Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_14-cv-04322/USCOURTS-cand-4_14-cv-04322-4/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

LEARNING TECHNOLOGY 

PARTNERS,

Plaintiff,

v.

UNIVERSITY OF THE INCARNATE 

WORD,

Defendant.

Case No. 14-cv-4322-PJH 

ORDER DENYING MOTION FOR 

PARTIAL SUMMARY JUDGMENT

On October 14, 2015, defendant’s motion for partial summary judgment came on 

for hearing before this court. Plaintiff Learning Technology Partners (“plaintiff” or “LTP”) 

appeared through its counsel, Michael Dorsi. Defendant University of the Incarnate Word

(“defendant” or “UIW”) appeared through its counsel, Jon Eldredge and Clement Glynn. 

Having read the papers filed in conjunction with the motion and carefully considered the 

arguments and the relevant legal authority, and good cause appearing, the court hereby 

rules as follows.

BACKGROUND

This is a breach of contract case. Plaintiff LTP is an online education software 

company. Its president is Reda Athanasios. Defendant UIW is a private university 

located in San Antonio, Texas. Vince Porter serves as UIW’s dean, and Dr. Cyndi Porter

serves as its Vice President. 

UIW offers on-campus courses as well as a number of online courses and 

partially-online courses. The parties use UIW’s own terminology to refer to these various 

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 1 of 22
2

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

courses, and the court will use that terminology throughout this order. 

UIW’s all-online college courses are referred to as either “UIW Online” or 

“Universe Online.”

UIW also has an adult education program called the Adult Degree Completion 

Program, or “ADCaP.” ADCaP is split into two categories. One is for students who take 

classes primarily on-campus, and they are referred to as “ADCaP Non-Blended” (also 

referred to in the parties’ papers as “click through” students). The second category is for 

students who take classes primarily online, with a small on-campus component. Those 

students are referred to as “ADCaP Blended.”

Finally, UIW offers an online high school program referred to as “UIW Prep.” 

In 2004, the parties entered into a contract (referred to as the “Services 

Agreement”) under which LTP would provide to UIW an “online learning platform” called 

“IZIO.” LTP describes IZIO as a platform to “manage all teaching and learning aspects of 

the institution’s relationship with its students, from posting of course materials and 

announcements to grading of exams.”

The original term of the Services Agreement was three years, but it was extended 

multiple times, the final extension coming in December 2013. That extension (referred to 

as an “addendum”) was for a term of one year, to end on December 31, 2014. 

At the time that the original Services Agreement was executed, LTP provided 

services only for UIW Online (i.e., the online college courses), but over time, LTP also 

began providing services for the ADCaP programs and the UIW Prep program. 

Under the terms of the agreement, UIW paid LTP a per-student fee for each 

student who used the LTP software as part of their courses. 

LTP now claims that UIW breached five provisions of the contract, three of which 

are at issue on this motion. The facts regarding each alleged breach are disputed, so the 

court will first present each relevant provision, and then will summarize the facts as 

alleged by each party.

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 2 of 22
3

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Section 7.6 (exclusivity provision)

Section 7.6 of the Services Agreement provides as follows:

LTP Exclusivity. Client acknowledges and agrees that LTP will incur 

significant costs in initializing the relationship with Client, including initial 

setup fees and custom work charges. In addition, LTP is providing a 

discount exceeding sixty percent (60%) of its standard fees. As a 

consideration for LTP agreeing to waive its setup fees and custom work 

charges, and providing such discount, Client agrees that for the term of this 

Agreement LTP shall be Client’s sole and exclusive provider for all distance 

education Content Management Systems or Learning Management 

Systems.

LTP alleges that UIW breached the exclusivity provision in three ways. First, it 

alleges that UIW Prep students used another software program, thereby violating the 

provision. UIW does not dispute that UIW Prep students did indeed use a different 

software program, but it maintains that UIW Prep is not covered by the exclusivity 

provision. 

Interestingly, UIW Prep did not yet exist at the time of the contract’s original 

execution in 2004 (it was started in 2010). There was correspondence between the 

parties before the contract was finalized in 2004, and both parties point to the 

correspondence as supporting their position – with LTP arguing that it shows that UIW 

Prep should be covered by the exclusivity provision, and UIW arguing that it shows the 

opposite.

The substance of the correspondence is as follows. Before the agreement was 

executed, UIW’s lawyer reviewed the exclusivity provision, and had concerns that it 

would interfere with UIW’s non-online students, who used a different software provider 

(called “Blackboard”) to access course materials. To clarify, Dr. Cyndi Porter sent an 

email to Athanasios, stating that UIW’s lawyer was “concerned that we use Blackboard 

on our main campus program,” but noting that she “assured him that this contract is 

between LTP and UIW Universe Online and that what they do on main campus has no 

part of this contract.” Dkt. 53, Ex. C. Dr. Porter asked Athanasios to “add a sentence to 

your fax stating that Universe Online is the only part of UIW that is tied to exclusive use of 

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 3 of 22
4

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

your products?” Id. Athanasios responded with a fax stating “We also understand that, 

said [exclusivity] provision, only pertains to UIW Distance Education online program.” 

Dkt. 53, Ex. D.

Based on this correspondence, UIW argues that only the UIW Online program 

(i.e., not UIW Prep) is subject to the exclusivity provision. 

LTP argues that the Services Agreement was amended over time – first to include 

ADCaP non-blended, then to include UIW Prep, then to include ADCaP blended – and 

that the exclusivity provision was intended to cover all of them. LTP does not point to any 

formal amendments – instead, it appears that the parties had an informal practice of 

discussing potential expansions over email, after which they would negotiate price and 

then have LTP implement the functionality. 

LTP also makes an alternative argument – that in response to Dr. Porter’s request 

for clarification, Athanasios “rejected [her] narrow interpretation, insisting that the 

exclusivity clause apply more broadly to all of UIW’s courses that took place solely online 

and did not have a classroom component.” Dkt. 52 at 6. LTP claims that, by 

“differentiating between ‘UIW Distance Education online program’ and ‘UIW Online 

Universe,’ the parties intended for the exclusivity agreement to apply to courses and 

products outside of UIW Online.” Id. LTP also characterizes Athanasios’ use of the 

“distance education” terminology as “counter offering a more broad interpretation.” And 

because “UIW did not reject this counter offer” and continued to move forward with the 

agreement, UIW accepted the counteroffer. 

The second alleged breach of the exclusivity provision is slightly more 

straightforward. In 2013, UIW made the decision to stop using LTP’s software and to 

transition to Blackboard’s software. As part of the transition, UIW planned to conduct 

“test” courses using Blackboard in summer 2014, before its agreement with LTP lapsed 

in December 2014. Before implementing the test courses, it notified LTP that it was 

planning to do so, and then “voluntarily paid LTP the full price for the 111 enrollments it 

would have paid had the students been enrolled in IZIO instead of Blackboard.” LTP 

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 4 of 22
5

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

accepted the payment, which, according to UIW, meant that LTP acquiesced to the use 

of Blackboard and thus cannot now claim a breach of contract. UIW further argues that, 

even if the Blackboard test courses technically constituted a breach, there are no 

damages, since LTP was fully compensated. 

LTP disputes that it acquiesced to the breach of exclusivity. When UIW first 

emailed Athanasios about the test courses, Athanasios responded by saying “you also 

still have the exclusivity provision so we will have to work something around that if we 

need to and if we can.” Dkt. 53, Ex. H. With regard to the check, LTP claims that there 

was no understanding that the check was meant as compensation for the breach of 

exclusivity. LTP cites to the letter accompanying the check, which makes no mention of 

waiving the exclusivity provision. Dkt. 53, Ex. I. The letter and check are also relevant to 

the third alleged breach of exclusivity, so it will be discussed further in the next 

paragraphs.

The third alleged exclusivity breach began in August 2014 and continued through 

the end of the contract term in December 2014. In August, UIW informed LTP that it 

intended to terminate the agreement early. UIW sent a letter to LTP giving notice of 

termination, and also enclosing a check for $120,144 to cover the remaining term of the 

agreement (the check also included the payments for the 111 students from the “test” 

courses, mentioned above1). UIW estimated the number of enrollments that it would 

receive from August 2014 until the end of the contract term in December 2014, calculated 

how much it would owe LTP based on those enrollments, and paid that amount, along 

with the above-mentioned payment for the 111 “test” students. 

The letter accompanying the check stated that “[i]n order to fulfill payment terms of 

the contract addendum of December 10, 2013, I am enclosing a check for $120,144.00.” 

 

1

The parties’ papers never make clear that the 111 “test” student payments and the 

estimated fall 2014 student payments were paid in one lump sum via the August 2014 

check, but an email from Dr. Porter to Athanasios breaks down the total amount paid, 

and it shows that the check included payment for the 111 “test” students. See Dkt. 46, 

Ex. G. 

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 5 of 22
6

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Dkt. 53, Ex. I. “Your acceptance of this check will signify your willingness to give me 

access to our current Izio portal to retrieve historical information for a period of six 

months.” Id. 

UIW argues that, by accepting the check, LTP acquiesced to UIW’s use of 

Blackboard, both for the “test” courses and for the post-August 2014 use. Thus, UIW 

argues that there was no breach of the exclusivity provision. UIW further argues that, 

even if there was a breach, there are no damages, because LTP was fully compensated 

for any amount that it would have earned under the contract. 

In LTP’s view, its acceptance of the check did not signify acquiescence to the 

breach of exclusivity. LTP points to the language used in the letter, which mentions 

nothing about exclusivity, and indicates that the payment was provided to ensure that 

UIW would continue to have access to IZIO. LTP also cites an email sent by Athanasios 

in response to the letter, in which he says “You have requested in your letter that we 

keep access to the systems for 6 months and we have no problem with that as we fully 

intend to do it for remainder of our contract anyways. Please be aware that cashing the 

check will not constitute waiving any of our rights under the contract or accepting the 

count of enrollments you estimated by any means.” Dkt. 53, Ex. J. Thus, according to 

LTP, it preserved its right to seek damages for the breach of exclusivity. 

As to the amount of those damages, LTP points back to the exclusivity provision of 

the contract, which states that “[a]s a consideration for LTP agreeing to waive its setup 

fees and custom work charges, and providing such [60%] discount, Client agrees that for 

the term of this Agreement LTP shall be Client’s sole and exclusive provider.” See

Complaint, Ex. 1. Because UIW breached the exclusivity provision, LTP argues, it is now 

entitled to the full (non-discounted) rate for all students and a reimbursement of its 

previously-waived startup costs. As a result, LTP maintains that the payment provided by 

UIW was not sufficient to fully compensate it for UIW’s use of Blackboard – either for the 

“test” courses or the post-termination use. 

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 6 of 22
7

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Fee schedule (section 5.1 and exhibit A)

LTP also alleges that UIW breached the fee schedule set forth in section 5.1 and 

exhibit A of the agreement (and as later amended). Section 5.1 reads as follows: 

Client shall pay LTP all fees for the Core Services in accordance with the 

applicable fee schedule set forth in Exhibit A.

Exhibit A, in turn, reads:

UIW Universe will pay LTP $15 per a student per (5-8 weeks) semester per 

course for up to 1800 students in any given semester.

UIW Universe will pay LTP $12 per a student per (5-8 weeks) semester per 

course for all students above 1800 and up to 2500 in any given semester.

UIW Universe will pay LTP $11 per a student per (5-8 weeks) semester per 

course for all students above 2500 in any given semester.

LTP alleges that UIW violated these provisions of the agreement in two ways: (1) 

by enrolling ADCaP non-blended students in IZIO, without paying the per-student rate, 

and (2) allowing ADCaP students to use IZIO for greater than the eight-week period set 

forth in the agreement. 

The facts underlying (1) are very much disputed. The ADCaP non-blended

students were not covered under the original 2004 agreement, but in 2009, UIW 

approached LTP to ask if there was a way to allow the non-blended students to access 

their textbooks online, through IZIO. LTP responded that there were technical obstacles 

preventing that functionality, but suggested that the non-blended students use a “web 

portal” (which is described as a web page used by the students that allowed them to view 

school-related information, but without the full range of use that IZIO provided). UIW 

agreed, and the parties negotiated a $2 per student rate for this textbook access through 

the web portal. It appears that this deal was worked out over email, and not 

memorialized in a written contract. 

For the next year and a half, the ADCaP non-blended students used the web 

portal to access their textbooks. However, in 2011, UIW switched to a new textbook 

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 7 of 22
8

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

vendor (called CourseSmart). On December 8, 2011, Dr. Cyndi Porter emailed 

Athanasios asking if they could have a phone call to “talk about what you are going to do 

with ADCaP.” Dkt. 53, Ex. P. According to the email, Vince Porter believed that UIW 

“was going to use the portal for the integration not Izio.” Id. Athanasios responded that 

he was “scrambling to see if we can achieve what Vince likes before this coming quarter,” 

but also said that “[w]hat we have developed in Izio will work for Vince today.” Id. 

Athanasios also stated that he “suggested to Vince using the Portal only for the nonblended guys who have no need for Izio otherwise.” Id. Vince Porter wrote back to say 

that “using Izio is fine with me,” to which Athanasios replied “this is a kind consideration 

and a good spirit of cooperation Vince.” Id. Athanasios also said that he would “continue 

to work towards giving your non-blended students an ability to get their books through the 

portal,” and that he would “come out with a plan tomorrow.” Id.

The parties draw different conclusions from this exchange. UIW contends that 

Athanasios gave the non-blended students permission to use IZIO, because their 

previous method of using the web portal no longer functioned with the new CourseSmart 

books. LTP argues that only the blended students were given permission to use IZIO, 

and that the non-blended students were to continue using the web portal. 

After the December 2011 exchange, UIW’s non-blended students began using 

IZIO to access their textbooks. Regarding the “plan” that Athanasios was going to submit 

to UIW, it never came to be – LTP claims that it was completed, but never implemented, 

because “Vince Porter never responded to LTP’s meeting request,” while UIW claims that 

the new module was not completed until November 2012 or January 2013, and also 

argues that LTP’s web developer was told to stop working on it after the parties’ 

agreement to have the non-blended students use IZIO.

LTP now claims that the non-blended students were never given permission to use 

IZIO, and that UIW has not fully compensated LTP for such use, as UIW never paid the 

full fee for those students, only the $2 per student that it was originally paying for portalbased textbook access. 

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 8 of 22
9

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

UIW not only argues that it was given permission via the December 2011 email 

exchange, but also argues that LTP’s account manager (Luigi DiGrande) helped set up 

IZIO accounts for the non-blended students, further showing LTP’s acquiescence. LTP 

now claims that DiGrande did not have any authority to modify the contract, as he was an 

independent contractor with no knowledge of the contract’s terms.2 

Moving to category (2) of the alleged violation of section 5.1, LTP alleges that UIW 

violated the agreement by allowing their ADCaP students to access IZIO immediately 

after registration, resulting in more than eight weeks of access. LTP argues that the 

Services Agreement allowed IZIO access only for a maximum of eight weeks per course. 

UIW argues that the parties never agreed to an eight week limitation. UIW also argues 

that DiGrande helped UIW set up courses for longer than eight weeks.

Section 4.3 (restrictions on use of LTP’s technology)

Section 4.3 reads as follows:

Client acknowledges that the Software and its structure, organization, and 

source code constitute valuable trade secrets of LTP. Accordingly, Client 

agrees not to (a) modify, adapt, alter, translate, or create derivative works 

from the Software; (b) merge the Software with other software; (c) 

sublicense, lease, rent, loan, or otherwise transfer (except as explicitly 

provided in Section 3) the Software to any third party; (d) reverse engineer, 

decompile, disassemble, or otherwise attempt to derive the source code for 

the Software; or (e) otherwise use or copy the Software except as expressly 

allowed under Section 3.

LTP alleges that UIW has “breached section 4.3 of the service agreement by 

allowing UIW to integrate IZIO with other products, thus allowing competitors the ability to 

copy or create derivative works of LTP’s technology,” and further alleges that UIW

“adapted and customized third party software, including Black Board, Banner, Recruiter, 

and DataTel to replicate the turn-key product that LTP provides.” LTP argues that UIW 

“created software ‘bridges’ in order to replicate the whole system solution that belongs to 

 

2 Despite all of this, UIW does admit that certain professors of non-blended students did 

“mistakenly overuse” IZIO, utilizing services that UIW was not entitled to under the 

contract. UIW refers to these as “rogue courses,” and explains that it is not seeking to 

adjudicate any claims arising out of the rogue courses on this motion. 

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 9 of 22
10

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

LTP.” UIW does not dispute that it created software bridges, but maintains that such 

bridges are not derivative works. 

LTP filed suit in state court on August 19, 2014, asserting one cause of action for 

breach of contract. The case was removed to this court on September 25, 2014. In 

addition to alleging the above breaches (of sections 7.6, 5.1, and 4.3), the complaint also 

alleges breaches of sections 8.1 and 13.8, which restrict the use of LTP’s software. 

However, UIW does not move for summary judgment as to those alleged breaches, so 

they are not discussed in this order. UIW moves for partial summary judgment only as to 

the alleged breaches of section 7.6, 5.1, and 4.3 of the Services Agreement.3

DISCUSSION

A. Legal Standard

A party may move for summary judgment on a “claim or defense” or “part of . . . a 

claim or defense.” Fed. R. Civ. P. 56(a). Summary judgment is appropriate when there 

is no genuine dispute as to any material fact and the moving party is entitled to judgment 

as a matter of law. Id. 

A party seeking summary judgment bears the initial burden of informing the court 

of the basis for its motion, and of identifying those portions of the pleadings and discovery 

responses that demonstrate the absence of a genuine issue of material fact. Celotex 

Corp. v. Catrett, 477 U.S. 317, 323 (1986). Material facts are those that might affect the 

outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A 

dispute as to a material fact is “genuine” if there is sufficient evidence for a reasonable 

jury to return a verdict for the nonmoving party. Id. 

Where the moving party will have the burden of proof at trial, it must affirmatively 

 

3 UIW’s motion also purports to seek summary judgment as to LTP’s allegation, made in 

an interrogatory response, that UIW improperly disclosed LTP’s source code and other 

confidential information. Dkt. 44 at 23. LTP does not make this allegation in its 

complaint, nor is the allegation addressed in LTP’s opposition brief. Given that the only 

place in which this allegation appears is in an interrogatory response (i.e., not the 

complaint), and given LTP’s failure to address the issue in its opposition, the court 

considers the allegation to have been abandoned by LTP, and does not address it further 

in this order. 

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 10 of 22
11

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

demonstrate that no reasonable trier of fact could find other than for the moving party. 

Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). On an issue 

where the nonmoving party will bear the burden of proof at trial, the moving party may 

carry its initial burden of production by submitting admissible “evidence negating an 

essential element of the nonmoving party’s case,” or by showing, “after suitable 

discovery,” that the “nonmoving party does not have enough evidence of an essential 

element of its claim or defense to carry its ultimate burden of persuasion at trial.” Nissan 

Fire & Marine Ins. Co., Ltd. v. Fritz Cos., Inc., 210 F.3d 1099, 1105-06 (9th Cir. 2000); 

see also Celotex, 477 U.S. at 324-25 (moving party can prevail merely by pointing out to 

the district court that there is an absence of evidence to support the nonmoving party’s 

case).

When the moving party has carried its burden, the nonmoving party must respond 

with specific facts, supported by admissible evidence, showing a genuine issue for trial. 

Fed. R. Civ. P. 56(c), (e). But allegedly disputed facts must be material – the existence 

of only “some alleged factual dispute between the parties will not defeat an otherwise 

properly supported motion for summary judgment.” Anderson, 477 U.S. at 247-48. 

When deciding a summary judgment motion, a court must view the evidence in the 

light most favorable to the nonmoving party and draw all justifiable inferences in its favor. 

Id. at 255; Hunt v. City of Los Angeles, 638 F.3d 703, 709 (9th Cir. 2011).

If a party makes a showing “that there is no genuine issue of material fact as to 

particular claim(s) or defense(s), the court may grant summary judgment in the party’s 

favor ‘upon all or part thereof.’” Schwarzer, Tashima & Wagstaffe, Federal Civil 

Procedure Before Trial (2008) § 14:33 (emphasis added). “This procedure is commonly 

referred to as a ‘partial summary judgment.’” Id. § 14:34.

B. Legal Analysis

As mentioned above, UIW moves for partial summary judgment regarding the 

alleged breaches of three provisions of the Services Agreement. The court will address 

each allegedly-breached provision in turn. 

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 11 of 22
12

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

1. Section 7.6 (exclusivity provision)

UIW raises three issues relating to its alleged breach of the exclusivity provision: 

(1) UIW Prep was not covered by the exclusivity provision, and thus, those students’ use 

of non-LTP software cannot constitute a breach; (2) LTP acquiesced to UIW’s use of 

Blackboard for its “test” courses, and thus, there is no breach, and even if there was a 

breach, there are no damages; and (3) UIW’s early termination of the Services 

Agreement did not cause LTP to suffer any damages. 

Starting with (1), UIW makes two independent arguments here – first arguing that 

no part of the Services Agreement applies to UIW Prep, and separately arguing that, 

even if the Services Agreement does apply, the exclusivity provision does not. 

As mentioned above, the Services Agreement was executed in December 2004, 

and because UIW Prep did not come into existence until 2010, it obviously could not 

have been covered by the original agreement. Nor did the parties expressly amend the 

agreement to include UIW Prep. Instead, it appears that the parties informally agreed to 

have LTP provide its software for UIW Prep, though the parties appear to dispute the 

terms of their informal agreement. LTP explains that it was “tapped” by UIW to “develop 

the software platform necessary to operate UIW Prep and in 2010, UIW began enrolling 

UIW Prep students in IZIO,” and further argues that “the Services Agreement was 

amended to include UIW Prep via email.” Dkt. 52 at 3. UIW counters that “LTP cannot 

identify any document showing that UIW Prep was added to the Services Agreement 

despite specifically alleging that the amendment was by way of email.” Dkt. 58 at 2. 

However, UIW does not offer any evidence of its own regarding LTP’s provision of 

software for UIW Prep. In fact, UIW offers no explanation of what terms govern the UIW 

Prep software, and is instead content to deny LTP’s allegations. 

It is undisputed that LTP provided services to UIW for UIW Prep, so there must 

have been some type of an agreement between LTP and UIW regarding UIW Prep. See

Dkt. 46, ¶ 6. LTP argues that the parties informally agreed via email to add UIW Prep to 

the Services Agreement, and while UIW objects to LTP’s failure to submit those emails 

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 12 of 22
13

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

as evidence, UIW also fails to submit any evidence in support of its own argument that 

the UIW Prep-related software was subject to terms other than those provided in the 

Services Agreement. Without any further evidence, the court is left with only the course 

of conduct between the parties – with LTP providing services for UIW Prep, and UIW 

paying for those services. Based on that course of conduct, and based on the fact that 

UIW presents none of its own evidence suggesting that UIW Prep was subject to some 

agreement separate from the Services Agreement, the court finds there to be a triable 

issue of fact as to whether UIW Prep was added to the Services Agreement. 

UIW’s next argument is that, even if UIW Prep is subject to the Services 

Agreement, it is not subject to the exclusivity provision. UIW relies on the email/fax 

exchange between Dr. Porter and Athanasios before the contract was executed. As an 

initial matter, by basing its argument on the exchange between Dr. Porter and 

Athanasios, UIW implicitly concedes that the language of the contract does not 

definitively support its position. The contract states only that “LTP shall be Client’s sole 

and exclusive provider for all distance education Content Management Systems or 

Learning Management Systems,” and does not specifically carve out any of UIW’s online

programs from the exclusivity provision. See Complaint, Ex. 1 at § 7.6. 

As mentioned above, before the contract was executed, Dr. Porter and Mr. 

Athanasios negotiated certain provisions over email, including the exclusivity provision. 

According to UIW, Dr. Porter asked Athanasios to clarify that “UIW Universe Online” is 

the only part covered under the exclusivity provision, and (in UIW’s view), Athanasios 

“confirmed it was so limited.” Dkt. 44 at 12. 

However, the actual evidence tells a different story. The exchange began when

Dr. Porter forwarded to Athanasios an email thread between her and UIW’s attorney, 

discussing various provisions of the Services Agreement. Dr. Porter told Athanasios that 

the “lawyer didn’t like some of our language (What a shock, eh?) so here is his final 

tweaking.” Dkt. 53, Ex. C. Dr. Porter also asked Athanasios to “put in your exclusive 

language and tell me where it is.” Id.

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 13 of 22
14

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

After receiving a draft containing the exclusivity language, Dr. Porter emailed 

Athanasios to say that “the man on campus is concerned that we use Blackboard on our 

main campus program. I assured him that this contract is between LTP and UIW 

UNIVERSE ONLINE and that what they do on main campus has no part of this contract. 

Can you add a sentence to your fax stating that Universe Online is the only part of UIW 

that is tied to exclusive use of your products?” Dkt. 53, Ex. C. 

Athanasios then responded by sending a letter via fax, stating that he understands 

that “said provision” (referring to the exclusivity provision) “only pertains to UIW Distance 

Education online program.” Dkt. 53, Ex. D.

In its motion, UIW ignores the phrasing used by Athanasios, even though it mirrors 

the language used in the contract, which states that “LTP shall be Client’s sole and 

exclusive provider for all distance education Content Management Systems or Learning 

Management Systems.” Complaint, Ex. 1, § 7.6 (emphasis added). UIW does not 

present any argument on the meaning of the term “distance education” as used in the 

contract, so the court has no basis on which to find that it includes or excludes UIW Prep. 

Overall, taking into account both the contract itself and the extrinsic evidence 

submitted by UIW, the court finds there to be a triable issue of fact as to whether UIW 

Prep was covered by the exclusivity provision. As mentioned above, the language of the 

agreement itself does not resolve the issue, nor does the exchange between Athanasios 

and Dr. Porter clear up the uncertainty. While LTP ultimately bears the burden at trial of 

showing that the exclusivity provision does apply to UIW Prep, the court finds that the 

cited evidence is sufficient to create a triable issue of fact on that question. A reasonable 

factfinder could find that Dr. Porter was attempting to draw a line between the services 

used for on-campus (i.e., non-online) courses, and those used for online courses. Her 

email specifically mentions giving assurances to her lawyer that “this contract is between 

LTP and UIW Universe Online and that what they do on the main campus has no part of 

this contract.” Dkt. 53, Ex. C (emphasis added). Under that interpretation, any online 

courses for which LTP provided software pursuant to the Services Agreement would be 

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 14 of 22
15

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

subject to the exclusivity provision. 

The second alleged breach of the exclusivity provision relates to the Blackboard 

“test” courses conducted in the summer of 2014. As mentioned above, UIW decided in 

2013 that it would stop using LTP’s software after the termination of the Services 

Agreement, and would instead use software developed by one of LTP’s competitors, 

Blackboard. UIW enrolled 111 students in Blackboard test courses in order to prepare for 

the transition. By itself, UIW’s use of Blackboard does appear to constitute a breach, 

though UIW argues that it “paid full price for the 111 enrollments it would have paid had 

the students been enrolled in IZIO instead of Blackboard,” and because “LTP accepted 

the payment without objection or dispute,” it therefore “acquiesced,” negating any breach. 

Dkt. 44 at 12-13.

LTP disputes that it “acquiesced” to anything, and emphasizes that, when Dr. 

Porter emailed Athanasios to inform him of the test program, Athanasios responded “You 

also still have the exclusivity provision so we will have to work something around that if 

we need to and if we can,” to which Porter replied “I know about the exclusivity provision. 

I don’t mean for you to lose any revenue.” Dkt. 53, Ex. H. LTP further argues that, while 

it did accept the payment mentioned by UIW, the letter accompanying that payment said 

nothing about exclusivity. In LTP’s view, the payment was offered only as consideration 

for allowing UIW to continue to access IZIO records past the end of the contract term. 

Dkt. 53, Ex. I (“Your acceptance of this check will signify your willingness to give me 

access to our current Izio portal to retrieve historical information for a period of six 

months.”). Athanasios’ response further bolsters his argument that there was no 

waiver/acquiescence, as he said “please be aware that cashing the check will not 

constitute waiving any of our rights per our contract.” Dkt. 53, Ex. J. 

The court agrees with LTP that there was no acquiescence to the “test” courserelated breach. UIW may still argue that it fully compensated LTP for any breach, thus 

negating the damages element of LTP’s claim, but that argument will be addressed 

below. 

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 15 of 22
16

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

The third and final alleged breach of section 7.6 relates to the early termination of 

the Services Agreement by UIW. As mentioned above, in August 2014, UIW notified LTP 

that it intended to terminate the agreement early, and provided a payment to LTP based 

on the estimated number of enrollments from August until the end of the contract term in 

December 2014. 

Confusingly, UIW appears to concede that the early termination of the agreement 

was an “efficient breach” of the agreement, while simultaneously arguing that “there was 

no breach.” The court finds that the early termination of the agreement did indeed 

constitute a breach, but UIW may still argue that summary judgment is warranted 

because LTP was fully compensated, thus negating any damages. 

The damages issue is one of the main points of contention between the parties on 

this motion. As mentioned above, regarding the latter two alleged exclusivity breaches, 

UIW argues that summary judgment is warranted because LTP was fully compensated 

for any breach, and thus, there are no damages. LTP responds by arguing that the rates 

set forth in the contract are its “discounted” rates, and that the discount was contingent 

on exclusivity. Because UIW breached exclusivity, LTP argues, it must now pay the nondiscounted rates. 

LTP argues that the language used in the contract supports its position, because

the discount is specifically tied to exclusivity:

Client acknowledges and agrees that LTP will incur significant costs in 

initializing the relationship with Client, including initial setup fees and 

custom work charges. In addition, LTP is providing a discount exceeding 

sixty percent (60%) of its standard fees. As a consideration for LTP 

agreeing to waive its setup fees and custom work charges, and providing 

such discount, Client agrees that for the term of this Agreement LTP shall 

be Client’s sole and exclusive provider. 

Complaint, Ex. 1 at § 7.6 (emphasis added). 

In LTP’s view, the Services Agreement provides for two exchanges: one where 

LTP provides software services to UIW in exchange for money, and a separate one 

where UIW provides exclusivity to LTP in exchange for money. Because the value of the 

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 16 of 22
17

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

software exceeded the value of the exclusivity, LTP’s “payment” was made in the form of 

a discount, rather than an actual tender of money to UIW. LTP’s position is that, if UIW 

does not provide a service that LTP paid for, then UIW must refund the value of the 

discount. 

UIW responds by arguing that, if it were forced to pay the non-discounted rates, 

LTP would end up in a better position than it would have been if the contract had been 

fully performed. In other words, if there were no alleged breach of the exclusivity 

provision, then LTP would not be entitled to the non-discounted fees and startup costs, 

and thus, by seeking those fees and costs now, LTP’s damages claim goes beyond the 

benefit of the bargain. 

While UIW may be correct from a purely monetary perspective, it ignores the fact 

that LTP bargained for exclusivity, but did not receive it. The value of exclusivity is 

difficult to quantify, so the discount clause works as a type of liquidated damages 

provision – providing that, if exclusivity is breached, then LTP is entitled to the value of 

the discount and the startup fees. If UIW did not want to pay such a large penalty for 

breaching exclusivity, then it should not have agreed to a contract that expressly stated 

that the discount was provided as “consideration” for exclusivity. UIW also complains 

that none of LTP’s other clients actually pay the non-discounted rates, but that is 

irrelevant, as UIW agreed to the terms of this contract.

The court does find it questionable that LTP seeks to recover non-discounted rates 

for the entire life of the contract, dating back to 2004; however, that issue is not presently 

before the court. On this motion, the court’s review is limited to whether summary 

judgment is warranted in UIW’s favor based on the argument that LTP has been fully 

compensated for two of the alleged exclusivity breaches. And on that issue, the court 

finds that summary judgment is not warranted. There remains a triable issue of fact as to 

whether LTP may recover the non-discounted rates and/or the previously-waived startup 

costs in case of a breach of the exclusivity clause. 

Thus, overall, the court finds triable issues of fact regarding all three of the alleged 

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 17 of 22
18

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

exclusivity breaches. Accordingly, UIW’s motion for partial summary judgment is 

DENIED as to the alleged breaches of section 7.6.

2. Section 5.1 (fee schedule)

As to section 5.1 of the Services Agreement, LTP alleges two breaches by UIW: 

(1) enrolling ADCaP non-blended students in IZIO without paying the per-student rate, (2) 

allowing ADCaP students to use IZIO for greater than the eight-week period set forth in 

the agreement. 

Starting with (1), the court first observes that both parties attempt to support their 

positions by citing the same email exchange between Vince Porter and Athanasios. As 

mentioned in the background section of this order, on December 8, 2011, Dr. Cyndi 

Porter asked Athanasios if they could have a phone call to “talk about what you are going 

to do with ADCaP,” because Vince Porter was of the belief that UIW “was going to use 

the portal for the integration not Izio.” Dkt. 53, Ex. P. Athanasios wrote back to say that 

LTP was “scrambling to see if we can achieve what Vince likes before this coming 

quarter,” but informing UIW that “[w]hat we have developed in Izio will work for Vince 

today.” Id. Athanasios also stated that he “suggested to Vince using the Portal only for 

the non-blended guys who have no need for Izio otherwise.” Id. Vince Porter wrote back 

to say that “using Izio is fine with me,” to which Athanasios replied “this is a kind 

consideration and a good spirit of cooperation Vince.” Id. Athanasios also said that he 

would “continue to work towards giving your non-blended students an ability to get their 

books through the portal,” and that he would “come out with a plan tomorrow.”

Based on that exchange, UIW argues that Athanasios granted permission for all 

ADCaP students to use IZIO for textbook access, while LTP maintains Athanasios’ 

response stated that IZIO “was fine for ADCaP blended students,” but that non-blended 

students “could continue to use the portal.” Dkt. 53, ¶ 25. 

The court does find ambiguity in the parties’ exchange. When Athanasios stated 

that “what we have in Izio will work for Vince today,” UIW took that to mean that all

ADCaP students (i.e., both blended and non-blended) could use IZIO, whereas LTP 

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 18 of 22
19

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

claims that he was referring only to blended students, as shown by Athanasios’ further 

statement that he had “suggested to Vince using the Portal only for the non-blended guys 

who have no need for Izio otherwise.” Both of these interpretations are reasonable. 

That said, the email exchange does not support LTP’s current position that nonblended students “did not have to access their CourseSmart E-books through IZIO” 

because “their regular Portals worked just fine.” Dkt. 52 at 19. Athanasios specifically 

assured the Porters that he would “continue to work towards giving your non-blended 

students an ability to get their books through the portal,” directly implying that the nonblended students could not yet access books through the portal. 

The court also notes that Athanasios did not follow up on his promise to “come out 

with a plan tomorrow,” and in fact, LTP’s own web developer (Andrew Schmidt) says that 

he was told to stop work on the portal-based solution. Dkt. 48, ¶ 4. LTP responds by 

arguing that it “told Mr. Schmidt to stop working on the CourseSmart module because 

LTP had not heard back from Mr. Vince Porter about implementation of the module.” Dkt. 

52 at 19, n. 5. LTP also claims that the module was “completed, but never was

implemented because UIW never responded to LTP’s request for a meeting on the 

matter.” Id. at 19. However, the “meeting request” that LTP cites to was actually sent on 

April 10, 2012, well after Athanasios promised on December 11, 2011 to “come out with a 

plan tomorrow.” Dkt. 53, Ex. Q. The timeline afterwards is vague, but it does appear that 

the module was completed at some point, though LTP was slow to test or implement it, 

despite multiple reminders from Schmidt. See, e.g., Dkt. 48, ¶¶ 10-13. LTP did 

eventually ask UIW for permission to install and test the module, but there is no evidence 

of that occurring before February 2014 – more than two years after the topic was first 

broached. See Dkt. 46, Ex. E. 

Overall, while the evidence suggests that LTP was slow to provide a portal-based 

solution for the ADCaP non-blended students, the ambiguity in Athanasios’ email to the 

Porters prevents the court from finding that he granted permission for the non-blended 

students to use IZIO. However, UIW asserts an alternate basis for relief – arguing that 

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 19 of 22
20

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

LTP “actively facilitated” the non-blended students’ use of IZIO by “assisting with or 

setting up UIW’s non-blended courses in IZIO in 2011, 2012, and 2013.” Dkt. 44 at 18. 

UIW argues that this conduct either expressly or impliedly modified the parties’ 

agreement. 

LTP responds to the “modification” argument by pointing out that any assistance in 

setting up the non-blended IZIO courses was provided by Luigi DiGrande, who did not 

have authority to modify the contract on behalf of LTP. 

In reply, UIW asserts that DiGrande “was the Account Manager and UIW’s main 

contact at LTP,” and that “UIW necessarily relied on his guidance on how to use LTP’s 

services.” Dkt. 58 at 8. However, UIW cites no legal standard regarding the authority of 

an individual to modify the contract, preventing the court from making a determination as 

to whether DiGrande had such authority. 

In order to modify the contract, DiGrande must have been an agent of LTP acting 

within the scope of his authority. See, e.g., Penthouse Int’l, Ltd. v. Barnes, 792 F.2d 943, 

947-48 (9th Cir. 1986). Issues regarding the existence of agency are questions of fact. 

Id. at 947. As the party moving for summary judgment, UIW must present evidence 

showing that there is no triable issue of material fact regarding DiGrande’s authority to 

modify the contract, and UIW’s showing falls short of that standard. Accordingly, the 

court DENIES UIW’s motion for partial summary judgment on the section 5.1 claim 

arising out of the non-blended students’ use of IZIO.

Moving to the second alleged breach of section 5.1, UIW argues that there is 

nothing in the contract limiting the use of IZIO to eight weeks. According to UIW, the 

contract’s reference to “5-8 weeks” is referring to the semester/course length, and places 

no temporal restrictions on the students’ use of IZIO. 

UIW Universe will pay LTP $15 per a student per (5-8 weeks) semester per 

course for up to 1800 students in any given semester.

UIW Universe will pay LTP $12 per a student per (5-8 weeks) semester per 

course for all students above 1800 and up to 2500 in any given semester.

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 20 of 22
21

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

UIW Universe will pay LTP $11 per a student per (5-8 weeks) semester per 

course for all students above 2500 in any given semester.

Complaint, Ex. 1. 

However, contrary to UIW’s interpretation, the language of the contract does 

appear to tie each payment to a single student, a single 5-8 week semester, and a single 

course. Thus, a reasonable factfinder could find that, to the extent IZIO access went 

beyond a single 5-8 week semester, LTP was owed an additional payment.

Further, to the extent that UIW claims that LTP acquiesced to the longer IZIO 

access period by virtue of DiGrande’s assistance in setting up courses for longer than 

eight weeks, the court finds that summary judgment is unwarranted for the same reasons 

discussed above. Thus, the court DENIES UIW’s motion for partial summary judgment 

on the section 5.1 claim arising out of the use of IZIO for greater than eight weeks.

3. Section 4.3 (restrictions on use of LTP’s technology)

Finally, UIW moves for summary judgment as to LTP’s section 4.3 claim, which 

arises out of UIW’s adaptation of third-party software to mimic the same functions as 

LTP’s software. The entire dispute revolves around whether UIW’s use of the third-party 

software constituted a “derivative work” of the LTP software. 

As a threshold matter, UIW points out that the contract prohibits only the creation 

of “derivative works from the Software,” with “Software” defined in the contract as “LTP’s 

learning platform (‘IZIO’).” Thus, there was no restriction on creating derivative works 

from non-IZIO portions of LTP’s software, only a restriction on creating a derivative work 

from IZIO. 

It appears undisputed that UIW did adapt third-party software to perform the same 

functions as LTP’s software. UIW’s main challenge to this argument is to point to LTP’s

Rule 30(b)(6) deposition (with Athanasios serving as the deponent), where, according to 

UIW, Athanasios “admitted that none of these unsupported allegations describe a 

derivative work.” Dkt. 58 at 14. 

The deposition transcript is actually not as clear as UIW’s characterization

indicates. UIW’s attorney appears to be asking about four competing products –

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 21 of 22
22

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Blackboard, Banner, Recruiter, and DataTel – and is asking about whether UIW’s use of 

any of them constitutes a derivative work. With regard to Blackboard, the attorney asks 

“Do you believe that’s a derivative work from IZIO,” and Athanasios says “no, that’s a 

derivative work from all our integrated solution.” Dkt. 45, Ex. G at 100:17-24. Later, the 

attorney questions him about Banner, asking “but it’s not a derivative work of IZIO, 

correct?”, to which he responded “It’s a derivative work of our portal and integration 

facility. It’s a derivative work of the LTP full solution.” Id. at 101:25-102:3. The attorney 

further pressed, asking “do you believe it’s a derivative work of IZIO itself,” to which 

Athanasios said “I don’t know the answer” (his attorney then objected on the grounds that 

the question called for a legal conclusion). Id. at 102:10-14. Finally, UIW’s attorney asks 

about Recruiter, asking “you don’t believe it’s a derivative work of IZIO specifically, 

correct?” to which Athanasios responded “correct.” Id. at 104:17-21. 

Overall, not only is the deposition testimony muddled, it asks Athanasios to offer

legal conclusions. For those reasons, it cannot serve as the basis for granting summary 

judgment in UIW’s favor. Other than citing the deposition testimony, UIW offers little else 

in the way of argument – its motion does not meaningfully engage on the substance of 

what constitutes a “derivative work,” and does not set forth any legal standard nor cite 

any cases supporting its position. Overall, the court finds there to be a triable issue of 

fact as to whether UIW created a “derivative work” of LTP’s product, and thus, UIW’s 

motion for summary judgment is DENIED as to the section 4.3 claim. 

CONCLUSION

For the foregoing reasons, UIW’s motion for partial summary judgment is DENIED. 

IT IS SO ORDERED.

Dated: October 30, 2015

__________________________________

PHYLLIS J. HAMILTON

United States District Judge

Case 4:14-cv-04322-PJH Document 74 Filed 10/30/15 Page 22 of 22