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ConcealFab Corporation v. Sabre Industries, Inc.

United States District Court, D. Colorado

July 22, 2019

CONCEALFAB CORPORATION, a Colorado corporation, Plaintiff,
SABRE INDUSTRIES, INC., a Delaware corporation, and MIDWEST UNDERGROUND TECHNOLOGY, INC., an Illinois corporation, Defendants.



         This case involves a dispute between two competing businesses over whether either party breached agreements concerning their merger or acquisition and, if so, the extent of damages caused by any such breach.

         Beginning on March 26, 2018, the Court presided over the three-day bench trial on Plaintiff ConcealFab Corporation's claims for: (1) breach of contract of the parties' Licensing Operating Agreement and of their Non-Disclosure Agreement; (2) breach of the implied covenant of good faith and fair dealing; (3) breach of fiduciary duty; (4) misappropriation of trade secrets; (5) tortious interference with contractual relationships; (6) tortious interference with prospective business relations; (7) fraud in the inducement; and (8) breach of contract of the Employment Agreement between ConcealFab's CEO and Defendant Sabre Industries, Inc., [1] see (Doc. # 68 at 10-20); and on Defendants Sabre Industries, Inc. and Midwest Underground Technology, Inc.'s (together, “Sabre”) counterclaims for: (1) unjust enrichment, and (2) breach of contract of the Licensing Operating Agreement, [2] see (Doc. # 70 at 26-31). (Doc. ## 137-43.) Having heard the evidence presented at the trial and having reviewed the parties' proposed findings of fact and conclusions of law (Doc. ## 148-49), the Court now enters its findings of fact and conclusions of law.


         A. THE PARTIES

         Plaintiff ConcealFab and Defendant Sabre are competitors in the small cell Distributed Antennae System (“DAS”) and outdoor Distributed Antennae System (“oDAS”) segments of the telecom market, and each has product lines, customer relationships, and intellectual property. (Doc. # 126 at 8.)

         ConcealFab is a Colorado corporation that engineers and manufactures small cell DAS and oDAS products for the commercial wireless industry and for the government. (Testimony of Fitzhugh, Doc. # 141 at 5-6.) It was founded by Michael Slattery. Since March 2013, Jonathan Fitzhugh has been ConcealFab's CEO and a member of its Board of Directors. (Id. at 6.) At all relevant times, Chris Odell and Duncan Stewart were members of ConcealFab's Board of Directors. (Id. at 56.) Richard Denton was a member of the Board of Directors between 2011 and 2013 and then again from June 2015 through the present, and he was the sole member of ConcealFab's Special Litigation Committee. (Testimony of Denton, Doc. # 142 at 310- 13.)

         Sabre[3] is a Delaware corporation that has been in the telecom industry for 40 years. (Testimony of Rossetti, Doc. # 143 at 487.) Sabre sought to diversify into the small cell DAS and oDAS segments of the telecom industry, and in April 2014, Sabre's parent company acquired 180 Logistics, LLC (“180 Logistics”), a company that engineered and manufactured products for the small cell DAS and oDAS markets. (Id. at 487-88; Testimony of Cochran, Doc. # 142 at 363-64.) At all relevant times, Peter Sandore was the CEO and President of Sabre, and he is currently the Chair of the Board of Sabre. (Testimony of Rossetti, Doc. # 143 at 482.) Timothy Rossetti was Sabre's Executive Vice President and Chief Financial Officer; he presently serves in those positions and as Sabre's Chief Administrative Officer. (Id. at 420.) Patrick Cochran founded 180 Logistics and, in 2015, was the Vice President for Engineering Solutions for Sabre. (Testimony of Cochran, Doc. # 142 at 335.) Cochran is now a Senior Vice President. (Id.) Douglas Huff was the President of Sabre's telecom division until early March 2015. (Testimony of Fitzhugh, Doc. # 141 at 25, 100.) Tony Sabatino, Sabre's Chief Development Officer, replaced Huff as the President of Sabre's telecom division upon Huff leaving the employ of Sabre. (Id. at 101; Testimony of Rossetti, Doc. # 143 at 436.)


         ConcealFab and Sabre began discussions to combine the two businesses in 2014. (Doc. # 126 at 8; Testimony of Rossetti, Doc. # 143 at 479.) In late July 2014, Sabre suggested that the parties enter into a non-disclosure agreement. (Trial Ex. 5.) Sabre provided a draft agreement, to which ConcealFab did not make any material changes. (Testimony of Cochran, Doc. # 142 at 336; Testimony of Fitzhugh, Doc. # 141 at 10-11.)

         The parties executed the Non-Disclosure Agreement (“NDA”) on August 4, 2014. (Trial Ex. 1 at 5.) The preamble to the NDA explained that “the Parties wish to explore a business opportunity of mutual interest, and in connection with this opportunity, each Party may disclose to the other certain business and/or technical information that is non-public, confidential or proprietary in nature.” (Id. at 1.) The NDA defined “Confidential Information” broadly; the term included, among other information:

(a) past, present and future business affairs such as finances, customer and/or supplier information, products, services, organizational structure and internal practices . . . and all business, marketing, development, sales and other commercial strategies;
(b) know-how, trade secrets, tools, methods, techniques, designs, and other information which derives economic value, actual or potential, from not being generally known to, or readily ascertainable through proper means by persons who can obtain economic value from its disclosure or use (collectively “Trade Secrets”); [and]
(c) all designs, specifications, documentation, components, source code, object code, images, icons, schematics, drawings, protocols, processes or depictions, in whole or in part, of any of the foregoing[.]

(Id.) The NDA obligated the parties to keep in confidence “all Confidential Information disclosed to either of them by the other” and to “use such Confidential Information only for the purposes of evaluating and engaging in discussion concerning a potential business relationship between the Parties.” (Id. at 2.) Finally, the NDA also required the parties to agree “that any violation or threatened violation of [the NDA] may cause irreparable injury to the other Party, entitling the other Party to seek . . . injunctive relief . . . and . . . [to] pursue any other available remedy, at law or in equity, including the recovery of damages.” (Id. at 3.)

         The parties have not amended or cancelled the NDA, and it remains in effect. (Testimony of Fitzhugh, Doc. # 141 at 15-16.)

         C. THE TERM SHEET

         Between November 2014 and February 2015, the parties exchanged drafts of a Term Sheet, in which they sought to outline the key terms from which a definitive agreement to combine ConcealFab and Sabre could be developed. (Doc. # 126 at 8.) Fitzhugh represented ConcealFab and Huff represented Sabre in these discussions. (Trial Exs. 10-14, 33; Testimony of Fitzhugh, Doc. # 141 at 26-37.)

         The parties executed the Term Sheet on February 3, 2015; Fitzhugh signed the agreement on ConcealFab's behalf, and Sandore signed it on Sabre's behalf. (Trial Ex. 2 at 6.) The Term Sheet began with an overview of each entity's “product lines, customer relationships, and intellectual property, ” which included:

• [Sabre] brings the following: manufacturing capability, engineering expertise as it relates to power, battery back-up, and radio enclosures . . ., backed by a large and credible parent organization, Sabre, and customer credibility with key accounts such as CCI [Crown Castle], AT&T, VzW [Verizon], Sprint, and others.
• [ConcealFab] brings the following: RF expertise as it relates to antenna concealment, PIM mitigation, and RF interference mitigation, engineering expertise as it relates to sound suppression, electrical integration, and total system integration. In addition, [ConcealFab] has significant customer penetration at key accounts including CCI, Verizon, and AT&T; plus an established marketing/sales footprint with several leading Manufacturing Reps, National Distributors, and OEM partners. [ConcealFab] is working in both the commercial and government markets and an important aspect of the government market in maintaining small business status . . . as [it] works to be an approved secure facility with appropriate clearances.

(Id. at 1); see (Testimony of Fitzhugh, Doc. # 141 at 173-75.)

         The Term Sheet explicitly stated that it was “non-binding on ether party and establishes only the intent of the organizations to work diligently to develop a formal agreement around the basics of the key points as outlined in [the Term Sheet].” (Id. at 5.) It called for the parties to “establish an interim plan/agreement that [would] allow for combined efforts in the marketing, business development, customer relationships, and manufacturing areas” within ten days of the execution of the Term Sheet. (Id.) The Term Sheet also provided for a 60-day “exclusivity period” “to allow for [the parties] to formulate an agreement acceptable to both parties” and during which ConcealFab could not “solicit, receive, share documents, or take any other action that would be in conflict with the goal of developing a formal agreement.” (Id. at 6.)

         Two provisions of the Term Sheet are notable, as they informed the parties' subsequent discussions about acquisition. First, the Term Sheet contemplated Sabre paying $1.2 million for the “[p]urchase of all the non-cash assets of ConcealFab . . . (including but not exclusive to all IP, processes, designs, etc.).” (Id. at 2.) The purchased assets were to be “setup in a new Sabre entity within [Sabre's] products group” that would “manage all commercial and governmental products and complementary services that are awarded, ” and what remained of ConcealFab post-acquisition was to “change its name to ‘CFG Systems.'” (Id.) ConcealFab was to use the $1.2 million to, among other things, “[f]und employee obligations of ~$250, 000.00” (Id.) The Term Sheet also stated that “[a]ll existing shareholders and option holders must vote (per [ConcealFab's] bylaws) to approve this transaction, ” and that “[f]ull releases will be provided by each shareholder and option holder.” (Id.)

         Second, the Term Sheet contemplated Fitzhugh leaving the employ of ConcealFab and becoming the “Executive VP of Engineered [P]roducts serving the Small Cell/oDAS/DAS segment” of Sabre upon Sabre's acquisition of ConcealFab. (Id. at 5.) It also called for “[a]n agreed upon employee base” to transition from ConcealFab to Sabre, where they would “accept employment packages (including non-compete language) and become key team members.” (Id.)

         Finally, the Term Sheet also included an appendix, “Addendum A, Base & Upside Case, ” that was created by Fitzhugh and other ConcealFab employees and identified ConcealFab's business opportunities at the time the parties agreed to the Term Sheet. (Id. at 7; Testimony of Fitzhugh, Doc. # 141 at 166-67.) Among ConcealFab's identified opportunities was “Hill AFB” (Hill Air Force Base), with a “potential lifetime value” of $21 million. (Trial Ex. 2 at 7.) Fitzhugh knew at the time that the value of the contract for Hill Air Force Base was $7.9 million, according to the request for proposal (“RFP”), but “believe[d] that the value of [the] contract was going to be greater than just what was represented in the RFP.” (Testimony of Fitzhugh, Doc. # 141 at 168-69.)

         On March 6, 2015, approximately one month after the parties executed the Term Sheet, ConcealFab informed Sabre that it had lost that opportunity to provide services to Hill Air Force Base. (Doc. # 126 at 9.)


         While Fitzhugh and Huff negotiated the Term Sheet, they also collaborated on an Employment Agreement for Fitzhugh's future employment by Sabre, which the Term Sheet contemplated. Fitzhugh represented ConcealFab and Huff represented Sabre in these discussions in January 2015. See (Trial Exs. 4, 18, 20-24, 26-27.) Fitzhugh represented to Huff that ConcealFab's Board of Directors needed to review and approve an Employment Agreement before they signed off on the Term Sheet. (Trial. Ex. 15; Testimony of Fitzhugh, Doc. # 141 at 36, 43-44.) Sabre's vice president for human resources drafted an Employment Agreement, the first draft of which Sabre emailed to Fitzhugh on January 7, 2015. (Trial Ex. 18; Testimony of Fitzhugh, Doc. # 141 at 44.) Fitzhugh's and Huff's subsequent drafts reflected changes to the definitions of “cause” for termination and “good reason” for resignation, and to the conditions upon which Fitzhugh's signing bonus would be returned or his severance would be paid. (Trial Exs. 20-22, 24, 26-27.)

         The parties finalized the Employment Agreement on or about January 15, 2015, prior to the execution of the aforementioned Term Sheet. (Trial Ex. 4; Testimony of Fitzhugh, Doc. # 141 at 57, 216.) Fitzhugh assigned his rights to the $125, 000.00 sign- on bonus and the $300, 000.00 in severance pay to ConcealFab. (Testimony of Fitzhugh, Doc. # 141 at 60-61.) At some point thereafter, ConcealFab's Board of Directors approved the January 15, 2015 version of the Employment Agreement. (Testimony of Fitzhugh, Doc. # 141 at 59, 220.) However, neither party executed the Employment Agreement at the time because it was intended to go into effect when Fitzhugh became any employee of Sabre. (Trial Ex. 4; Testimony of Fitzhugh, Doc. # 141 at 59-60, 98; Testimony of Odell, Doc. # 142 at 244.)

         Under the terms of the final, non-executed Employment Agreement, Fitzhugh was to become an employee of Sabre “on the date of consummation of the acquisition of [ConcealFab] . . . by Sabre . . . (such date, the ‘Effective Date').” (Trial Ex. 4 at 2.) The Employment Agreement also provided:

This Agreement shall automatically terminate without any action on the part of any person and be void ab initio if the Asset Purchase Agreement is terminated in accordance with its terms, and neither Sabre nor any other person shall have any liability to [Fitzhugh] under this Agreement if the Closing (as defined in the Stock Purchase Agreement) does not occur.

(Id.) Neither an asset purchase agreement or a stock purchase agreement ever occurred between the parties. (Testimony of Fitzhugh, Doc. # 141 at 216.)

         The Employment Agreement provided that Fitzhugh's title at Sabre was to be “Executive Vice President - DAS and Small Cell Product Segment” and that he was to report to the president of Sabre's Telecom Segment. (Trial Ex. 4 at 2.) Fitzhugh's annual salary was to be $300, 000.00, plus a $725.00 per month stipend for his vehicular costs. (Id.) Within 30 days of Fitzhugh's hire date, Sabre was to pay him a $125, 000.00 sign-on bonus. (Id. at 3.) The Employment Agreement required that Fitzhugh repay the sign-on bonus to Sabre if he was terminated for cause or resigned without good reason within the first year of his employment. (Id.)

         The Employment Agreement also detailed conditions of any potential severance pay:

If Sabre terminates [Fitzhugh] without “Cause” (as defined in Paragraph 25) after expiration of the Non-Termination Period, or [Fitzhugh] resigns at any time for “Good Reason” (as defined in Paragraph 25) . . ., [Fitzhugh] shall receive severance pay equivalent to his base salary at the end of employment . . . for a period of one (1) year.
. . . If [Fitzhugh] ends his . . . employment voluntarily, or is terminated for “Cause” as set forth in Paragraphs 24 and 25, [Fitzhugh] shall not be entitled to any severance.

(Id. at 2.) Paragraph 25 of the Employment Agreement defined “Cause” as:

[T]he material failure by [Fitzhugh] to observe Sabre written policies . . .; willful misconduct by [Fitzhugh] in the performance of [his] duties hereunder; insubordination; [and] willful unauthorized disclosure or misuse of Confidential Information. . . “Cause” shall not include termination as a result of a job elimination or staff reduction, including any that might occur during a re-organization or restructuring.

(Id. at 6.) “At the conclusion of Year 2” of Fitzhugh's employment by Sabre, the definition of “Cause” was to expand to include “the material failure by [Fitzhugh] to meet financial and performance criteria as established for the business segment that [Fitzhugh] is directing.” (Id.) Paragraph 25 defined “Good Reason” as:

[T]he occurrence of any of the following without [Fitzhugh's] consent: (1) a materially [sic] reduction in [Fitzhugh's] duties; (B) [Fitzhugh's] annual base salary or annual bonus potential is reduced or [Sabre] fails to pay any material amount of compensation when due; (; [sic] Sabre relocates [Fitzhugh's] principal place of business more than . . . 50 miles away from his current residence; or (E) Sabre materially breaches any material provision of this Agreement.


         Neither party has ever signed the Employment Agreement. See (Trial Ex. 4 at 10.)


         The Term Sheet established target deadlines for the parties' formalized agreements: within ten days of its execution, the parties were to “establish an interim plan/agreement that [would] allow for combined efforts, ” and within a maximum of 75 days, the parties were to “clos[e]” on a deal. (Trial Ex. 2 at 5, 6.) After the parties executed the Term Sheet on February 3, 2015, ConcealFab tried unsuccessfully to schedule a series of meeting to reach these target deadlines, but Huff cancelled them on Sabre's behalf. (Testimony of Fitzhugh, Doc. # 141 at 63-64.)

         On or about February 14, 2015, Huff contacted Fitzhugh to inform him that Sandore and Rossetti had not given their approval to an acquisition and that Sabre wanted to restructure their deal as a licensing operating agreement to together secure near-term business opportunities and to satisfy ConcealFab's need for capital. (Id. at 64-65.) ConcealFab was, as Fitzhugh well knew, in a precarious financial position at the time. (Id. at 24; Trial Ex. 102 at 3-4.) It had a significant amount of outstanding accounts payable, many of which were well past due; its total accounts payable was $422, 968.26 as of March 11, 2015, for example. (Trial Ex. 55; Trial Ex. 102 at 3-4; Testimony of Rossetti, Doc. # 143 at 494-96.) On February 16 and 18, 2015, Fitzhugh responded to Huff's suggestion with “thought document” and a draft list of the party's responsibilities under a licensing operating agreement. (Trial Exs. 37, 41; Testimony of Fitzhugh, Doc. # 141 at 65-69.) In turn, Huff proposed a first draft of an agreement on February 23, 2015. (Trial Ex. 45.) The parties continued to exchange drafts through late February and early March 2015. See (Trial Exs. 47, 50, 51; Testimony of Odell, Doc. # 142 at 252; Testimony of Fitzhugh, Doc. # 141 at 85-88.)

         On or about March 10, 2015, Huff informed Fitzhugh that he was leaving his employment with Sabre. (Testimony of Fitzhugh, Doc. # 131 at 100-01.)

         On March 12, 2015, Fitzhugh informed Huff that ConcealFab had “received an affirmative vote from a majority [of] both the Preferred class standalone and the Common plus Preferred classes combined” in support of the parties' draft agreement. (Doc. # 126 at 9; Trial Ex. 57.)

         On March 13, 2015, the parties executed a final Licensing Operating Agreement (“LOA”). (Doc. # 126 at 9; Trial Ex. 3.) Fitzhugh signed the LOA on behalf of ConcealFab, and Sandore signed it on behalf of Sabre. (Trial Ex. 3 at 4.)

         The LOA began with a preface explaining that in support of their previous agreement to pursue current opportunities, the parties “agree to amend the [T]erm [S]heet with . . . adjustments to facilitate an accelerated ability to execute business opportunities and to support the working capital requirements” of ConcealFab. (Id. at 1.) The LOA's initial term was from the date of execution through August 30, 2015, and during this period, Sabre had “the sole exclusive right to effectuate [an] acquisition” of ConcealFab. (Id.)

         The LOA provided that Sabre would “set up a financial reporting segment under their engineered product group [(‘EPG')]” to “capture all financial-related results associated” with the parties' collaboration, (id.), which the Court henceforth refers to as the “new Sabre EPG segment, ” see (id. at 3). “All commercial and non-small business/non-cleared facility work and opportunities” were to be “marketed, closed, [and] operated” through the new Sabre EPG segment, as were “[a]ny orders post-execution of [the LOA] not depending on [ConcealFab's] small business or cleared facility status.” (Id. at 2, 3.) The new Sabre EPG segment was also to capture all financial transactions related to such work. (Id. at 2.) The working capital for the new Sabre EPG segment would be funded by Sabre, but the LOA clarified that none of ConcealFab's pre-existing accounts payable would “move over to the new Sabre EPG segment.” (Id. at 3.)

         The remaining ConcealFab entity-that which was not absorbed into the new Sabre EPG segment-was to be renamed “CFG.” (Id. at 2.) “Any Sabre products requiring small business or a cleared facility status” were to run through CFG, “when possible.” (Id. at 2, 3.)

         With respect to employees, the LOA stated that Fitzhugh and “agreed upon employees [would be] terminated from [ConcealFab] as of an agreed upon date (targeted for [March 9, 2015])” and onboarded at Sabre through its “typical . . . onboarding process.” (Id. at 1.) ConcealFab was responsible for all liabilities of these employees “prior to the Sabre hire date.” (Id.)

         The LOA affirmed the Term Sheet's contemplated “purchase price of $1.2 [million], ” approximately $250, 000.00 of which was to “[f]und employee obligations.” (Id. at 2.) The LOA detailed that $120, 000.00 of this $250, 000.00 in employee obligations was to be directed to an “Employee/Contractor buyout, ” would “funded through a prepayment/deposit fee licensing fees, ” and would be paid to ConcealFab in “scheduled payment amounts to be determined.” (Id. at 2, 3.) Elsewhere, the LOA again restated that this same $120, 000.00 “must be utilized to effectuate a buyout of the current consulting agreement, ” implicitly referring to the consulting agreement between ConcealFab and its founder, Slattery. (Id. at 3; Testimony of Fitzhugh, Doc. # 141 at 92; Testimony of Rossetti, Doc. # 143 at 429.) That consulting agreement, executed November 18, 2014, required ConcealFab to pay Slattery a monthly fee of $12, 000.00 for 12 months, for a total of $144, 000.00. (Trial Ex. 8; Testimony of Fitzhugh, Doc. # 141 at 21-22.) If the LOA was terminated, the amounts paid by Sabre towards the $250, 000.00 in employee obligations “would revert to a 1-year note due [to] Sabre guaranteed by all IP [(intellectual property)] at a rate equivalent to their incremental borrowing rate.” (Trial Ex. 3 at 2.)

         Under the terms of the LOA, both parties were responsible for licensing fees. As the new Sabre EPG segment acquired business, Sabre would “accrue licensing fees due [to] CFG at the rates and per the calculations outlined” in the Term Sheet. (Id. at 3.) And as CFG generated business, it would accrue licensing fees “due [to] Sabre at the rate of 45% of the EBITDA [(earnings before interest, tax, depreciation, and amortization)] generated by the CFG entity.” (Id.)

         Significantly, the LOA called for Sabre to “provide working capital at an amount to be determined to CFG at Sabre's incremental cost of capital, ” with the “method of funding to be determined.” (Id. at 3.) The LOA specified:

Sabre will pre-pay/deposit licensing fees to CFG at an amount to be agreed upon at the execution of and during the duration of this LOA. This amount must be repaid to Sabre prior to any distributions to CFG shareholders. This includes an immediate infusion of cash to ConcealFab in the amount of [$160, 000.00] on March 13[, 2015, ] to be utilized as source of funds to pay current [accounts payable] as per listing received [March 11, 2015, ] and as per agreement, 2015 [sic] and an additional [$120, 000.00] (with scheduled payment amounts to be determined) for the Employee/Contractor which must be utilized to effectuate a buyout of the current consulting agreement.

(Id.) (emphases added.) These pre-pay/deposit licensing fees paid by Sabre were to be repaid by CFG “or offset against licensing fees earned and due to CFG from Sabre.” (Id.)

         In the event that “the LOA is terminated without an acquisition and the licensing fees due [to] CFG from Sabre are not sufficient to offset balances due to Sabre from CFG, ” the LOA required that the balance due from CFG to Sabre to repay the licensing fees would “revert to the form of a 1-year note at Sabre's incremental borrowing rate payable in monthly installments.” (Id.) This note was to be guaranteed by a security interest in ConcealFab's intellectual property. (Id.)

         The LOA included three “[a]dditional provisions” bearing on the parties' claims. First, the LOA required that “[a]ll existing shareholders and option holders [of ConcealFab] must vote (per ConcealFab's Corporation's By-Laws) to approve this LOA structure in accordance with ConcealFab's corporate governance documents.” (Id. at 4.)

         Second, in the event that the LOA was terminated, Fitzhugh's “employment agreement shall terminate as ‘resignation for good reason.'” (Id.) This was the only mention of an employment agreement in the LOA.

         Third, the LOA identified the parties' respective licensing rights in the event that the LOA was terminated. (Id.) Licensing rights “for the concealed shelters and back lobe suppressors” would belong to ConcealFab, though ConcealFab would provide “most favored nation” status and offer reduced pricing on these products to Sabre. (Id.) Sabre would “retain the exclusive IP [(intellectual property)] rights to their radio cages and shroud portfolio as outlined in Exhibit A, ” though ConcealFab would receive a ten percent discount on these products. (Id.) Any intellectual property developed by the new Sabre EPG segment would become the property of Sabre. (Id.) And finally, the parties agreed that they “each have specific pole capability and designs that will be shared, and that upon the termination of the LOA, will compete on this product line with no restrictions.” (Id.)


         The parties vociferously debate the extent to which they performed their obligations under the LOA. Although there is insufficient evidence to resolve all of these disputes, the Court makes the following findings of fact.

         First, in accordance with the LOA, see (Trial Ex. 3 at 1), Sabre set up “a financial reporting segment under their engineered product group” to “capture all financial related results” associated with the new Sabre EPG segment. (Testimony of Rossetti, Doc. # 143 at 493, 535.) Additionally, what remained of ConcealFab after the parties' attempted integration was renamed CFG.[4] See (Testimony of Fitzhugh, Doc. # 141 at 121.)

         As to Fitzhugh's employment, Fitzhugh immediately began working at Sabre upon the execution of the LOA, and his title was Executive Vice President of the new Sabre EPG segment. (Testimony of Fitzhugh, Doc. # 141 at 107.) Between March 13, and May 26, 2015, Sabre paid Fitzhugh a gross annual salary of $300, 000.00, the same salary that was identified in the Employment Agreement. (Id.; Trial Ex. 4 at 2.) In the days after he was onboarded at Sabre, Fitzhugh made multiple inquiries to Sabre about the status of the Employment Agreement, which he and Huff had finalized but not executed some two months prior. (Testimony of Fitzhugh, Doc. # 141 at 98-101; Trial Ex. 60.) At the end of March 2015, Sandore told Fitzhugh that Sabre did not intend to execute the Employment Agreement because he, Rossetti, and Sabatino did not understand it to be a part of the parties' deal, to which Fitzhugh responded that execution of the Employment Agreement was part of the deal. (Testimony of Fitzhugh, Doc. # 141 at 101.) On April 20, 2015, Sabatino sent an email to Huff-at his personal email address, as he was no longer employed by Sabre-and Fitzhugh, stating that he needed Huff's “help on what was agreed upon specific to the LOA working rules of engagement” because Sandore and Rossetti were “telling [him] that the deal we have right now is not the deal that was agreed upon.” (Trial Ex. 66 at 2.) The following day, April 21, 2015, Fitzhugh responded by directing Sabatino to the LOA's text that “Jon Fitzhugh's employment agreement shall terminate as resignation for ‘good reason' in the event of termination of the LOA.” (Id. at 1.) Fitzhugh argued that this language in the LOA “[c]learly . . . point[ed] to [his] employment agreement and impl[ied] is [sic] was to be executed as part of the LOA.” (Id.) Sabatino replied to Huff, stating that it appeared to him that Fitzhugh “has documents that [he] d[id] not have as part of this deal, ” including “a January Employment agreement that [he] also did not see, ” and asking Huff for the history of the Employment Agreement. (Trial Ex. 67.) At some point thereafter, Sabatino, Huff, and Fitzhugh had a joint phone conversation about the Employment Agreement, from which Fitzhugh formed the impression that Sabatino would impress on Sandore and Rossetti that Sabre needed to live up to its deal and execute the Employment Agreement. (Testimony of Fitzhugh, Doc. # 141 at 105-06.) As the Court has already explained, Sabre never executed the Employment Agreement. Sabre did not pay Fitzhugh the $125, 000.00 sign-on bonus, grant him 250, 000 stock options, or pay him the monthly stipend of $725.00 for transportation costs contemplated by the Employment Agreement, nor did it award Fitzhugh any severance pay upon termination of his employment with Sabre. (Id. at 107, 121; Doc. # 149 at 18- 19; Doc. # 148 at 24.)

         With regard to the LOA's requirement that Sabre pre-pay/deposit licensing fees to CFG in the amount of $120, 000.00 “(with scheduled payment amounts to be determined) for the Employee/Contractor which must be utilized to effectuate a buyout” of Slattery's consulting agreement, see (Trial Ex. 3 at 3), Sabre sought to pay this amount in monthly installments of $12, 000.00 for a period of ten months. (Testimony of Fitzhugh, Doc. # 141 at 108.) Sabre made two $12, 000.00 payments for the March and April 2015 payments (a total of $24, 000.00) on May 5, 2015, which ConcealFab accepted. (Doc. # 126 at 9.) Sabre did not make any payments of this sort in May 2015 or at any point thereafter. (Testimony of Fitzhugh, Doc. # 141 at 109.) CFG/ConcealFab was subsequently unable to make the monthly payments to Slattery required by their consulting agreement. (Id.)

         Sabre complied with the LOA's provision that it would provide working capital to CFG by pre-paying licensing fees, including an “immediate infusion of case to ConcealFab in the amount of [$160, 000.00] on March 13[, 2015, ] to be utilized as source of funds to pay current [accounts payable].” See (Trial Ex. 3 at 3.) Sabre timely paid $160, 000.00 to ConcealFab. (Testimony of Fitzhugh, Doc. # 141 at 195; Doc. # 148 at 10.)


         On May 26, 2015, Sandore informed Fitzhugh on a telephone call that Sabre was terminating the LOA. (Testimony of Fitzhugh, Doc. # 141 at 120.) Several stakeholders from both entities, including Fitzhugh, Sabatino, Sandore, and Rossetti, participated in a joint call the next day, in which they debated how much CFG/ConcealFab owed Sabre upon termination and whether Sabre was obligated to pay Fitzhugh a $300, 000.00 severance. (Id. at 121.)

         On May 27, 2015, Sabre recorded a UCC-1 Financing Statement with the Colorado Secretary of State (the “UCC Lien”). (Trial Ex. 86; Testimony of Rossetti, Doc. # 143 at 450.) The UCC Lien identified ConcealFab as the debtor and listed as collateral “[a]ll right, title, and interests of the Debtor in any Intellecutal Property.” (Trial Ex. 86 at 2.) Sabre did not inform ConcealFab of the UCC Lien.

         Late in the evening of May 28, 2015, Rossetti emailed Fitzhugh a list of “expenses incurred on behalf of ConcealFab [for] which [Sabre was] seeking reimbursement in the form of a note per the LOA” and attached a promissory note. (Trial Ex. 90.) Rossetti wrote, “[Sabre] will keep the employees on for another week and [ConcealFab] agree[s] to execute the note in consideration thereof” by 12:00 PM EST the following day, May 29, 2015. (Id. at 1; Testimony of Fitzhugh, Doc. # 141 at 122.) The promissory note required ConcealFab to pay a principal of $621, 559.30 by May 31, 2016, subject to an 11% interest rate. (Trial Ex. 90 at 2.) ConcealFab did not sign the promissory note because it took issue with Sabre's accounting of amounts owed under the LOA. (Testimony of Fitzhugh, Doc. # 141 at 128; Trial Ex. 91; Testimony of Odell, Doc. # 142 at 269-72.)

         On June 3, 2015, Sabre emailed Fitzhugh a letter from Sandore, dated May 29, 2015, in which Sandore formally terminated the LOA and “remind[ed]” ConcealFab of its “obligation to execute a promissory note for the amounts owed to Sabre.” (Trial Ex. 92; Testimony of Fitzhugh, Doc. # 141 at 128-29.)

         ConcealFab did not learn of the UCC Lien until later in June or July 2015, when it was applying for financing and a potential financier informed ConcealFab that it needed to amend its term sheet because ConcealFab had a lien against it. (Testimony of Fitzhugh, Doc. # 141 at 132.)

         On July 24, 2015, ConcealFab demanded that Sabre terminate the UCC Lien. (Doc. # 126 at 9-10.) Sabre refused to do so. (Testimony of Fitzhugh, Doc. # 141 at 134.)

         On August 19, 2015, ConcealFab initiated this action against Sabre. (Doc. # 1.)

         On September 11, 2015, ConcealFab filed an initial financing statement with the Colorado Secretary of State, stating the Sabre's UCC Lien against it “was wrongfully filed because no security agreement exists between [Sabre] and [ConcealFab].” (Trial Ex. 87; Testimony of Fitzhugh, Doc. # 141 at 134-35.)

         Nearly two years after Sabre filed the UCC Lien, Sabre terminated it on May 18, 2017. (Trial Ex. 88; Doc. # 126 at 10.)

         Neither party has ever repaid any monies that may be owed pursuant to the LOA. ConcealFab concedes that it owes Sabre $184, 000.00 for Sabre's initial cash infusion of $160, 000.00 and for Sabre's two $12, 000.00 payments towards the buyout of Slattery's consulting agreement with ConcealFab but argues that this sum must be reduced “by any licensing ...

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