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Snell & Wilmer
L.L.P.
LAW OFFICES

DENVER LAS VEGAS ORANGE COUNTY PHOENIX SALT LAKE CITY TUCSON

One Arizona Center Phoenix, AZ 85004-2202 602.382.6000 602.382.6070 (Fax) www.swlaw.com

Dan W. Goldfine 602.382.6282 [email protected]

October 13, 2006

The Honorable Roslyn O. Silver United States District Court 401 West Washington Phoenix, Arizona 85003 RE: Meritage Corporation v. Greg Hancock, et. al. No. CV 04-0384-PHX-ROS Joint Letter Regarding Discovery Dispute Conference

Dear Judge Silver: Meritage and the Third-Party Defendants ("Meritage") write separately because the Hancocks' submission is filled with misstatements. Counsel for Meritage will not sign a document that fundamentally misrepresents the factual record. The Hancocks have misstated this Court's Order, misstated what Meritage has produced and provided to them, and failed to comply with the meet and confer requirements of the Federal Rules of Civil Procedure or the Rules of this District. Simply stated, the Hancocks attempt to create false strawmen for no other purpose than harassment or the hope that this Court will ignore the merits of the claims before it. This letter exceeds three pages, but it was necessary to respond to the numerous misrepresentations and slanderous and unsupported attacks by the Hancocks' counsel. In total, the Hancocks' counsel make nine separate attacks. Not a single one of them has any merit. A number of exhibits have been attached so that the Court can evaluate for itself the true record. 1. Suzanne Hilton Documents

This Court did not order Meritage simply to produce the Suzanne Hilton records; instead, it instructed Meritage's counsel to review records with respect to Suzanne Hilton to determine: if any document exists that would support Mr. Frisbee's position, that is to be turned over whether or not it's contained in a personnel file or not. If there is anything that would indicate that these payments were made and they were not authorized and that Ms. Mesicko knew about it and then there's a possibility that she

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was retaliated against, any and all of that documentation is to be provided. Tr. at 11:25 to 12:7 (Sept. 27, 2006).1 The quote that counsel for the Hancocks uses to support his contrary assertions is taken out of context and deals with a different request for production 16 pages later in the transcript. (As discussed below, Meritage fully complied with that request by October 4, 2006.) The Court plainly entered its ruling recognizing the likely potential for harassment that existed when an opposing party seeks to impugn the character of a defendant through the actions of his wife on issues that have no connection at all to any issue in the case. Notwithstanding the Hancocks' assertions to the contrary, Meritage's counsel fully complied with the Court's Order. On September 28, 2006, the day after the telephonic conference with the Court, Meritage's counsel contacted Meritage with respect to gathering any and all documents that would support Mr. Frisbee's position that Meritage allegedly retaliated against Ms. Mesicko because allegedly she was a whistleblower with respect to alleged illegal payments to Ms. Hilton. In-house counsel directed the gathering of documents immediately. The review of these documents commenced on October 3, 2006. On October 4, 2006, Meritage made a production with respect to other items raised during the September 27, 2006 telephonic conference. Exhibit A. There were, however, no documents that supported Mr. Frisbee's theory, and no documents with respect to Ms. Hilton were produced on October 4, 2006. Id. On October 5, 2006, Hancocks' counsel asked Meritage's counsel whether documents related to Ms. Hilton were in the October 4, 2006 production, and Meritage's counsel responded that (1) per this Court's Order, no documents supporting Mr. Frisbee's position existed; (2) per this Court's Order, no documents from Ms. Hilton's personnel file would be produced based on the status of the review at that time; and (3) our review is still ongoing (since the Court had instructed Meritage to look in files other than Ms. Hilton's personnel records). Exhibit B. Four days later, on October 9, 2007, Mr. Frisbee first responded with respect to documents in Ms. Hilton's personnel file demanding immediate production irrespective of the contents. Exhibit C. In response, Meritage's counsel responded that per this Court's Order, and based on his review, there were no documents to produce. Id. The Hancocks' counsel again demanded production without regard to contents stating that Meritage's counsel was not "ordered to review Suzanne's doc[ument]s, you were ordered to produce them." Id. Meritage's counsel provided the quote from this Court which is set forth above and which directs counsel to review. Id. Mr. Frisbee stated that this Court's Order did not authorize a review. Id. Notwithstanding Mr. Frisbee's accusations that Meritage's counsel was somehow unethical and dilatory, the true record reflects nothing of the kind. Instead, there simply is a
1

For convenience of the Court, Meritage has attached a copy of the transcript of the September 27, 2006 telephonic conference as Exhibit G.

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dispute over what this Court's Order stated. Meritage's position is that this Court's Order only requires the production of Ms. Hilton's documents to the extent the documents tend to support Mr. Frisbee's illegal payment and retaliation theory. None do, and so none have been produced. 2. John Landon's Deposition2

On Friday, September 28, 2006, the day after this Court's September 27, 2006 telephonic conference ordering Mr. Landon's deposition, Meritage contacted Mr. Landon for available dates. Mr. Landon responded on Monday, October 2, 2006, offering three dates in October. Due to conflicts with counsel's schedule, only one of the dates (October 19, 2006) was available for a deposition in Dallas. Later on October 2, 2006, Meritage's counsel contacted the Hancocks' counsel and offered that date. Exhibit D. Soon thereafter, Hancocks' counsel agreed to October 19, 2006. Id. In this light, the issue with respect to John Landon's deposition is nothing more than a false strawman. After all, the Hancocks agreed to the date. 3. Arneson Documents

The purported dispute over the Arneson documents is also a strawman. As this Court already knows, Meritage cannot produce documents that do not exist in its files, accordingly, there were no additional so-called Arneson documents in Meritage's October 4, 2006 production. Exhibit A. That is, according to Mr. Arneson, precisely what we have here ­ as was fully explained to the Hancocks. On October 9, 2006, Meritage Counsel provided the Hancocks' counsel the following explanation: "The day after the Court's Order, Arneson reaffirmed that he has produced all documents responsive to the subpoena including the ones you believe he has. He was going on vacation and will be traveling through this week, but I asked him to double-check upon his return. Jim [Arneson] and I will talk when he returns, and he will provide the certification then." Exhibit C. The Hancocks' counsel did not respond to the portion of the email relating to Mr. Arneson. Id.

2

It became clear almost immediately that the parties could not agree on dates within the week-and-a-half after the September 27, 2006 telephonic conference. Nevertheless, it seemed like the parties were working to schedule the depositions as soon as reasonably possible. Mr. Arneson, a former employee at Meritage, started a lengthy vacation to the East Coast on September 29, 2006 and was not planning on coming back to town until October 17, 2006. We offered that date in the afternoon, and the Hancocks agreed. Mr. Hilton was out of the country and had out-of-town meetings already scheduled most of October and offered dates at the end of the month. Mr. Frisbee suggested taking Mr. Hilton's deposition on November 1, 2006 and postponing Greg Hancock's deposition until November 2, 2006.

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4.

Delaying Depositions

As set forth above, in Footnote 2 and in the attached Exhibits, there has been no delay in setting depositions. The issue relating to prejudicing Rick and Brenda Hancock with respect to their motions to dismiss is hogwash for two reasons. First, it is a motion to dismiss. The Motion addresses questions of law; the proposed depositions have no merit to them. Second, the Hancocks did not even seek to take these second depositions until just before the close of discovery and have not even asked for an extension to respond to the motion to dismiss, belying their prejudice claim. 5. Navigant Documents

Immediately after this Court's Order with respect to the Navigant detailed billing records and the question about the purported Arneson document, Meritage's counsel requested Navigant to produce the detailed billing records and search to ensure that its production has been complete. In response, Navigant made supplemental production on October 13, 2006, per the Hancocks' request. It is not insignificant that this Court did not order Meritage to produce these documents by October 4, 2006 ­ despite innuendos by Rick Hancock's counsel to the contrary. Tr. at 13:17 to 15:3 (Sept. 27, 2006). 7. The DVD

Following the Court's Order to produce the documents related to the request, which was expressly limited by Rick and Brenda Hancocks' attorney to this Court on September 27, 2006 to documents related to Rick Hancock Homes, RLH Development and Rick Hancock's activities at those two entities, Tr. at 18:20 to 24:3 (Sept. 27, 2006), a paralegal for Meritage's counsel worked with a paralegal for the Hancocks' counsel to provide the documents in a format that was then-readable by the Hancocks' counsel. That DVD containing the additional responsive documents was provided to the Hancocks on October 4, 2006 per the Court's Order. Exhibit A; Tr. at 27:21 to 28:2 (Sept. 27, 2006). (Meritage has already produced more than 60,000 responsive documents to the Hancocks and made hundreds of thousands of financial records available to the Hancocks for their review.) Apparently, the week of October 4, 2006, Mr. Mathew terminated the employment of his paralegal, and she took the software needed to read the DVD with her. After learning this fact

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only three days ago, we commenced procedures to put the data in another format that it was readable, Mr. Mathew can read even though his paralegal is gone.3 Rick and Brenda Hancocks' attorney's September 27, 2006 letter attempting to expand his request beyond what he represented to this Court and his effort to mischaracterize this Court's Order is in direct contravention of this Court's Order. Meritage's counsel responded by letter dated October 4, 2006. Exhibit E. In that letter, a detailed discussion of the Court's Order takes place, including pointing out that Rick and Brenda Hancocks' attorney's September 27, 2006 letter directly contravened the Court's Order. Id. at 1. It is not insignificant that Mr. Mathew has yet to deny that his September 27, 2006 letter contravenes the Court's Order. 8. Rick Hancock's Counsel Failed to Meet and Confer

In addition to the correspondence set forth above, the undersigned counsel for Meritage called Mr. Mathew on October 4, 2006 and discussed Mr. Mathew's additional requests set forth in his September 27, 2006 letter. After a short discussion, both sides agreed to talk the next day at 9 am, Thursday October 5, 2006. Undersigned counsel had an emergent criminal matter that arose that morning and directed his assistant to call Mr. Mathew and apologize. Later that day, Mr. Goldfine called Mr. Mathew reaching his answering machine. Mr. Mathew did not return that call. On Monday, October 9, 2006, Mr. Goldfine asked his colleague, Mr. Lang, to call Mr. Mathew to discuss the letter. Mr. Lang did so, reaching Charlotte, Mr. Mathew's former paralegal, and asking when Ivan and Charlotte could meet to discuss discovery issues. Exhibit F. Neither Mr. Mathew's nor Charlette returned Mr. Lang's call. Id. Mr. Lang followed up with an email on October 11, 2006. Id. On Thursday, October 12, 2006, Mr. Mathew's assistant, Karen, called Mr. Lang saying he would be willing to discuss the discovery issues. Mr. Lang could not get through on the phone and emailed Mr. Mathew this morning asking for dates in which Mr. Mathew was available. Mr. Mathew has not yet responded. The record is plain that counsel for Meritage was responsive and acted candidly and in good faith. 9. Request for Sanctions

Rick Hancock's counsel's request for sanctions is baseless. First, Meritage has complied with each and every one of its discovery obligations. Second, counsel for Rick Hancock directly contravened this Court's Order by attaching his September 27, 2006 letter and misrepresented his
3

As to the number of emails, thousands have been produced by Meritage in this case. As to the total number of documents on the DVD, there are more than one thousand documents.

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client's true intent to this Court with respect to the scope of the discovery he now seeks. Third, counsel for Rick Hancock failed to comply with the "meet and confer" requirement set forth in Rule 37(a)(4)(A), Federal Rules of Civil Procedure.

Respectfully submitted this 13th day of October, 2006.

SNELL & WILMER L.L.P.

By s/ Dan W. Goldfine Dan W. Goldfine Adam Lang Snell & Wilmer, L.L.P. One Arizona Center 400 E. Van Buren Street Phoenix, Arizona 85004-2202 Attorneys for Plaintiffs and Counterdefendants and Third Party Defendants Steve Hilton and John Landon and

By s/ Grant Woods Grant Woods, Esq. GRANT WOODS, P.C. 1726 North Seventh Street Phoenix, Arizona 85006 Attorneys for Plaintiffs and Counterdefendants and Third Party Defendants Steve Hilton and John Landon

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CERTIFICATE OF SERVICE I hereby certify that on 13th day of October, 2006, I electronically transmitted the foregoing document 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: Ivan K. Mathew Mathew & Mathew, P.C. 1850 N. Central Avenue, Suite 1910 Phoenix, Arizona 85004 Attorneys for Defendant Rick Hancock Robert M. Frisbee Frisbee & Bostock, PLC 1747 East Morton Avenue Suite 108 Phoenix AZ 85020 Attorneys for Defendant Greg Hancock Mark I. Harrison Sarah Porter Osborn Maledon, P.A. 2929 North Central Avenue Suite 2100 Phoenix, Arizona 85012-2794 Attorneys for Defendant Greg and Linda Hancock and Counsel of Record Robert Frisbee

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Kenneth J. Sherk Timothy J. Burke Fennemore Craig, P.C. 3003 N. Central Ave. Suite 2600 Phoenix, AZ 85012-2913 Attorneys for Defendant Snell & Wilmer, L.L.P. in State Court Action

s/ Dan W. Goldfine
29323.0078\GOLDFID\PHX\1900855

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