MER005340, and MER005373) and continued to use the Hancock mark and extensively advertised and conducted sales of homes operating under the Hancock name. (See Rick Hancock Depo., Ex. E, at 118:10 to 120:13 and 161:15 to 162:4; Seay Decl., Ex. F, at ¶¶ 7 and 9.) In fact, Meritage is currently still selling Hancock Communities Series homes at Rancho Bella Vista. (See Abel Decl., Ex. G, at ¶ 11.) 89. Meritage controverts this paragraph. Missy Valliere testimony was that it

was her "personal opinion" that changing names was not the right thing to do--not that there were no legitimate marketing reasons for doing so. (See March 22, 2006 Deposition of Missy Valliere ("Valliere Depo."), attached as Exhibit SS hereto, at 91:6-7.) Hilton, however, did testify regarding the marketing reasons for rebranding: We had a corporate goal to expose the Meritage Homes and the Meritage Corporation name and at the same time preserve the goodwill and integrity of our local brands, and we decided that we needed to preserve the Hancock Communities name, at the same time make the Meritage Homes name more prominent and that's exactly what we've done. (See Hilton Depo., Ex. B, at 29:19-25.) Also, Seay testified that Meritage wanted to "make people aware of the Meritage Homes name brand" ­ which is a legitimate marketing reason. (See Seay Depo., Ex. J, at 79:7-15.) Further, Valliere's testimony does not indicate that it was "merely to preclude the Hancocks from using their name" but to keep the Hancock name "out there." (See Valliere Depo., Ex. SS, at 101:15-16.) Using the "Hancock Communities" name was within Meritage's exclusive right and Meritage wanted to take advantage of the goodwill in the community. (See License Agreement, Ex. 4 to RH SOF, at ¶ 2; see also Seay Depo., Ex. J, at 85:12-21.) See Objections to Paragraphs 82, 84, and 87-88. 90. To the extent that Defendants imply that Meritage was required to use the

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Hancock name over a certain minimum threshold, Meritage objects. Meritage controverts this paragraph. Defendants misstate the License Agreement. Nowhere does the license
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agreement provide that the "use of the Hancock names shall not be diminished in any capacity" or that a quota or minimum exists regarding the frequency of use of the Hancock Name. (See License Agreement, Ex. 4 to RH SOF, generally.) 91. Meritage controverts this paragraph. The purported support for the factual

assertion does not, in fact, support the assertion. First, Meritage objects to this paragraph to the extent that Defendants imply that Meritage was required to ask for permission for name and advertising changes. Nothing in the License Agreement obligates Meritage to seek or obtain the permission of Greg Hancock to alter its name or advertising. (See License Agreement, Ex. 4 to RH SOF, generally.) Secondly, Meritage did not stop using the Hancock name. See Objections to Paragraphs 82, 84, and 87-89, supra. 92. Meritage controverts this paragraph. The purported support for the factual

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assertion does not, in fact, support the assertion. Instead, Mr. Hilton testified that changing various community names to Meritage made Hancock Communities "less visible." (See Hilton Depo., Ex. B, at 70:19.) Hilton, in fact, testified that "[i]t's no less marketable whether we use [Hancock Communities] on two communities or eight communities[,]" that the degree of public recognition of the Hancock Communities has not decreased, and that Meritage was not in breach of the License Agreement. (See Hilton Depo., Ex. B, at 69:5 to 72:11.) Less visible is entirely different than reducing the "public recognition" as described by Defendant Hancock. Rick Hancock testified that the Hancock name currently enjoys an outstanding reputation in the valley. (See Rick Hancock Depo., Ex. E, at 24:5-7.) Further, the evidence shows that Meritage continued to use the Hancock name extensively after the July 1, 2004, rebranding. See Objections to Paragraphs 82, 84, 87-89, and 91, supra. 93. Meritage controverts this paragraph. Defendant Hancock provides no

Snell & Wilmer L.L.P.

support for the assertion as required by LRCiv 56.1(a). Even if the fact were supported, Greg Hancock could only terminate the License Agreement provided Meritage had breached the License Agreement or the Master Transaction Agreement. (See License Agreement, Ex. 4 to RH SOF, at ¶ 7.3; see also Objection to Paragraph 12, supra.) This
Case 2:04-cv-00384-ROS Document 437- 27 Filed 02/23/2007 Page 27 of 49

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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

Court has already dismissed with prejudice Greg Hancock's claims that Meritage breached either the License Agreement or the Master Transaction Agreement. (See Order at 5 (Mar. 31, 2006); Order at 10 (Aug. 22, 2006); see also Hilton Depo., Ex. B, at 69:5 to 72:11 (testifying that Meritage did not breach the License Agreement).) Since Meritage did not breach the License Agreement or MTA, Defendant was not entitled to terminate the agreement. (See License Agreement, Ex. 4 to RH SOF at ¶ 7.1.) 94. Meritage controverts this paragraph. Defendant Hancock provides no

support for the assertion as required by LRCiv 56.1(a). Meritage notes that the June 2004 Press Release announcing the re-branding strategy included an expression of intent to continue using the Hancock name. (See June/July press release, Ex. BBB, at RHH0143RHH0147.) 95. 96. 97. This paragraph was not used by Defendants. This paragraph was not used by Defendants. Meritage controverts thi