Free Statement - District Court of Arizona - Arizona

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LANG & BAKER, PLC
8233 VIA PASEO DEL NORTE, SUITE C-100 SCOTTSDALE, ARIZONA 85258 TELEPHONE (480) 947-1911

KENT A. LANG, #010041 WILLIAM G. KLAIN, #015851 Attorneys for Defendants/Counterclaimant

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA QC CONSTRUCTION PRODUCTS, LLC, a Delaware limited liability company, ) ) ) Plaintiff, ) ) v. ) ) COHILL'S BUILDING SPECIALTIES, INC., ) and MICHAEL COHILL, ) ) Defendants. ) _______________________________________ ) ) COHILL'S BUILDING SPECIALTIES, INC., an ) Arizona corporation, ) ) Counterclaimant, ) ) v. ) ) QC CONSTRUCTION PRODUCTS, LLC, a ) Delaware limited liability company, ) ) Counterdefendant. ) _______________________________________ ) NO. CV03-1997 PHX ROS DEFENDANTS' SUPPLEMENTAL STATEMENT OF OBJECTIONS TO PLAINTIFF'S STATEMENT OF MATERIAL FACTS IN OPPOSITION TO COHILL'S MOTION FOR SUMMARY JUDGMENT.

Defendant/Counterclaimant Cohills Building Specialties, Inc. and Defendant Timothy Michael
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Cohill, pursuant to Rule 56(c) of the Federal Rules of Civil Procedure and Local Rule 56.1 of this
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Court, by and through their counsel undersigned, hereby submit the following Supplemental Statement
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of Objections to Plaintiff's Statement of Material Facts in Opposition to Cohill's Motion for Summary
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Judgment.
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I. Statement of Controverted Facts. Defendant/Counterclaimant Cohills Building Specialties, Inc. ("Cohills") and Defendant Timothy Michael Cohill ("Cohill"), hereby dispute and/or object on evidentiary grounds to the following portions of the following paragraphs of Plaintiff QC Construction Products, LLC's ("QC['s]") Statement of Material Facts in Opposition to Cohill's Motion for Summary Judgment: 5. . . . . Two customers were being assigned to QC Construction Products pursuant to this

relationship: namely, . . . Cohill's Building Specialties, Inc. ("Cohills") . . . . The only other customer assigned was Cohills. Objection and/or Controverting Evidence: Given that Cohills never had any agreement whatsoever with Bayer Corporation ("Bayer") during the time period leading up to the alleged assignment, there was nothing which could be assigned between these two parties. See Affidavit of Timothy Cohill attached hereto as Exhibit A at ¶ 2. Further, neither the LLC Agreement (of which pages 9 and 10 are missing from QC's filing) nor the quoted portions of the Maycock, Ingersoll or O'Conner Depositions relied upon by QC support the claim that any rights relative to Cohills were "assigned" by Bayer to any division of Bomanite. Finally, the LLC Agreement was entered into nearly a year after the Supply Agreement at issue was executed. Compare QC's Statement of Undisputed Facts in Support of Summary Adjudication ("PSOF") at Exhibit C with id. at Exhibit F. At the time of such execution, Bayer and Bomanite had merely entered into a Strategic Alliance Agreement allowing for the exploration of the formation of a joint venture between the two and which expressly permitted Bayer to compete with Bomanite. See PSOF at Exhibit F and Exhibit C at 9. 6. In early October 1998, representatives of Bomanite and Bayer met with the owners of

Cohills and explained to them the strategic alliance and the joint venture being formed. Cohills' representatives, including owners Mike Cohill and Karen Cohill, were well aware that QC was a division of Bomanite, and that the proposed joint venture between Bayer and Bomanite was to be known as QC Construction Products, LLC. Following those discussions, Cohills entered into an exclusive relationship with QC Construction Products (which was still at this time a division of 2 Document 118

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Bomanite) to be QC Construction Products' exclusive distributor in the State of Arizona. Objection and/or Controverting Evidence: The foregoing statements misstate the evidence and is contradicted by other evidence. None of the persons in attendance at the meeting explained that Bomanite and Bayer were entering into a joint venture which would result in the creation of QC. Indeed, Cohills believed that QC was a separate corporate entity at such time, and did not discover that QC was not organized until nearly a year later prior to learning the same through the course of this litigation. Exhibit A at ¶ 3. Furthermore, neither Mr. Stegemiller nor Mr. Ingersoll, upon whose Declaration and testimony QC relies in support of this assertion, respectively, are competent to testify as to what Cohills or its representatives were aware. Moreover, the relationship between QC and Cohills was not exclusive insofar as the Supply Agreement ("the Agreement") entered into by Cohills with what it thought was a separate entity, QC, specifically permitted Cohills to sell non-iron oxide products which competed with QC's products in the event that (1) a customer requested a competing product and could not be switched over to QC's products, or (2) the plans for a specific project specified that a competing product be used. See Transcript of Deposition of Ingersoll attached hereto as Exhibit B at 38 and 48; Transcript of Deposition of Karen Faye Cohill attached hereto as Exhibit C at 79-82. 7. . . . . The intent was to give Cohills a one year period to switch all customers to the QC

concrete coloring sustem [sic]. Objection and/or Controverting Evidence: The foregoing statement misstates the evidence and is controverted by other evidence. The Agreement specifically permitted Cohills to sell non-iron oxide products which competed with QC's products in the event that (1) a customer requested a competing product and could not be switched over to QC's products, or (2) the plans for a specific project specified that a competing product be used. See Exhibit B at 38 and 48; Exhibit C at 79-82. 8. The phrase "unless another competing product is specified and cannot be switched over"

was intended to apply to situations when an architect specifies a particular product on a particular job, not to a situation where a customer simply asks for a product which competes with QC products. 3 Document 118

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Objection and/or Controverting Evidence: The foregoing statement misstates the evidence and is controverted by other evidence. The quoted phrase was intended to permit Cohills to sell non-iron oxide products which competed with QC's products in the event that (1) a customer requested a competing product and could not be switched over to QC's products, or (2) the plans for a specific project specified that a competing product be used. See id. 11. Both QC Construction Products, LLC (hereinafter "QC") and Cohills recognized the

assignment and assumption of this agreement by QC by virtue of continuing to do business with one another uninterrupted as was done pervious to the assignment of the agreement to the new entity. Objection and/or Controverting Evidence: Objection. Matt Stegemiller ("Stegemiller"), whose Declaration is the only evidence offered by QC in support of this statement, is not competent to testify as to what Cohills "recognized" and has no personal knowledge thereof. Further, such statement is contradicted by competent evidence. At no time prior to this litigation did Cohills know that it had entered into the Agreement with a party that was not a separate entity, let alone ever have knowledge that Bomanite was, in actuality the party claiming to have entered into the contract. Accordingly, Cohills never had any knowledge of any assumption and assignment of the Agreement between QC and Bomanite. Exhibit A at ¶ 4. 12. At no time did Cohills ever complain or allege that the agreement was not valid or

binding by virtue of its assignment from Bomanite to QC in connection with the execution of the joint venture documents. Objection and/or Controverting Evidence: Objection. As Cohills never had knowledge that it

had entered into the Agreement with a party that had no separate legal existence, let alone ever have knowledge that Bomanite was, in actuality the party claiming to have entered into the contract, and never had any knowledge of any assumption and assignment of the Agreement between QC and Bomanite, Cohills could not have objected to the alleged assignment at such time. Exhibit A at ¶ 4. 13. . . . . This was brought to the attention of Cohills on numerous occasions, but they

continued to refuse to sell QC's full line of concrete coloring systems products, and instead carried 4 Document 118

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product lines from other manufacturers. There were numerous discussions between QC representatives, including its manufacturer's representative from Arizona, Tony Valdez, regarding this issue and there were a number of instances where the parties agreed to disagree on those issues and QC was authorized by Cohills to sell some of these other concrete coloring systems products to nonCohills customers in Arizona. Objection and/or Controverting Evidence: Neither Stegemiller nor Ingersoll, whose

declaration an deposition testimony are respectively offered to support this statement, are competent to testify as to conversations had between Tony Valdez and representatives of Cohills as they have no personal knowledge thereof. See PSOF at Exhibit A at ¶ 11 and Exhibit G at 199. Moreover, Stegemiller's and Ingersoll's testimony is likewise inadmissible as hearsay. In fact, Cohills authorized QC to sell directly to third parties in Arizona on only two occasions. In the first instance, San Javier (United Metro) Ready Mix in Tucson was willing to purchase QC products, but refused to do so through an intermediary. Exhibit A at ¶ 8; Exhibit C at 75-76; Transcript of Deposition of Tony Valdez attached hereto as Exhibit D at 44-46. As such, Cohills agreed to allow QC to sell directly to San Javier Ready Mix provided that Cohills received a 14 cent per pound commission on product sold. Exhibit A at ¶ 8; Exhibit D at 44-46. QC agreed to this commission and San Javier Ready Mix placed one order for product with QC. Exhibit A at ¶ 8. QC has never paid to Cohills the commission due Cohills under the parties' Agreement. Id. The second instance where Cohills authorized QC to sell directly to a third party in Arizona involved a situation where a Border Products salesman in Tucson succeeded in having the specification for a job at the University of Arizona changed to QC products. See Exhibit A at ¶ 8; Exhibit C at 71; Exhibit D at 63-64. Cohills consented to this sale which involved the first phase of the project. Exhibit C at 74. In violation of the Agreement and without Cohills consent, QC sold product directly to Casa Floors for use in the second phase of the project. Id.; Exhibit A at ¶ 8. 15. As a result, QC began looking for alternate suppliers to provide its products. . . . . These

products were identical to the Bayferrox by QC products that were sold by QC at the time but, as 5 Document 118

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stated above, provided QC with the opportunity to add synthetic iron oxides from a variety of manufacturers, including Bayer. QC had also determined that if Cohills was not agreeable to using the products with the new names, the existing supply agreement would be left intact and QC would have continued to supply Cohills Bayferrox by QC. Objection and/or Controverting Evidence: These statements are controverted by other evidence. The QC Colortech product which QC used to "replace" Bayferrox by QC (see Defendants' Separate Statement of Facts in Support of Motion for Summary Judgment ("DSOF") at Exhibits K and L) did not exclusively contained Bayferrox iron oxide pigments, but rather could contain pigments from other manufacturers. Id. at Exhibit B at 173-174 and 183-184. Moreover, QC could not obtain iron oxide pigments from Bayer for a period of time. Id. at 172. Finally, in response to orders for Bayferrox by QC placed by Cohills, QC shipped QC Colortech on one occasion (id. at Exhibit J at 4546), shipped QC Colortech in Bayferrox by QC bags on another occasion (id. at Exhibit P at 58-59), and directed Cohills to purchase product directly from Bayer on a third occasion. Id. at Exhibit J at 39-40. 16. . . . . Mr. Stegemiller explained why the name change was being proposed and offered

Mr. Cohill the opportunity to purchase products from QC at a reduced rate. . . . During this meeting, Mr. Stegemiller never stated or indicated to anyone that the supply agreement attached as exhibit F was terminated, breached or of no further force and effect. Objection and/or Controverting Evidence: These statements are controverted by other evidence. Stegemiller never explained that the reason for the name change was to afford QC with the opportunity to use suppliers other than Bayer as well as Bayer. Indeed, Stegemiller never advised Cohills that Cohills could still purchase Bayferrox product from QC. Exhibit A at ¶ 10. To the contrary, QC issued a press release and letter to its customers announcing that QC Colortech "replaces" Bayferrox by QC (DSOF at Exhibits K and L) and, in response to orders for Bayferrox by QC placed by Cohills, QC shipped QC Colortech on one occasion (DSOF at Exhibit J at 45-46), shipped QC Colortech in Bayferrox by QC bags on another occasion (id. at Exhibit P at 58-59), and 6 Document 118

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directed Cohills to purchase product directly from Bayer on a third occasion. Id. at Exhibit J at 39-40. 17. . . . . At no time did Mr. Stegemiller, or anyone at QC, ever tell anyone at Cohills that QC

could not continue to supply or manufacture products containing Bayer synthetic iron oxide pigments. QC always had the ability to use Bayer pigments in its products. Objection and/or Controverting Evidence: These statements are controverted by other evidence. QC issued a press release and letter to its customers announcing that QC Colortech "replaces" Bayferrox by QC (DSOF at Exhibits K and L) and, in response to orders for Bayferrox by QC placed by Cohills, QC shipped QC Colortech on one occasion (DSOF at Exhibit J at 45-46), shipped QC Colortech in Bayferrox by QC bags on another occasion (id. at Exhibit P at 58-59), and directed Cohills to purchase product directly from Bayer on a third occasion. Id. at Exhibit J at 39-40. 18. The new proposed supply agreement was never signed, but shortly thereafter, Cohills

stopped ordering products from QC. Mr. Stegemiller repeatedly had Bomanite's Assistant Plant Manager (note that Bomanite manufactures products for QC) to ask about orders and when Cohills would be purchasing further products. At this time, Cohills representatives started saying that the business was slow and they had no need to purchase products. QC relied upon these misrepresentations. Objection and/or Controverting Evidence: As an initial matter, Stegemiller, whose deposition testimony and Affidavit are relied upon by QC in support of this statement is not competent to testify thereto as he has no personal knowledge of statements made between Mark Sanchez and representatives of Cohills, and such testimony is further inadmissible as hearsay. Further, the first sentence of this statement is controverted by other evidence. During 2003, Cohills purchased 246,100 pounds of Bayferrox iron oxide pigment in its warehouse on consignment from QC, the last purchase made on July 17, 2003. Exhibit A at ¶ 11. Further, during 2003, Cohills purchased $71,365 worth of non-iron oxide pigment product from QC and continued to purchase product from QC until November 20, 2003, at which time QC filed suit against Cohills. Id. Finally, QC's bald assertion that it relied upon any representations made by Cohills is provably 7 Document 118

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false and controverted by competent testimony. On December 12, 2002, before Cohills began purchasing product from Bayer, Steven Darke, QC's Regional Sales Manager for the region including Arizona, met with representatives of Border Products ("Border") in Phoenix to introduce himself and attempt to establish Border as a QC distributer. DSOF at Exhibit M at 23-24 and Exhibit N at 3. This meeting was prearranged with Border by QC. Id. In direct breach of the Agreement, commencing November 4, 1998 and continuing through at least December 31, 2002, QC sold product directly to Border, a competitor of Cohills in Arizona, and various other third parties situated in Arizona. See DSOF at Exhibit G at 3-4 and Exhibit H at Exhibits 1-4. Such sales generated proceeds in the aggregate amount of $208,388.00. See id. 19. . . . . After January 2003, Cohills purchased little or no synthetic iron oxide products and

only a small amount of other QC products. This was a clear breach of the agreement. Objection and/or Controverting Evidence: The first sentence of this statement is controverted by other evidence. During 2003, Cohills purchased 246,100 pounds of Bayferrox iron oxide pigment in its warehouse on consignment from QC, the last purchase made on July 17, 2003. Exhibit A at ¶ 11. Further, during 2003, Cohills purchased $71,365 worth of non-iron oxide pigment product from QC and continued to purchase product from QC until November 20, 2003, at which time QC filed suit against Cohills. Id. The second sentence of this statement constitutes a conclusion of law upon which none of the offered witnesses are competent to testify. 21. . . . . There were a few minor purchases of concrete coloring systems products during

2003 but that ended completely by the fall of 2003. Objection and/or Controverting Evidence: This statement is controverted by other evidence. During 2003, Cohills purchased $71,365 worth of non-iron oxide pigment product from QC and continued to purchase product from QC until November 20, 2003, at which time QC filed suit against Cohills. Exhibit A at ¶ 12. 22. After it became apparent that Cohills was no longer going to purchase architectural

concrete products as required by the Supply Agreement attached as Exhibit F, ..., QC began 8 Document 118

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attempting to mitigate its damages by finding another distributer in Arizona. Objection and/or Controverting Evidence: This statement is false, and controverted by other competent evidence. On December 12, 2002, Steven Darke, QC's Regional Sales Manager for the region including Arizona, met with representatives of Border Products ("Border") in Phoenix to introduce himself and attempt to establish Border as a QC distributer. DSOF at Exhibit M at 23-24 and Exhibit N at 3. This meeting was prearranged with Border by QC. Id. Further, in direct breach of the Agreement, commencing November 4, 1998 and continuing through at least December 31, 2002, QC sold product directly to Border, a competitor of Cohills in Arizona, and various other third parties situated in Arizona. See DSOF at Exhibit G at 3-4 and Exhibit H at Exhibits 1-4. Such sales generated proceeds in the aggregate amount of $208,388.00. See id. 24. . . . with Cohills using QC products for virtually all of its architectural concrete sales,

QC's name would become recognized as an industry leader in the State of Arizona for products used in this industry. Objection and/or Controverting Evidence: This statement, supported by the Affidavit of Stegemiller, amounts to pure speculation on the part of Stegemiller and, therefor, is inadmissible. Stegemiller has no personal knowledge of that the effect of Cohills using QC's products would have had upon QC's market share or status as an "industry leader" in Arizona. 25. Cohills was well aware of QC's expectancy that its product would become the leading

architectural products in the State of Arizona.As a result, QC lost virtually all of its market share in Arizona because all of QC's customers had been effectively weaned off of QC's products in 2003 and onto Bayer products so that when QC began selling products through Border Products, the vast majority of those sales were lost. Objection and/or Controverting Evidence: Objection. Stegemiller is not competent to testify as to any of the matters set forth in the preceding paragraph because he has no personal knowledge thereof. This allegation is false and QC has failed to support it with any admissible or otherwise 9 Document 118

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competent evidence. Stegemiller has no personal knowledge of what Cohills might have been aware of, as to what Cohills would say to its customers or what such customers would say to Cohills, or what the effect of any such statements might have been upon QC's market share. Moreover, the statement is false insofar as it claims that QC began selling through Border Products in 2003. In fact, QC sold product through Border Products and various other entities in Arizona during the entire course of the relationship between Cohills and QC, in direct violation of the Agreement and without Cohills knowledge thereof. DSOF at Exhibit G at 3-4 and Exhibit H at Exhibits 1-4. Finally, Stegemiller's testimony as to the notion that Cohills sold Bayer product under QC product codes is directly controverted by the testimony of Mike Cohill. Transcript of Deposition of Timothy Cohill attached hereto as Exhibit E at 164-165. 27. To the extent that QC sold entities other than Cohills from 1998 through January 2003,

QC had permission from Cohills to do so. Objection and/or Controverting Evidence: Objection. This statement is false and

controverted by other evidence. Cohills authorized QC to sell directly to third parties in Arizona on only two occasions. In the first instance, San Javier (United Metro) Ready Mix in Tucson was willing to purchase QC products, but refused to do so through an intermediary. Exhibit A at ¶ 8; Exhibit C at 75-76; Exhibit D at 44-46. As such, Cohills agreed to allow QC to sell directly to San Javier Ready Mix provided that Cohills received a 14 cent per pound commission on product sold. Exhibit A at ¶ 8; Exhibit D at 44-46. QC agreed to this commission and San Javier Ready Mix placed one order for product with QC. Exhibit A at ¶ 8. QC has never paid to Cohills the commission due Cohills under the parties' Agreement. Id. The second instance where Cohills authorized QC to sell directly to a third party in Arizona involved a situation where a Border Products salesman in Tucson succeeded in having the specification for a job at the University of Arizona changed to QC products. See Exhibit A at ¶ 8; Exhibit C at 71; Exhibit D at 63-64. Cohills consented to this sale which involved the first phase of the project. Exhibit C at 74. In violation of the Agreement and without Cohills consent, QC sold product 10 Document 118

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directly to Casa Floors for use in the second phase of the project. Id.; Exhibit A at ¶ 8. Aside from these two instances, Cohills never consented to any sales by QC of its products to third parties in Arizona. Exhibit A at ¶ 8. 28. . . . . Thus, there was no time since September 1, 1999 when QC was unable to obtain

synthetic iron oxide pigments from Bayer to use in its products and had any customer specifically requested that only Bayer pigments be included in its products, QC could have and would have ensured that such pigments were contained therein. There was a short time that Bayer was threatening not to provide product to QC but Bayer never ultimately stopped supplying QC with pigment. Objection and/or Controverting Evidence: This statement is directly controverted by other

competent evidence. Bayer refused to sell QC product for a period of time. DSOF at Exhibit B at 166 and 172. On two separate occasions, QC indicated to Cohills that it could not supply Cohills with a certain iron oxide pigment from Bayer, and that Cohills should purchase the same from Bayer. Id. at Exhibit J at 39-40; Exhibit A at ¶ 7. 29. . . . . He did so in response to a directive by the owner of Cohill's Building Specialties,

Mike Cohill, that "we are not going to sell anything from QC anymore." Objection and/or Controverting Evidence: This statement is provided without relevant context. Cohills stopped purchasing products from QC after Cohills had been sued by QC in the instant action. Exhibit E at 178. 33. Although Cohills believed that QC may have been selling products to others in the State

of Arizona and had some knowledge of particular instances, it never terminated the agreement with QC or claimed that such sales were a basis of termination. . . . Despite what Cohills perceived to be breaches of the agreement by QC by selling products to other customers in Arizona, Cohills never terminated the contract but continued in force, thereby waiving any such claimed breaches. Objection and/or Controverting Evidence: Whether or not Cohills waived its right to claim

that QC breached the agreement is a question of law upon which none of the offered witnesses are 11 Document 118

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competent to testify. Further, this statement is controverted by other competent testimony. Cohills only consented to two instances where QC sold products to third parties in Arizona prior to the initiation of this lawsuit. Exhibit A at ¶ 8. Aside from these instances, Cohills discovered of one other occasion where QC offered to sell product directly to a third party in Arizona, Lasting Impression. Exhibit C at 69-70. Cohills did not have knowledge of any other sales QC engaged in with third parties in violation of the Agreement aside from these three instances. Exhibit A at ¶ 9. 34. . . . on the purported claim that QC was no longer supplying Bayferrox synthetic iron

oxide pigments. Objection and/or Controverting Evidence: This statement is controverted by competent evidence insofar as it characterizes Cohills' claim that QC was no longer supplying Bayferrox synthetic iron pigments to Cohills as "purported." In fact, in response to orders for Bayferrox by QC placed by Cohills, QC shipped QC Colortech on one occasion (DSOF at Exhibit J at 45-46), shipped QC Colortech in Bayferrox by QC bags on another occasion (id. at Exhibit P at 58-59), and directed Cohills to purchase product directly from Bayer on two separate occasions. Id. at Exhibit J at 39-40; Exhibit A at ¶ 7. 35. Cohills admitted that no one at QC told them that the new Colortech product was

actually different from the Bayferrox by QC products. Objection and/or Controverting Evidence: This statement mis-characterizes the testimony of Karen Cohill. Mrs. Cohill testified that Cohills believed the Colortech product was different than the Bayferrox by QC product based upon the fact that QC had issued a press release and letter to its customers indicating that Colortech "replaces" Bayferrox by QC and that QC presented Cohills with an agreement making no reference to Bayferrox by QC. Exhibit C at 33-35. Furthermore, as admitted by QC, the QC Colortech product which QC used to "replace" Bayferrox by QC (see DSOF at Exhibits K and L.) did not exclusively contained Bayferrox iron oxide pigments, but rather could contain pigments from other manufacturers. Id. at Exhibit B at 173-174 and 183-184. 36. No one at Cohills asked QC whether or not it would still be able to comply with its 12 Document 118

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supply agreement to supply Baryferrox products. Objection and/or Controverting Evidence: This statement is directly controverted by other competent evidence. QC communicated its inability to comply with the Agreement by (1) issuing a press release and letter to its customers indicating that Colortech "replaces" Bayferrox by QC (DSOF at Exhibits K and L), (2) presenting Cohills with a revised supply agreement that made no reference to Bayferrox but repeated referenced to Colortech (id. at Exhibit O), (3) indicating to Cohills that it could not supply Cohills with a certain iron oxide pigment from Bayer and directing Cohills to purchase the same from Bayer (id. at Exhibit J at 39-40; Exhibit A at ¶ 7), and (4) shipping Colortech product to Cohills in response to an order for Bayferrox. DSOF at Exhibit J at 45-46. 39. Mike Cohill, owner of Cohills, admitted that it is not important to have the Bayferrox

name on the bag, it is only important to have the quality because his customers are not clamoring for the name, they trust him because he is one who has given them "good pigment over the years." Objection and/or Controverting Evidence: This evidence is controverted by other competent evidence. In this regard, Karen Cohill testified that the fact that the bags contain the name "Bayferrox" was important to Cohills. Exhibit C at 60-61. Moreover, Cohill testified as to the importance to Cohills of the name Bayferrox and Cohills ability to use that name. Exhibit E at 57-58. II. Supplemental Statement of Facts.

1. When questioned at deposition as to what knowledge he had concerning QC's allegation that Cohills engaged in product substitution, Mr. Stegemiller testified as follows: A. I was at a company called Miller Holdings that is a very large developer that has several companies within the holding group that is involved in real estate development, wherein Dave Fresco [sic] represented ­ it was a conference call that I was listening in on when Dave Fresca represented to Miller Holdings, that the questions was ­ a specific question was asked of Dave Frasca that they would like to buy QC product, specifically the integral color products, and that we understood that they were no longer representing QC, did they still have QC available, and Dave Frasca said "Yes, we have Bayferrox." Q. A. Did he say Bayferrox by QC? No.

Q. Did you have any understanding as to whether Cohills had consigned inventory of Bayferrox by QC at that time? Case 2:03-cv-01997-ROS Document 118 13 Filed 10/21/2005 Page 13 of 14

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A.

I knew that they had some.

Exhibit F at 88-89. DATED this 21st day of October, 2005.

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LANG & BAKER, PLC
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By__/s/William G. Klain__________________ Kent A. Lang William G. Klain 8233 Via Paseo del Norte, Suite C-100 Scottsdale, AZ 85258 (480)947-1911 Attorneys for Defendants/Counterclaimant Original of the foregoing filed this 21st day of October, 2005, with: United States District Court For the District of Arizona Copy of the foregoing mailed this 21st day of October, 2005, to: Russell K. Ryan, Esquire Motschiedler Michaelides & Wishon LLP 1690 West Shaw Avenue; Suite 200 Fresno, California 93711 Attorneys for Plaintiff/Counterdefendant By:/s/ Dana M. Massie
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