Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_07-cv-02534/USCOURTS-azd-2_07-cv-02534-1/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 09:1 U.S. Arbitration Act

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Dialog4 System Engineering GmbH,

Plaintiff, 

vs.

Circuit Research Labs, Inc.; Charles

Brentlinger; and Tammy Brentlinger, 

 

 Defendants. 

 

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No. CV 07-2534-PHX-MHM

 

ORDER

On August 4, 2009, the Court presided over a bench trial in this case to resolve

issues of fact left to be resolved following the Court’s March 31, 2009 order granting in

part and denying in part Plaintiff Dialog4 System Engineering GmbH’s (“Dialog4”)

Motion for Summary Judgment (“March 31, 2009 order”). Dialog4 was represented by

Brett Dunkelman of Osborn Maledon PA and Defendants Circuit Research Labs, Inc.

(“CRL”) and Charles Brentlinger (“Brentlinger”) were represented by Donald Wall and

Sara Ransom of Squire Sanders & Dempsey LLP. Berthold Burkhardtsmaier

(“Burkhardtsmaier”), Dialog4’s Managing Director, and Brentlinger testified during the

bench trial. After considering the evidence and testimony presented, and having reviewed

the parties’ revised proposed findings of fact and conclusions of law, the Court issues the

following order.

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I. FINDINGS OF FACT

1. Dialog4 is a German corporation. (Dkt. #33, §C(1)(a)). 

2. Burkhardtsmaier is the Managing Director of Dialog4. (Dkt. #33, §C(1)(a)).

3. CRL is an Arizona corporation. (Dkt. #33, §C(1)(b)). 

4. Brentlinger became Chairman and CEO of CRL in September of 1999. (Transcript

(“Tr.”) at 151).

5. In January of 2002, Dialog4 and CRL entered into an Asset Sale and Purchase

Agreement and two Amendments (collectively the “ASPA”), whereby Dialog4

agreed to sell its business assets to CRL in exchange for $2,000,000: $750,000 in

cash installments and 1,250,000 shares of CRL’s stock (“CRL stock”), then valued

at approximately $1.00 per share, which were to be registered by CRL with the

Securities and Exchange Commission (“SEC”). (Dkt. #33, §C(1)(c); Trial Exhibit

(“Tr. Exh.”) 1; Tr. at 53).

6. Dialog4 did not intend to become a long-term shareholder of CRL. (Tr. at 53).

7. On November 16, 2001, Dialog4 and Brentlinger entered into a Stock Purchase

Agreement (“SPA”), whereby Brentlinger agreed to purchase the CRL stock from

Dialog4 upon written request “at any time beginning twelve months after the

purchase date and ending eighteen months after the purchase date.” (Dkt. #33,

§C(1)(c)). Conversely, Dialog4 agreed to sell the CRL Stock to Brentlinger at a

price of $1.10 per share upon written request from Brentlinger within that same

time period. (Tr. Exh. 2, ¶ 4).

8. In Fall 2002, disputes arose between Dialog4, Burkhardtsmaier, CRL, and

Brentlinger, and CRL ceased making installment payments to Dialog4 as required

by the ASPA. (Tr. at 153-55; Tr. Exh. 4, ¶ 17). By that time, CRL had made four

installment payments to Dialog4, totaling $152,944.67. (Tr. at 56; Tr. Exh. 4, ¶

17). CRL had not yet registered the CRL Stock with the SEC as required by the

ASPA. (Tr. at 56).

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9. On March 21, 2003, Dialog4 sent a timely written request to Brentlinger that he

purchase the CRL Stock from Dialog4 pursuant to the SPA. (Dkt. #33, §C(1)(e)). 

Brentlinger did not respond to the request and did not purchase the CRL Stock. 

(Tr. at 57). Brentlinger thus breached his obligations to Dialog4 under the SPA. 

(Dkt. #24).

10. On March 26, 2003, Dialog4 invoked an arbitration clause contained in the ASPA. 

(Tr. Exh. 4, ¶ 10). An arbitration hearing was conducted in Germany on April 28,

2004, and on October 4, 2004, the sole Arbiter issued an Arbitration Award. (Dkt.

#33, §C(1)(f)).

11. In February of 2004, Joseph Richardson (“Richardson”), an attorney representing

CRL, informed Dialog4 that his law firm could not issue an opinion regarding

Dilaog4’s proposed sale of CRL Stock because it appeared that Dialog4 was an

“affiliate” of CRL under SEC Rule 144(a)(1). (Tr. Exh. 104). Richardson

indicated that Dialog4 was an affiliate of CRL because “Dialog4 is identified as

the beneficial owner of 1,250,000 shares of common stock, or 32.8% of the shares

outstanding,” in addition to the fact that Burkhardtsmaier was a member of CRL’s

Board of Directors. (Id.).

12. The Arbitration Award, as slightly modified on December 2, 2004, awarded the

following: (a) CRL and Brentlinger, jointly and severally, were ordered to pay

Dialog4 the sum of $597,055.33, plus 10% interest from August 20, 2002, minus

$25,000, for a total of approximately $711,348; (b) CRL and Brentlinger, jointly

and severally, were ordered to pay MSC Vertriebs GmbH the sum of 135,000

euros, plus interest at the rate of 8% above the German base interest rate as of May

1, 2004 (the “MSC Obligation”), for a total of approximately $193,640; (c) CRL

was ordered to register the CRL Stock with the SEC; and (d) CRL and Brentlinger,

jointly and severally, were ordered to pay Dialog4 the sum of 29,567.47 for the

costs of the arbitration proceedings and the sum of 77,832.50 euros for Dialog4’s

attorneys’ fees and costs, for a total of approximately $143,970. (Tr. Exh. 4; Tr. at

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58, 59; Dkt. #56, ¶ 136). Accordingly, CRL and Brentlinger’s total obligations to

Dialog4 under the Arbitration Award, including interest and the MSC Obligation,

amounted to approximately $1,048,958.

13. In a May 30, 2008 prospectus of CRL filed with the SEC, CRL represented that

after learning of the Arbitration Award on October 8, 2004, CRL “increased its

reserves from $712,000, the amount of principle and interest then due under its

note payable to Dialog4 to $1,393,000.” (Tr. Exh. 29, p.76). CRL also stated that

the increase of $681,135 “represent[ed] the amount awarded by the Arbiter on

account of Dialog4’s costs and fees incurred in connection with the arbitration and

the amount of a liability to a third party vendor to Dialog4,” presumably referring

to the MSC Obligation. (Id.).

14. In February 2005, Dialog4 initiated litigation in the United States District Court

for the District of Arizona to confirm and enforce the Arbitration Award. (Dkt.

#33, §C(1)(g)).

15. On April 15, 2005, Dialog4, CRL, and Brentlinger entered into a Settlement

Agreement and Release (“SAR”) to settle the litigation initiated in February 2005

to enforce the Arbitration Award and to resolve an employment dispute between

Burkhardtsmaier and CRL. (Tr. Exh. 6). Dialog4, CRL, and Brentlinger also

sought to resolve any “additional claims which could be asserted under the ASPA

and the [SPA].” (Id., p.2).

16. Paragraph 1 of the SAR provided a complete release by the parties of, among other

things, “any claims that arise out of or relate to the ASPA or the [SPA] . . . .

presently known or unknown[,]” to become effective upon full payment by CRL

and Brentlinger made in accordance with Paragraph 3 of the SAR and the

registration of the CRL Stock pursuant to Paragraph 4 of the SAR. (Tr. Exh. 6, pp.

1-2).

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17. Paragraph 3 of the SAR required CRL and Brentlinger to pay Dialog4 the sum of

$965,000 in two installments. (Tr. Exh. 6, p.4). Both installments have been paid. 

(Id.; Dkt. #33, §C(1)(i)).

18. Paragraph 5 of the SAR required Dialog4 to pay one-half of the MSC Obligation,

which the Arbitration Award had obligated CRL and Brentlinger to pay, out of the

$965,000 that CRL and Brentlinger paid to Dialog4 under Paragraph 3 of the SAR. 

(Tr. Exh. 6, pp. 5-6).

19. Paragraph 6 of the SAR required CRL to pay Burkhardtsmaier 5,400 euros per

month for 60 months pursuant to a Court Settlement Agreement. (Tr. Exh. 6, p.6). 

CRL ceased making payments in March 2009; thirteen installments remain unpaid. 

(Tr. at 61-62).

20. Paragraph 7 of the SAR required Burkhardtsmaier to tender his resignation as a

member of the CRL Board of Directors. (Tr. Exh. 6). He did so in April of 2005. 

(Tr. Exh. 4; Tr. at 63). 

21. Paragraph 8(d) of the SAR provided that “[u]nless and until [CRL and Brentlinger]

are in default of their obligations under Paragraph 3 or Paragraph 4 of [the SAR],

Dialog4 shall not seek enforcement of the ASPA.” (Tr. Exh. 6, p.7). Similarly,

Paragraph 8(e) of the SAR provided that “[u]nless and until [CRL and Brentlinger]

are in default of any of their obligations under Paragraph 3 or Paragraph 4 of [the

SAR], [Dialog4 and Burkhardtsmaier] shall not seek enforcement of the [SPA].” 

(Id.).

22. Paragraph 4 of the SAR required CRL to (1) “file with the [SEC] a registration

statement,” (2) “use its best efforts to have such registration statement declared

effective as expeditiously as practicable,” and (3) “keep such registration statement

effective until the earliest of (a) all of the [CRL Stock] [is] sold . . . (b) the [CRL

Stock] become freely tradeable under [SEC] Rule 144(k) . . ., or (c) five years from

the date the registration statement becomes effective.” (Tr. Exh. 6, p.5; Dkt. #33,

§C(1)(h)).

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23. Pursuant to Paragraph 4 of the SAR, CRL filed a registration statement with the

SEC on June 29, 2005, with amendments on November 8 and 9, 2005. (Tr. Exh.

9). In order to maintain registration, CRL had to file quarterly, amended or

supplemental materials (referred to as “post-effective amendments”) with the SEC. 

(Dkt. #33, §C(1)(j)).

24. On August 23, 2005, Burkhardtsmaier wrote to his broker, Michael McGuire

(“McGuire”), asking him to offer 37,500 shares of the CRL Stock for sale at $1.25. 

(Tr. Exh. 14). However, Burkhardtsmaier stated that “if [that] asking price [was]

too high,” McGuire should call him because Dialog4 “want[ed] to sell the shares

quickly.” (Id.). Burkhardtsmaier also inquired into “how to get the remaining

1,220,000 shares in electronic format in order to put them into the Dialog4 depot.” 

(Id.). McGuire responded that the “stock [was] still restricted and [he] [did] not

hold [Dialog4’s] shares for 1,220,000[,]” but would “attempt to free [them].” (Id).

25. On September 14, 2005, Burkhardtsmaier wrote to McGuire, informing him that

“Dialog4 holds app[roximately] 19% of the shares issued from [CRL],” that

Burkhardtsmaier had “resigned from the [CRL Board of Directors] in April 2005”

and thus was “no longer an affiliate,” and that “CRL [had] filed . . . [a] registration

statement with the SEC” on June 29, 2005. (Tr. Exh. 14). Burkhardtsmaier then

inquired into why “the shares are still restricted” and “what steps need[ed] to be

taken in order for [McGuire] to be in a position to offer the CRL shares for sale in

any quantity at any time.” (Id.). Burkhardtsmaier continued, “For example: I want

to offer 100,000 shares the same day CRL files the next quarterly report. And if

the price goes up, I would like to sell another 25,000 the next day. And so on.” 

(Id.).

26. On September 20, 2005, Dialog4 sold 10,000 shares of CRL Stock. (Tr. Exh. 16).

27. On September 21, 2005, Burkhardtsmaier wrote to McGuire, “The first step is

taken! Congratulation[s]. Today the stock price went up to $ 1.02. Please offer

the next shares for $ 1.0 and sell as much as you can.” (Tr. Exh. 14). Dialog4 then

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sold 9,714 shares of CRL Stock on September 22, 2005, another 5,000 shares on

September 26, 2005, and another 12,286 shares in early October 2005. (Tr. Exh.

16).

28. On October 11, 2005, Burkhardtsmaier wrote to McGuire, expressing concern over

“the question of registration in order to sell the shares without limitation due to

rule 144,” indicating that he believed the CRL Stock was “freely tradeable as soon

as the shares [were] registered with the SEC,” which occurred on June 29, 2005. 

(Tr. Exh. 14). Burkhardtsmaier asked McGuire to “have a look and advise [him]

what to do in order to . . . sell [the stock] in quantities without limitation.” (Id.).

29. On October 20, 2005, Burkhardtsmaier wrote to McGuire, thanking him for selling

37,000 shares of the CRL Stock and noting that there were 7,946,337 shares of

CRL Stock outstanding, and that Dialog4 “[could] sell [a] max[imum] [of] 1% of

the outstanding shares every 3 month[s], which counts up to app[roximately]

80,000 shares.” (Tr. Exh. 14). Burkhardtsmaier instructed McGuire to “keep the

sale of the CRL shares rolling.” (Id.).

30. Between November 1 and 7, 2005, Dialog4 sold an additional 42,463 shares of the

CRL Stock. (Tr. Exh. 16).

31. On November 9, 2005, Burkhardtsmaier forwarded part of CRL’s September 11,

2005 registration statement to McGuire and inquired into whether Dialog4 was

“still restricted by rule 144 or [whether Dialog4 could] now sell the shares in every

quantity at every time.” (Tr. Exh. 14).

32. On November 11 and 14, 2005, Dialog4 sold an additional 27,500 shares of CRL

Stock. (Tr. Exh. 16). By this time, Dialog4 had sold a total of 106,963 shares of

the CRL Stock.

33. On November 15, 2005, Robert McMartin (“McMartin”), CRL’s former Chief

Financial Office, informed Burkhardtsmaier that he could not sell CRL Stock due

to CRL’s failure to timely file forms with the SEC. (Tr. Exh. 18, pp. 8-9). The

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registration of the CRL Stock became effective on November 22, 2005. (Tr. Exh.

9).

34. On November 23, 2005, Burkhardtsmaier wrote to McGuire, informing him that

the CRL Stock was now registered and that Dialog4 could “go on selling the stock

. . . but not below USD 1.50 per share,” to which McGuire responded, “I suggest

you set your sight a little lower[,] maybe around [ ] $1.25 for maybe around 30,000

to 50,000 shares.” (Tr. Exh. 14). Burkhardtsmaier replied, “I respect your

recommendation to sell up to 50,000 shares for . . . US $1.25. Good luck.” (Id.).

35. On March 29, 2006, McMartin informed Burkhardtsmaier that he could not sell

any of the CRL Stock after March 31, 2006, until CRL was able to comply with its

filing obligations with the SEC. (Tr. Exh. 18, pp. 7-8). CRL did not file a posteffective amendment until July 12, 2006. (Tr. Exh. 9). McMartin sent an email to

Burkhardtsmaier on July 25, 2006, stating that he could start selling the CRL Stock

again. (Tr. Exh. 18., p.6).

36. Burkhardtsmaier responded to McMartin’s July 25, 2006 email within the hour,

stating that he would “start to promote the [CRL Stock] and offer them for sale –

possibly in one or two blocks.” (Tr. Exh. 101).

37. The CRL Stock remained registered through November 14, 2006, after which CRL

stopped filing the necessary post-effective amendments with the SEC to maintain

registration. (Dkt. #33, §C(1)(j)). CRL then allowed the registration of the CRL

stock to lapse in early 2007. CRL did not inform Dialog4 or Burkhardtsmaier of

the lapse.

38. Dialog4 did not sell any of the CRL Stock in 2006 (Tr. Exh. 101). 

39. On January 25, 2007, Burkhardtsmaier sent an email to McMartin, informing him

that Dialog4 wanted “to sell 50,000 or 100,000 shares [of CRL Stock] in one

block.” (Tr. Exh. 18, p.5).

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40. On February 13, 2007, McGuire wrote to Burkhardtsmaier that “the stock – it just

does not trade. I suggest if you want $20,000.00 you sell at .23¢ to 25¢ or 80,000

to 100,000 shares.” (Tr. Exh. 14).

41. In February 2007, Harman Pro North America, Inc. (“Harman”), whom CRL owed

in excess of $2,000,000, offered to sell CRL its note payable and its shares of CRL

stock; negotiations ensued. (Tr. Exh. 102). The negotiations lasted approximately

six months, Harman ultimately accepted CRL’s bid, and the sale was completed on

July 13, 2007. (Id.).

42. On March 16, 2007, in an ongoing email exchange, Burkhardtsmaier wrote to

McMartin that “[t]he shares are free tradeable and Dialog4 has no relationship to

[CRL].” (Tr. Exh. 101).

43. On March 22, 2007, Burkhardtsmaier wrote to McMartin that Dialog4 “still

want[ed] to sell the remaining [CRL Stock]. . . . [and] any serious offer [would] be

considered.” (Tr. Exh. 101).

44. On March 24, 2007, McMartin wrote to Burkhardtsmaier, inquiring into what

Dialog4 wanted in exchange for the CRL Stock. (Tr. Exh. 18, p.4). 

Burkhardtsmaier responded that Dialog4 wanted “to get rid of the shares” and

would do so for “the book value, which is app. US 600K[,]” to which McMartin

replied, “Sounds interesting.” (Id.).

45. On May 21, 2007, McMartin asked Burkhardtsmaier to “take the posting of [his]

shares off [his] website” because Burkhardtsmaier was “using stale dated

information and there is [a] black out period on [his] shares right now [and] it will

not be lifted until we get the post effective amendment finished.” (Tr. Exh. 18,

p.3). A “blackout period” is “[a] period when a public company’s directors,

officers, and specified employees can’t trade the company’s stock. Blackout

period occur prior to the release of annual or quarterly financial earnings

information, and may extend for a time period after the release of the earnings

information. The company, not the [SEC] sets the blackout period.” Webster’s

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New World Finance and Investment Dictionary (Wiley Publ’g, Inc., Indianapolis,

IN, 2003).

46. On June 21, 2007, McMartin again inquired into how much Dialog4 wanted for

the CRL Stock. (Tr. Exh. 18, p.2). Burkhardtsmaier responded that Dialog4 “will

not sell [the CRL Stock] for less than the book value” or approximately 600,000

euros. Burkhardtsmaier continued that if Dialog4 could not get the book value

from CRL, “it [would] have to wait and be patient until the market reaches app. 75

cents.” (Id.).

47. On July 3, 2007, Burkhardtsmaier informed McMartin that Dialog4’s “broker

[had] already [been] instructed to start selling the [CRL Stock] in quantities as

soon as [it reached approximately 75 cents per share], and to offer the shares in

one block.” (Tr. Exh. 18, p.1). Later that day, McMartin responded via email and

informed Burkhardtsmaier that he was “in a black out period and therefore

prohibited from selling [the CRL Stock],” to which Burkhardtsmaier replied “[n]o

problem. The current share price is not attractive for any sales activities,” and then

inquired into “the reason for the ‘black out period’” and what had “to be done to

terminate [it]?” (Tr. Exh. 18). About half an hour later, Burkhardtsmaier wrote

another email to McMartin, asking “how [ ] Dialog4 [could] sell its shares to

[CRL] in a black out period[,]” and stating that he thought black out periods only

applied to officers and employees of CRL. (Id.). McMartin did not respond to

Burkhardtsmaier.

48. On September 1, 2007, Burkhardtsmaier wrote to McGuire, noting that

Burkhardtsmaier and McGuire had not been in contact since January 17, 2006, and

that “[s]ince [that] date the CRL stock price dropped continuously from $1.00 to

$0.25. SHIT . . . . We lost quite some money.” (Tr. Exh. 14). Burkhardtsmaier

then informed McGuire that Dialog4 would be willing to sell approximately

40,000 shares for 50 cents if possible and inquired into whether McGuire had any

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ideas or recommendations on how to “turn the page,” presumably meaning, sell the

CRL Stock. (Id.).

49. On September 19, 2007, Burkhardtsmaier wrote to McGuire, noting that the “value

per share [of the CRL Stock] [was] USD 0.54” and instructed him to “sell up to

40,000 shares in one block or in parts for the best price you can get [greater than]

USD 0.50.” (Tr. Exh. 14).

50. On October 1, 2007, Richardson issued Dialog4 an opinion letter, stating that

Dialog4 was authorized to sell up to 114,303 shares of the CRL Stock under SEC

Rule 144. (Tr. Exh. 105). In his opinion letter, Richardson also indicated that the

CRL Stock was “restricted.” (Id.).

51. October 4, 2007, Burkhardtsmaier responded to McGuire, inquiring into why

McGuire did not “start selling 40,000 . . . shares [of the CRL Stock]” on

September 19, 2007 as Burkhardtsmaier had instructed, and why he was waiting

for “approval from an attorney,” since Burkhardtsmaier thought the CRL Stock

was “registered . . . and [could] be sold in any quantity at any time[.]” (Tr. Exh.

14). In response, McGuire forwarded Richardson’s opinion letter to

Burkhardtsmaier, informing Burkhardtsmaier that based on his reading of the

opinion letter, Dialog4 “still need[ed] to file form 144 because [Burkhardtsmaier]

was still a control person (more than 10% of the [CRL] stock).” (Tr. Exh. 14).

52. On October 10, 2007, Burkhardtsmaier sent an email to Richardson, inquiring into

“why [Dialog4] [could not] sell the shares [it] want[ed] . . . . [and] [w]hy [Dialog4]

[had] to apply for an opinion, and . . . [could only] sell 114,303 shares,” as

indicated in Richardson’s October 1, 2007 letter. (Tr. Exh. 7). Burkhardtsmaier

indicated that “[t]o [his] knowledge, CRL [had] filled [sic] a [registration]

statement (and is also paying for it) to allowing [sic] DIalog4 to freely trade the

CRL shares.” (Id.). 

53. On October 11, 2007, Richardson responded to Burkhardtsmaier’s October 10,

2007 email, informing Burkhardtsmaier that “the registration statement [was]

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currently not in effect” because CRL had not filed the necessary post-effective

amendments with the SEC to keep the registration statement effective. Richardson

also stated that “[p]reparing a new up-to-date registration statement [would] cost

CRL between $15,000 and $60,000 . . . . [and] take[s] approximately 6 to 8

weeks[.]” (Id.). In addition, Richardson noted that “Dialog4 own[ed] about

1,250,000 shares of CRL common stock, or about 15% of the outstanding

shares[,]” and indicated that “[t]he SEC assumes an owner of 10% or more to be

an ‘affiliate’ of an issuer.” (Id.). However, Richardson qualified his statement by

writing that “[w]hile this assumption can be rebutted, that is not an opinion we

have been asked to render nor is it one that we would render,” and the “legal issue

of whether Dialog4 is not an affiliate of CRL notwithstanding the size of its share

ownership is a question to be considered by counsel of Dialog4 and not by counsel

to CRL.” (Id.).

54. On October 11, 2007, Burkhardtsmaier wrote to McGuire, noting that “there [was]

a lot of sales traffic with the CRL stock,” and that “Harman sold 1.5 [million]

shares plus some credit notes to Mr. Brentlinger Senior (the father of the CRL

CEO Jay Brentlinger) for USD 1.5 [million]. The 3[rd] quarter report will look

very good – [CRL] is now completely owned by the Brentlinger family.” (Tr. Exh.

14). Burkhardtsmaier then instructed McGuire to “sell 40,000 of our shares as

discussed,” and inquired into whether McGuire had received “the documents to

start selling[.]” (Id.). McGuire responded on October 15, 2007, that “[s]tock is

back and trying to sell at .50¢ – let me know if you want to do something

different[,]” to which Burkhardtsmaier replied, “Sales [greater than] .50¢ are ok.” 

(Id.).

55. On October 17 and 18, 2007, Dialog4 sold 1,000 and 9,000 shares, respectively, of

CRL Stock. (Tr. Exh. 16). Dialog4 did not sell any other stock in 2007. (Tr. Exh.

101).

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56. On October 19, 2007, Burkhardtsmaier wrote to McGuire, noting that 42,000

shares of stock had been sold at greater than 50 cents between October 16 and 18,

2007, and inquired into “[h]ow much of [that] volume was from [Dialog4’s CRL]

Stock.” (Tr. Exh. 14).

57. There appears to have been only three or four periods of substantial sales activity

between 2005 and the present, including (1) in the fourth quarter of 2005, just prior

to the registration of the CRL Stock becoming effective; (2) in the second quarter

of 2006, during the time period that CRL instructed Dialog3 not to sell any stock

because of a blackout period; and (3) in September/October of 2007, when

Dialog4 tried to sell CRL Stock only to discover that the stock registration had

lapsed.

58. On November 14, 2007, Dialog4 sent CRL and Brentlinger notice that it

considered them in default of their obligations under Paragraph 4 of the SAR and

stated that “[u]nless CRL immediately resumes performing its obligations under

Paragraph 4 and causes the registration to once again become effective within 30

days, Dialog4, at its discretion, will exercise any and all rights it may have under

the [SAR] . . . .” (Tr. Exh. 10). CRL and Brentlinger did not respond to Dialog4’s

letter.

59. Dialog4 filed the instant lawsuit against CRL and Brentlinger on December 14,

2007. (Dkt. #33, §C(1)(k)). In its Complaint, Dialog4 seeks (1) an order

“[c]onfirming and enforcing the Arbitration Award in an amount which reflects the

sums previously paid by [CRL]”; (2) “an order compelling [CRL] to specifically

perform its obligation under Paragraph 4 of the SAR”; (3) “an order compelling

Brentlinger to specifically perform his obligations under the SPA to purchase the

CRL Stock at $1.10 per share, plus prejudgment interest”; (4) “an award of the

attorneys’ fees and costs Dialog4 has incurred in this action”; and (5) “such other

and further relief as the Court may deem just and appropriate.” (Dkt. #1, pp. 5-6).

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60. Dialog4 filed its Motion for Partial Summary Judgment in this action on May 30,

2008. (Dkt. #33, §C(1)(k)).

61. On May 30, 2008, CRL filed post-effective amendments to re-register the CRL

Stock. (Dkt. #33, §C(1)(l)). CRL continued to file post-effective amendments

through November 14, 2008. (Id.). As a result of these filings with the SEC, the

CRL Stock was registered from June 6, 2008, until approximately February 14,

2009. (Tr. Exh. 9; Tr. at 171).

62. On March 31, 2009, the Court granted in part and denied in part Dialog4’s Motion

for Partial Summary Judgment (“March 31, 2009 order”), holding (1) “Brentlinger

breached the SPA in 2003 by failing to purchase the CRL stock pursuant to

Dialog4’s timely March 2003 request”; (2) Defendants breached Paragraph 4 of

the SAR by failing to take any steps between early 2007 and May 2008 to keep the

CRL stock registered”; and (3) the release and discharge in Paragraph 1 of the

SAR has not yet become effective and thus does not bar Dialog4 from seeking to

enforce the ASPA and the SPA.” The Court was unable to conclude at that time,

however, whether “Defendants’ breach of Paragraph 4 of the SAR was material.” 

(Dkt. #24, p.16).

63. On June 10, 2009, the Court dismissed with prejudice Defendant Tammy

Brentlinger from this case pursuant to the parties’ June 10, 2009 stipulation. (Dkt.

#39).

II. CONCLUSIONS OF LAW

A. SEC Rule 144

CRL and Brentlinger ask this Court to find that “by October 2007, Dialog4 knew,

or reasonably should have known, that Dialog4 was no longer an affiliate of CRL” and

thus the CRL Stock had become “freely tradeable” under SEC Rule 144, such that CRL

and Brentlinger were no longer bound by Paragraph 4(b) of the SAR. (Dkt. #56, p.13 ¶

71). In other words, CRL and Brentlinger implicitly ask the Court to reconsider its March

31, 2009 order holding that CRL and Brentlinger breached Paragraph 4 of the SAR and

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CRL and Brentlinger contend that they “could not reasonably discover that Dialog4

knew that it was no longer an affiliate, and that the CRL shares were [freely tradeable] until

after the Court’s ruling on Dialog4’s motion for partial summary judgment because Dialog4

did not disclose documents containing the pertinent information until April 8, 2009 – a week

after the Court’s ruling.” (Dkt. #56, p.14 ¶ 73). CRL and Brentlinger, however, did not

serve Dialog4 with a set of interrogatories or request for production of documents until July

21, 2008, five days after Dialog4’s Motion for Partial Summary Judgment had been fully

briefed. Furthermore, even if Burkhardtsmaier’s September 14, 2005 and October 11, 2007

letters established that he believed Dialog4 was no longer an “affiliate,” it is clear from

Burkhardtsmaier’s other letters during those same time periods that he always believed that

registration of the CRL Stock was still necessary in order for Dialog4 to be able to freely

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instead hold that the terms of Paragraph 4 were satisfied and the release of Paragraph 1 of

the SAR became effective. The Court, however, will not reconsider its March 31, 2009

order.

First, the defense that the CRL Stock had become “freely tradeable” under SEC

Rule 144 and thus the release in Paragraph 1 of the SAR had become effective is an

affirmative defense. See, e.g., In re Cellular 101, Inc., 539 F.3d 1150, 1155 (9th Cir.

2008) (“[R]elease is an affirmative defense and is generally waived if not asserted in the

answer to a complaint.”) (citing Fed.R.Civ.P. 8(c)) (“In responding to a pleading, a party

must affirmatively state any avoidance or affirmative defense, including: . . . release . . .

.”). CRL and Brentlinger did not raise this defense in their Answer to Dialog4’s

Complaint. (Dkt. #10). Nor did they raise it in response to Dialog4’s Motion for Partial

Summary Judgment (Dkt. #19), in the parties’ Joint Proposed Pretrial Order (Dkt. #33),

their Trial Brief (Dkt. #34), or their Proposed Findings of Fact and Conclusions of Law

(Dkt. #44). In fact, the first time CRL and Brentlinger raised this defense – the argument

that in fact the CRL Stock had become freely tradeable under SEC Rule 144 and thus they

had not breached the SAR, but in actuality fulfilled their obligations under Paragraph 4 of

the SAR and the release in Paragraph 1 had gone into effect – was during the bench trial

on August 4, 2009. Accordingly, not only did CRL and Brentlinger forfeit this defense

by not raising it in their Answer, they waived it by raising it for the first time on the day

of trial.1

 See United States v. Olano, 507 U.S. 725, 733 (1993) (“Waiver is different from

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trade the CRL Stock. (Tr. Exh. 14). Moreover, McMartin, CRL’s CFO, consistently treated

Dialog4 as an affiliate, informing Burkhardtsmaier several times that he could not sell any

CRL stock at various times either because CRL had not timely filed registration documents

or because of black out periods. (Tr. Exh. 18). Finally, whether or not Dialog4 was an

affiliate based on the number of shares it retained at any given time was well within CRL and

Brentlinger’s knowledge; the determination of Dialog4’s status as an affiliate or non-affiliate

did not depend on Dialog4’s disclosure of the emails between Burkhardtsmaier and his

broker.

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forfeiture. Whereas forfeiture is the failure to make the timely assertion of a right, waiver

is the intentional relinquishment or abandonment of a known right.”) (internal quotation

marks and citations omitted).

Second, as Richardson stated in his October 11, 2007 email to Burkhardtsmaier,

“[t]he SEC assumes an owner of 10% or more to be an ‘affiliate’ of an issuer.” (Tr. Exh.

7). And as CRL and Brentlinger acknowledge, as of October 2007, Dialog4 possessed

1,133,037 shares of CRL Stock out of approximately 8,000,000 shares of CRL Stock, or

approximately 14 percent of CRL’s outstanding stock at that time. (Dkt. #56, p.13 ¶ 68). 

Despite CRL and Brentlinger’s arguments to the contrary, Dialog4 reasonably relied on

the SEC’s presumption of their status as an affiliate, not to mention CRL’s consistent

treatment of the CRL Stock as not freely tradeable and subject to Rule 144’s restrictions. 

Accordingly, even if CRL and Brentlinger had not forfeited and waived their defense that

Dialog4 was a non-affiliate and thus the CRL Stock was freely tradeable under Rule 144,

the Court concludes that CRL and Brentlinger have not overcome the SEC’s rebuttable

presumption that Dialog4 was an affiliate because it owned more than 10% of CRL’s

outstanding stock or proven that Burkhardtsmaier knew it was no longer an affiliate of

CRL.

B. Breach

In its March 31, 2009 order, the Court held that CRL breached Paragraph 4 of the

SAR by failing to take any steps between early 2007 and May 2008 to keep the CRL

stock registered, that the release in Paragraph 1 of the SAR had not become effective and

did not bar Dialog4 from seeking to enforce the ASPA and the SPA, and that Brentlinger

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breached the SPA in 2003 by failing to purchase the CRL stock pursuant to Dialog4’s

timely request. The remaining question is whether the breach of Paragraph 4 of the SAR

was material.

“Under Arizona law, a material breach occurs when (1) a party fails to perform a

substantial part of the contract or one or more of its essential terms or conditions or (2)

fails to do something required by the contract which is so important to the contract that

the breach defeats the very purpose of the contract.” Biltmore Bank of Arizona v. First

Nat’l Mortgage Sources, LLC, 2008 WL 564833, at *6 (D. Ariz. 2008) (citation omitted);

see Found. Dev. Corp. v. Loehmann’s, Inc., 163 Ariz. 438, 445 (1990) (“[T]he breach

must be ‘material,’ ‘serious,’ or ‘substantial.’”). Substantial performance, on the other

hand, “is the antithesis of material breach; if it is determined that a breach is material, or

goes to the root or essence of the contract it follows that substantial performance has not

been rendered, and further performance by the other party is excused.” Id. at *8. Thus, in

determining whether a breach is material, courts may look to whether the breaching party

substantially performed under the contract.

“[S]ubstantial performance means that one party has performed all that is required

by a contract, except for slight deficiencies in performance that can easily be cured.” Id.

“To determine whether a party has substantially performed his obligations . . ., the court. .

. should consider the nature of the promised performance, the purpose of the contract, and

the extent to which any deficiencies in performance have defeated that purpose.” Id.

Courts may also consider whether the breaching party’s behavior comports with standards

of good faith and fair dealing. Loehmann’s, 163 Ariz. at 446. “The burden of proving

substantial performance is on the party claiming it.” Biltmore Bank, 2008 WL 564833, at

*8.

At trial, CRL and Brentlinger did not meet their burden of proving that they

substantially performed under the SAR. CRL and Brentlinger contend that their breach of

the SAR – the lapse of registration of the CRL Stock – is not material because CRL has

substantially performed its obligations under the SAR: they fulfilled their obligation

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under Paragraph 3 to pay Dialog4 $965,000; they registered the CRL stock with the SEC

pursuant to Paragraph 4; maintained that registration for approximately one year; and then

re-registered the CRL Stock on May 30, 2008 and maintained that registration until

February 14, 2009. (Dkt. #56, p.23 ¶ 130). To the extent CRL and Brentlinger also

contend that they substantially performed because Dialog4 “indicated” at various times

“that it did not want to sell its shares for then-current trade value” or that the lapse in

registration did not “impact Dialog4,” whether CRL and Brentlinger substantially

performed the SAR depends on their conduct under the SAR, not Dialog4’s conduct. 

Further, it is disingenuous for CRL and Brentlinger to argue that because Dialog4 did not

sell the entire amount of stock it was allowed to sell every three months under Rule 144

somehow evidences that CRL and Brentlinger’s failure to maintain registration of the

CRL Stock was not material. Selling restricted stock is not as simple as CRL and

Brentlinger submit; stock is generally sold in blocks during “windows of opportunity,”

and the ability to sell depends on the amount of stock being traded and the amount of

buyers at any given time. Further challenges were created for Dialog4 when McMartin,

CRL’s CFO, instructed Dialog4 several times that Dialog4 could not sell the CRL Stock

and by the fact that Dialog4 was required to obtain legal opinions pursuant to Rule 144

before selling the CRL Stock due to CRL and Brentlinger’s failure to maintain

registration. (Tr. at 118-19, 137, 141; Tr. Exh. 18). Regardless, the inquiry into

substantial performance is an inquiry into the nature of the promised performance under

the SAR, the purpose of the SAR, the extent to which any deficiencies in performance

have defeated that purpose, and whether CRL and Brentlinger’s behavior comports with

the standards of good faith and fair dealing.

There is no dispute that the SAR was entered into by the parties to settle litigation

brought by Dialog4 to enforce the Arbitration Award against CRL and Brentlinger. Thus,

the primary purpose of the SAR was to settle the parties’ disputes over money and the

CRL Stock. CRL and Brentlinger benefitted by entering the SAR as opposed to fulfilling

the Arbitration Award; they were obligated to pay Dialog4 only $965,000, as opposed to

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approximately $1,048,958. In addition, the SAR provided that Dialog4 would not seek to

enforce the SPA against Brentlinger as long as CRL maintained registration of the CRL

Stock for five years or until Dialog4 sold the CRL Stock or it became freely tradeable. 

Further, Dialog4 benefitted by not having to pursue enforcement of the Arbitration Award

or the SPA, and Dialog4 was provided a five-year window in which to sell the CRL

Stock.

Although CRL’s payment of $965,000 to Dialog4 under Paragraph 3 of the SAR

satisfied part of the purpose of the SAR, CRL’s failure to maintain registration of the

CRL Stock for only 20 months out of 60 months defeats the other part of the purpose of

the SAR. CRL and Brentlinger’s contentions that Dialog4 was not harmed by the breach

of Paragraph 4 because Dialog4 was not prevented from selling any CRL Stock ignores

the fact that CRL’s failure to maintain registration of the CRL Stock deprives Dialog4 of

the benefit of its bargain. In any event, while the evidence presented at trial established

that Dialog4 was not technically prevented from selling more shares than it did at any one

time, CRL and Brentlinger’s failure to maintain registration of the CRL Stock limited

Dialog4’s ability to freely trade the CRL Stock in any amount and at any time under the

right circumstances by, among other things, requiring Dialog4 to obtain opinion letters

prior to offering the CRL Stock for sale. In addition, contrary to CRL and Brentlinger’s

contentions, Dialog4 was harmed by the lapse in registration. For example, in midSeptember 2007, Dialog4 instructed its broker to sell 40,000 shares of the CRL stock for

below the market price at that time. In addition, Burkhardtsmaier testified that Dialog4

would have sold additional shares at that price if the sale of the initial 40,000 shares had

been successful. (Tr. at 86). Dialog4’s efforts, however, were frustrated by the fact that

the CRL Stock was not registered and Dialog4 was thus required to obtain opinion letters

for each block of shares that it attempted to sell during that time period. But for that

delay, it appears that Dialog4 likely would have sold additional shares of the CRL Stock. 

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The fact that Dialog4 did not sell any CRL Stock in 2006 is not as significant as CRL

and Brentlinger make it out to be: there appears to have been only one “window of

opportunity” in 2006, which occurred during the second quarter, the same time period that

CRL instructed Dialog3 not to sell any stock as the result of a blackout period. To the extent

CRL and Brentlinger contend that the CRL-Harman transaction should excuse the lapse in

registration during this particular time period because the transaction prevented CRL from

filing updated registration documents (Tr. at 181-84), CRL and Brentlinger fail to establish

why they were unable to file updated registration documents when they regularly filed other

documents with the SEC. (Tr. Exh. 9).

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CRL and Brentlinger’s failure to maintain registration of the CRL Stock clearly frustrated

the purpose of the SAR.2

In addition, Richardson’s October 11, 2007 communication implied that CRL

allowed the registration to lapse because “[p]reparing a new up-to-date registration

statement [would] cost CRL between $15,000 and $60,000 . . . . [and] take[s]

approximately 6 to 8 weeks[.]” (Id.). Furthermore, CRL and Brentlinger did not inform

Dialog4 of their decision to stop preparing registration statements to maintain the

registration of the CRL Stock; nor did they respond to Dialog4’s November 14, 2007

letter, which provided CRL and Brentlinger an opportunity to cure their breach. That

behavior does not comport with the standards of good faith and fair dealing.

For the reasons stated above, the Court finds that CRL and Brentlinger did not

substantially perform the SAR. To that end, the Court finds that CRL and Brentlinger’s

breach of the SAR was material. As previously stated, the materiality inquiry concerns

the provisions of the contract, not the non-breaching party’s response to the breach. And

the materiality of Paragraph 4 of the SAR is evident on its face – it is one of only two

provisions in the SAR that constitute consideration for Dialog4’s promise to not enforce

the Arbitration Award and forgo any other claims against CRL and Brentlinger. The

purpose of registering the CRL stock – to allow Dialog4 to freely trade all of its shares,

not just 80,000 to 115,000 of its shares every 90 days pursuant to Rule 144’s restrictions,

at any time it saw fit – was clearly frustrated by the multiple lapses in registration of the

CRL Stock. The contention that the lapses in registration amount to a “deviat[ion] from

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the [SAR] in only a trivial or minor way,” Biltmore Bank, 2008 WL 564833, at *24-25, is

unpersuasive.

This conclusion is supported by the case law. In Loehmann’s, the Arizona

Supreme Court held that a tenant’s two day delay in paying a single common interest

charge, which represented an insignificant percentage of the overall rent payable under

the tenant’s lease, was so trivial a breach of a ten-year commercial lease that it did not

support termination of the lease. 163 Ariz. at 446-48. The Supreme Court relied on the

facts that the breach was short in length and was immediately cured when called to the

attention of the tenant, i.e., it was not willful or persistent. Id. Similarly, in Cracchiolo v.

Carlucci, the Arizona Supreme Court held that a breach was not material when a building

contractor had completed five out of six tasks he had agreed to perform and nearly

completed the sixth task (which cost an insignificant amount to complete). 62 Ariz. 284

(1945).

As stated above, CRL and Brentlinger’s repeated breaches of Paragraph 4 of the

SAR are a far cry from the insignificant, non-material breaches at issue in Loehmann’s

and Cracchiolo. CRL and Brentlinger have maintained registration of the CRL Stock for

only approximately 20 months out of the promised 60 months; they failed to inform

Dialog4 of the breach, despite being fully aware that Dialog4 intended to sell the CRL

Stock as soon as possible; they failed to timely cure the breach, despite being provided a

reasonable opportunity to cure by Dialog4; they have no intention of curing the breach at

this time. (Tr. at 171). Accordingly, for these reasons, among the others discussed

above, the Court finds that CRL and Brentlinger’s failure maintain registration of the

CRL Stock constitutes a material breach.

B. Remedy

As a result of CRL and Brentlinger’s breach of the SAR, Dialog4 seeks specific

performance of the of the Arbitration Award and SPA pursuant to Paragraphs 8(d) and

8(e) of the SAR.

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Specific performance is “an equitable remedy which is extraordinary and

dependent upon the sound discretion of the court.” Glad Tidings Church of America v.

Hinkley, 71 Ariz. 306, 314 (1951). Specific performance is available where: (1) there is a

contract; (2) the terms of the contract are certain and fair; (3) the party seeking specific

performance did not act inequitably; (4) specific enforcement will not inflict a hardship

on the breaching party that outweighs the anticipated benefit to the non-breaching party;

and (5) there is no adequate remedy at law. The Power P.E.O., Inc. v. Employees

Insurance of Wausau, 201 Ariz. 559, 563 (2002). Here, the SAR obligated CRL and

Brentlinger to maintain registration of the CRL Stock, and in the event of CRL and

Brentlinger’s failure to fulfill that obligation, specifically provided that Dialog4 would

enforce the Arbitration Award and SPA. There is no evidence to suggest the terms of the

SAR are anything but certain and fair. In addition, there is no evidence that Dialog4, the

non-breaching party, acted inequitably.

With respect to the issue of undue hardship, at trial Brentlinger testified that he

could not, “to the best of [his] knowledge,” purchase the CRL Stock from Dialog4 at this

time because his “current financial condition [was] linked entirely to [CRL],” and CRL

had allegedly ceased operations and is preparing to file for bankruptcy. (Tr. at 158, 163). 

The Court, however, does not find that testimony entirely credible. CRL’s May 30, 2008

filing with the SEC indicated that the total assets of CRL at that time was over 11 million. 

(Tr. Exh. 30, Tr. at 179). And although not at issue in this case, it appears that CRL may

be doing business as Nabro Able LLC and may have transferred at least some of its assets

to that company. (Tr. at 175-180). Thus, the Court cannot conclude that an award of

specific performance in this case would inflict undue hardship that would outweigh the

benefit to Dialog4.

Further, CRL and Brentlinger’s contention that “Dialog4 may be made whole by

an award of damages” is undercut by their additional contention that it is difficult to

“calculat[e] damages for alleged breach of agreements pertaining to assets such as stock,

which are inherently unpredictable . . . .” (Dkt. #56, p.36 ¶ 49). Although CRL and

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3

CRL and Brentlinger also argue that Dialog4 failed to mitigate its damages. As

failure to mitigate is an affirmative defense, it is CRL and Brentlinger’s burden to prove that

“mitigation was reasonably possible, but was not reasonably attempted.” Norther Ariz. Gas

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Brentlinger cite the Court to Clements v. Mueller, 41 F.2d 41 (9th Cir. 1930), and Scully

v. US WATS, Inc., 238 F.3d 497, 510 (3d Cir. 2001), those cases are inapposite. 

Clements involves a damages remedy for the sale of stock under contracts that required

the stock’s sale or delivery at a specific time; or the date of the conversion of stock. The

SAR did not require sale or delivery of the CRL Stock at a time certain; it was supposed

to provide Dialog4 the ability to freely trade its stock whenever it chose to do so over a

five-year time period. And Scully involves calculating damages for a breach of contract

on the date of the breach. Here, not only are there multiple breaches, the breaches do not

necessarily correspond with the windows of opportunity in which Dialog4 wanted to sell

the CRL Stock. The Court cannot find that Dialog4 has an adequate remedy at law in this

case.

Nevertheless, CRL and Brentlinger also argue that it would be “impossible for the

Court to order specific performance of the SPA, as Dialog4’s March 2003

correspondence demanded that Defendant Brentlinger purchase 1,213,000 shares of CRL

stock, but thousands of those shares are now in the hands of unknown third parties.” 

(Dkt. #56, pp. 34-35 ¶ 43). But Dialog4 is not seeking to specifically enforce their March

2003 demand letter. Nor does the SAR provide for specific performance of the demand

letter; it allows Dialog4 to enforce the SPA, which requires Brentlinger to purchase “any

portion” of the CRL Stock. Despite CRL and Brentlinger’s contentions, this case is not

akin to Grummel v. Hollenstein, 90 Ariz. 256 (1962), in which specific performance was

unavailable where a portion of the land contracted for had been sold to a third party. 

Specific enforcement of the SPA does not require Brentlinger to purchase all of the CRL

Stock, including that now owned by third-parties; it requires Brentlinger to perform his

obligations under the SPA. Any other interpretation would render Paragraph 8(e) of the

SAR unenforceable.3

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Serv. Inc. v. Petrolane Transp., Inc., 145 Ariz. 467, 477 (Ariz. App. 1984). CRL and

Brentlinger have not met their burden; there is no indication that mitigation was reasonably

possible after Dialog4 became aware of the breach of Paragraph 4 of the SAR, as there was

no evidence presented that there were potential buyers of the CRL Stock after the breach was

discovered by Dialog4. More importantly, it is unclear whether the defense of failure to

mitigate applies in this case when Paragraph 4 of the SAR provided Dialog4 with five years

of registration rights and Dialog4 was under no obligation to sell the CRL Stock during any

specific time period. Moreover, CRL and Brentlinger’s arguments concerning Dialog4’s

alleged failure to mitigate is based on 20/20 hindsight, and “whether a party has acted

reasonably under the circumstances is not to be measured by ex post facto wisdom.” Id. at

479.

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The Court concludes that the appropriate remedy for CRL and Brentlinger’s

material breach of the SAR is to specifically enforce the SPA and the Arbitration Award

pursuant to Paragraphs 8(d) and 8(e) of the SAR. As a result, Brentlinger must fulfill his

obligation under the SPA to purchase Dialog4’s CRL Stock at $1.10 per share. As

Dialog4 has sold 116,963 shares out of 1.25 million shares of the CRL Stock, it retains

1,133,037 shares of the CRL Stock. Therefore, the amount to be paid by Brentlinger to

Dialog4 under the SPA is $1,246,340.70, plus prejudgment interest at a rate of 10% per

year. A.R.S. § 44-1201.

In addition, CRL and Brentlinger must pay the amount of the Arbitration Award,

plus prejudgment interest at the rate of 10%, less the amounts previously paid under

Paragraph 3 of the SAR. However, although it is understandable for Dialog4 to rely on

CRL’s own filings with the SEC, which represented CRL’s liability to Dialog4 under the

Arbitration Award to be $1,393,000, the Court agrees with CRL and Brentlinger that the

actual amount of the Arbitration Award totaled approximately $1,048,958. (Dkt. #56, pp.

25-26 ¶¶ 136-140). And because Dialog4 itself subtracts the $965,000 paid under

Paragraph 3 of the SAR from that Award to determine the amount to be paid under the

Award, the Court will do the same. Thus, the amount due under the Arbitration Award is

$83,958. The appropriate prejudgment interest under Arizona law, contrary to CRL and

Brentlinger’s unexplained application of “an average federal interest rate of 3.28%” (Dkt.

#56, pp. 25-26 ¶ 139), is 10% per year. A.R.S. § 44-1201 (“Interest on any loan,

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indebtedness, judgment or other obligation shall be at the rate of ten per cent per annum,

unless a different rate is contracted for in writing, in which event any rate of interest may

be agreed to.”). Therefore, the amount to be paid by CRL and Brentlinger to Dialog4

under the Arbitration Award is $83,958.00, with prejudgment interest at a rate of 10% per

year.

Accordingly,

IT IS HEREBY ORDERED finding that CRL’s breach of Paragraph 4 of the

SAR is material.

IT IS FURTHER ORDERED finding that specific performance of the SPA

against Brentlinger and the Arbitration Award against CRL and Brentlinger is warranted.

IT IS FURTHER ORDERED finding that the amount to be paid by Brentlinger

to Dialog4 under the SPA is $1,246,340.70, plus prejudgment interest at a rate of 10% per

year.

IT IS FURTHER ORDERED finding that the amount to be paid by CRL and

Brentlinger to Dialog4 under the Arbitration Award is $83,958.00, with prejudgment

interest at a rate of 10% per year.

IT IS FURTHER ORDERED awarding Plaintiff its reasonable attorney’s fees

and costs. Plaintiff is directed to file its application for attorney’s fees in accordance with

LRCiv 54.2.

IT IS FURTHER ORDERED directing the Clerk of the Court to enter judgment

accordingly.

DATED this 30th day of November, 2009.

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