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Duncan v. Lifelock, Inc.

Court of Appeals of Arizona, First Division, Department A

July 2, 2013

NEAL DUNCAN, as an individual, Plaintiff/Appellant,
v.
LIFELOCK, INC., a corporation, Defendant/Appellee.

(Not for Publication – Rule 28, Arizona Rules of Civil Appellate Procedure)

Appeal from the Superior Court in Maricopa County Cause No. CV2010-001452 The Honorable Robert H. Oberbillig, Judge

Law Offices of Kevin Koelbel PC Chandler By Kevin Koelbel and Laufenberg Stombaugh & Jassak S.C. Platteville, WI By Christopher D. Stombaugh Attorneys for Plaintiff/Appellant.

Greenberg Traurig LLP Phoenix By Booker Travis Evans, Jr. Attorneys for Defendant/Appellee

MEMORANDUM DECISION

KENT E. CATTANI, Judge

¶1 Neal Duncan appeals the summary judgment entered in favor of LifeLock, Inc. ("LifeLock") and the award of attorney's fees. For reasons that follow, we affirm.

FACTS AND PROCEDURAL BACKGROUND

¶2 Duncan, Robert Maynard, and Todd Davis founded LifeLock. Maynard and Davis recruited Duncan because he had significant experience in setting up and running a call center. Duncan contends that at a meeting in March 2005, Maynard offered him 10% ownership in LifeLock in exchange for helping to start the company. Although Duncan admits he was to receive the stock in four installments -- one 2.5% installment at start up followed by three annual installments of the same percentage over the next three years -- Duncan claims the parties agreed that he would not have to first earn the LifeLock stock.

¶3 LifeLock agrees that Duncan was entitled to the first 2.5% installment at start up, but argues the three subsequent annual installments had to be earned by Duncan's efforts for the company over each of the next three years. LifeLock in fact issued the start-up installment on April 17, 2006 by distributing to Duncan 2.5% of the company's stock as of incorporation on April 16, 2005. LifeLock did not, however, issue the following three 2.5% installments, claiming Duncan did not complete even one year of service to earn a second or subsequent installment. The central dispute between the parties is whether Duncan was required to continue working for LifeLock to earn the three additional installments.

¶4 Early in their relationship, the parties exchanged a number of e-mails discussing this particular issue. In a May 12, 2005 e-mail to Maynard, Duncan recalled that the stock agreement reached in March was as follows:

my percentage went to 10% equity but you said I would have to earn it. . . . I am not as comfortable earning equity as just having it in place for participating which was the primary reason I got involved. Having said that, I am okay with a schedule to acquire equity through my efforts but I need to see your thoughts.

In the same e-mail, Duncan explained why he believed that he had earned $7, 500 of "sweat equity" every month in April, May, and June.

¶5 Maynard responded later that day, in pertinent part:

I'm fairly certain that the only number I ever discussed was 10%, earned equally over three years, 2.5 immediately and then 2.5 per year at ...

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