Yea I don't know why people are so hung out up on the "no offer = wasn't our first choice" thing. That's just not how job searches work at all. The only reason we never "formally offered" him a contract is because the sides couldn't agree on the parameters of what that contract would look like. That hardly means we preferred another candidate (be it Clawson or anyone else) over Lembo.
It'd be like discussing a job opening with Applicant A, your first choice, where it comes out during discussions that Applicant A will not agree to a start date before January 1, 2014. You really need whoever fills this position on December 15, 2013. So you talk to Applicant B, who is free to start on December 15. And you offer Applicant B, and he accepts. None of this means that Applicant A wasn't your first choice; he just had a demand -- here, a later start date -- that you as the employer weren't comfortable with. It's fine, it happens.