Samuel C. Straight (7638)

Ryan B. Bell (9956)

Caleb J. Frischknecht (11648)

RAY QUINNEY & NEBEKER, P.C.

36 South State Street, Suite 1400

Salt Lake City, Utah 84111

Telephone: (801) 532-1500

Attorneys for Defendant e.Digital Corporation

This case involves contractual disputes between plaintiff digEcor, Inc. and defendant e.Digital Corporation, the parties responsible for the creation and marketing of a portable in-flight entertainment device known as the digEplayer 5500. By various rulings of the Court and stipulations of the parties, the claims in this case have been reduced to three main causes of action for damages based on three different contracts.1 First, digEcor claims consequential damages for an alleged delay in delivery of digEplayers under a purchase order issued by digEcor on November 11, 2005 (the "Purchase Order"). Second, digEcor claims that e.Digital

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digEcor also asserts a claim for injunctive relief in connection with one of these contracts.

has breached the Digital Rights Management Agreement executed by the parties on November 11, 2005 (the "DRM Agreement") by using digital rights management technology ("DRM") in its competing portable in-flight player (the eVU), which allegedly infringes on digEcor’s exclusive license to certain DRM technology under the Agreement. Third, digEcor claims that e.Digital breached the warranty provision of an agreement executed between the parties on October 22, 2002 (the "October 22 Agreement") by failing to reimburse digEcor for doing warranty repairs.

These three causes of action were tried to the Court during May 2009. The Court heard the testimony of fact and expert witnesses, received additional testimony by deposition, received numerous exhibits into evidence, and heard the arguments of counsel for the parties. Based on the evidence presented, the Court enters the following findings of fact and conclusions of law:

I. FINDINGS OF FACT

The Court enters these findings of fact based on a preponderance of the evidence. In assessing the credibility of the witnesses, the Court has considered the sources of each witness’s knowledge; the ability of each witness to observe; the strength of the witness’s memory; each witness’s interest, if any, in the outcome of the litigation; the relationship of each witness to either side of the case; the extent to which each witness’s testimony is either supported or contradicted by other evidence presented at trial, and the witness’s willingness and ability to give reasonably succinct and responsive answers to questions at trial.

The Court notes specifically that it found e.Digital’s witnesses to be credible, while some witnesses offered by digEcor lacked credibility under the above criteria. Specifically, digEcor’s President, Brent Wood, offered self-serving testimony at trial that was often contradicted by his

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2 The independence of Paul Hepworth, digEcor’s expert on the DRM issues, was also questioned prior to trial, due to the past and ongoing business relationship between Mr. Hepworth’s employer, VPI engineering, and digEcor. The Court received written arguments from the parties on this issue and has taken Mr. Hepworth’s possible bias into consideration in weighing the usefulness of his testimony.

own past testimony (compare Tr. 305-309 with digEcor 30(b)(6) Dep. p. 74; and Tr. 333-336 with July 14, 2006 Brent Wood Declaration, ¶ 26, Doc. #17) or with his own private statements in the contemporaneous communications offered in evidence. (Compare Tr. 162, 171 with Exs. 62 & 71.) At one point during the trial, Mr. Wood stated that his sworn testimony on a crucial issue (which did not align with digEcor’s litigation position), given in the 30(b)(6) deposition of digEcor, was false. (Tr. 309.) Further, while the Court found digEcor Vice President Chris Wood to be generally credible, documents introduced at trial demonstrate that he misled e.Digital regarding the purpose of the inspection performed by digEcor.2 (See n. 5, infra.) The Court has incorporated these credibility determinations in reaching the findings discussed below. Finally, the Court notes that the trial was extended by several days to permit digEcor to introduce evidence and testimony well beyond the time originally allotted.

Background

2. 1. In early 2002, digEcor (then known as Aircraft Protective Systems, or "APS") approached e.Digital with a request that e.Digital develop a portable video player designed to allow airlines to offer first-run Hollywood movies and other content to their passengers. (See Uncontroverted Fact ¶ 6(d), Pretrial Order, Docket No. 372, at 10; Ex. 1.) The market space in which this device was intended to compete is known as the In Flight Entertainment, or "IFE" industry. (See Uncontroverted Fact ¶ 6(e).)

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2. 2. On October 22, 2002, e.Digital and APS entered into the October 22 Agreement whereby e.Digital agreed to design and assist with the manufacture of an IFE device that eventually became known as the digEplayer 5500. (See Uncontroverted Fact ¶ 6(c); Ex. 1.)
3. 3. In October 2004, APS was acquired by Wencor West, Inc., a large, worldwide supplier of airline parts. (See Uncontroverted Facts 6(f); Tr. 116.) APS’s name was subsequently changed to digEcor. (See Uncontroverted Facts, 6(g).)
4. 4. Over the course of their relationship, e.Digital sold more than 9,000 digEplayer 5500s to APS/digEcor, approximately 7,000 of which were sold after the acquisition and name change. (See Pre-Trial Order, Uncontroverted Facts ¶¶ 6(f), 6(j).)
5. 5. digEcor purchased digEplayers from e.Digital by issuing purchase orders, which specified the number of digEplayers needed along with a unit price and ship date. (See, e.g., Exs. 12, 18.)
6. 6. It was standard procedure between the parties for digEcor to specify the color of the digEplayers’ plastic shells, as well as the airline logo to be affixed to the shells, either on the purchase order itself or shortly after the purchase order was issued. (See Ex. 6 (specifying KLM as airline), Ex. 35 (specifying Martinair as airline), Ex. 18 (4/7/05 P.O. for 1,620 players) and Ex. 240, p. 5 (4/8/05 Fred Falk email discussing "1620 Alaska players."); Tr. 879, 999-1000, 1011.) This procedure allowed the plastic shells and the electronic sub-assemblies to be manufactured simultaneously so that the electronic sub-assemblies could be inserted into the plastic shells as soon as they were completed. (See Exs. 26, 69, 72; Tr. 1000-01.) The digEplayers could not be completed without the case color and branding information from digEcor. (Ex. 90 at 1; Tr. 580-81, 594.)

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2. 7. On two purchase orders issued prior to November 2005, digEcor deviated from this standard procedure and failed to provide the color and branding information for the shells until well after the purchase order was issued. (Tr. 481-82, 1000-02.) When this happened, e.Digital repeatedly objected to digEcor’s delay and requested that digEcor provide the color and branding information, warning that failure to do so would interfere with the manufacturing process and would result in further delay. (See Tr. 1001, 1004, 1011; Exs. 26, 29, 31, 32.)
3. 8. The parties entered into and performed purchase orders using the standard process (where color and branding information were provided with or shortly after the purchase order) both before and after the two deviating purchase orders. (Tr. 1002, 1011; Exs. 12, 18, 35.)
4. 9. As early as October 2004 — shortly after APS was acquired by Wencor — e.Digital was considering designing a next generation IFE player to replace the digEplayer 5500 and actively sought to obtain digEcor’s input and participation in the next-generation project. (See Tr. 989-93; Exs. 3, 11; Anandpura Dep. p. 205:4-12.) These efforts continued through the early autumn of 2005. (Anandpura Dep. p. 204-05.)

digEcor Abandons e.Digital in Favor of the digEplayer XT Product

2. 10. On October 13, 2005, digEcor announced in a press release that a company other than e.Digital would be the "key partner in developing the new version of the digEplayer" and that digEcor would continue selling the digEplayer only "[f]or the balance of 2005." (Ex. 49.)
3. 11. Contemporaneous documents introduced at trial demonstrate that it was digEcor’s intention to abandon the digEplayer 5500 and begin selling its next generation player, the digEplayer XT, by sometime in the second quarter of 2006. (Exs. 62, 71, 111.) In November 2005, Brent Wood wrote to a digEcor colleague that he "would love to get an order from a

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2. customer for our new player and not have to use e.Digital." (Ex. 62.) Based on this evidence, the Court finds that it was digEcor’s intention to shift emphasis to its next-generation digEplayer XT and cease offering the digEplayer 5500.

The Purchase Order

2. 12. On November 11, 2005, digEcor issued what turned out to be the final purchase order between the parties, representing to e.Digital that it needed players "immediately," and had customers who required players very soon. (Exs. 45, 60, 63.) This purchase order (the "Purchase Order") requested 1250 digEplayers and 1250 digEplayer batteries, with a "ship date" requiring them to be delivered by January 10, 2006. (Ex. 60; Tr. 467, 885.) It also requested an additional 750 players, leaving open the delivery date for the parties to determine later. (Ex. 60; Tr. 182)
3. 13. The Purchase Order was expressly made contingent on the parties reaching terms on a written license agreement (the "DRM Agreement") whereby e.Digital would license to digEcor certain digital rights management technology used to ensure security of the content loaded on the players. (Ex. 60.)
4. 14. Likewise, the DRM Agreement was contingent on the execution of a purchase order for 2000 digEplayers, 1250 of which would be called for immediately. (Ex. 64 ¶ 5.) Both the DRM Agreement and the Purchase Order provided that an order for 750 players would be confirmed later, with the DRM Agreement specifying that this subsequent order for the remaining 750 players was contingent on meeting the terms of the Purchase Order for the first 1250 units. (Ex. 64 ¶ 6; Ex. 60.)

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3 Exhibit 63 is a November 11, 2005 Chris Wood Email stating "You should be receiving a signed copy of the agreement today and a new PO."

2. 15. The parties executed both the DRM Agreement and the 1250 Purchase Order on November 11, 2005. (Exs. 60, 633, 64; Tr. 307-09, 1030.) They were negotiated simultaneously, and as joint transactions. (Exs. 52, 54, 55; Tr. 1026-30.) They were also contingent upon each other, and contained interlocking terms which the parties viewed as dependent upon each other. (Exs. 60, 64, 123, 138, 141, 172; Tr. 1026-30.)
3. 16. The parties jointly agreed that Maycom, a manufacturing company in Korea that had manufactured nearly every digEplayer previously made, would be responsible for manufacturing the 1250 players. (Ex. 64 ¶ 5; Tr. 40, 126, 309-10.)
4. 17. In keeping with the parties’ standard practice, and relying on digEcor’s representations that it needed players very soon, e.Digital immediately began requesting that digEcor provide the color and branding information for the 1250 players. (Ex. 69; Tr. 1031-32.) When digEcor failed to provide the needed information, e.Digital objected to digEcor’s delay and continued to demand that digEcor provide the color and branding information, warning that failure to provide the information could result in problems with the manufacturer. (Exs. 72, 74, 123; Tr. 885, 1037-38.)
5. 18. Specifically, e.Digital cautioned that "it takes some of the pressure off of [Maycom] which is not the way to deal with any manufacturer," (Ex. 72) and that "this really disrupts the manufacturing process from a scheduling point of view." (Ex. 74.)

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4 digEcor had attempted to specify the branding for 714 of the 1250 players on February 22, 2006 (see Ex. 112, 114, 115), but Maycom responded to both e.Digital and digEcor stating that it would not begin producing the cases until branding for all 1250 players was specified. (Exs. 245, 116.) March 2 was the first time digEcor specified branding for all 1250 players. (Tr. 332-33.)

2. 19. digEcor failed to provide branding information for the 1250 players in time for the players to be completed by the January 10, 2006 ship date, making it impossible for e.Digital to fulfill the order by the contractual deadline. (Ex. 60; Tr. 303, 580, 878.)
3. 20. The parties did not agree on a date for delivery of the 1250 players after digEcor’s failure to timely provide the branding information rendered the January 10, 2006 deadline impossible. (Tr. 931.)
4. 21. On March 2, 2006, digEcor received a letter from William Blakeley, e.Digital’s president at the time, stating that digEcor had breached the Purchase Order and DRM Agreement for, among other things, failing to deliver branding information and failing to take delivery of the players by January 10, 2006. (Ex. 123; Tr. 584-85, 878-80.)
5. 22. Later that very same day (and nearly four months after the Purchase Order was issued and accepted), digEcor finally notified e.Digital that the 1250 players should be in generic black cases without any specific customer branding. (Ex. 127.)4
6. 23. Based on digEcor’s communication, e.Digital immediately instructed Maycom to produce all of the 1250 Players using black plastic cases without any customer name on the front. (Ex. 126.)
7. 24. Unfortunately for all involved, shortly thereafter Maycom’s president and CEO, Su Won Bae, informed e.Digital by email that Maycom lacked the necessary funds to procure components and labor necessary to manufacture the 1250 Players. (Ex. 144; Tr. 890, 971.) The

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2. parties learned that Maycom had misappropriated the funds advanced by digEcor for digEplayer assembly. (Ex. 144, 162 p. 3; Tr. 970-71, 1089-90.)
3. 25. In his email, Mr. Bae stated that his bank had given him until the end of January 2006 to pay his other obligations. (Ex. 144.) The Court notes that Mr. Bae’s payment obligations did not come due until three weeks after the digEplayers would have shipped under the Purchase Order, had digEcor provided branding information in time to meet the January 10 ship date.
4. 26. e.Digital immediately informed digEcor of Maycom’s financial problems. (Ex. 144.)
5. 27. Both digEcor and e.Digital were completely surprised to learn that Bae had misappropriated digEcor’s funds. (Tr. 891, 1046.) digEcor’s chief executive officer testified that when he received Bae’s March 15, 2006 email "[he] went crazy" and that the email "just shocked [him]." (Tr. 226.) He also testified that he had no reason to believe or foresee that Maycom would misappropriate the funds advanced by digEcor. (Tr. 356.)
6. 28. Only after Maycom announced its unlawful acts, indeed after this litigation began, did e.Digital learn that digEcor had reason to know, based on a January inspection of Maycom, that problems existed with the production of the players. In early January, 2006, digEcor sent an agent of its parent company to inspect the status of the production at Maycom. (Ex. 90 p. 3.) The inspection was done with e.Digital’s encouragement. (Tr. 1039-40.)
7. 29. However, e.Digital was never given the final inspection report. (Tr. 323-24, 591-92, 895, 1041.) Rather, after the inspection was completed, Mr. Falk wrote to Mr. Wood asking

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5 Indeed, after the parties had learned about Maycom’s financial misconduct, e.Digital repeatedly pressed for greater detail regarding the inspection (Ex. 146, 147, 165 p. 5,) and digEcor continued to withhold the inspection information. (Exs. 147, 148.) Chris Wood went so far as to state, falsely, that the inspection was not intended to reveal the production status of the 1250 players (compare Exs. 147, 148 with Ex. 90. p. 3.) and instructed the inspector not to divulge to e.Digital any details of the inspection. (Ex. 150, pp. 2-3.)

2. that digEcor make final payment for the players if no issues had arisen as a result of the inspection. (Ex. 91.) digEcor promptly made the payment. (Tr. 198, 1041.)
3. 30. The inspection report, which was kept from e.Digital, raised significant issues as to whether Maycom was prepared to produce the ordered players. Specifically, it stated that only 50% of the subassemblies had been completed, and the rest of the production would wait until after receipt of branding information from e.Digital or digEcor. (Ex. 90.) This report contradicted the understanding digEcor claims to have had, that the subassemblies should be completely assembled by the ship date, while awaiting the branding information needed to finalize the cases. (Tr. 195.) Yet digEcor did not share these details with e.Digital.5
4. 31. e.Digital witnesses testified that the details in the inspection report are suspect, and would have raised significant concerns with e.Digital staff if those details had been shared with them at the time the report was issued. (Tr. 895-98.)
5. 32. In the days following receipt of Mr. Bae’s email, digEcor instructed e.Digital to continue with Maycom as the manufacturer of the 1250 Players. (Exs. 155, 159; Tr. 898-99, 909-10.)
6. 33. Immediately after learning of Maycom’s misfeasance, e.Digital took all reasonably possible measures to secure prompt production of the 1250 Players. (Tr. 916.) These efforts included: immediately travelling to Korea to confer with and apply pressure on Mr. Bae

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6 E.Digital took several subsequent trips to Korea as well. (Tr. 902.)

2. (Ex. 164; Tr. 891-92, 902)6; taking inventory of Maycom’s assets to assist in their potential sale in an effort to raise capital (Ex. 164; Tr. 893-94, 906-07); hiring Korean counsel to apply legal pressure on Maycom and Mr. Bae personally to perform (Ex. 164; Tr. 903-04); frequent contacts with Mr. Bae (Tr. 903); contacting Maycom’s vendors to assist in expediting delivery of component parts (Ex. 164; Tr. 904); investigating alternative manufacturing options in the United States (Ex. 164; Tr. 905); conducting discussions with the vendor of the plastic shells concerning acquisition of shells independent of Maycom (Ex. 164; Tr. 906); and purchasing, at its own expense, some of the component parts used to produce the 1250 players. (Tr. 914.) e.Digital spent approximately 630 man hours during the Spring and Summer of 2006 working to secure production of the players, combined with expenses for travel, parts procurement, and legal assistance. (Tr. 914.)
3. 34. e.Digital persisted with its exhaustive and continuous efforts even after digEcor filed its lawsuit for damages on May 4, 2006. (Ex. 180; Tr. 916-17.)
4. 35. As a result of its efforts, e.Digital was ultimately successful in securing Maycom’s manufacture of the 1250 Players and their delivery to digEcor. (Tr. 933.)
5. 36. Beginning in June 2006, e.Digital offered on multiple occasions to deliver the players, seeking only digEcor’s reasonable assurance that it would accept them. However, digEcor repeatedly rejected these offers, at one point claiming that the players were no longer acceptable to their customers, and that digEcor would not accept the players. (See Ex. 232 at 7, 8, 19, 21, 29, 30, 36, 37.)

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2. 37. During this same time period, digEcor had hoped to release its digEplayer XT product, which would obviate the need to receive any players from e.Digital. (See Exs. 71, 158, p. 2, 183.) When it became clear that the XT would not be ready for production in that time frame, digEcor changed its stance with regard to the 1250 digEplayer 5500’s, accepting e.Digital’s offer to deliver the players, and offering those players to customers as a "Plan B." (Exs. 232 at 47, 196 p. 3, 184.)
3. 38. digEcor did not send notice to e.Digital that it would accept the digEplayer 5500’s until October 10, 2006. (See Ex. 232 at 47.)
4. 39. e.Digital delivered, and digEcor accepted, the players during the week beginning October 30, 2006. (Uncontroverted Fact ¶ 6(t), Pretrial Order, Docket No. 372, at 12.)
5. 40. Each of the 1250 Players was either sold or leased by digEcor shortly thereafter, and digEcor has also obtained other digEplayer 5500’s from other sources since that time. (Tr. 283-84, 1140.)
6. 41. digEcor never placed the order for the remaining 750 digEplayers called for under both the DRM Agreement and the Purchase Order, despite e.Digital’s stated willingness to produce those players. (Ex. 125; Tr. 285, 343.)
7. 42. e.Digital did not, and does not, have any obligation to provide any additional players to digEcor. (Tr. 444.)
8. 43. The damages claimed by digEcor under the Purchase Order were incurred "in connection with" the DRM project. (Exs. 60, 64 ¶ 5, 11(c); Tr. 307-09, 1030; digEcor 30(b)(6) Dep. p. 74.) Indeed, in discussing the problems with the Purchase Order, digEcor’s internal counsel himself relied on the terms of the DRM Agreement. (Ex. 138 ¶¶ 2, 5; Ex. 172, at 2-3.)

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7 Wherein one digEcor sales person is on record stating that "[o]ur biggest problem is e.digital who is also "dumping" their product at around $900-1000 ea. which we cannot compete with!"

2. 44. digEcor’s claimed damages resulted from factors other than delay attributable to e.Digital in delivery of the 1250 players, including the following: digEcor’s failure to timely provide the color and branding information on the 1250 players for months after substantial payments were made to Maycom (Ex. 127; Tr. 1136; Uncontroverted Facts ¶¶ M-P), digEcor’s failure to report the findings of its inspection (see Finding No. 28-31, supra), delay in availability of the digEplayer XT (Ex. 196; Ex. 235 at 6; Tr. 827-28, 841-43, 864-65, 1138), fierce competition (Ex. 179, 1907; Tr. 388), lack of customer demand, and stagnant market growth (Tr. 388; Exs. 122, 240), increased content prices (Tr. 388), poor customer service (Ex. 189; Tr. 381-82); negotiations with third parties (Ex. 184); and digEcor’s rejection of e.Digital’s offers to deliver the 1250 players during the summer of 2006. (See Ex. 232 at 7, 8, 19, 21, 29, 30, 36, 37.)
3. 45. digEcor’s damages analysis also claims losses related to several thousand more digEplayers than e.Digital was ever obligated to deliver. (Tr. 1172)
4. 46. In addition, digEcor’s claims for lost profits are speculative and have not been proven with reasonable certainty. (Tr. 824-25, 847-48, 856, 1134-38, 1140, 1217.) For example, instead of real-world data, digEcor’s damages calculations were based on projections made in 2004 of expected profits in 2007 and 2008, despite the facts that these projections proved inaccurate in many ways and failed to predict numerous important events in the IFE and airline industries. (Tr. 1137-39.) In addition, subsequent projections made after the events at issue in the lawsuit made no mention of e.Digital’s alleged breaches or of losses arising therefrom. (Tr. 862-863; 1137-39.)

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2. 47. digEcor’s hypothetical damages analysis also fails to consider what might have happened if digEcor had performed its duties under the Purchase Order such that the 1250 players could have been shipped by January 10, 2006. (Tr. 1136.)
3. 48. digEcor could have purchased the batteries called for under the Purchase Order from any number of other suppliers in the open market. (Ex. 165; Tr. 386.) digEcor did in fact purchase 1250 batteries directly from a battery manufacturer without the involvement of e.Digital or Maycom prior to October 2006. (Tr. 386-87.)

The DRM Agreement

2. 49. digEcor claims that e.Digital breached the DRM Agreement by both failing to deliver a full, functional version of technology the parties contracted for, and by using DRM technology in its own players, despite the provision giving digEcor exclusive rights to use that technology. (Pretrial Order, Docket No. 372, p. 5.)
3. 50. Under the DRM Agreement, e.Digital granted an "unrestricted, unlimited, irrevocable right" to use certain DRM technology defined as the sum of the component parts listed in Addendum One to the DRM Agreement in exchange for a promise to pay $25,000 and the issuance of the Purchase Order. (Ex. 64 ¶¶ 2, 5; Memorandum Decision and Order on Motions, entered on January 19, 2007, at 16-17, Dkt No. 65.)
4. 51. This license is exclusive to digEcor within the "aircraft industry." (Ex. 64 ¶ 2.)
5. 52. The DRM Agreement stated that "[a]s part of this agreement," digEcor was obligated to place an order for 1250 new digEplayers, "deliverable immediately," plus 750 other players to be released for production later. (Ex. 64 ¶ 5.)

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2. 53. The income from the order for the 2000 digEplayers, and the ability to report that revenue in 2005 constituted additional consideration, beyond a one-time $25,000 payment, to e.Digital for its work on the DRM technology. (Tr. 878-79, 882-83.)
3. 54. In the letter from William Blakeley that digEcor received on March 2, digEcor received notice that its failure to specify branding information and receive digEplayers by January 10, as well as its refusal to pay the full amount owing under the Purchase Order, was in breach not only of the Purchase Order, but of the DRM Agreement. (Ex. 64, 123.)
4. 55. In that letter, Mr. Blakeley also sought confirmation that digEcor intended to order the remaining 750 players as required by the DRM Agreement. (Ex. 123.) digEcor never did request production of the remaining 750 players. (Tr. 343, 948-49.)
5. 56. digEcor never tendered the $25,000 payment for the DRM technology until after e.Digital had notified digEcor that it had breached the DRM Agreement. (Exs. 123, 139.) On July 28, 2006, citing digEcor’s rejection of the ordered digEplayers, e.Digital’s counsel notified digEcor that it was officially terminating the DRM Agreement. (Ex. 232, p. 23.)
6. 57. Due to digEcor’s breaches, e.Digital never accepted any payment from digEcor under the DRM Agreement. (Tr. 887, 888.)
7. 58. The DRM technology used in e.Digital’s eVU player is different from that specified in the DRM Agreement, and therefore outside the scope of the exclusive license granted to digEcor under the DRM Agreement. The Court finds the testimony of e.Digital’s expert credible and persuasive on this point, illustrating that the eVU’s DRM technology differs from the DRM technology licensed to digEcor with respect to cryptography (Tr. 723-24, 726), physical barriers (Tr. 726-27), authentication (Tr. 728-29), license recovery process (Tr. 729-31),

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2. master key recovery (Tr. 731-32), and license decryption (Tr. 733-34; see also, generally, Ex. 237).
3. 59. Damages for breach of the DRM Agreement are "limited to money damages, specifically, the lesser of the actual amount paid under [the DRM Agreement] or $25,000." (Ex. 64 ¶ 11(c).)
4. 60. The DRM Agreement also specifies that "[i]n no event will either party be liable to the other for any . . . consequential damages . . . arising out of or in connection with the DRM project." (Id.)
5. 61. No evidence was introduced at trial to show that digEcor has suffered, or may suffer, irreparable harm as a result of e.Digital’s actions with respect to the DRM technology. The Court finds no risk of irreparable harm.

The 750 Players

2. 62. The DRM Agreement provides that digEcor must order an additional 750 players beyond the original order of 1250. (Ex. 64 ¶ 5.) e.Digital was not obligated to deliver such players until digEcor "release[d] the other units for production." (Id.) The requirement that the 750 players be provided was expressly "contingent upon meeting the terms of the PO for the first 1250 units . . ." (Ex. 64 ¶ 6.) As discussed above, the terms of the PO for the initial 1250 players were not met, specifically, the January 10, 2006 ship date and payment schedule. (See ¶¶ 17-19, supra.)
3. 63. The Purchase Order requests this additional set of 750 players, but does not state the date on which they are expected to be delivered. (Ex. 60.) Rather, the Purchase Order lists a

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2. ship date of 99/99/9999, which means that there was no delivery schedule for those units. (Ex. 60; Tr. 182.)
3. 64. Although the parties had some discussions about when digEcor would "release the other units for production," (Ex. 64 ¶5) digEcor never ordered the players to be produced. (Tr. 343, 888-89.)

The October 2002 Agreement

2. 65. As part of the October 2002 Agreement, e.Digital agreed to repair defective digEplayers sold thereunder for a period of twelve months after shipment. (Ex. 1 ¶ H.) However, e.Digital’s warranty obligation could be triggered only after digEcor shipped the defective digEplayers back to e.Digital. (Ex. 1 ¶ H.)
3. 66. The October 2002 Agreement provides that "[n]o waiver of any provision of this Agreement or any rights or obligations of either party hereunder shall be effective, except pursuant to a written instrument signed by the party or parties waiving compliance." (Ex. 1 ¶ N.)
4. 67. There was no subsequent modification or waiver of the provision in the October 2002 Agreement requiring digEcor to ship defective digEplayers to e.Digital to activate e.Digital’s warranty obligation, as claimed by digEcor. (Exs. 87, 95; Tr. 1012, 1017-19, 1021-23.) Indeed, digEcor continued to send warranty repairs to e.Digital—conduct that would be inconsistent with digEcor’s alleged oral agreement permitting it to make repairs itself and bill them to e.Digital. (Ex. 87; Tr. 201, 534, 536-37.)
5. 68. At some point, digEcor decided that it was no longer practical to send the players to e.Digital for warranty repairs, and began performing the repairs itself, in contravention of the warranty agreement. (Tr. 536-37.)

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2. 69. digEcor has not proven any damages with reasonable certainty arising from the alleged violation of the warranty provision in the October 2002 Agreement. (Tr. 540-42, 1135, 1142.) Specifically, digEcor never introduced evidence indicating the number of players repaired, the specific repairs made, nor the actual cost of performing such repairs. (Tr. 1142.)

II. CONCLUSIONS OF LAW

2. 1. The Court has subject-matter jurisdiction of this case under 28 U.S.C. § 1332(a) as there is complete diversity of citizenship between plaintiff digEcor, a Washington corporation with its principal place of business in Springville, Utah, and defendant e.Digital, a Delaware corporation with its principal place of business in San Diego, California, and as the amount in controversy exceeds $75,000.
3. 2. Venue is proper in the Central Division of the District of Utah pursuant to 28 U.S.C. § 1391(a)(2) and 28 U.S.C. § 125(2).
4. 3. To recover for breach of contract, digEcor must prove the following by a preponderance of the evidence: "(1) a contract, (2) performance by the party seeking recovery, (3) breach of the contact by the other party, and (4) damages." Bair v. Axiom Design, L.L.C., 20 P.3d 388, 393 (Utah 2001); see also Sanpete Water Conservancy Dist. v. Carbon Water Conservancy Dist., 226 F.3d 1170, 1177 (10th Cir. 2000).

A. The Purchase Order

2. 4. digEcor has failed to prove by a preponderance of the evidence that it performed under the Purchase Order, that e.Digital breached the Purchase Order, and that digEcor is entitled to any damages.

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8 digEcor also contends that the deviating purchase orders represented a "course of performance." However, a "course of performance" may only be established in a single transaction that "involves repeated occasions for performance by a party." Utah Code Ann. § 70A-1a-303(1)(a). Such was not the case with respect to the Purchase Order — e.Digital was to deliver the 1250 players but once. Regardless, the many objections made by e.Digital (see Finding No. 17 , supra) to digEcor’s proposed modus operandi invalidate it as a course of performance. See Utah Code Ann. § 70A-1a-303(1)(b).

9 See also Remco Equip. Sales, Inc. v. Manz, 952 S.W.2d 437, 339 (Tenn. Ct. App. 1997) (collecting cases for the proposition that a single transaction does not constitute a course of dealing).

digEcor Has Not Proven a Course of Dealing

2. 5. The Purchase Order required e.Digital to ship the 1250 players by January 10, 2006. There was no course of dealing between the parties that somehow overrode the express terms of the Purchase Order. A "course of dealing" is "a sequence of conduct concerning previous transactions between the parties" and is relevant to the meaning of a disputed contract only where it may be "fairly" regarded "as establishing a common basis of understanding" between the parties. Utah Code Ann. § 70A-1a-303 (emphasis added).8
3. 6. A course of dealing is not established by one or two occurrences when there were multiple other transactions in which the alleged course of dealing was not followed. See, e.g., Aero Consulting Corp. v. Cessna Aircraft Co., 867 F. Supp. 1480, 1490 (D. Kan. 1994).9 In Aero Consulting Corporation, for example, the purchaser of an airplane asserted that a course of dealing was established in two prior transactions where the seller reduced the final purchase price of the airplane by a portion of a sales commission that the seller was contractually obligated to pay. Id. at 1490. However, because the purchaser had been involved in twelve other similar transactions in which this practice was not followed, the court found "that the evidence failed to establish a course of dealing sufficient to be fairly regarded as a common basis of understanding." Id.

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2. 7. In this case, it was standard procedure of the parties that digEcor would provide the color and branding information when it issued a purchase order or shortly thereafter. In only two prior instances did digEcor wait to provide the branding information until after the subassemblies were completed, and then only over the vigorous objection of e.Digital. These deviating purchase orders were the exception rather than the rule and, therefore, cannot fairly represent a mutual understanding as to e.Digital’s performance obligations under the Purchase Order. As in Aero Consulting, the two prior deviations were simply not enough to establish a course of dealing between the parties, particularly as the deviations were both followed by purchase orders that employed the standard procedure.
3. 8. Several other pieces of evidence weigh against a finding that the parties reached an understanding different from that memorialized in the Purchase Order. Prior to issuance of the Purchase Order, digEcor told e.Digital that it needed players "immediately," and had customers requiring delivery in November and December. Numerous communications between the parties demonstrate the parties’ intention that the players should be delivered within the time frame set by the Purchase Order. (See Finding Nos. 12, 17, 18, supra.) digEcor introduced no contemporaneous evidence mitigating the import of these documents—that the parties were operating under the assumption that the January 10 ship date governed.
4. 9. Indeed, after the ship date passed (but before the parties knew of Maycom’s financial misconduct), e.Digital notified digEcor that its failure to specify branding information constituted breach of the Purchase Order. (See Finding No. 21, supra.) One would not expect such a statement from a party who understood that digEcor was free to specify branding on its own timetable.

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2. 10. Finally, and most importantly, e.Digital clearly and strongly objected to digEcor’s proposed practice of order-now-specify-later, both with regard to past orders and the Purchase Order. There can be no "common basis of understanding" in a record so rife with these objections. See Associated Milk Producers, Inc. v. Meadow Gold Dairies, Inc., No. 92-C-540, 1992 WL 674734, at *6 (W.D. Wis. Dec. 23, 1992) ("[A] course of dealing cannot be regarded as establishing a common basis of understanding between the parties when one party has specifically objected to the [course] and requested a change.") (unpublished opinion); see also Johnson Tire Serv., Inc. v. Thorn, Inc., 613 P.2d 521, 523-24 (Utah 1980) (finding course of dealing/course of performance where course continued "without objection" for more than five years) (emphasis added). Indeed, the Court is not aware of even a single case in which an asserted course of dealing was found despite the contemporaneous objection of the other party. e.Digital did not only object to the practice, but gave clear warnings to digEcor that the proposed conduct posed real risks for the manufacturing process. When those warnings of manufacturing problems became reality, digEcor then sought to make e.Digital responsible for the very outcome e.Digital had warned of. Such result is unwarranted both under the law of course of dealing, and basic principles of fairness.
3. 11. In light of all of the evidence discussed above, the Court finds no "common basis of understanding" supporting a revision of the written terms of the Purchase Order. The January 10, 2006 ship date governed the parties. Accordingly, digEcor’s failure to abide by that deadline constitutes breach of the Purchase Order.

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10 Tweedie Footwear Corp. v. Roberts-Schofield Co., 285 P. 476, 478 (Id. 1930) (when a seller’s delay is caused directly by acts of the buyer, the seller is given a "reasonable" time to respond to the new circumstances).

e.Digital Delivered the Players In a Reasonable Time

1. 12. digEcor’s failure to timely provide branding information excused e.Digital’s obligation to deliver the 1250 players by the January 10, 2006 ship date specified in the Purchase Order. Bonneville Distrib. Co. v. Green River Dev. Assocs., 2007 UT App 175, ¶ 32, 164 P.3d 433 (quoting CCD, L.C. v. Millsap, 2005 UT 42, ¶ 29, 116 P.3d 366) (internal quotations omitted).
2. 13. As the parties did not agree to a new delivery date after digEcor’s breach rendered the purchase order deadline impossible, e.Digital was at most obligated to deliver the players "within a reasonable time," if ever. Power Sys. & Controls, Inc. v. Keith’s Elec. Const. Co., 765 P.2d 5, 10 (Utah Ct. App. 1988); Utah Code Ann. § 70A-2-309(1). Reasonableness in this situation is measured by reference to "the nature, purpose, and circumstances of the action." Power Sys. & Controls, 765 P.2d at 10.

3. 14. Considering "the nature, purpose and circumstances," — including the delays caused by the acts of digEcor10 — related to performance under the Purchase Order, the Court concludes that e.Digital delivered the 1250 players within a reasonable time. UCC § 2-309 cmt. 1; see also Power Sys. & Controls, 765 P.2d at 10. Due to digEcor’s delay in providing the color and branding information, the final production orders for the 1250 players were not given until March 2006. By this time, Maycom had already used the production money to meet other obligations and no longer had the resources necessary to manufacture the 1250 players. Nonetheless, Maycom still presented the best option for obtaining delivery of the players within

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2. the timeframe demanded by digEcor. Indeed, digEcor instructed e.Digital to stay with Maycom for the manufacture of the 1250 players. (See Finding No. 23, supra.)
3. 15. Thus, e.Digital was faced with the prospect of compelling a manufacturer in a foreign country to produce a large quantity of electronic goods where the money advanced for production had already been improperly used for other purposes. As outlined above, the evidence shows that e.Digital took every reasonable measure available to meet its contractual obligations and was ultimately successful in obtaining delivery of the 1250 players. e.Digital offered to deliver the players as early as July 2006 and repeatedly thereafter until digEcor finally agreed to accept them in October 2006. e.Digital accomplished all of this while under the cloud of a lawsuit in which digEcor sought only damages (not delivery of the players), and during a time when digEcor often expressed unwillingness even to accept the players if delivered. Under these circumstances, e.Digital’s delivery of the entire 1250 player order in late October and early November 2006 was within a reasonable time.

Any Earlier Delivery Was Commercially Impracticable

2. 16. Any delay in delivering the 1250 players that could be considered unreasonable was excused under the impracticability defense. Under Utah Code Ann. § 70A-2-615, "[d]elay in delivery or nondelivery" is excused as impracticable where "(1) a contingency has occurred; (2) the contingency has made performance impracticable; and (3) the nonoccurrence of that contingency was a basic assumption upon which the contract was made." Leanin’ Tree, Inc. v. Thiele Techs., Inc., 43 Fed. Appx. 318, 322 (10th Cir. Aug. 1, 2002) (unpublished decision).
3. 17. Where the parties to a contract for the sale of goods mutually select a specific third-party supplier — as in this case — non-performance or delay in performance by the seller

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11 See, e.g., Selland Pontiac-GMC, Inc. v. King, 384 N.W. 2d 490, 492 (Minn. Ct. App. 1986) (finding performance impracticable where manufacturer selected by both parties without any knowledge as to the manufacturer’s financial difficulties became insolvent and unable to provide parts used to manufacture the goods); Specialty Tires of Am., Inc. v. CIT Group/Equip. Fin., Inc., 82 F. Supp. 2d 434 (W.D. Pa. 2000) (applying impracticability defense in granting summary judgment where parties agreed on purchase of specific items which were no longer on sale); Fed. Pants, Inc. v. Stocking, 762 F.2d 561 (7th Cir. 1985) (finding seller’s performance was excused as impracticable where supplier selected by both parties terminated seller’s license).

2. is excused when the supplier fails to timely deliver due to events that were not reasonably foreseeable by the parties at the time of contracting.11 The comment to UCC § 2-615 specifically deals with this situation as follows: "In the case of failure of production by an agreed source for causes beyond the seller’s control, the seller should, if possible, be excused since production by an agreed source is without more a basic assumption of the contract." UCC § 2-615 cmt. 5. The Minnesota appellate decision in Selland Pontiac-GMC, Inc. v. King, which presents facts very similar to those in this case, illustrates this principle. 384 N.W. 2d 490 (Minn. Ct. App. 1986). In Selland-Pontiac, the parties contracted for defendant to deliver four school bus bodies, specifically naming the supplier. When the supplier became insolvent and could not deliver, the seller immediately informed the buyer of the problem, and the transaction was never consummated. Id. at 492. The buyer sued for damages under the contract, and the trial court found for the defendant. The appellate court upheld the trial court’s finding that the seller’s performance was rendered impracticable because the supplier was designated by both parties in the original agreement and neither party had any knowledge of the supplier’s "questionable financial circumstances." Id. at 492-93.
3. 18. Likewise, any delay in e.Digital’s delivery was excused as impracticable after Maycom announced that it had misappropriated the funds advanced for production of the 1250 players and, therefore, no longer had the resources necessary to produce the 1250 players. The

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2. parties mutually selected Maycom to manufacture the 1250 players. Maycom had delivered many prior orders of digEplayers without a hint of the type of difficulties encountered during the incident under consideration. Neither of the parties could have reasonably foreseen Maycom’s misfeasance, and the evidence indicates that neither party did. In other words, it was a basic assumption of the contract that Maycom would not convert the production funds. When Maycom used the production funds to meet other obligations it became impracticable to secure delivery of the 1250 players without a fair measure of delay. Thus, any delay that might possibly be considered unreasonable was excused by the impracticability resulting from Maycom’s unlawful acts.

e.Digital Was Not Obliged To Deliver the 750 Players

2. 19. e.Digital had no obligation to deliver the additional 750 players contemplated by the Purchase Order because digEcor did not meet the terms of the Purchase Order when it failed to timely provide color and branding information, (which rendered the January 10, 2006 ship date inoperative), and because digEcor never released the 750 players for production — both of which were conditions precedent to any obligation by e.Digital to deliver the 750 players. See Bilanzich v. Lonetti, 160 P.3d 1041, 1045 & n.4 (Utah 2007); see also Buchheit v. Cape Toyota-Suzuki, Inc., 903 S.W.2d 644, 647 (Mo. Ct. App. 1995) (applying condition precedent analysis in UCC context); Blair Int’l, LTD. v. LaBarge, Inc., 675 F.2d 954, 958 (8th Cir. 1982) (same).

digEcor’s Claimed Damages Are Barred

2. 20. The damages claimed by digEcor under the Purchase Order are consequential in nature and are barred by the DRM Agreement because they "[arose] out of or in connection with

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2. the DRM project." (See Ex. 64 ¶ 11(c).) The contractual phrase "arising out of" is interpreted broadly "to mean originating from, incident to, or having connection with." Maroney v. N.Y. Cent. Mut. Fire Ins. Co., 839 N.E.2d 886, 536 (N.Y. 2005) (internal quotations omitted); see also Meadow Valley Contractors, Inc. v. Transcontinental Ins. Co., 27 P.3d 594, 597 (Utah Ct. App. 2001) ("[T]he term ‘arising out of’ is ordinarily understood to mean originating from, incident to, or in connection with the item in question.") (quoting Viking Ins. Co. v. Coleman, 927 P.2d 661, 663 (Utah Ct. App. 1996)). The phrase "in connection with" is interpreted even more broadly to mean "related to, linked to, or associated with." Metro. Prop. and Cas. Ins. Co. v. Fitchburg Mut. Ins. Co., 793 N.E.2d 1252, 821-22 (Mass. App. Ct. 2003).
3. 21. For example, the court in the case of In re Stone & Webster, Inc. considered the meaning of the contractual phrase "arising out of or in connection with" in a factual scenario similar to the one before this Court. In that case, the owner of a nuclear power plant entered into an agreement with a contractor to decommission the plant. 270 B.R. 1 (Bankr. D. Del. 2001). The contract contained a clause limiting the contractors’ total liability on all claims "arising out of or in connection with its services [under the contract]" to $65 million. Id. at 5. After the contractor failed to perform the decommission services, the owner brought a claim against the contractor seeking more than $65 million, comprised of damages for breach of the contract as well as claims for equitable subrogation on amounts paid to subcontractors. Acknowledging that the equitable subordination claims were not based on the contract, the court nonetheless found that the damages cap applied to the equitable subrogation claims because they were "connected with" the contractor’s services. The court explained that "the phrase ‘in connection with [the contractor’s] services’ unambiguously broadens the covered claims to include those claims that

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12 DigEcor has questioned in the past the enforceability of limitations of liability such as the one found in paragraph 11 of the DRM Agreement. These challenges are unavailing. See Coverstar, Inc. v. Cooley, Inc., No. 2:01cv663, 2006 WL 1579620, *5 (D. Utah, June 1, 2006) (stating that "Utah law enforces such limitations on liability."). In fact, digEcor has conceded that the limitation applies to its claim for breach of the DRM Agreement. (See Pre-Trial Order, p. 5 (Doc. # 372).)

2. do not ‘arise out of’ the Agreement, yet are nonetheless ‘connected with [the contractor’s] services." Id. at 10
3. 22. Applying these principles to this case, the liability limitation found in paragraph 11(c) of the DRM Agreement applies to any damages that digEcor might otherwise be entitled to as a result of the November 2006 delivery of the players because the purchase of the players was made in connection with the DRM project. Although the Court has ruled that the Purchase Order is not generally governed by the DRM Agreement, e.Digital’s assent to the DRM Agreement was expressly contingent on the issuance of the Purchase Order. The DRM technology licensed to digEcor under the DRM Agreement was to be implemented on the 1250 players. The parties conceived, negotiated, and executed the two agreements simultaneously, and as two different parts of the same larger transaction. Therefore, the consequential damages sought by digEcor for the alleged delay in delivering the 1250 players were "related to, linked to, or associated with" the DRM project.
4. 23. Because any damages arising from the late delivery of the 1250 arise in connection with the DRM Project, the liability limitation in the DRM Agreement applies, and digEcor may not recover any damages related to the Purchase Order.12

digEcor Has Not Proven Damages With Sufficient Certainty

2. 24. digEcor has not proven by a preponderance of the evidence that it is entitled to any consequential damages on its claim for breach of the Purchase Order. To recover for

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2. consequential damages, a non-breaching party must prove that the consequential damages were proximately caused by the contract breach. Mahmood v. Ross, 990 P.2d 933, 938 (Utah 1999); Utah Code Ann. § 70A-2-715(2). "Proximate cause is that cause which, in the natural and continuous sequence[] (unbroken by an efficient intervening cause), produces the injury and without which the result would not have occurred. It is the efficient cause—the one that necessarily sets in operation the factors that accomplish the injury." Mahmood, 990 P.2d at 938. Additionally, the amount of lost profits must be proven with "reasonable certainty." Kraatz v. Heritage Imports, 71 P.3d 188, 201 (Utah Ct. App. 2003). "[S]peculative" awards of lost profits are not sustainable. Cook Assocs., Inc. v. Warnick, 664 P.2d 1161, 1166 (Utah 1983).
3. 25. As discussed above, the consequential damages sought by digEcor in this case resulted from a number of factors other than any delay in delivery of the 1250 players that might be attributable to e.Digital. Under these circumstances, the Court concludes that e.Digital’s actions were not the proximate cause of digEcor’s alleged damages. As the Court has also noted, digEcor’s damage calculations are built on a number of speculative or mistaken assumptions and, therefore, were insufficient to prove the amount of lost profits with reasonable certainty.
4. 26. A non-breaching party is not entitled to any consequential damages that it could have reasonably prevented "by cover or otherwise." Utah Code Ann. § 70A-2-715(2). digEcor failed to mitigate its damages by refusing to accept delivery of the 1250 players in July 2006, by entering into agreements with customers when it knew that Maycom was not producing the players on schedule, and by failing to inform e.Digital of the inspection report. Perhaps most significantly, digEcor might have avoided any damage at all by simply specifying the branding information for the 1250 players in time for the players to be shipped on January 10, 2006.

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13 The Court recognizes that this possibility is somewhat hypothetical, but considers it as proper rebuttal evidence to the various hypotheticals postulated by digEcor’s damages expert with reference to his "but for world."

2. Given that Maycom probably did not have need to misappropriate the parties’ funds until the end of January, the players could have been shipped to their customers well before Maycom had occasion to redirect the production payments.13
3. 27. Based on the foregoing, the Court will enter judgment dismissing digEcor’s claim for breach of the Purchase Order with prejudice and on the merits.

B. The DRM Agreement

2. 28. digEcor has failed to prove by a preponderance of the evidence that it performed under the DRM Agreement, that e.Digital breached the DRM Agreement, and that digEcor is entitled to recover any damages.
3. 29. By failing to perform under the Purchase Order relating to both the order for the 1250 players and the subsequent order of 750 players, digEcor breached the DRM Agreement, which specifically required digEcor to abide by the terms of the Purchase Order.
4. 30. e.Digital timely notified digEcor of its breaches and justifiably refused to accept payment for the DRM technology. As a result, the license created under the DRM Agreement was never consummated, and e.Digital did not breach the agreement. Accordingly, e.Digital is not required to tender to digEcor the source code for its proprietary DRM software, nor has the Court seen any evidence indicating the e.Digital is obligated to provide software patches allowing prior versions of software to function in perpetuity.
5. 31. Further, the DRM technology found in e.Digital’s eVU is outside the scope of the exclusive license granted to digEcor under the DRM Agreement, as discussed above.

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2. 32. digEcor failed to prove that it is entitled to any damages under the DRM Agreement. As digEcor never paid any portion of the $25,000 license fee, the damages cap found in the DRM Agreement limits digEcor’s claim for damages to zero.
3. 33. As noted above, there is no evidence or risk of irreparable harm if an injunction does not issue in favor of digEcor. See Port City Prop. v. Union Pac. R. Co., 518 F.3d 1186, 1190 (10th Cir. 2008) (stating that irreparable harm must be shown as a condition to entry of injunction based on contract.) Moreover, the Court affirmatively finds that any injury under the DRM Agreement may be adequately redressed by the payment of money damages. Therefore, digEcor is not entitled to any injunctive relief in connection with this claim.
4. 34. Accordingly, the Court will enter judgment dismissing digEcor’s claim for breach of the DRM Agreement with prejudice and on the merits.

C. The October 2002 Agreement

2. 35. digEcor has failed to prove by a preponderance of the evidence that it performed under the October 2002 Agreement, that e.Digital breached the warranty provision of the October 2002 Agreement, and that digEcor is entitled to any damages.
3. 36. Pursuant to the express language of the October 2002 Agreement, e.Digital’s warranty obligations are triggered only when digEcor returns broken digEplayers that would otherwise be covered by the warranty provision for e.Digital’s inspection and repair.
4. 37. e.Digital did not orally agree that digEcor could perform warranty repairs and then charge back the costs of the repairs to e.Digital, nor did it waive digEcor’s obligation to ship warranty repairs to e.Digital.

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14 The October 2002 Agreement expressly states that it "is made in accordance with and shall [be] governed and construed in accordance with the laws of the State of New York." (Ex. 1 ¶ L.)

2. 38. Additionally, under New York law, which governs the October 2002 Agreement,14 a written agreement containing a provision barring oral modifications "cannot be changed by an executory agreement unless such executory agreement is in writing and signed by the party against whom enforcement of the change is sought or by his agent." N.Y. Gen. Oblig. Law § 15-301(1); see, e.g., Envtl. Prods. & Servs., Inc. v. Consol. Rail Corp., 728 N.Y.S.2d 256, 257-58 (N.Y. App. Div. 2001) (finding oral modification unenforceable due to clause in written contract barring oral modifications). The October 2002 Agreement forbids waiver of any right under the contract except by writing signed by the party against whom enforcement is sought. Thus, any alleged oral modification of digEcor’s obligation to ship warranty repairs to e.Digital is unenforceable. Additionally, digEcor’s alleged performance of warranty repairs appears to have been the result of the demands of digEcor’s clients, who did not accept the delays entailed by shipping broken players to San Diego. Thus, any alleged part performance is not "unequivocally referable" to the alleged oral modification and, therefore, does not qualify for the part performance exception. See Rose v. Spa Realty Assocs., 366 N.E.2d 1279 (N.Y. 1977) ("But it bears repeating, partial performance alone is not enough; the performance must be unequivocally referable to the oral agreement to modify.").
3. 39. Thus, e.Digital’s warranty obligations under the October 2002 Agreement were not triggered by the alleged warranty repairs performed by digEcor. Therefore, e.Digital did not breach the October 2002 Agreement by refusing to pay for the costs digEcor allegedly incurred in performing these repairs.

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2. 40. Finally, digEcor failed to prove any damages for the alleged violation of the October 2002 Agreement with reasonable certainty.
3. 41. Accordingly, the Court will enter judgment dismissing digEcor’s claim for breach of the October 2002 Agreement with prejudice and on the merits.

III. CONCLUSION AND ORDER

2. 42. Based on all of the foregoing, it is hereby ORDERED that all of digEcor’s remaining claims against e.Digital are dismissed with prejudice, and digEcor recovers no damages or injunctive relief.
3. 43. The Clerk of the Court is directed to close this case forthwith.

ENTERED this ____ day of July, 2009.

________________________________

The Honorable Clark Waddoups

District Court Judge

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CERTIFICATE OF SERVICE

I hereby certify that on this 10th day of July, 2009, I caused the foregoing E.DIGITAL’S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW with the Clerk of Court using the CM/ECF system which sent notification of such filing to the following:

David W. Tufts

DURHAM JONES & PINEGAR

111 E. Broadway, Suite 900

Salt Lake City, Utah 84111

Brandy Judd

1035301v3

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