Grochocinski v. Mayer Brown Rowe & Maw LLP et al

Filing 165

RULE 56 56.1(a) Statement by Mayer Brown Rowe & Maw LLP, Ronald B Given regarding motion for summary judgment 135 Reply to Plaintiff's Rule 56.1(b)(3)(C) Statement in Support of His Response to Defendants' Motion for Summary Judgment (Novack, Stephen)

IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION
DAVID GROCHOCINSKI, not individually
but solely in his capacity as the Chapter 7
Trustee for the bankruptcy estate of
CMGT, INC.,
Plaintiff,
v.
MAYER BROWN ROWE & MAW LLP and
RONALD B. GIVEN,
Defendants.

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No. 06 C 5486
Judge Virginia M. Kendall
Magistrate Judge Morton Denlow

REPLY TO PLAINTIFF’S RULE 56.1(b)(3)(C) STATEMENT IN SUPPORT
OF HIS RESPONSE TO DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT
Defendants “Mayer Brown” and Ronald B. Given (“Ronald”) (collectively,
“Defendants”), by their attorneys, Novack and Macey LLP, pursuant to Local Rule 56.1(a),
submit this Reply to Plaintiff’s Local Rule 56.1(b)(3)(C) Statement in Support of His Response
to Defendants’ Motion for Summary Judgment (“Plaintiff’s Statement”).
CMGT Hires Defendants
1. In July 1999, CMGT, Inc. (“CMGT”) hired Defendants Mayer Brown Rowe & Maw
LLP (“MBRM”) and Ronald Given (“Given”) (together, “Defendants”) as its attorneys because
CMGT’s President, Lou Franco’s (“Franco”), had a pre-existing personal and business
relationship with Given. (Ex. 2.)
RESPONSE:
Defendants object to Paragraph 1 because it fails to comply with Local Rule 56.1
because the facts asserted therein are not material to the resolution of the Unclean Hands
Motion. Defendants object to Paragraph 1 because the allegations therein relate to the merits
of the case, about which discovery has not been taken.

Without waiving the foregoing

objections, Defendants dispute the allegations of Paragraph 1 because: (1) the cited exhibit

does not support the allegation that Franco and Ronald “had a pre-existing personal and
business relationship;” and (2) Defendants’ engagement letter provided that they were to
provide legal services “in connection with [CMGT’s] initial capitalization, formative
acquisition activities, and other general corporate activities.” (Compl. ¶2, Ex. 1 at 1.)

CMGT and SC Revise SC’s Contract
2. In June 2002, Spehar Capital, LLC (“SC”) asked CMGT to revise its contract. SC’s
owner, Gerry Spehar (“Spehar”), stated that the revisions were warranted because SC had
made valuable contributions to CMGT. (See e.g., Ex. 3 and Ex. 4.)
RESPONSE:
Defendants object to Paragraph 2 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citations contained therein are made to multipage documents generally
rather than to a specific page of the documents cited. Defendants object to Paragraph 2
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute Paragraph 2
because: (1) it relies on Exhibits 2 and 3, which are inadmissible hearsay and have not been
authenticated; (2) the cited exhibits do not support the allegation that “the revisions were
warranted because SC had made valuable contributions to CMGT;” (3) Spehar’s job was to
find financing for CMGT and he never did so CMGT (Compl. ¶¶32-46; see also Gerry Dep. at
41); and (4) Franco, Baliga, Quarles and Wong believe that Spehar caused CMGT to fail (Franco
Aff., Appendix Ex. B, ¶¶16, 39-40; Trustee Dep. Ex. 23; Baliga Aff., Appendix Ex. C, ¶¶6-8;
Quarles Aff., Appendix Ex. D, ¶5 & Ex. A; Wong Aff., Appendix Ex. E, ¶12 & Ex. A).1

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References to “Appendix” herein are made to Defendants’ Appendix of Exhibits in
Support of Their Motion for Summary Judgment Based on Their Unclean Hands Defenses.
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3. On September 30, 2002, CMGT and SC executed a revised contract. SC’s revised
contract was to expire on October 1, 2003, but could be terminated earlier. (Ex. 5.)
RESPONSE:
Defendants object to Paragraph 3 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution the Unclean Hands
Motion; and (2) the citation contained therein is made to a multipage document generally
rather than to a specific page of the document cited. Defendants object to Paragraph 3 because
the allegations therein all relate to the merits of the case, about which discovery has not been
taken. Without waiving the foregoing objections, Defendants dispute Paragraph 3 because it
relies on Exhibit 5 which is inadmissible hearsay and has not been authenticated.

CMGT Approves SC to Have Discussions with Trautner and Signs a Letter of Intent with
Trautner
4. On January 27, 2003, Franco asked Spehar to participate in a phone conference with
Franco, Given and a CMGT shareholder, Charles Trautner (“Trautner”), to vet Trautner’s ideas
for restructuring CMGT into an entity he referred to as “Newco.” Under Trautner’s proposal,
CMGT’s shareholders would receive only about 20% of Newco’s stock and Newco would not
be responsible for CMGT’s liabilities. Franco (on behalf of CMGT) rejected Trautner’s
“Newco” idea. (See Exhibits 6 and 7; see also, Mot. at Ex. B, Franco Aff., at ¶ 7.)
RESPONSE:
Defendants object to Paragraph 4 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) certain citations contained therein are made to multipage documents generally
rather than to a specific page of the documents cited; and (3) it contains multiple sentences and
facts rather than a short statement of fact. Defendants object to Paragraph 4 because the
allegations therein all relate to the merits of the case, about which discovery has not been
taken. Without waiving the foregoing objections, Defendants dispute Paragraph 4 because:

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(1) the cited exhibits do not support the allegations that “[u]nder Trautner’s proposal, CMGT’s
shareholders would receive only about 20% of Newco’s stock and Newco would not be
responsible for CMGT’s liabilities;” and (2) the cited exhibits do not support the allegation that
“Franco (on behalf of CMGT) rejected Trautner’s ‘Newco’ idea.”

5. Also in January 2003, Franco approved SC/Spehar to have discussions with an
individual introduced to CMGT by Trautner, Harlan Smith (“Smith.”) Although Smith was not
formally added to Exhibit A of SC’s Contract, Franco acknowledged in writing that SC was
involved in discussions with him. (Ex. 8 at p. 2.)
RESPONSE:
Defendants object to Paragraph 5 because it fails to comply with Local Rule 56.1
because the facts asserted therein are not material to the resolution of the Unclean Hands
Motion. Defendants object to Paragraph 5 because the allegations therein all relate to the
merits of the case, about which discovery has not been taken. Without waiving the foregoing
objections, Defendants dispute Paragraph 5 because: (1) it relies on Exhibit 8, which is
inadmissible hearsay and has not been authenticated; and (2) the cited exhibit does not support
any of the allegations for which it is cited.

6. In May, 2003, Given and Trautner revived discussions about Trautner’s “Newco”
proposal. (Ex. 7; see also, Compl. at ¶ 41 and Mot. at Ex. B, Franco Aff., at ¶8.) Given
spearheaded those negotiations on behalf of CMGT. (Ex. 7.) Given’s negotiations resulted in
the July 31, 2003, letter of intent (“LOI”) that later became the Trautner Deal. (Id.; see also,
Compl. at Ex. 9.) Franco’s involvement in the negotiations was very limited. (Ex. 7.)
RESPONSE:
Defendants object to Paragraph 6 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) it contains multiple sentences and facts rather than a short statement of fact.
Defendants object to Paragraph 6 because the allegations therein all relate to the merits of the

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case, about which discovery has not been taken. Without waiving the foregoing objections,
Defendants dispute the allegations of Paragraph 6 because: (1) the cited exhibits do not
support the allegation that “Franco’s involvement in the negotiations was very limited,” to the
contrary, Franco was involved in fine tuning the Trautner LOI (Resp. Ex. 7 at 1 ¶1); and (2)
Franco testified that, with regard to the Trautner Deal, “Over the next several weeks, on behalf
of CMGT, I discussed this proposal with CMGT’s shareholders, management and its
professional advisors” (Franco Aff., Appendix Ex. B, ¶8).

CMGT Engages in Discussions with the Washoe
7. In July 2003, CMGT was pursuing discussions with the Washoe Tribe (the “Washoe”)
about a possible investment in CMGT. (See Ex. 9; see also, Mot. at Ex. B, Franco Aff., at
¶25.)
RESPONSE:
Defendants object to Paragraph 7 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) at least one citation contained therein is made to a multipage document
generally rather than to a specific page of the document cited. Defendants object to Paragraph
7 because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute Paragraph 7
because it relies on Exhibit 9, which is inadmissible hearsay and has not been authenticated.

Franco Conditions the Trautner Deal on the Resolution Several “Lou Franco” Issues
8. On August 7, 2003, Franco asked Given to review a draft letter to Trautner regarding
“Lou Franco” issues that Franco wanted resolved in the Trautner Deal -- e.g., negotiating
future employment terms with Newco and resolving credit card debts, IRS obligations and
personal loans. (Ex. 10.)

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RESPONSE:
Defendants object to Paragraph 8 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) at least one citation contained therein is made to a multipage document
generally rather than to a specific page of the document cited. Defendants object to Paragraph
8 because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute Paragraph 8
because it relies on Exhibit 10, which is inadmissible hearsay and has not been authenticated.

Franco Recommends the Given-Negotiated Trautner Deal to CMGT’s Shareholders
9. On August 8, 2003, Franco sent CMGT’s shareholders a letter recommending the
Trautner Deal. He stated that there were “no alternatives.” (Ex. 11.) Given helped prepare the
August 8 letter. (Ex. 12.)
RESPONSE:
Defendants object to Paragraph 9 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) the citations contained therein are made to multipage documents generally rather
than to a specific page of the documents cited; and (3) it contains multiple sentences and facts
rather than a short statement of fact. Defendants object to Paragraph 9 because the allegations
therein all relate to the merits of the case, about which discovery has not been taken. Without
waiving the foregoing objections, Defendants dispute Paragraph 9 because: (1) it relies on
Exhibits 11 and 12 which are inadmissible hearsay and have not been authenticated; and (2)
the cited exhibits do not support the allegation that “Given helped prepare the August 8 letter.”

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SC Asks CMGT to Acknowledge that the Trautner Deal is Within the Scope of Its
Contract
10. After reviewing Franco’s letter to CMGT’s shareholders, Spehar asked Franco to add
Trautner and another potential investor, FlexBen, to Exhibit A of SC’s contract. Spehar
reminded Franco of the conversations that Spehar had with Trautner at Franco’s request. (Ex.
6.)
RESPONSE:
Defendants object to Paragraph 10 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citation contained therein is made to a multipage document generally
rather than to a specific page of the document cited. Defendants object to Paragraph 10
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute the allegations
of Paragraph 10 because the cited exhibit speaks for itself and Plaintiff’s summary of it is
inaccurate and misleading.

11. In response to Spehar, Franco stated: “[g]ot it. I’ll be back...” Franco did not dispute
the accuracy of Spehar’s recitation of facts. (Ex. 13.)
RESPONSE:
Defendants object to Paragraph 11 because it fails to comply with Local Rule 56.1
because: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) it is argumentative. Defendants object to Paragraph 11 because the allegations
therein all relate to the merits of the case, about which discovery has not been taken. Without
waiving the foregoing objections, Defendants dispute Paragraph 11 because: (1) it relies on
Exhibit 13 which is inadmissible hearsay and has not been authenticated; (2) the cited exhibit
does not support the allegation that “Franco did not dispute the accuracy of Spehar’s recitation

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of the facts;” (3) Franco testified that Spehar did not initiate the Trautner Deal (Franco Aff.,
Appendix Ex. B, at ¶8); and (4) Franco testified that Spehar was not entitled to compensation
for the Trautner Deal (id. ¶14).

12. Franco forwarded Spehar’s request to Given. (Ex 14.) On August 8, 2003, Given
responded to Spehar on behalf of CMGT. In part, Given stated:
Chuck [Trautner] and I have never discussed any of the prior communications to
which you refer (and some of which I also participated in)” and that “as to the
proposed LOI transaction, to avoid distractions, I would ask Lou to simply refer
any questions you [Spehar] might have to me.” Given also noted that he and
Franco were “big fans” of SC’s services.
(Ex. 7.)
RESPONSE:
Defendants object to Paragraph 12 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) the citations contained therein are made to multipage documents generally rather
than to a specific page of the documents cited; and (3) it contains multiple sentences and facts
rather than a short statement of fact.

Defendants object to Paragraph 12 because the

allegations therein all relate to the merits of the case, about which discovery has not been
taken. Without waiving the foregoing objections, Defendants dispute Paragraph 12 because it
relies on Exhibit 14, which is inadmissible hearsay and has not been authenticated.

13. Spehar responded to Given the next day. He stated, in part, that:
The important and relevant question is: Did Chuck Trautner - at any point during
the term of my contract [sic] - become a legitimate member of Exhibit A of that
contract? The honest answer is: Yes he did. Once he legitimately became a
member of Exhibit A, the Rubicon was crossed, so to speak, and Spehar Capital
became entitled to be paid per its contract with CMGT.
(Ex. 15.)

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RESPONSE:
Defendants object to Paragraph 13 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citation contained therein is made to a multipage document generally
rather than to a specific page of the document cited. Defendants object to Paragraph 13
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute Paragraph 13
because:

(1) it relies on Exhibit 15, which is inadmissible hearsay and has not been

authenticated; and (2) the exhibit cited therein is not accurately quoted.

14. Given responded to Spehar that same day (August 9, 2003). In part, Given stated:
There is nothing left to be said regarding the LOI, in my view. If you wish to
pursue it, you will be in an adversarial position and should deal with us through
counsel. You have the right to do that, of course, but if you do I believe all of
your activities on behalf of CMGT should cease (as well as your MOIC
involvement) -- ultimately, that is not my call, however.
(Ex. 16.)
RESPONSE:
Defendants object to Paragraph 14 because it fails to comply with Local Rule 56.1
because the facts asserted therein are not material to the resolution of the Unclean Hands
Motion. Defendants object to Paragraph 14 because the allegations therein all relate to the
merits of the case, about which discovery has not been taken. Without waiving the foregoing
objections, Defendants add that Ronald also stated to Spehar in the same email that:

However, you [Spehar] have not succeeded in putting together
anything of your own to date and are not part of the [Trautner
Deal]. I encourage you to continue your work on the deals that
have been carved out for you to continue with. I’m going to try to

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get the [Trautner Deal] done, but I am just as happy to work on one
of your prospects. (Resp. Ex. 16 at 1 ¶1.)
15. Spehar forwarded Given’s email to Franco and asked Franco for his thoughts about the
dispute. (Ex. 17.) Franco forwarded Spehar’s email to Given and told him, “[o]f course, you
and I are completely [sic] one voice on this matter.” (Ex. 18.)
RESPONSE:
Defendants object to Paragraph 15 because it fails to comply with Local Rule 56.1
because the facts asserted therein are not material to the resolution of the Unclean Hands
Motion. Defendants object to Paragraph 15 because the allegations therein all relate to the
merits of the case, about which discovery has not been taken. Without waiving the foregoing
objections, Defendants dispute Paragraph 15 because it relies on Exhibits 17 and 18 which are
inadmissible hearsay and have not been authenticated.

Without waiving the foregoing

objections, Defendants add that Franco also purportedly stated to Ronald in the same email
that, “I am very disappointed in Gerry and will discuss with you when you have some time.”
(Resp. Ex. 18 at 1.)

16. On August 11, 2003, Franco acknowledged in writing that FlexBen (but not Trautner)
was within the scope of SC’s contract even though FlexBen was not listed on Exhibit A. (Ex.
19.)
RESPONSE:
Defendants object to Paragraph 16 because it fails to comply with Local Rule 56.1
because the facts asserted therein are not material to the resolution of the Unclean Hands
Motion. Defendants object to Paragraph 16 because the allegations therein all relate to the
merits of the case, about which discovery has not been taken. Without waiving the foregoing
objections, Defendants dispute Paragraph 16 because: (1) it relies on Exhibit 19, which is
inadmissible hearsay and has not been authenticated; (2) the cited exhibit does not support the

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allegation that “FlexBen was not listed on Exhibit A;” and (3) the cited exhibit does not
support the allegations concerning Trautner, who is not mentioned in Exhibit 19.

Given Advises Franco about the “Lou Franco” Issues
17. On August 12, 2003, Franco sent Given an email with a draft letter to Trautner
attached. Franco’s draft letter set forth a proposal for resolving the “Lou Franco” issues. The
proposal included a $36,000 signing bonus to resolve Franco’s IRS issues, a $100,900 loan to
Franco so that he could immediately repay credit card obligations, and an initial salary of
$180,000, with the possibility of salary increases and year-end cash bonuses. (Ex. 20.)
RESPONSE:
Defendants object to Paragraph 17 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) the citation contained therein is made to a multipage document generally rather
than to a specific page of the document cited; and (3) it contains multiple sentences and facts
rather than a short statement of fact.

Defendants object to Paragraph 17 because the

allegations therein all relate to the merits of the case, about which discovery has not been
taken. Without waiving the foregoing objections, Defendants dispute Paragraph 17 because it
relies on Exhibit 20, which is inadmissible hearsay and has not been authenticated. Without
waiving the foregoing objections, Defendants add that Exhibit 20 was purportedly prepared by
Franco at Trautner’s request. (Resp. Ex. 20 at 2 ¶1.)

CMGT Sends the Washoe an LOI
18. On August 13, 2003, Franco sent Given an e-mail stating that the Washoe wanted to do
a deal and that they would accelerate their evaluation of CMGT because they “can do deals
quickly…i.e., in 30-60 days.” Franco stated, “I believe the interest is real and that we should
provide Andrea with a suggested LOI format (a succinct version would be best) as she
requested and see what develops.” Franco attached a draft LOI that Sephar had prepared. (Ex.
21.)

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RESPONSE:
Defendants object to Paragraph 18 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) the citation contained therein is made to a multipage document generally rather
than to a specific page of the document cited; and (3) it contains multiple sentences and facts
rather than a short statement of fact.

Defendants object to Paragraph 18 because the

allegations therein all relate to the merits of the case, about which discovery has not been
taken. Without waiving the foregoing objections, Defendants dispute Paragraph 18 because:
(1) it relies on Exhibit 21, which is itself inadmissible hearsay, contains hearsay statements
from other persons and has not been authenticated; (2) the cited exhibit does not support the
allegation that “the Washoe wanted to do a deal”; (3) the Washoe never signed a letter of intent
to provide CMGT with financing (Compl. ¶46; Gerry Dep. at 48-51); (4) the Washoe never
provided CMGT with any financing (id.); and (5) the Washoe were not in the business of
investing in companies like CMGT (Franco Aff., Appendix Ex. B, at ¶34).

19. The next day, August 14, 2003, Spehar sent Franco a revised LOI for the Washoe.
Franco forwarded the draft LOI to Given for his review and comment. (Ex. 22.) Given
suggested sending the Washoe the Trautner LOI with the “20 percentage [sic] deleted.” Franco
responded that he did not want to “set the bar down as low as the Newco LOI & encourage a
similar offer...I sense the Tribe has an appetite for a much better deal for CMGT...” (Ex. 23.)
RESPONSE:
Defendants object to Paragraph 19 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) the citations contained therein are made to multipage documents generally rather
than to a specific page of the documents cited; and (3) it contains multiple sentences and facts
rather than a short statement of fact.

Defendants object to Paragraph 19 because the

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allegations therein all relate to the merits of the case, about which discovery has not been
taken. Without waiving the foregoing objections, Defendants dispute Paragraph 19 because:
(1) it relies on Exhibits 22 and 23 which are inadmissible hearsay and have not been
authenticated; (2) Spehar sent Franco the so-called “revised LOI” on August 13, 2003; (3) the
cited exhibit does not support the allegation that “Franco forwarded the draft LOI to Given for
his review and comment;” (4) the LOI at issue in Exhibit 23 is not the same LOI at issue in
Exhibit 22; (5) the Washoe never signed a letter of intent to provide CMGT with financing
(Compl. ¶46; Gerry Dep. at 48-51); (6) the Washoe never provided CMGT with any financing
(id.); and (7) the Washoe were not in the business of investing in companies like CMGT
(Franco Aff., Appendix Ex. B, at ¶34).

20. Later that day (August 14), Franco instructed SC to send the Washoe an LOI, which he
had approved, that gave the Washoe until September 30, 2003 to complete due diligence. SC
carried-out Franco’s instruction. (Ex. 24; see also, Exs. 21 & 22.)
RESPONSE:
Defendants object to Paragraph 20 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citations contained therein are made to multipage documents generally
rather than to a specific page of the documents cited. Defendants object to Paragraph 20
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute Paragraph 20
because: (1) it relies on Exhibits 21, 22 and 24, which are inadmissible hearsay and have not
been authenticated; (2) the cited exhibits do not support the allegation that “SC carried-out
Franco’s instruction;” (2) Franco testified that he “became dissatisfied with the way that
Speahr was handling the discussions with the Washoe and became concerned that he was

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acting erratically and not in CMGT’s best interests” (Franco Aff., Appendix Ex. B, ¶27); (3)
Franco testified that Spehar directly contravened his instructions regarding the Washoe
negotiations (id. ¶29); and (4) the cited exhibits do not support the allegation that the subject
LOI “gave the Washoe until September 30, 2003 to complete due diligence,” to the contrary,
no LOI is attached to Exhibit 24 whatsoever.

Trautner Approves Franco’s Proposals for Resolving the “Lou Franco” Issues
21. On August 14, 2003, Franco sent Trautner a letter with Franco’s proposals for
resolving the “Lou Franco” issues. On August 15, 2003, Trautner agreed to Franco’s
proposals. (Ex. 25.)
RESPONSE:
Defendants object to Paragraph 21 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citation contained therein is made to a multipage document generally
rather than to a specific page of the document cited. Defendants object to Paragraph 21
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute Paragraph 21
because:

(1) it relies on Exhibit 25, which is inadmissible hearsay and has not been

authenticated; and (2) none of the allegations therein are supported by the cited exhibit because
Exhibit 25 contains a draft letter to Trautner that Franco sent to Given and that is dated August
18, 2003 and Exhibit 25 contains no correspondence at all from Trautner.

CMGT Seeks Shareholder Approval of the Trautner Deal and Rejects SC’s Settlement
Attempts
22. On August 16, 2003, Franco sent CMGT’s shareholders a letter (dated August 15)
seeking their approval of the Trautner Deal. Franco did not disclose CMGT’s negotiations
with the Washoe, Franco’s belief that the Washoe’s interest was real, or Franco’s belief that

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the Washoe wanted to consummate a deal that would be better for CMGT than the Trautner
Deal. (Ex. 26.) Given helped prepare the August 15 letter. (Ex. 27.)
RESPONSE:
Defendants object to Paragraph 22 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) the citations contained therein are made to multipage documents generally rather
than to a specific page of the documents cited; (3) it contains multiple sentences and facts
rather than a short statement of fact; and (4) it is argumentative.

Defendants object to

Paragraph 22 because the allegations therein all relate to the merits of the case, about which
discovery has not been taken. Without waiving the foregoing objections, Defendants dispute
Paragraph 22 because: (1) it relies on Exhibits 26 and 27, which are inadmissible hearsay and
have not been authenticated; (2) the Washoe never signed a letter of intent to provide CMGT
with financing (Compl. ¶46; Gerry Dep. at 48-51); (3) the Washoe never provided CMGT with
any financing (id.); (4) the Washoe were not in the business of investing in companies like
CMGT (Franco Aff., Appendix Ex. B, at ¶34); (5) the cited exhibit does not support the
allegation that Franco believed “that the Washoe’s interest was real;” (6) the cited exhibit does
not support the allegation that “that the Washoe wanted to consummate a deal that would be
better for CMGT than the Trautner Deal;” and (7) Franco testified that, “At the time CMGT
and its shareholders accepted the Trautner [Deal], there was no bona fide financing available to
CMGT, much less better financing (Franco Aff., Appendix Ex. B, at ¶21).

23. Meanwhile, Spehar trying [sic] to resolve SC’s contract dispute regarding the Trautner
Deal. On August 19, 2003, Spehar sent Franco and Given an email regarding the discussions
of the dispute. In part, Spehar stated:
Ron [Given], in between your many epithets and derogatory comments, you were
extremely dismissive today of my efforts to discuss a settlement based on

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honoring Spehar Capital’s contract. You encouraged me to ‘bring it on’ and told
me that you were ‘not afraid’ because whatever I do would not affect the deal. In
your words: ‘This deal will go forward!’ [sic]
(Ex. 28.)
RESPONSE:
Defendants object to Paragraph 23 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) the citation contained therein is made to a multipage document generally rather
than to a specific page of the document cited; and (3) it contains multiple sentences and facts
rather than a short statement of fact.

Defendants object to Paragraph 23 because the

allegations therein all relate to the merits of the case, about which discovery has not been
taken. Without waiving the foregoing objections, Defendants dispute Paragraph 23 because:
(1) it relies on Exhibit 28, which is inadmissible hearsay and has not been authenticated; and
(2) the cited exhibit does not support the allegation that “[m]eanwhile, Spehar trying [sic] to
resolve SC’s contract dispute regarding the Trautner Deal.” Without waiving the foregoing
objections, Defendants add that Spehar’s purported email also demanded that “Spehar Capital
[] be fully compensated - by CMGT/‘Oldco’ and ‘Newco’ - under its Agreement with CMGT
should CMGT consummate its pending deal with Chuck Trautner’s ‘Newco,’” which, to
Spehar included an extensive list of demands. (Resp. Ex. 28 at 1 ¶7 (emphasis added); Resp.
Ex. 39.)

24. Given responded that same day. He stated, in part, that:
[f]rom a legal point of view, we simply cannot play your game of throwing EMails back and forth. We have talked to you. We have listened to you. We have
told you our view. I’m sorry, but we can do no more...you have told us you have
counsel. I will henceforth deal only with him or her, as is appropriate.

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(Ex. 29.)
RESPONSE:
Defendants object to Paragraph 24 because it fails to comply with Local Rule 56.1
because the facts asserted therein are not material to the resolution of the Unclean Hands
Motion. Defendants object to Paragraph 24 because the allegations therein all relate to the
merits of the case, about which discovery has not been taken. Without waiving the foregoing
objections, Defendants add that Ronald also stated in his email to Gerry that:

I very much regret, Gerry, that from my lawyer’s perspective it
seems you have always focused so much on yourself and churning
words that you have forgotten that your job was to raise money.
You have never been in a better position to actually do your job
(go out and get someone to beat the LOI for heaven’s sakes!), but
you choose to squander your energy spending all you time on
nonsense like this. (Resp. Ex. 29 at 1 ¶1.)

25. On August 21, 2003, Spehar sent an email to Franco, stating:
I remain agreeable to further legitimate attempts to resolve this dispute amicably.
As stated on our call, however, your delays and the pace of events are quickly
forcing my hand...Please seek a second legal opinion and reconsider -- you run
CMGT, not Ron Given.
(Ex. 30.)
RESPONSE:
Defendants object to Paragraph 25 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citation contained therein is made to a multipage document generally
rather than to a specific page of the document cited. Defendants object to Paragraph 25
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute Paragraph 25

17

because:

(1) it relies on Exhibit 30, which is inadmissible hearsay and has not been

authenticated; (2) Spehar’s settlement demands were unreasonable; (Franco Aff., Appendix Ex.
B, ¶¶14-16 & 43; Baliga Aff., Appendix Ex. C, ¶6; Wong Aff., Appendix Ex. E, ¶5); and (3)
Spehar demanded to be “fully compensated” for the Trautner Deal which, to Spehar, included
an extensive list of demands (Resp. Ex. 28 at 1 ¶7 (emphasis added); Resp. Ex. 39).

26. Franco forwarded Spehar’s email to Given and stated, “[m]y trust is in you and
remains so.” (Ex. 31.) Given advised Franco to “[j]ust let it be.” (Ex. 32.)
RESPONSE:
Defendants object to Paragraph 26 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citations contained therein are made to a multipage documents generally
rather than to a specific page of the documents cited. Defendants object to Paragraph 26
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute Paragraph 26
because:

(1) it relies on Exhibit 31, which is inadmissible hearsay and has not been

authenticated; and (2) it relies on Exhibit 32, which is inadmissible hearsay, in part, and has
not been authenticated, in part. Without waiving the foregoing objections, Defendants add that
Franco’s purported email to Ronald also stated that: “FYI, I just received this from Gerry.
Obviously, much of his ‘memorialization’ is for effect, not accurate and is twisted into his
distortion of reality. He still thinks his contract and interpretation thereof are clear as a bell
and is unwilling to be flexible.” (Resp. Ex. 31 at 1.)

27. In Franco’s affidavit, which is Exhibit B to Defendants’ Motion, Franco stated that he
discussed a settlement proposal with Spehar that involved Newco paying SC “$250,000 or so”
post-closing. (Mot. at Ex. B, Franco Aff., at ¶ 15.) None of the contemporaneous documents

18

produced to Plaintiffs, including the documents produced by Defendants, make any reference
to Franco’s alleged settlement proposal. (See generally, Pl. App. of Exhibits.) Moreover,
Spehar disputes that Franco ever told him about any such proposal. (Ex. 33.)
RESPONSE:
Defendants object to Paragraph 27 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) one citation contained therein is made to dozens of documents generally rather
than to a specific page of any document cited; and (3) it contains multiple sentences and facts
rather than a short statement of fact.

Defendants object to Paragraph 27 because the

allegations therein all relate to the merits of the case, about which discovery has not been
taken.

Without waiving the foregoing objections, Defendants dispute the allegations of

Paragraph 27 because: (1) Franco testified that he made a settlement offer of $250,000 or so
to Spehar, who rejected it (Franco Aff., Appendix Ex. B, ¶15); (2) Franco, Baliga and Wong
testified that they believed that Spehar’s settlement demands were unreasonable (Franco Aff.,
Appendix Ex. B, ¶¶14-16 & 43; Baliga Aff., Appendix Ex. C, ¶6; Wong Aff., Appendix Ex. E,
¶5); and (3) Spehar demanded to be “fully compensated” for the Trautner Deal which, to
Spehar, included an extensive list of demands (Resp. Ex. 28 at 1 ¶7 (emphasis added); Resp.
Ex. 39).

Defendants Tell Trautner About SC’s Contract Dispute, Advise Trautner How to Protect
Newco Against a Deal Disruption and Propose that Trautner Pay Legal Fees to MBRN
28. On August 22, 2003, Given sent a memo to Trautner and Trautner’s attorney, John
Politan (“Politan”), that disclosed SC’s contract dispute regarding the Trautner Deal. Given
stated that he thought Spehar was simply “rattling [his] sword a bit.” Given also provided his
strategy for protecting Newco (Politan’s client) in the event that SC was able to stop or unwind
the deal. In that regard, Given stated that the deal documents should have CMGT (Given’s
client): (a) indemnify Newco against third-party claims, (b) allow Newco to escrow the
purchase price to cover the indemnification, and (c) grant Newco a “perpetual, nonexclusive
license” covering CMGT’s software and business methods. Given also recommended that

19

Newco be formed and enter into an employment agreement with Franco. Given (CMGT’s
attorney) then stated:
Interestingly enough, they [SC and Dick Ross] may have actually improved the
deal from Newco’s perspective. With the license, if either Gerry or Dick [a
shareholder who had a dispute with CMGT] was successful in disrupting the deal,
you [Trautner] could walk away with the software and, most importantly, Lou
Franco without making any payment to CMGT whatsoever.
(Ex. 34.) (Emphasis added.)
RESPONSE:
Defendants object to Paragraph 28 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) the citation contained therein is made to a multipage document generally rather
than to a specific page of the document cited; and (3) it contains multiple sentences and facts
rather than a short statement of fact.

Defendants object to Paragraph 28 because the

allegations therein all relate to the merits of the case, about which discovery has not been
taken.

Without waiving the foregoing objections, Defendants dispute the allegations of

Paragraph 28 because: (1) the cited exhibit does not support the allegation that “Given stated
that he thought Spehar, was simply ‘rattling [his] sword a bit,’” to the contrary, Ronald stated
that “[Spehar had] nothing to lose by rattling [his] sword[] a bit; and (2) the cited exhibit
speaks for itself and Plaintiff’s summary of it is inaccurate and misleading.

29. Given then proposed that Trautner/Newco pay Defendants: (a) $50,000 for MBRM’s
accrued legal fees immediately, (b) $50,000 for accrued fees when the Trautner Deal closed,
and (c) the entire amount of Defendants’ expenses and legal fees incurred from July 31, 2003
through closing. Given threatened to stop working on the Trautner Deal if the payment issue
was not promptly resolved. He also solicited future business from Newco. (Id.)

20

RESPONSE:
Defendants object to Paragraph 29 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) the citation contained therein is made to a multipage document generally rather
than to a specific page of the document cited; and (3) it contains multiple sentences and facts
rather than a short statement of fact.

Defendants object to Paragraph 29 because the

allegations therein all relate to the merits of the case, about which discovery has not been
taken.

Without waiving the foregoing objections, Defendants dispute the allegations of

Paragraph 29 because the cited exhibit does not support the allegation that “Given threatened
to stop working on the Trautner Deal if the payment issue was not promptly resolved.” To the
contrary, Given stated:

Out of a sense of commitment to Lou and CMGT, I have taken you
to a point of success without asking for a thing. However, if
Mayer Brown is to continue in our role, arrangements must be
made for our payment. I am part of a partnership, and that
partnership wants me to work on matters that pay. (Resp. Ex. 34 at
2, ¶2.)
Without waiving the foregoing objections, Defendants add that the $100,000 requested was
less than 45% of Defendants’ total fees outstanding -- $235,000. (Id.)

30. The next day (August 23), Franco addressed MBRM legal fee’s [sic] with Given as
follows:
Chuck [Trautner] wants to work something out with you [Given]/MBRM that will
not ‘look funny’, even if he [Trautner] has to personally ‘take care of it.’ I told
him that you had sent a letter to him and that he should refer to it on this subject.
He had not yet picked-up your letter from John Politan’s office.
(Ex. 35.)

21

RESPONSE:
Defendants object to Paragraph 30 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citation contained therein is made to a multipage document generally
rather than to a specific page of the document cited. Defendants object to Paragraph 30
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute Paragraph 30
because it relies on Exhibit 35, which is inadmissible hearsay and has not been authenticated.

Given and Franco Tell CMGT’s Shareholders about the SC Dispute
31. On August 27, 2003, Franco sent CMGT’s shareholders a letter regarding the Trautner
Deal. (Ex. 36.) Given wrote that letter. (Ex. 37.) The letter stated: (a) SC has claimed that it is
entitled to compensation as a result of the Trautner Deal, (b) CMGT and its legal counsel
strongly disagree with that contention, (c) SC’s claim should not delay or hinder the proposed
transaction, (d) the appropriate venue for the resolution of SC’s claim will be in the winding up
of CMGT, (e) as a result of SC’s claim, Newco will require indemnification and an escrow of
the shares, (f) to protect against any threat to a break-up of the transaction after it is
consummated, Newco will require an independent license to CMGT’s software that would
survive a break-up, and (g) the only substantive effect of SC’s claim will be additional
documentation complexity and a delay in the winding up of CMGT until such time as the
escrow is released. (Ex. 36.)
RESPONSE:
Defendants object to Paragraph 31 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) the citations contained therein are made to multipage documents generally rather
than to a specific page of the documents cited; and (3) it contains multiple sentences and facts
rather than a short statement of fact.

Defendants object to Paragraph 31 because the

allegations therein all relate to the merits of the case, about which discovery has not been
taken. Without waiving the foregoing objections, Defendants dispute Paragraph 31 because:

22

(1) it relies on Exhibits 36 and 37, which are inadmissible hearsay and have not been
authenticated; (2) the cited exhibits speak for themselves and Plaintiff’s summary of them is
inaccurate and misleading; (3) the cited exhibits do not support the allegation that Ronald
“wrote” Franco’s August 26 letter, to the contrary, Ronald drafted the letter and received
revisions from Franco (Resp. Ex. 37); and (4) the cited exhibits do not support the allegation
that “SC’s claim should not delay or hinder the proposed transaction,” to the contrary, the
letter states that Spehar’s claim “should not be allowed to delay or hinder the [Trautner Deal].”
Without waiving the foregoing objections, Defendants add that the purported August 26 letter
also states that “CMGT’s numerous conversations with Gerry [regarding his claim to
compensation] have not been productive.” (Resp. Ex. 36 at 1 ¶3.)

The Washoe Commit to Deliver A Signed LOI By September 2
32. On August 29, 2003, the Washoe sent Spehar an email stating, “[w]e are very
interested in this opportunity...I will commit to you to have a signed LOI on Tuesday
September 2 if not sooner.” (Ex. 38.)
RESPONSE:
Defendants object to Paragraph 32 because it fails to comply with Local Rule 56.1
because the facts asserted therein are not material to the resolution of the Unclean Hands
Motion. Defendants object to Paragraph 32 because the allegations therein all relate to the
merits of the case, about which discovery has not been taken. Without waiving the foregoing
objections, Defendants dispute Paragraph 32 because: (1) it relies on Exhibit 38, which is
inadmissible hearsay and has not been authenticated; (2) the cited email is from Garrett
Furuichi and there is no evidence he had authority to speak for the Washoe; (3) the Washoe
never signed a letter of intent to provide CMGT with financing (Compl. ¶46; Gerry Dep. at 4851); (4) the Washoe never provided CMGT with any financing (id.); and (5) the Washoe were

23

not in the business of investing in companies like CMGT (Franco Aff., Appendix Ex. B, at
¶34).

Given Advises Franco to “Ignore” SC’s Contract Dispute
33. On August 31, 2003, Spehar sent Franco an email asserting that certain compensation
provisions of SC’s contract were trigged [sic] when CMGT’s shareholders voted in favor of the
Trautner Deal and chose to accept Newco stock. (Ex. 39.)
RESPONSE:
Defendants object to Paragraph 33 because it fails to comply with Local Rule 56.1
because the facts asserted therein are not material to the resolution of the Unclean Hands
Motion. Defendants object to Paragraph 33 because the allegations therein all relate to the
merits of the case, about which discovery has not been taken. Without waiving the foregoing
objections, Defendants dispute Paragraph 33 because it relies on Exhibit 39, which is
inadmissible hearsay and has not been authenticated.

Without waiving the foregoing

objections, Defendants add that Exhibit 39 contains a list of Spehar’s demands that is
inconsistent with the Trustee’s suggestion that Spehar was open to a reasonable compromise of
his purported claims.

34. Franco asked Given if he should respond to Spehar’s email in a “legal fashion.” (Ex.
40.) Franco advised Given to “ignore it.” (Ex. 41 at p. 2.)
RESPONSE:
Defendants object to Paragraph 34 because it fails to comply with Local Rule 56.1
because the facts asserted therein are not material to the resolution of the Unclean Hands
Motion. Without waiving the foregoing objections, Defendants dispute Paragraph 34 because:
(1) it relies on Exhibit 40, which is inadmissible hearsay and has not been authenticated.
Defendants object to Paragraph 34 because the allegations therein all relate to the merits of the

24

case, about which discovery has not been taken. Without waiving the foregoing objections,
Defendants dispute the allegations of Paragraph 34 because: (1) the cited exhibits speak for
themselves and Plaintiff’s summary of them is inaccurate and misleading; and (2) the cited
exhibits do not support the allegation that “Franco advised Given to ‘ignore it.’” To the
contrary, in the purported email, Ronald stated, “This is nothing new.

I would ignore

[Spehar’s demand]. Do share it with [Baliga] and [Wong], though. . . . .” (Resp. Ex. 41 at 2.)

35. On September 1, 2003, Franco sent Given a draft summary of CMGT’s potential
corporate liabilities for his review. With respect to SC’s contract dispute, the summary stated,
“[n]o legal action required,” “[l]ikelihood of settlement is high if legal action is taken against
CMGT,” “MBR&M and Management agree there is no basis for a claim,” “G. Spehar has
indicated he will take legal action to enforce his contract based on his previous introductions
to/discussions with Chuck Trautner & various investors,” degree of risk is “high,” and no
curative action is required. (Ex [sic] 42.)
RESPONSE:
Defendants object to Paragraph 35 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) the citation contained therein is made to a multipage document generally rather
than to a specific page of the document cited; and (3) it contains multiple sentences and facts
rather than a short statement of fact.

Defendants object to Paragraph 35 because the

allegations therein all relate to the merits of the case, about which discovery has not been
taken. Without waiving the foregoing objections, Defendants dispute Paragraph 35 because:
(1) it relies on Exhibit 42 which is inadmissible hearsay and has not been authenticated; (2) the
cited exhibit speaks for itself and Plaintiff’s summary of it is inaccurate and misleading; and
(3) the cited exhibit does not support the allegation that “the summary stated, ‘[n]o legal action
required,’” regarding Spehar’s claim, as the cited exhibit contains no such language.

25

36. On September 2, 2003, Franco sent a final version of that summary, which was
unchanged with respect to SC’s contract dispute, to a representative of Trautner’s investment
group, Peter Bentz (“Bentz”). (Ex. 43.)
RESPONSE:
Defendants object to Paragraph 36 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citation contained therein is made to a multipage document generally
rather than to a specific page of the document cited. Defendants object to Paragraph 36
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute Paragraph 36
because:

(1) it relies on Exhibit 43, which is inadmissible hearsay and has not been

authenticated; (2) the cited exhibit does not support the allegation that Bentz was “a
representative of Trautner’s investment group;” and (3) the cited exhibit does not support the
allegation that any attachments to the purported September 2 email were “final.”

The Washoe Deliver a Letter of Intent
37. On September 2, 2003, John Crishon (“Crishon”), a Siemens employee who was
involved with the Washoe negotiations, told Franco and Spehar that they should be receiving
“the signed Non-Disclosure & LOI documents” from the Washoe shortly. Crishon also stated
that the Washoe had hired both an attorney and several call center companies to review
CMGT’s proposal. (Ex. 44.)
RESPONSE:
Defendants object to Paragraph 37 because it fails to comply with Local Rule 56.1
because the facts asserted therein are not material to the resolution of the Unclean Hands
Motion. Defendants dispute the allegations of Paragraph 37 because the allegations therein all
relate to the merits of this case, about which no discovery has been done. Without waiving the
foregoing objections, Defendants dispute Paragraph 37 because: (1) it relies on Exhibit 44,

26

which is inadmissible hearsay and has not been authenticated; (2) the Washoe never signed a
letter of intent to provide CMGT with financing (Compl. ¶46; Gerry Dep. at 48-51); (3) the
Washoe never provided CMGT with any financing (id.); and (4) the Washoe were not in the
business of investing in companies like CMGT (Franco Aff., Appendix Ex. B, at ¶34).

38. That same day, the Washoe delivered an unsigned letter of intent to Spehar on the
Washoe’s letterhead. (Compl. Ex. 6.) Spehar e-mailed that LOI to Franco and Given. (Ex. 45;
see also, Ex. 46.)
RESPONSE:
Defendants object to Paragraph 38 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citations contained therein are made to multipage documents generally
rather than to a specific page of the documents cited. Defendants object to Paragraph 38
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute Paragraph 38
because: (1) it relies on Exhibits 45 and 46 which are inadmissible hearsay and have not been
authenticated; (2) the cited exhibits do not support the allegation that “the Washoe delivered an
unsigned letter of intent to Spehar on the Washoe’s letterhead,” to the contrary, it is unclear
where the unsigned LOI came from and the unsigned LOI attached to Franco’s September 2
email is not on Washoe letterhead; (3) the Washoe never signed a letter of intent to provide
CMGT with financing (Compl. ¶46; Gerry Dep. at 48-51); (4) the Washoe never provided
CMGT with any financing (id.); and (5) the Washoe were not in the business of investing in
companies like CMGT (Franco Aff., Appendix Ex. B, at ¶34).

27

Given Modifies the Washoe LOI
39. On September 3, Given sent revised copies of the Washoe’s LOI to SC and Franco.
(Ex. 47 and Ex. 48.) Given shortened the due diligence deadline from September 30 to
September 29. (Compl. Ex. 7.) He also included language that allowed CMGT to close a
competing bid (e.g., the Trautner Deal) at any time prior to September 30. (Id.)
RESPONSE:
Defendants object to Paragraph 39 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) one citation contained therein is made to a multipage document generally rather
than to a specific page of the document cited; and (3) it contains multiple sentences and facts
rather than a short statement of fact.

Defendants object to Paragraph 39 because the

allegations therein all relate to the merits of the case, about which discovery has not been
taken. Without waiving the foregoing objections, Defendants dispute Paragraph 39 because:
(1) it relies on Complaint Exhibit 7, which is inadmissible hearsay and has not been
authenticated; (2) the cited exhibits do not support the allegation that “Given sent revised
copies of the Washoe’s LOI to SC and Franco,” to the contrary, Exhibits 47 and 48 are missing
their attachments, so there is no evidence that Ronald made the alleged changes or that the
letter attached as Exhibit 7 to the Complaint was drafted by Ronald; (3) the Washoe never
signed a letter of intent to provide CMGT with financing (Compl. ¶46; Gerry Dep. at 48-51);
(4) the Washoe never provided CMGT with any financing (id.); and (4) the Washoe were not
in the business of investing in companies like CMGT (Franco Aff., Appendix Ex. B, at ¶34).

40. Later that day (September 3), Spehar sent Franco and Given a revised LOI that Spehar
had prepared. Spehar’s revised LOI incorporated Given’s September 29 due diligence
deadline, but removed CMGT’s ability to close a competing deal before the Washoe finished
its due diligence. (Ex. 49.) Spehar asserts that Franco told him to send his revised LOI to the
Washoe, which Spehar did on September 3. (Ex. 50 and Ex. 51.) Franco asserts that he did
not authorize SC to send that LOI to the Washoe. (Ex. 51.)

28

RESPONSE:
Defendants object to Paragraph 40 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) the citations contained therein are made to a multipage documents generally rather
than to a specific page of the documents cited; and (3) it contains multiple sentences and facts
rather than a short statement of fact.

Defendants object to Paragraph 40 because the

allegations therein all relate to the merits of the case, about which discovery has not been
taken. Without waiving the foregoing objections, Defendants dispute Paragraph 40 because:
(1) it relies on Exhibits 49, 50 and 51 which are inadmissible hearsay and have not been
authenticated; (2) the cited exhibits do not support the allegation that the alleged changes were
suggested or required by Ronald (see Response to ¶39); (3) Exhibit 50 does not include the
attached LOI, so it is contents are unknown; (4) the Washoe never signed a letter of intent to
provide CMGT with financing (Compl. ¶46; Gerry Dep. at 48-51); (5) the Washoe never
provided CMGT with any financing (id.); and (6) the Washoe were not in the business of
investing in companies like CMGT (Franco Aff., Appendix Ex. B, at ¶34). Without waiving
the foregoing objections, Defendants add that Franco purportedly stated to Gerry in Exhibit 51
that, “As with many other contacts, I brought you into the Washoe deal to represent and advise
us, not to unilaterally handle things as you see fit.” (Resp. Ex. 51 at 1 ¶4.) Defendants further
add that Franco stated to Ronald in Exhibit 51 that:

I am not going to respond to Gerry’ e-mail. He does not have an
accurate recall of what happened, wants to run the show, his
attitude is adversarial and I am inclined to terminate his contract
now . . . I was not happy with the way Gerry barraged you with emails last night after I told him you needed to Wahsoe’s phone
number and would be making the call. (Id. at 2.)

29

The Washoe Reject the Revised LOI
41. On September 4, Franco instructed Spehar to tell the Washoe about Given’s additional
revisions, e.g., that CMGT could close a competing deal prior to September 29. Spehar
warned Franco that the Washoe would not agree to that change, but Franco insisted that Spehar
tell the Washoe about Given’s revisions. (Ex. 52.) Franco then sent Given an email,
confirming that he would support Given’s terms to protect the Trautner Deal:
Gerry [Spehar] contends nothing less than CMGT ‘guarantee’ that no closing will
occur until at least 9/30 will satisfy them [the Washoe] because they intend to use
an expensive Philadelphia law firm to accelerate their review/due diligence to be
able to commit to [sic] funding by 9/30. Of course, we are using 9/29 as the
significant date!
(Ex. 53.)
RESPONSE:
Defendants object to Paragraph 41 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) at least one citation contained therein is made to a multipage document generally
rather than to a specific page of the document cited; and (3) it contains multiple sentences and
facts rather than a short statement of fact. Defendants object to Paragraph 41 because the
allegations therein all relate to the merits of the case, about which discovery has not been
taken. Without waiving the foregoing objections, Defendants dispute Paragraph 41 because:
(1) it relies on Exhibits 52 and 53 which are inadmissible hearsay and have not been
authenticated; (2) the cited exhibits do not support the allegation that the alleged changes were
suggested or required by Ronald (see Response to ¶39); (3) Exhibit 52 states that the proposed
revisions were suggested by both Franco and Ronald; (4) Exhibit 52 states that the Washoe
could not complete due diligence by September 29, and says nothing about CMGT’s ability to
close a deal before September 29; (5) the Washoe never signed a letter of intent to provide
CMGT with financing (Compl. ¶46; Gerry Dep. at 48-51); (6) the Washoe never provided

30

CMGT with any financing (id.); and (7) the Washoe were not in the business of investing in
companies like CMGT (Franco Aff., Appendix Ex. B, at ¶34).

42. Spehar followed Franco’s instructions and told the Washoe about Given’s additional
revisions. (Ex.. 52.) The Washoe told Spehar that it would not agree to Given’s changes to the
LOI. (Id.) After learning that the Washoe had rejected the revised LOI, Franco asked Given
whether he should suggest to the Washoe that they “step into” the Trautner investment group’s
position. (Ex. 54.)
RESPONSE:
Defendants object to Paragraph 42 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) it contains multiple sentences and facts rather than a short statement of fact.
Defendants object to Paragraph 42 because the allegations therein all relate to the merits of the
case, about which discovery has not been taken. Without waiving the foregoing objections,
Defendants dispute Paragraph 42 because: (1) it relies on Exhibits 52 and 54, which are
inadmissible hearsay and have not been authenticated; (2) the cited exhibits do not support the
allegation that the alleged changes were suggested or required by Ronald (see Response to
¶39); (3) the Washoe never signed a letter of intent to provide CMGT with financing (Compl.
¶46; Gerry Dep. at 48-51); (4) the Washoe never provided CMGT with any financing (id.); and
(5) the Washoe were not in the business of investing in companies like CMGT (Franco Aff.,
Appendix Ex. B, at ¶34).

Without waiving the foregoing objections, Defendants add that

Franco stated in his purported email to Ronald that:

I believe Gerry mishandled this situation in several ways, including
telling the Washoe he thought The Washoe would have until
10/15(17) because he saw that date in the [Trautner] LOI/Proxy
form - once this expectation was floated I am sure The Washoe
were effectively conditioned to expect CMGT would “guarantee”
them “exclusive” time until 9/30 and possibly into October. This

31

is why the timing issue became a flash point and effort to get us
talking by phone failed.
It also didn’t help when Gerry recently sent The Washoe a draft
LOI that was supposed to be discussed between you, me and Gerry
ONLY. Unfortunately, I believe Gerry’s adversarial position with
us is adversely affecting his judgment.
FYI, Gerry also told me he tried everything he could to keep these
guys talking, including telling them “[he was] sure CMGT would
give more time if pressed for it.” This, of course, was another
unauthorized representation on his part and I consistently told
Gerry CMGT needs to keep its options open.
Gerry says the door is still open, but only if we guarantee The
Washoe that we will not close another deal before 10/17. I do not
see how we can possibly do this. However, if you see a
compromise we can live with perhaps we can reconnect with them
through a teleconference with you and me on the line to be sure
our message is delivered correctly.
Perhaps I should send The Washoe a letter over my signature that
thanks them for their consideration with an expression of what we
are willing to do under the circumstances, so we don’t burn any
bridges and are assured our message gets to them accurately Perhaps suggesting that they consider “stepping into the [Trautner]
Group position” may be an option here? (Resp. Ex. 54.)

43. In response, Given arranged a phone call between himself and the Washoe. (See Ex
[sic] 55, Ex [sic] 56 and Ex. 57.) There were no discussions during that call about the Washoe
“stepping into” the Trautner group position. (Spehar Dep. Tr. dated 1/21/09 at 63:4-64:10.)
Because Given shortened the due diligence deadline and would not guarantee that CMGT
would not close a competing deal prior to the Washoe completing due diligence, the Washoe
terminated its negotiations with CMGT. (Ex. 58.)
RESPONSE:
Defendants object to Paragraph 43 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) one citation contained therein is made to a multipage document generally rather
than to a specific page of the document cited; and (3) it contains multiple sentences and facts

32

rather than a short statement of fact.

Defendants object to Paragraph 43 because the

allegations therein all relate to the merits of the case, about which discovery has not been
taken. Without waiving the foregoing objections, Defendants dispute Paragraph 43 because:
(1) it relies on Exhibits 55 and 56, which are inadmissible hearsay, and Exhibit 57, which is
inadmissible hearsay, in part, and has not been authenticated, in part; (2) the cited exhibits do
not support the allegation that the alleged changes were suggested or required by Ronald (see
Response to ¶39); (3) the cited exhibits do not support the allegation that “[t]here were no
discussions during that call about the Washoe ‘stepping into’ the Trautner group position,” to
the contrary, that issue was not discussed at the place cited in Gerry’s deposition; (4) the cited
exhibits do not support the allegation that the Washoe terminated negotiations with CMGT
because CMGT “would not guarantee that CMGT would not close a competing deal prior to
the Washoe completing due diligence,” to the contrary, that issue is not mentioned in Gerry’s
September 5 email (Resp. Ex. 58); (5) the Washoe never signed a letter of intent to provide
CMGT with financing (Compl. ¶46; Gerry Dep. at 48-51); (6) the Washoe never provided
CMGT with any financing (id.); and (7) the Washoe were not in the business of investing in
companies like CMGT (Franco Aff., Appendix Ex. B, at ¶34).

SC Notifies CMGT and Defendants That it is Going to Court to Ask for a TRO
44. On September 9 and 11, 2003, SC notified Given that it was seeking a TRO to prevent
the Trautner Deal from closing. (See Group Ex. 59 and Group Ex. 60.) SC obtained a TRO on
September 12, 2003. (Def. SOF at ¶39.)
RESPONSE:
Defendants object to Paragraph 44 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citations contained therein are made to multipage documents generally

33

rather than to a specific page of the documents cited. Defendants object to Paragraph 44
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute Paragraph 44
because it relies on Exhibits 59 and 60 which are inadmissible hearsay and have not been
authenticated.

CMGT Receives $20,000 From Trautner
45. On or about September 12, 2003, CMGT received $20,000 from Trautner. (Ex. 61.)
RESPONSE:
Defendants object to Paragraph 45 because it fails to comply with Local Rule 56.1
because the facts asserted therein are not material to the resolution of the Unclean Hands
Motion. Defendants object to Paragraph 45 because the allegations therein all relate to the
merits of the case, about which discovery has not been taken. Without waiving the foregoing
objections, Defendants dispute Paragraph 45 because it relies on Exhibit 61, which is
inadmissible hearsay and has not been authenticated.

Given Provides Trautner’s Attorney with a Nine-Point Strategy For Responding to a
Potential TRO and Given Demands a $50,000 Legal Fee Payment
46. On September 14, 2003, Given sent a memo to Politan (Trautner’s attorney). The first
issue Given addressed was Defendants’ fees. He told Politan what needed to be put into a
letter on Politan’s letterhead regarding the Trautner group’s payment of Defendants’ fees. (Ex.
62.)
RESPONSE:
Defendants object to Paragraph 46 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citation contained therein is made to a multipage document generally

34

rather than to a specific page of the document cited. Defendants object to Paragraph 46
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants add that the proposed
payments of Defendants’ legal unpaid legal fees were less than half of the total amount owed
by CMGT. (Resp. Ex. 62 at 1.)

47. Given then explained to Politan that the work he (Given) needed to do (and be paid
for) included “cleaning up Lou Franco’s credit card situation.” Given next discussed timing
issues. He stated that CMGT’s shareholder approval of the Trautner Deal was going to expire
on October 17, 2003. He also stated his understanding that Trautner’s investment group might
prefer a later closing date, but thought pushing the date back was a bad idea because (a) a later
closing dated would require another shareholder solicitation, and (b) he did not think Franco
could “hold out much longer.” (Ex. 62.)
RESPONSE:
Defendants object to Paragraph 47 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) the citation contained therein is made to a multipage document generally rather
than to a specific page of the document cited; and (3) it contains multiple sentences and facts
rather than a short statement of fact.

Defendants object to Paragraph 47 because the

allegations therein all relate to the merits of the case, about which discovery has not been
taken.

Without waiving the foregoing objections, Defendants dispute the allegations of

Paragraph 47 because the cited exhibit speaks for itself and Plaintiff’s summary of it is
inaccurate and misleading.

48. As a consequence of Franco’s credit card situation and the possibility of a pretransaction SC TRO, Given advised Politan to form Newco as soon as possible and to have
Newco immediately enter into an employment agreement with Franco. He stated, “this is the
only way to get him [Franco] focused on building Newco’s business instead of dealing with
less productive things such as the Spehar TRO.” (Ex. 62.)

35

RESPONSE:
Defendants object to Paragraph 48 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citation contained therein is made to a multipage document generally
rather than to a specific page of the document cited. Defendants object to Paragraph 48
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute the allegations
of Paragraph 48 because the cited exhibit speaks for itself and Plaintiff’s summary of it is
inaccurate and misleading.

49. Given then discussed the possibility of SC obtaining a pre-transaction TRO, and he
provided Politan with the following nine-point strategy:
The Spehar TRO may mandate the approach we should now take anyway ...
whether we are simply dealing with threats of a pre-transaction TRO, or an actual
TRO, I think the following [nine-point] strategy makes sense:
1. We notify CMGT’s shareholders of the threats of the TRO or send them a
copy of the actual TRO if it is in fact issued.
2.

Lou Franco and Newco [enter] into an employment agreement, which
will confirm the arrangements to deal with Franco’s debts and to move
him to Phoenix.

3.

I subsequently notify the shareholders (using the E-mail list that includes
Spehar) that neither Franco nor Newco has any desire to expend time or
funds to engage in litigation, even if they firmly believe the Spehar
litigation is frivolous. As a consequence of the Spehar TRO, I will
announce that Lou intends to resign and that Newco intends to terminate
the LOI. I also announce that I have not been retained to deal with the
TRO. Lou’s previous correspondence with the shareholders has made it
clear that he is on the verge of financial collapse and will need to move on
to other opportunities if a transaction cannot happen. Neither Newco nor
any other third-party investor group could be expected to get bogged down
in this type of litigation when they have many viable alternatives.

36

4

When I notify the shareholders that Lou Franco intends to resign, I will
indicate that he will do all he can [to] make arrangements for the servicing
of the existing contracts to avoid default and the consequent potential
shareholder liability.

5.

Spehar will have to return to court to make the TRO permanent. My notice
to the shareholders (which includes at least one California lawyer) will
give them an opportunity to take their own actions against Spehar. His
TRO may simply be dissolved, or he may be convinced to give up his
efforts to disrupt the transaction beforehand. In either case, the
uncertainty and delay he will have caused will make it reasonable to ask
the shareholders to extend the October 17 deadline.

6.

If the Spehar situation does not resolve itself, I think Newco should
simply start on its own with Lou Franco as its president and CEO. Newco
would enter into a commercial transaction to service, in the name of
CMGT, Inc., its existing four contracts. In effect, CMGT, Inc., will
outsource the servicing of its existing book of business to Newco pursuant
to arm’s-length agreements. When these existing contracts expire, the
clients would be free to roll over their accounts to Newco. For this
service, Newco would be paid for its expenses. Any excess amounts
could be returned to CMGT, but this would only be done after netting
everything Newco has paid on CMGT, Inc.’s behalf (including legal fees
and expenses). This outsourcing arrangement would require Newco to
enter into a service arrangement with Rob Crandall and other Canadian
employees, just like it would in the transaction contemplated by the LOI.
I am very confident they would cooperate.

7.

Depending on the actual language of the TRO, if it is issued, I think it
would be reasonable for Newco to also be granted a license in the
software. Again depending on the language of the TRO, we might
structure this as an option to acquire a license in the software. I would
like to note that if for whatever reason such a license is not deemed
appropriate or desirable, Lou Franco is comfortable that we can
independently create appropriate software which will not infringe on
anything belonging to CMGT, Inc.

8.

If the outsourcing alternative is consummated, CMGT, Inc. will not
receive any shares of Newco. Also, Newco will not have to be
immediately capitalized at the $2.5 million level. CMGT, Inc. and
Newco would, of course, be free to subsequently enter into a transaction
like that contemplated by the LOI after the Spehar situation is clarified.
It may be no longer in Newco’s interests to do so, however, in which
case all Spehar will have accomplished is to (have deprived the CMGT,
Inc. shareholder/stakeholder group of a 20% interest in Newco. This is
not Newco’s fault and is, frankly, beyond its control. I think everything

37

that could be done to be fair to the CMGT, Inc. shareholder/stakeholder
group has been done.
9.

I believe the outsourcing alternative could be the functional equivalent
of the transaction contemplated by the LOI. The only difference is that
Newco would not be receiving exclusive rights in the software. As a
practical matter, however, once Lou Franco leaves CMGT, Inc., there is
no one left to do anything with the software anyway.

(Ex. 62.) (Emphasis added.) (Hereafter, Given’s strategy for consummating the Trautner Deal
without any payment to CMGT is referred to as the “functional equivalent” deal.)
RESPONSE:
Defendants object to Paragraph 49 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) it contains multiple sentences and facts rather than a short statement of fact.
Defendants object to Paragraph 49 because the allegations therein all relate to the merits of the
case, about which discovery has not been taken.

50. Given ended his letter to Politan by stating, “I simply cannot proceed further unless an
arrangement [for payment of Defendants’ fees] along the lines proposed in this letter come
about on an immediate basis.” (Ex. 62.)
RESPONSE:
Defendants object to Paragraph 50 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citation contained therein is made to a multipage document generally
rather than to a specific page of the document cited. Defendants object to Paragraph 50
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken.

38

51. On September 15, 2003, Franco confirmed his receipt of Given’s memo to Politan.
Franco also stated that a process server had been to his house and that he would notify Given
as soon as he was served. (Ex. 63.)
RESPONSE:
Defendants object to Paragraph 51 because it fails to comply with Local Rule 56.1, as
follows because the facts asserted therein are not material to the resolution of the Unclean
Hands Motion. Defendants object to Paragraph 51 because the allegations therein all relate to
the merits of the case, about which discovery has not been taken.

Without waiving the

foregoing objections, Defendants dispute Paragraph 51 because: (1) it relies on Exhibit 63,
which is inadmissible hearsay and has not been authenticated; and (2) Exhibit 63 does not
contain a memo attachment, so there is no evidence of the contents of any memo therein.

52. During his citation deposition, Franco stated, “[w]e could not set foot -- couldn’t set
foot in a California Court for legal reasons, and Ron can explain that...” (Ex. 64.)
RESPONSE:
Defendants object to Paragraph 52 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citation contained therein is made to a multipage document generally
rather than to a specific page of the document cited. Defendants object to Paragraph 52
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute Paragraph 52
because:

(1) it relies on Exhibit 64, which is inadmissible hearsay and has not been

authenticated by the court reporter; and (2) the cited exhibit speaks for itself and Plaintiff’s
quotation of it is inaccurate and misleading.

Without waiving the foregoing objections,

Defendants add that the purported transcript of Franco’s citation deposition further states:

39

One of you guys or both of you guys should pick up the phone,
talk to Ron Given, talk lawyer to lawyer, and he will tell you what
I am telling you. We could not set foot -- couldn’t set foot in a
California court for legal reasons, and Ron can explain that, and
we have no attorney to represent ourselves. Otherwise, we would
show up in court way back when, and then this matter would have
been resolved, because it would have been established that there
was no funding. Therefore, there wasn’t a basis for Gerry’s
lawsuit, and that would have been that. (Resp. Ex. 64 at 57:4-14.)
Given Receives Notice of SC’s TRO and Implements His Nine-Point Strategy, Which Will
Culminate in the “Functional Equivalent” Deal
53. On September 16, 2003, Given received notice of SC’s TRO. (Ex. 65.)
RESPONSE:
Defendants object to Paragraph 53 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citation contained therein is made to a multipage document generally
rather than to a specific page of the document cited. Defendants object to Paragraph 53
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants admit the allegations of
Paragraph 53 solely for the purposes of the Unclean Hands Motion.

54. The next day, September 17, Given sent SC’s TRO to CMGT’s shareholders and
Spehar. Consistent with his nine-point strategy, Given stated “Mayer Brown has not been
retained to deal with this matter, and we do not expect to be.” (Ex. 66.)
RESPONSE:
Defendants object to Paragraph 54 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) the citation contained therein is made to a multipage document generally rather
than to a specific page of the document cited and; (3) it is argumentative. Defendants object to
Paragraph 54 because the allegations therein all relate to the merits of the case, about which
40

discovery has not been taken. Without waiving the foregoing objections, Defendants admit,
solely for the purposes of the Unclean Hands Motion, that on September 13, 2003, Given sent
a copy of the TRO to CMGT’s shareholders and Spehar, and, in an email to them, stated,
“Mayer Brown has not been retained to deal with this matter, and we do not expect to be.”
Defendants dispute the allegation “[c]onsistent with his nine-point strategy” because there is
no evidence that the so-called “nine-point strategy” was ever agreed to or implemented and it
is not mentioned in the cited exhibit.

55. On September 18, 2003, Franco told Given “I’ll talk with you in the AM about [SC’s
TRO].” (Ex. 67.)
RESPONSE:
Defendants object to Paragraph 55 because it fails to comply with Local Rule 56.1
because the facts asserted therein are not material to the resolution of the Unclean Hands
Motion. Defendants object to Paragraph 55 because the allegations therein all relate to the
merits of the case, about which discovery has not been taken. Without waiving the foregoing
objections, Defendants dispute Paragraph 55 because: (1) it relies on Exhibit 67, which is
inadmissible hearsay and has not been authenticated; and (2) the cited exhibit does not support
the allegation that Franco wanted to discuss Spehar’s TRO, to the contrary, the cited email
states, “This is from Gerry’s Denver, CO lawyer and he’s communicating directly with our
shareholders. I think I know what Gerry is up to now and I’ll talk with you in the AM about
it.” (Resp. Ex. 67 at 1.)

56. On September 19, 2003, Given implemented points one, three and four of his
September 14 strategy. In that regard, Given sent CMGT’s shareholders and Spehar an email,
stating: (a) as a result of SC’s TRO, Franco has advised Given that he must now plan to leave
his position with CMGT and pursue other opportunities, (b) representatives of Newco have
indicated that they intend to terminate the LOI in short order, (c) SC’s claim is “absolutely

41

spurious” and its request for injunctive relief is “clearly inappropriate,” (d) CMGT has no
money to fight this battle, and (e) Franco and Given are going to “work on” the issue of CMGT
not breaching its client contracts. Given invited CMGT’s shareholders to call him with
questions about SC’s lawsuit, but he said nothing about the “functional equivalent” deal. (Ex.
68.)
RESPONSE:
Defendants object to Paragraph 56 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) the citation contained therein is made to a multipage document generally rather
than to a specific page of the document cited; (3) it contains multiple sentences and facts rather
than a short statement of fact; and (4) it is argumentative. Defendants object to Paragraph 56
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute the allegations
of Paragraph 56 because: (1) the cited exhibit speaks for itself and Plaintiff’s summary of it is
inaccurate and misleading; (2) there is no evidence that the so-called “September 14 strategy”
was ever agreed to or implemented and it is not mentioned in the cited exhibit; (3) there is no
evidence that the so-called “functional equivalent” deal or any other deal was agreed to or
implemented and it is not mentioned in the cited exhibit; and (4) Ronald invited shareholders
to contact him or Franco regarding the “current situation,” not the Spehar Lawsuit.

57. SC’s attorney responded to Given’s September 19 email that same day. He stated,
“Spehar Capital was forced to rely on the legal process to preserve its rights because CMGT
and its counsel refused to substantively address Spehar Capital’s claims, even though it knew
of Spehar Capital’s position and the potential for legal action.” He also stated that there were
many ways that CMGT could still close the Trautner Deal while protecting SC’s rights, but
that instead of pursuing those options, CMGT decided to “just pull the plug.” (Ex. 69.)

42

RESPONSE:
Defendants object to Paragraph 57 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) the citation contained therein is made to a multipage document generally rather
than to a specific page of the document cited; and (3) it contains multiple sentences and facts
rather than a short statement of fact.

Defendants object to Paragraph 57 because the

allegations therein all relate to the merits of the case, about which discovery has not been
taken. Without waiving the foregoing objections, Defendants dispute Paragraph 57 because:
(1) it relies on Exhibit 69, which is inadmissible hearsay and has not been authenticated; and
(2) the cited exhibits do not support the allegation that “there were many ways that CMGT
could still close the Trautner Deal while protecting SC’s rights,” to the contrary, Spehar’s
attorney purportedly stated that “there may be ways” to close the Trautner Deal “while still
protecting Spehar Capital’s rights” (Resp. Ex. 69 at 2 ¶10); (3) Franco testified that he made a
settlement offer of $250,000 or so to Spehar, who rejected it (Franco Aff., Appendix Ex. B,
¶15); (4) Franco, Baliga and Wong believed that Spehar’s settlement demands were
unreasonable (Franco Aff., Appendix Ex. B, ¶¶14-16 & 43; Baliga Aff., Appendix Ex. C, ¶6;
Wong Aff., Appendix Ex. E, ¶5); and (5) Spehar demanded to be “fully compensated” for the
Trautner Deal which, to Spehar, included an extensive list of demands (Resp. Ex. 28 at 1 ¶7
(emphasis added); Resp. Ex. 39).

58. On September 19, 2003, Franco sent Given copies of two shareholder emails that he
had received from an employee. (Ex. 70.) The shareholders expressed concern about the status
of CMGT. One of those shareholders, John Ross (“Ross”), stated:
I have no idea of what, if any, disputes or claims may exist which might delay
and/or diminish the ultimate distribution to the rightful shareholders. Further, I
have just received a faxed copy of a filing by Spehar Capital, LLC for a

43

temporary restraining order against CMGT in connection with the Newco sale. It
sounds as if this is going to be a difficult sale to consummate.
(Id. at p. 3.) Clearly, Ross was neither asked to contribute money to defend SC’s TRO request
nor told about Given’s nine-point strategy and the fact that Given and Franco were
implementing that strategy.
RESPONSE:
Defendants object to Paragraph 58 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) the citations contained therein are made to a multipage document generally rather
than to a specific page of the document cited; (3) it contains multiple sentences and facts rather
than a short statement of fact; and (4) it is argumentative. Defendants object to Paragraph 58
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute Paragraph 58
because:

(1) it relies on Exhibit 70, which is inadmissible hearsay and has not been

authenticated; (2) the cited exhibit does not support the allegations “Clearly, Ross was neither
asked to contribute money to defend SC’s TRO request nor told about Given’s nine-point
strategy and the fact that Given and Franco were implementing that strategy,” which are not
contained in Ross’s email; (3) there is no evidence that the so-called “nine-point strategy” was
agreed to or implemented and it is not mentioned in the cited exhibit; (4) Ross stated that he
was “an unwilling ‘investor’ [in CMGT], to say the least” (Resp. Ex. 70 at 4 ¶1); (5) Franco
testified that he asked all of CMGT’s shareholders to contribute additional funds to defend the
Spehar Lawsuit, but most of them rejected his request (Franco Aff., Appendix Ex. B, ¶42); and
(6) Ross received other communications that Franco made to all of CMGT’s shareholders (E.g.
Resp. Ex. 11, 26 & 94).

44

59. On September 20, 2003, Baliga sent an email to Spehar, Franco and James Wong
(“Wong”). Baliga encouraged them to settle SC’s dispute. (Ex. 71.) Spehar stated that he
remained willing to talk about solutions. (Ex. 72.) Franco forwarded that email exchange to
Given. (Ex. 73.)
RESPONSE:
Defendants object to Paragraph 59 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) at least one citation contained therein is made to a multipage document generally
rather than to a specific page of the document cited; and (3) it contains multiple sentences and
facts rather than a short statement of fact. Defendants object to Paragraph 59 because the
allegations therein all relate to the merits of the case, about which discovery has not been
taken. Without waiving the foregoing objections, Defendants dispute Paragraph 59 because:
(1) it relies on Exhibits 71, 72 and 73 which are inadmissible hearsay and have not been
authenticated; (2) the cited exhibit does not support the allegation that “Baliga encouraged
[Spehar, Franco and Wong] to settle SC’s dispute,” to the contrary, in it Baliga purportedly
“urge[d] everyone to focus effots not on current or potential future legal proceedings, but on
proceedings that will solve CMGT’s near term and long term funding issues,” (Resp. Ex. 71);
(3) the cited exhibits do not support the allegation that “Spehar stated that he remained willing
to talk about solutions” in response to Baliga’s email, to the contrary, Exhibit 72 does not
contain the message to which Gerry was responding (Resp. Ex. 72); (4) Exhibit 73 does not
support the allegation that “Franco forwarded that email exchange to Given,” as Exhibit 73
attaches the purported email from Baliga (i.e. Exhibit 71), but does not attach the purported
email in which Gerry allegedly stated that “he remained willing to talk about solutions” (i.e.
Exhibit 72); (5) Franco testified that he made a settlement offer of $250,000 or so to Spehar,
who rejected it (Franco Aff., Appendix Ex. B, ¶15); (6) Franco, Baliga and Wong believed that

45

Spehar’s settlement demands were unreasonable (Franco Aff., Appendix Ex. B, ¶¶14-16 & 43;
Baliga Aff., Appendix Ex. C, ¶6; Wong Aff., Appendix Ex. E, ¶5); and (7) Spehar demanded to
be “fully compensated” for the Trautner Deal which, to Spehar, included an extensive list of
demands (Resp. Ex. 28 at 1 ¶7 (emphasis added); Resp. Ex. 39). Without waiving the
foregoing objections, Defendants add that Baliga purportedly stated, “As you are aware, I have
been the principal source of funds for CMGT the past year. Based on recent developments, I
cannot continue in that position” and that “I cannot commit further funding to CMGT.” (Resp.
Ex. 71 at 1.)

Trautner’s Investment Group Pays Defendants $50,000, and Given’s “Functional
Equivalent” Deal Moves Full Steam Ahead
60. On September 21, 2003, Politan sent Given the letter that he had requested in his
September 14 memo (see Ex. 62) regarding payment of Defendants’ fees. Politan’s letter did
not say anything about the Trautner LOI being terminated. Politan enclosed a $50,000 check
payable to Defendants. (Ex. 74.)
RESPONSE:
Defendants object to Paragraph 60 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) the citations contained therein are made to multipage documents generally rather
than to a specific page of the documents cited; and (3) it contains multiple sentences and facts
rather than a short statement of fact.

Defendants object to Paragraph 60 because the

allegations therein all relate to the merits of the case, about which discovery has not been
taken. Without waiving the foregoing objections, Defendants dispute Paragraph 60 because it
relies on Exhibit 74, which is inadmissible hearsay and has not been authenticated.

61. The next day, September 22, Franco sent Given several “to do” lists that were prepared
by Trautner’s representative, Bentz. Bentz’s lists, which are dated September 20, 2003, reveal

46

Given and Franco moving forward with Given’s “functional equivalent” deal. They also reveal
that Newco’s name would be “First In Touch.” Finally, these lists reveal that Wong knew
about and was participating in Given’s “functional equivalent” deal. (Ex. 75.)
RESPONSE:
Defendants object to Paragraph 61 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) the citation contained therein is made to a multipage document generally rather
than to a specific page of the document cited; (3) it contains multiple sentences and facts rather
than a short statement of fact; and (4) it is argumentative. Defendants object to Paragraph 61
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute Paragraph 61
because: (1) it relies on Exhibit 75, which is inadmissible hearsay and has not been
authenticated; (2) the cited exhibit does not support the allegation that Bentz was “Trautner’s
representative;” and (3) there is no evidence that the so-called “functional equivalent” deal or
any other deal was agreed to or implemented and it is not mentioned in the cited exhibit.

62. On October 1, 2003, Franco sent Given a fax attaching a notice from the DuPage
County Clerk that a decree/judgment had been entered against CMGT and in favor of SC.
Franco asked Given, “[d]o we need/want to do anything in DuPage County?” (Ex. 76.)
RESPONSE:
Defendants object to Paragraph 62 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citation contained therein is made to a multipage document generally
rather than to a specific page of the document cited. Defendants object to Paragraph 62
because the allegations therein all relate to the merits of the case, about which discovery has

47

not been taken. Without waiving the foregoing objections, Defendants dispute Paragraph 62
because it relies on Exhibit 76, which is inadmissible hearsay and has not been authenticated.

63. On October 2, 2003, Given sent CMGT’s shareholders and Spehar an email. He stated
that because SC had not withdrawn its lawsuit, Newco had terminated their [sic] LOI. (Ex.
77.)
RESPONSE:
Defendants object to Paragraph 63 because it fails to comply with Local Rule 56.1
because the facts asserted therein are not material to the resolution of the Unclean Hands
Motion. Defendants object to Paragraph 63 because the allegations therein all relate to the
merits of the case, about which discovery has not been taken.

64. On October 3, 2003, SC’s attorney responded to Given’s email. He stated that SC
disagreed with many of Given’s statements, but that instead of dwelling on such differences,
SC would rather join CMGT’s investors in trying to salvage a deal that worked for all parties.
(Ex. 78.)
RESPONSE:
Defendants object to Paragraph 64 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citation contained therein is made to a multipage document generally
rather than to a specific page of the document cited. Defendants object to Paragraph 64
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute Paragraph 64
because: (1) it relies on Exhibit 78, which is inadmissible hearsay and has not been
authenticated; (2) Franco testified that he made a settlement offer of $250,000 or so to Spehar,
who rejected it (Franco Aff., Appendix Ex. B, ¶15); (3) Franco, Baliga and Wong believed that
Spehar’s settlement demands were unreasonable (Franco Aff., Appendix Ex. B, ¶¶14-16 & 43;

48

Baliga Aff., Appendix Ex. C, ¶6; Wong Aff., Appendix Ex. E, ¶5); and (4) Spehar demanded to
be “fully compensated” for the Trautner Deal which, to Spehar, included an extensive list of
demands (Resp. Ex. 28 at 1 ¶7 (emphasis added); Resp. Ex. 39).

65. On October 3, 2003, Franco sent Given a typed version of Bentz’s September 2, 2003
“to do” lists. (Ex. 79.)
RESPONSE:
Defendants object to Paragraph 65 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citation contained therein is made to a multipage document generally
rather than to a specific page of the document cited. Defendants object to Paragraph 65
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute Paragraph 65
because:

(1) it relies on Exhibit 79, which is inadmissible hearsay and has not been

authenticated; and (2) there is no evidence that Bentz was Trautner’s representative.

66. Unaware of Given’s “functional equivalent” deal with Trautner, Spehar sent an email
to Franco, Given and Baliga regarding SC’s continued efforts to resolve SC’s contract dispute.
Spehar asked Franco for the Trautner investment group’s representative’s contact information
so that he could try to (a) bring them back to the table, and (b) resolve SC’s contract dispute.
(Ex. 80.) Franco forwarded Spehar’s October 4, 2003 email to Bentz and stated, “Ron and I
discussed this and we are not replying to Gerry’s email as it is not necessary.” (Ex. 81.)
RESPONSE:
Defendants object to Paragraph 66 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) it contains multiple sentences and facts rather than a short statement of fact.
Defendants object to Paragraph 66 because the allegations therein all relate to the merits of the

49

case, about which discovery has not been taken. Without waiving the foregoing objections,
Defendants dispute Paragraph 66 because: (1) it relies on Exhibit 81, which is inadmissible
hearsay and has not been authenticated; (2) the cited exhibits do not support the allegations
that Spehar wanted to “bring [the Trautner group] back to the table” and/or “resolve [Spehar’s]
contract dispute,” to the contrary, Exhibit 80 contains no such language; (3) there is no
evidence that Bentz was Trautner’s representative; (4) there is no evidence that the so-called
“functional equivalent” deal or any other deal was agreed to or implemented and no such deal
is mentioned in the cited exhibits; (5) Franco testified that he made a settlement offer of
$250,000 or so to Spehar, who rejected it (Franco Aff., Appendix Ex. B, ¶15); (6) Franco,
Baliga and Wong believed that Spehar’s settlement demands were unreasonable (Franco Aff.,
Appendix Ex. B, ¶¶14-16 & 43; Baliga Aff., Appendix Ex. C, ¶6; Wong Aff., Appendix Ex. E,
¶5); and (7) Spehar demanded to be “fully compensated” for the Trautner Deal which, to
Spehar, included an extensive list of demands (Resp. Ex. 28 at 1 ¶7 (emphasis added); Resp.
Ex. 39).

67. On or about October 6, 2003, Given, Franco, Bentz and Trautner had a conference call
to discuss “the many issues” before them, including SC’s preliminary injunction and TRO.
(Ex. 82.)
RESPONSE:
Defendants object to Paragraph 67 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; and (2) the citation contained therein is made to a multipage document generally
rather than to a specific page of the document cited. Defendants object to Paragraph 67
because the allegations therein all relate to the merits of the case, about which discovery has
not been taken. Without waiving the foregoing objections, Defendants dispute Paragraph 67

50

because:

(1) it relies on Exhibit 82, which is inadmissible hearsay and has not been

authenticated; (2) there is no evidence that Bentz was Trautner’s representative; and (3) the
cited exhibits do not support the allegation that any conference call was actually held, to the
contrary, Exhibit 82 indicates only that Franco was trying to schedule a conference call. (Ex.
82 at 1.)

68. By October 2003, the structure of Given’s “functional equivalent” deal was in full
swing. Instead of Trautner’s investment group forming and owning Newco/First In Touch, the
plan was to have an existing company, Keenan & Associates (“Keenan”), with whom CMGT
had a pre-existing relationship, form First In Touch as its subsidiary. (See Ex. 83.) Keenan
would then enter into an outsourcing agreement with CMGT to service CMGT’s four existing
clients. (Id. at 3.) That work would be done by First In Touch, which would have an Arizonabased call center called the “Arizona Call Center.” (Id. at 4.)
RESPONSE:
Defendants object to Paragraph 68 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) it contains multiple sentences and facts rather than a short statement of fact; and
(3) it is argumentative. Defendants object to Paragraph 68 because the allegations therein all
relate to the merits of the case, about which discovery has not been taken. Without waiving the
foregoing objections, Defendants dispute the allegations of Paragraph 68 because: (1) there is
no evidence that the so-called “functional equivalent” deal or any other deal was agreed to or
implemented, to the contrary, the proposed deal with Keenan indicates that there was no such
deal; and (2) the cited exhibit speaks for itself and Plaintiff’s summary of it is inaccurate and
misleading.

69. According to the draft deal documents, Trautner’s investment group was to have
funded CMGT’s operating deficit from July 31, 2003 through the formation of First In Touch.
(Ex. 83 at ¶1 & 7(a).) The draft documents gave Trautner’s Arizona investment group an
option to purchase an ownership interest in the Arizona Call Center. (Id. at ¶ 7.) The formula

51

for the purchase price was based on the difference between (a) the amount spent by Keenan
with respect to First In Touch, and (b) the amount paid by Trautner’s investment group to fund
CMGT’s operating deficit. (Id.) The deal documents also contemplated that Franco would be
the President of both First In Touch and the Arizona Call Center. (Id. at ¶¶, 5 & 8(d); see also,
Ex. 84.) Franco also had an opportunity to become an owner of the Arizona Call Center. (Ex.
83 at ¶8(a).)
RESPONSE:
Defendants object to Paragraph 69 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) at least one citation contained therein is made to a multipage document generally
rather than to a specific page of the document cited; and (3) it contains multiple sentences and
facts rather than a short statement of fact. Defendants object to Paragraph 69 because the
allegations therein all relate to the merits of the case, about which discovery has not been
taken; and the phrase “draft deal documents” is vague and ambiguous. Without waiving the
foregoing objections, Defendants dispute Paragraph 69 because: (1) it relies on Exhibit 84,
which is inadmissible hearsay and has not been authenticated; and (2) the cited exhibit speaks
for itself and Plaintiff’s summary of it is inaccurate and misleading

Given Advises Franco About SC’s Lawsuit and How to Respond to Shareholder Inquires
Regarding CMGT’s Status
70. On November 28, 2003, Franco sent Given an email regarding SC’s lawsuit. Franco
attached a copy of SC’s amended complaint. He told Given that he wanted to discuss the
amended complaint and “what Gerry & his lawyers are up to.” (Ex. 85.) Given responded the
next day. He stated, “I have it. We’ll talk later.” (Ex. 86.) On November 30, 2003, Franco
sent additional documents relating to SC’s lawsuit to Given so that they could discuss them.
(Ex. 87.)
RESPONSE:
Defendants object to Paragraph 70 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands

52

Motion; (2) at least one citation contained therein is made to a multipage document generally
rather than to a specific page of the document cited; and (3) it contains multiple sentences and
facts rather than a short statement of fact. Defendants object to Paragraph 70 because the
allegations therein all relate to the merits of the case, about which discovery has not been
taken. Without waiving the foregoing objections, Defendants dispute Paragraph 70 because it
relies on Exhibits 85 and 87, which are inadmissible hearsay and have not been authenticated.

71. On January 12, 2004, Franco sent Given and Wong an email regarding SC’s request
for a default judgment. (Ex. 88.) Franco stated that he would call Given to discuss SC’s
request. (Id.) Given told Franco to call anytime after noon on January 15. (Ex. 89.) On
January 30, 2004, Franco sent Given an email regarding the status of SC’s lawsuit. (Ex. 90.)
Franco continued to seek Given’s advice regarding SC’s lawsuit even after SC obtained its
default judgment. (E.g., Ex. 91.)
RESPONSE:
Defendants object to Paragraph 71 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) certain citations contained therein are made to multipage documents generally
rather than to a specific page of the document cited; and (3) it contains multiple sentences and
facts rather than a short statement of fact. Defendants object to Paragraph 71 because the
allegations therein all relate to the merits of the case, about which discovery has not been
taken. Without waiving the foregoing objections, Defendants dispute Paragraph 71 because:
(1) it relies on Exhibits 88, 90 and 91, which are inadmissible hearsay and have not been
authenticated; (2) the cited exhibits do not support the allegation that the call mentioned by
Ronald in Exhibit 89 was connected Exhibit 88, the purported email from Franco; (3) the cited
exhibits do not support the allegations that “Franco continued to seek Given’s advice regarding
SC’s lawsuit even after SC obtained its default judgment,” to the contrary, the communications

53

cited indicate only that such matters would be “discussed” and the content of these discussions
-- whether legal counsel or otherwise -- is not in evidence; and (4) Franco, Baliga and Wong
testified that they sought -- and in some cases interviewed -- attorneys (other than Defendants) in
California and Chicago to represent CMGT in the Spehar Lawsuit. (Franco Aff., Appendix Ex.
B, ¶¶ 42; Baliga Aff., Appendix Ex. C, ¶9; Quarles Aff., Appendix Ex. D, ¶4; Wong Aff.,
Appendix Ex. E, ¶¶9-10.)

72. In March, 2004, Franco and Given began receiving emails from or on behalf of CMGT
shareholders inquiring about the status of CMGT. (Ex. 92.) One such email stated, “[i]s
CMGT still active? We have heard nothing since being advised of the Spehar injunction ...
Please fulfill your obligation to respond.” (Id. at p. 4.) Franco asked Given how to respond.
(Id. at p. 2.) Given told Franco to “send your note out to everyone regarding the LA lawsuit. I
wouldn’t bother with them [the CMGT shareholders] anymore than that.” (Id. at p. 1.)
RESPONSE:
Defendants object to Paragraph 72 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) it contains multiple sentences and facts rather than a short statement of fact; and
(3) it is argumentative. Defendants object to Paragraph 72 because the allegations therein all
relate to the merits of the case, about which discovery has not been taken. Without waiving the
foregoing objections, Defendants dispute Paragraph 72 because: (1) it relies on Exhibit 92,
which is inadmissible hearsay, in part, and has not been authenticated, in part; (2) the cited
exhibit speaks for itself and Plaintiff’s summary of it is inaccurate and misleading; and (3) the
cited exhibit does not support the allegation that “Franco and Given began receiving emails
from or on behalf of CMGT shareholders.”

Without waiving the foregoing objections,

Defendants add that the purported email to Franco more fully stated, “Is CMGT still active?
We have heard nothing since being advised of the Spehar injunction. I must advise my father

54

whether or not his investment is a loss. Please fulfill your obligation to respond. Thank you.”
(Resp. Ex. 92 at 4.)

73. Pursuant to that advice, Franco sent CMGT’s shareholders an email, which was preapproved by Given. In part, that email stated, “[a]s Ronald B. Given of Mayer Brown Rowe &
Maw indicated to you in his e-mail dated September 19, 2003, I have resigned as President and
CEO of’ CMGT, Inc. and no longer have any employment relationship with the company.”
(Ex. 93 and Ex. 94.) Franco later testified, in a citation deposition, that he officially resigned
on September 19, 2003. (Ex. 64 at p. 59.)
RESPONSE:
Defendants object to Paragraph 73 because it fails to comply with Local Rule 56.1, as
follows: (1) the facts asserted therein are not material to the resolution of the Unclean Hands
Motion; (2) certain citations contained therein are made to a multipage documents generally
rather than to a specific page of the documents cited; and (3) it contains multiple sentences and
facts rather than a short statement of fact. Defendants object to Paragraph 73 because the
allegations therein all relate to the merits of the case, about which discovery has not been
taken. Without waiving the foregoing objections, Defendants dispute Paragraph 73 because:
(1) it relies on Exhibits 64, 93 and 94, which are inadmissible hearsay and have not been
authenticated; (2) there is no evidence that the Franco’s purported email (Resp. Exs. 93 & 94)
was connected in any way to the purported “advice” described in Paragraph 72; and (3) the
cited exhibits do not support the allegation that Franco’s email “was pre-approved by Given,”
to the contrary, Exhibit 93 indicates only that a draft letter was sent to Ronald. (Resp. Ex. 93.)

Respectfully submitted by,

MAYER BROWN LLP and RONALD B. GIVEN
By:

55

/s/ Stephen Novack
One Of Their Attorneys

Stephen Novack
Mitchell L. Marinello
Steven J. Ciszewski
NOVACK AND MACEY LLP
100 N. Riverside Plaza
Chicago, IL 60606
[phone]
Doc. #301341

56

CERTIFICATE OF SERVICE
Stephen Novack, an attorney, hereby certifies that he caused a true and correct copy of
the foregoing Reply to Plaintiff’s Rule 56.1(b)(3)(C) Statement in Support of His Response to
Defendants’ Motion for Summary Judgment to be served through the ECF system upon the
following:
Edward T. Joyce
Arthur W. Aufmann
Robert D. Carroll
Edward T. Joyce & Assoc., P.C.
11 South LaSalle Street
Chicago, IL 60603
on this 19th day of August, 2009.

/s/ Stephen Novack