## F I L E D United States Court of Appeals Tenth Circuit 

### JUN 29 2004 

### PATRICK FISHER Clerk PUBLISH
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

LIFEWISE MASTER FUNDING, a Delaware limited liability company; LIFEWISE FAMILY FINANCIAL SECURITY, a Utah corporation, Plaintiffs-Counter-Defendants - Appellants,

v. TELEBANK, now known as E Trade Bank, a federally chartered savings bank, Defendant-Counter-Claimant - Appellee. No. 03-4086

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF UTAH (D.C. No. 00-CV-495-B)
Thomas E. Plank, University of Tennessee College of Law, Knoxville, Tennessee, and Brent V. Manning, (Candice Anderson Vogel, withhim on the brief, and Sammi V. Anderson, on the brief, Manning, Curtis, B radshaw and Bednar, L.L.C., Salt Lake City, Utah), for Plaintiffs-Counter-Defen dants - Appellants. Barkley Clark and Douglas Lobel (and Patrick D. Con ner, Morgan, Lewis & Bockius, L.L.P., on the brief, McLean, Virginia), f or Defendant-Counter-Claimant - Appellee.

Before EBEL , KELLY , and McCONNELL , Circuit Judges.- 2 -

KELLY , Circuit Judge.

Plaintiffs-Appellants LifeWise Master Funding, LLC and LifeWise Family Financial Security, Inc. (collectively “LifeWise”) appeal the district court’s grant of judgment as a matter of law and summary judgmentagainst them in their breach of contract claim against Defendant-Appellee E*TRADE Bank (“E*TRADE”). The district court held that (1) Life Wise failed to satisfy a condition precedent to E*TRADE’s provision of fundi ng under the contract, and (2) LifeWise failed to produce an admissible damage s model attributable to its lost profits. We have jurisdiction pursuant to 28 U.S.C. § 1291. For the reasons stated below, we affirm.

Background A. Factual Background LifeWise was in the business of lending money to te rminally ill patients. The company began business in 1996 by acquiring the assets of a prior viatical company. V Aplt. App. at 2577. Its business plan i nvolved making loans in the form of lines of credit to terminally ill borrowers who pledged their life insurance policies as collateral. When a borrower died, the amounts drawn from the line of credit were deducted from the value of the insuranc e policy, plus interest and1 LifeWise Master was formed as a “bankruptcy remote” subsidiary, so that

the bankruptcy of the parent, LifeWise Family, woul d not affect its assets. XV Aplt. App. at 6549. - 3 - fees. Effective December 31, 1998, LifeWise and E*TRADE’s predecessor, Telebank, entered into a Funding Agreement that all owed LifeWise to obtain up to $200 million from Telebank over seven years. Se e I Aplt. App. at 239-88. This arrangement was also known as the “Facility.” Under the Facility, Telebank would serve as LifeWise’s long-term “takeout lender .” This meant that when LifeWise made a loan, it would draw from its own fu nds or from its short-term lender, Bank One. XII Aplt. App. at 5319-21. Once it originated $1.75 million in loans, LifeWise would make a funding request from T elebank. Id. at 5321-22. LifeWise would sell its loans to a wholly-owned sub sidiary, LifeWise Master, 1 which in turn obtained funds from Telebank, V Aplt. App. at 2578, and placed the policies in trust with Bankers Trust Company under a Trust Indenture, XV Aplt. App. at 6544-654. The sale of loans from LifeWise Family to LifeWise Master was governed by a Loan Sale Agreement. II Aplt. Ap p. at 734-58. Later, when a borrower died, Telebank would first be paid in full from the proceeds of the life insurance policy, and then LifeWise would receive i ts interest and fees. V Aplt. App. at 2578-79. The Funding Agreement imposed several conditions th at the parties were to2 Section 4.10 provided:

The Initial Investor shall have determined that the underwriting policies and procedures of LifeWise and the general business operations of LifeWise are satisfactory to it. If not so satisfactory, the Initial Investor shall disclose t o the Company in writing, in reasonable detail, the reasons for suchdetermination. I Aplt. App. at 259.

3 Section 12 defined “lien” to include any interest in property securing an obligation owe d to . . . any Person other than the owner of the property . . . w hether or not such interest shall be recorded or perfected and wh ether or not such interest shall be contingent upon the occurren ce of some future event or events . . . and including the lien , privilege, security interest or other encumbrance . . . . I Aplt. App. at 277.

4 Section 9.8(b) provided: Except for the conveyances under the Indenture, Lif eWise will not sell, pledge, assign or transfer to any other Perso n, or grant, create, incur, assume or suffer to exist any Lien o n the Trust Property or any interest therein (other than Permitted Liens), and LifeWise shall defend the right, title, and interes t of the Company and the Trustee in, to and under the Trust Assets a gainst all claims of third parties claiming through or under L ifeWise; provided however , that LifeWise’s obligations under the Section - 4 - meet before any funding was required to be provided . Section 4.10 of the Agreement gave Telebank the right to determine whet her LifeWise’s general business operations were unsatisfactory to it, and if so, the reasons for the dissatisfaction were to be provided to LifeWise in writing in reasonable detail. 2 Additionally, Section 9.8(b) prohibited LifeWise fr om allowing any liens 3 to be placed on the policies that were placed in trust as collateral for Telebank’s advances. 49.8 shall terminate upon the repayment in full of t he Notes and the

expiration of any applicable preference period. I Aplt. App. at 267. - 5 - During 1999, the first year in which the Facility w as in place, the arrangement ran smoothly. In January 2000, Teleban k merged with E*TRADE Bank, and concerns were soon raised within E*TRADE about LifeWise’s business operations. Various meetings were held in early 20 00 between E*TRADE and LifeWise personnel. On April 28, 2000, E*TRADE sent a letter to LifeWis e invoking its right under § 4.10 of the Funding Agreement to delay fund ing to LifeWise until it became satisfied with the general business operatio ns of LifeWise. XV Aplt. App. at 6667-68. The one-and-a-half page letter ad dressed E*TRADE’s dissatisfaction with LifeWise’s low rate of loan pr oduction, failed marketing campaign, inability to attract investors, unrestrai ned spending, and overall losses. After E*TRADE’s continued refusal to provide fundin g, LifeWise filed this lawsuit in June 2000. B. Procedural Background During pretrial proceedings, LifeWise submitted a t otal of four damages models to the district court. The first model was based on the written report of Mr. Merrill Norman, LifeWise’s damages expert. I Aplt. App. at 309-63. Upon E*TRADE’s motion in limine, V Aplt. App. at 2100-45 4, the district court- 6 -

excluded the testimony of Mr. Norman on the basis o f Federal Rules of Evidence 403 and 702, and the rule set forth in Daubert v. M errell Dow Pharmaceuticals,
Inc. , 509 U.S. 579 (1993), and Kumho Tire Co. v. Carmic hael , 526 U.S. 137 (1999). VIII Aplt. App. at 3530-43. LifeWise thenpresented its second damages model, based on the testimony of Mr. Mark Livingsto n, its Chief Executive Officer. Id. at 3567-97, 3695-727. This too immediately met wi th a challenge from E*TRADE, and the district court concluded thatthis second submission was also inadmissible under Rule 702, Daubert/Kumho , and New York law’s reasonable certainty standard, see Schonfeld v. Hilliard , 62 F. Supp. 2d 1062, 1071-72 (S.D.N.Y. 1998), rev’d in part , 218 F.3d 164 (2d Cir. 2000). VIII Aplt. App. at 3841-47. At the district court’s invitatio n, LifeWise submitted a third damages model, id. at 3735-840, 3848-924, which was met by E*TRADE’s Motion for Summary Judgment for lack of damages, IXAplt. App. at 3925-4132. Although the district court denied E*TRADE’s motion , it rejected LifeWise’s damages model, which was based on regression analys is, pursuant to Rule 702. XIII Aplt. App. at 5970-79. The district court gav e LifeWise one final chance to produce an acceptable damages model. Id. at 6025-27. LifeWise’s fourth and final damages model was submi tted to the district court on September 13, 2002. X Aplt. App. at 4501- 647. As could be expected, E*TRADE once again moved for summary judgment on damages. XI Aplt. App.- 7 -

at 4898-5118. The district court took E*TRADE’s mo tion under advisement and also ordered that the trial be bifurcated. XIV Apl t. App. at 6222-48. Trial was held December 2-20, 2002, and focused pri marily on LifeWise’s main claim, that E*TRADE denied funding in bad fait h for pretextual reasons unrelated to LifeWise’s poor business operations. The jury rejected this claim, finding that E*TRADE’s denial was not in bad faith, and LifeWise does not challenge this finding on appeal. XIII Aplt. App. at 5592-93. The jury also found, however, that E*TRADE’s letter to LifeWise e xplaining its dissatisfaction with LifeWise’s business was not sufficiently detai led. Id. After the jury verdict as to liability, E*TRADE fil ed a motion for judgment as a matter of law, arguing that it had no obligati on to provide funding to LifeWise because LifeWise violated § 9.8 of the Fun ding Agreement by placing liens on E*TRADE’s collateral. XII Aplt. App. at 5 294-402. On March 5, 2003, the district court granted both o f E*TRADE’s pending motions. XIII Aplt. App. 5594-666. On the motion for judgment as a matter of law, the district court ruled that LifeWise violate d Section 9.8 of the Funding Agreement by placing liens on the collateral that s ecured repayment of E*TRADE’s funding advances. On the summary judgment motion regarding damages, the district court held that LifeWise’s September 13, 2002, damages mo del was unduly speculative5 The Funding Agreement between LifeWise and E*TRADE was governed

by New York law, I Aplt. App. at 282; the Note Purc hase Agreement and the Security Agreement (both of which were between Life Wise Family and BP) were governed by Utah law, XV Aplt. App. at 6712, 6732; the Loan Sale Agreement between LifeWise Family and LifeWise Master was gov erned by New York Law, II Aplt. App. at 751; and the Trust Indenture betwe en LifeWise and Bankers Trust was also governed by New York law, XV Aplt. App. at6564.

6 Specifically, LifeWise pledged “all assets of the D ebtor . . . , whether now owned or existing or hereafter acquired, owned, exi sting or arising (whether - 8 - under New York Law, unreliable and not helpful unde r Rule 702, and unduly prejudicial under Rule 403. The district court als o held that LifeWise CEO Mark Livingston, its only designated expert, was not qua lified under Rule 702 to testify to the September 13, 2002, damages model. The district court entered judgment for E*TRADE on March 24, 2003. This appeal followed.

Discussion A. The Liens Issue In early 1999, LifeWise asked its Chairman Michael Salzhauer for financial assistance. On April 1, 1999, LifeWise obtained a $5 million loan from Benjamin Partners (“BP”), a Salzhauer family partnership, byexecuting a Security Agreement, XV Aplt. App. at 6716-37, and a Note Pur chase Agreement, id. at 6690-715. 5 In the Security Agreement, LifeWise Family grante d BP a security interest in “all assets” 6 of LifeWise, including LifeWise’s interests in the policiesacquired by contract or operation of law) and where ver located . . . including,

without limitation . . . [a]ll of Debtor’s right, t itle and interest in any and all Life Insurance Policies . . . .” XII Aplt. App. at 5351

.

7 Unless otherwise indicated, both BP and Combined Partnership will be referred to as BP in this opinion. - 9 - held by Bankers Trust that secured E*TRADE’s advanc es. XII Aplt. App. at 5351. LifeWise does not dispute that liens were pl aced on the policies. XV Aplt. App. at 6736. On December 31, 2000, another Salzhauer family entity, Combined Partnership, was substituted as the secured party i n the Security Agreement. 7XII Aplt. App. at 5396-97. E*TRADE did not discover the liens on the policies until after this lawsuit was filed, during the deposition of LifeWise’s Chie f Financial Officer, Mr. Syver Norderhaug. XV Aplt. App. at 6788-94. Three weeks later, on April 1, 2001, LifeWise and Combined Partnership executed an Ackno wledgment and Confirmation. Id. at 6736-37. The document acknowledged that “LifeW ise granted Combined Partnership a security interest in. . . LifeWise’s rights under certain Life Insurance Policies,” but that “Combine d Partnership wishes to disclaim any and all right, title or interest in th e Life Insurance Security Interest, if any such interest ever existed.” Id. The Security Agreement listed two ways in which BP’ s lien could be released. First, under § 7, the liens could be rel eased if “the Secured Obligations have been paid in full.” Id. at 6728. Second, under § 11, BP could unilaterall y8 Effective July 1, 2000, UCC Article 9 was repealed from the Utah Code

and superceded by “Article 9A,” Utah Code Ann. §§ 7 0A-9A-101 et seq. See WebBank v. Am. Gen. Annuity Serv. Corp. , 54 P.3d 1139, 1142 n.3 (Utah 2002) (citing S.B. 168, 53d Leg., Gen. Sess., 2000 Utah L aws 866-943). However, the former Article 9–specifically § 9-306(2)–was in eff ect at the time the Security Agreement was signed and effective. XV Aplt. App. at 6717, 6734. - 10 - decide to surrender the collateral. Id. at 6729. LifeWise concedes that neither of these conditions was met. LifeWise argues, however, that BP’s lien was releas ed pursuant to § 5.6 of the Security Agreement, coupled with Section 9-306( 2) of the Uniform Commercial Code, Utah Code Ann. § 70A-9-306(2) (199 9). 8 Section 9-306(2) provided that “a security interest continues in col lateral notwithstanding sale, exchange, or other disposition thereof unless the d isposition was authorized by the secured party in the security agreementor otherwise, and also continues in any identifiable proceeds including collections by the debtor.” (emphasis added). Section 5.6 of the Security Agreement, wherein BP a uthorized disposition of the collateral by LifeWise Family in certain cases, states: Debtor will not sell, assign, transfer or otherwise dispose of any material portion of the Account or Contracts, whichconstitute a part of the Collateral, or attempt, offer or contra ct to do so except , so long as no Event of Default has occurred and is continuing, for the disposition of such accounts and Contracts [1] in the ordinary course of business [2] to third party purchasers [3 ] without recourse to the Debtor. XV Aplt. App. at 6726 (emphasis added).- 11 -

The dispute in the present case therefore focuses o n whether the assignment of loans from LifeWise Family to LifeWise Master wa s “without recourse” and thus authorized by BP. If the disposition of the p olicies was authorized by BP, such authorization would extinguish any security interest BP would have had in the policies, and the policies would therefore be u nencumbered when transferred to Bankers Trust as collateral. The district court granted judgment as a matter of law to E*TRADE on the liens issue. We review a grant of a judgment as a matter of law de novo, applying the same standard as the district court. Hyler v. Geo-Seis Helicopters, Inc. , 269 F.3d 1190, 1193 (10th Cir. 2001). A motion for jud gment as a matter of law may be granted if “a party has been fully heard on an i ssue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue.” Fed. R. Civ. P. 50(a)(1). LifeWise argues that when LifeWise Family transferr ed the life insurance policies to LifeWise Master and thereafter to Banke rs Trust, any lien that was on the policies was terminated pursuant to UCC § 9-306 (2) because BP authorized such disposition under § 5.6 of the Security Agreem ent. As a preliminary matter, we note that E*TRADE argue s that because § 5.6 nowhere expresslyreleased the liens, no release was ever created. Aplee. Br. at 35-36. This is unpersuasive. According to E*TRADE , no release occurs absent- 12 -

the requisite words of release, discharge, or renun ciation. However, the cases cited by E*TRADE all relate to releases from tort l iability. See State v. Upstate Storage, Inc. , 535 N.Y.S.2d 246, 248 (N.Y. App. Div. 1988); Carp enter v. Machold , 447 N.Y.S.2d 46, 46-47 (N.Y. App. Div. 1982); Sim onson v. Travis , 728 P.2d 999, 1002 (Utah 1986). It is well settled , however, that under UCC § 9- 306(2), a lienholder who authorizes the sale of pro perty in which he has a security interest waives the lien on the collateral. See First Fin. Co. v. Akathiotis , 249 N.E.2d 663, 665 (Ill. App. Ct. 1969); Lisbon Bank & Trust Co. v. Murray , 206 N.W.2d 96, 97 (Iowa 1973); Whirlpool Corp. v. Daile y Constr., Inc. , 429 S.E.2d 748, 750 (N.C. App. Ct. 1993). No magic language o f release is required; indeed, courts have even terminated security interests simp ly by implying authorization from a party’s conduct. See, e.g. , Lisbon Bank , 206 N.W.2d at 99. E*TRADE has provided us with no contrary authority applying a stricter standard. We now turn to whether LifeWise Family’s assignmentof the loans and the underlying security interests in the policies was i n accordance with § 5.6 of the Security Agreement. As stated above, § 5.6 require d that dispositions be (1) in the ordinary course of business, (2) to third partypurchasers, and (3) without recourse to LifeWise. There can be no serious dispute that the first two requirements of § 5.6 were met in the transfer of the loans to LifeWise M aster. LifeWise Master is a- 13 -

distinct and separate legal entity from LifeWise Fa mily. Moreover, as the Loan Sale Agreement stated, LifeWise Master was “formed . . . for the sole purpose of acquiring certain . . . loans secured by related li fe insurance policies,” and LifeWise Family “intend[ed] to sell or contribute [ the] loans” to LifeWise Master. II Aplt. App. at 736. Thus, LifeWise sold its loan s “in the ordinary course of business” and to a “third party purchaser.” E*TRADE, however, attempts to argue that the first two requirements are not met because (1) a “purchaser” requires a “sale, ” and that no “sale” was made between LifeWise Family and LifeWise Master because the transfer of the policies constituted, in part, a capital contributi on by LifeWise Family under the Loan Sale Agreement, (2) life insurance policies ar e not “goods” and therefore cannot be purchased in the ordinary course of busin ess, and (3) LifeWise Family is not in the business of selling insurance policie s. Aplee. Br. at 39-43. E*TRADE arrives at these three arguments by equatin g the requirement in § 5.6 that the dispositions be made “in the ordinary cour se of business to third party purchasers” to the definition of a “buyer in the or dinary course” in UCC § 1- 201(9), Utah Code Ann. § 70A-1-201(9). That provis ion, however, concerns purchasers of goods, and, as E*TRADE states, insurance policies are not “goods.” Aplee. Br. at 42. But the Security Agreement and s pecifically § 5.6 both concerned the life insurance policies on which BP h ad a lien. Therefore, to apply- 14 -

§ 1-201(9)’s definition of “buyer in ordinary cours e” onto § 5.6 would render the section a nullity. As for the third requirement, the Loan Sale Agreeme nt is again instructive: Section 2(i) states [1] Except as specifically provided for herein , [2] the sale and the purchase of the Loans under this Agreement is witho ut recourse to any Seller; [3] provided that the Seller shall be l iable to the Purchaser for all representations, warranties, cove nants and indemnities made by it under this Agreement

. II Aplt. App. at 744 (emphasis added). Following § 2(i) is a list of seventeen representations and warranties that survived the sa le of any loan. The district court essentially held that because § 2(i) has an “except” clause and a “provided that” clause, the sale of lo ans was not “without recourse.” The court reasoned that if the sale were truly with out recourse, “the provision would have stated simply that ‘the sale and the pur chase of the Loans under this Agreement is without recourse to any Seller.’” XII I Aplt. App. at 5649. We conclude that the district court erroneously int erpreted the phrase “without recourse.” “Recourse” refers only to the liability of a seller of receivables to the purchaser if the underlying obli gors fail to pay the receivables. A seller disclaims this liability, known as “creditliability,” by selling the receivables “without recourse.” See Thomas E. Plank, The True Sale of Loans and the Role of Recourse , 14 Geo. Mason L. Rev. 287, 289 (1991). However,9 E*TRADE claims that LifeWise raises the differences between credit

liability and warranty liability for the first time on appeal. Aplee. Br. at 45. This is doubtful, considering the district court’s exten sive discussion of the matter. See XIII Aplt. App. at 5650-52. - 15 - although the sale of receivables “without recourse” releases the seller from liability in case of the debtor’s insolvency, the s eller retains liabilityfor breach of warranty, or “warranty liability.” 9 See id. at 306. As the Oklahoma Supreme Court stated, the term “no recourse” or “without recourse” in an assignment does not, without more, evidence an intent to discl aim the implied warranty of genuineness and validity, but is meant only to make clear the assignor does not guarantee the debtor’s solvency or that the debtor will fulfill his obligation. Indiana Nat’l Bank v. State Dep’t of Human Servs. , 880 P.2d 371, 380 (Okla. 1994); see also Gen. Elec. Credit Corp. v. Air Flow Indus., Inc. , 432 So.2d 607, 609 (Fla. App. Ct. 1983) (“implied warranties are n ot affected . . . by the fact that the assignment was made ‘without recourse.’”); 12 C.F.R. pt. 3, app. A, § 4(a)(11) & (a)(3)(iii) (excluding from definition o f “recourse” “[w]arranties that permit the return of assets because of fraud, misre presentation, or incomplete documentation”). Thus, even in a non-recourse assignment, there is s till an implied warranty that, for instance: • the chose assigned is a valid and genuine obligati on of the parties;- 16 -

• the right assigned actually exists and is subject to no limitations or defenses other than those stated or apparent at the time of the assignment; • the right assigned is based on adequate considerat ion; • any evidence of the right delivered as part of the assignment, or exhibited as an inducement to acceptthe assignment, is genuine and what it purports to be. 6 Am. Jur. 2d Assignment § 158 (footnotes omitted); see also Wait v. Williams , 91 S.E. 969, 970 (S.C. 1917); Restatement (Second) of Contracts § 333. Contrary to the district court’s and E*TRADE’s posi tion, the warranty made by LifeWise Family to LifeWise Master in § 5(i ) of the Loan Sale Agreement does not convert the sale from a nonrecou rse assignment to a recourse assignment. Section 5(i) provides that, if LifeWis e Family breaches one of the seventeen representations and warranties that “mate rially and adversely affects” a loan, LifeWise Family must “immediately repurchas e” the loan from LifeWise Master. The section merely provides a remedy if Li feWise Family breached an express warranty or made a false representation; itdoes not allow recourse against LifeWise Family simply for the obligors’ in solvency or failure to pay. The seventeen representations and warranties act as an inducement for LifeWise Master to accept the assignment; even in a nonrecou rse assignment, LifeWise Family must warrant that those representations are genuine. See Penowa Coal Sales Co. v. Gibbs & Co. , 85 A.2d 464, 467 (Md. 1952). In deciding that the LifeWise Family’s sale of the loans to LifeWise- 17 -

Master was not without recourse, the district courtalso reasoned that were the Court to interpret the “except for” and th e “provided for” clauses as not providing “recourse” in this ca se, they would convey no new rights to LifeWise Master than it was already entitled to as a matter of contract law. However, New York law disfavors contract interpretations that render prov isions of a contract superfluous. XIII Aplt. App. at 5652. We disagree. First, the seventeen representations and warranties in the Agreement are specific to this transaction. Their incorporation into the part of the Agreement that details the parties’ liability is therefore no t superfluous. Moreover, while the “except for” and “provided that” language techn ically may not be necessary as a matter of contract law, their placement along with the “without recourse” language reinforces and confirms LifeWise Family’s responsibilities under the Agreement. Indeed, sellers frequently specify thata sale of a receivable is “without recourse,” even when they sell with expres s warranties. See, e.g. , 1 U.C.C. Legal Forms § 2:174 (Assignee’s Right to Pay ment); 3 U.C.C. Legal Forms § 9:473 (Assignment Without Recourse). LifeW ise’s argument that such redundancy in contracting language is common to avo id frivolous litigation is given greater weight in light of the fact that “wit hout recourse” is often found in assignment contracts but also simply restates the l aw of assignment. See 29 Williston on Contracts § 74:8 (“[When using the phr ase ‘without recourse,’] the assignor is only seeking to make certain what the l aw would indeed, in any event,- 18 -

imply from mere assignment, that the assignor is no t responsible for the solvency of the debtor.”); see also Restatement (Second) of Contracts § 333(2) (“An assignment does not of itself operate as a warrantythat the obligor is solvent or that he will perform his obligation.”). Under the district court’s ruling, any contract provision that attempts to state the law i s superfluous and therefore must be interpreted in a manner inconsistent with the law. We do not interpret New York’s law regarding contract construction so broad ly. Finally, our conclusion as to the meaning of “witho ut recourse” in the law of assignments is in accord with the meaning of that term for negotiable instruments. An indorser of a negotiable instrument assumes credit liability. See UCC § 3-415(a), Utah Code Ann. § 70A-3-415(a) (an i ndorser becomes liable to pay the instrument according to its terms if the pr imary obligor fails to pay the instrument). The indorser may disclaim credit liab ility by indorsing the instrument “without recourse.” See UCC § 3-415(b). Disclaiming credit liability by indorsing “without recourse” does not, however, disclaim applicable transfer and presentment warranties. See UCC § 3-416 cmt. 3. Because LifeWise Family’s assignment of the policie s to LifeWise Master was without recourse, we hold that BP’s lien on the collateral was released upon the transfer of the loans from LifeWise Family to L ifeWise Master. LifeWise therefore did not fail to satisfy a condition prece dent to the funding agreement- 19 -

with E*TRADE. B. The Damages Issue Having concluded that LifeWise did not fail to sati sfy a condition precedent does not end our review. The question we now turn to is whether the district court erred in rejecting the fourth damage s model proffered by LifeWise and in declining to consider what LifeWise refers t o as “reliance” damages. We conclude that the court correctly ruled that the fu ture lost profits evidence was speculative and thus properly excluded, and that th e jury verdict in favor of E*TRADE precludes reliance damages. We review the district court’s grant of summary jud gment and its conclusions of law de novo, applying the same legal standard used by the district court under Rule 56. Essence, Inc. v. City of Fede ral Heights , 285 F.3d 1272, 1283 (10th Cir. 2002). “When applying this standar d, we view the evidence and draw reasonable inferences therefrom in the light m ost favorable to the nonmoving party.” N. Tex. Prod. Credit Ass’n v. Mc Curtain County Nat’l Bank , 222 F.3d 800, 806 (10th Cir. 2000) (internal quotat ion marks and citations omitted). We review a district court’s decisions e xcluding evidence at the summary judgment stage only for an abuse of discret ion. Lantec, Inc. v. Novell,
Inc. , 306 F.3d 1003, 1016 (10th Cir. 2002). Under this standard, “we will not disturb the district court’s decision unless we hav e a definite and firm conviction10 In its reply brief, LifeWise argues that it did app eal the district court’s

rulings concerning the three previous damages model s in that (1) its Notice of Appeal included “all prior rulings . . . leading up to the final judgment;” (2) LifeWise’s Statement of Issues in its opening brief appealed broadly the district court’s rejection of all lost profits evidence; (3) the factual and procedural history for each model is provided in the background sectio n of the opening brief; and (4) LifeWise provided record cites where it preserved f or appeal each of the district court’s adverse rulings. Aplt. Reply Br. at 16 n.7 (citations omitted). All of these points, however, only show that LifeWise could have appealed the district court’s rulings on the other damages models. An examinatio n of the argument section of LifeWise’s brief, however, shows that it did not infact appeal such rulings, as it set forth no substantive arguments against the district court’s decisions. See Aplt. Br. at 50-72; Dubbs v. Head Start, Inc. , 336 F.3d 1194, 1202 n.4 (10th Cir. 2003) (“even issues designated for review are lost if the y are not actually argued in the party’s brief”); Adler v. Wal-Mart Stores, Inc. , 144 F.3d 664, 679 (10th Cir. 1998) (“Arguments inadequately briefed in the openi ng brief are waived . . . .”). - 20 - that the lower court made a clear error of judgmentor exceeded the bounds of permissible choice in the circumstances.” Id. (internal quotation marks and alteration omitted). 1. Lost Profits Damages LifeWise submitted a total of four damages models t o the district court, all of which were excluded. LifeWise appeals only the district court’s decision to exclude its fourth and final model. 10 In short, the first three damages models were excluded because they were found to be deficie nt under Rules 403 and 702, Daubert/Kumho , and New York’s requirement that alleged losses be capable of being proved with reasonable certainty, see Schonfeld v. Hilliard , 62 F. Supp. 2d 1062, 1071-72 (S.D.N.Y. 1998).- 21 -

LifeWise’s fourth damages model based a damages amo unt on an estimate of $167 million in projected loans from April 2001 through the end of 2005. X Aplt. App. at 4502-03, 4510, 4514. In a nutshell, LifeWise predicted that based on the $167 million figure, gross revenue was about$44 million, and total costs about $30 million. Id. at 4502-03. When costs are subtracted from the gr oss revenue, the resulting lost profits equal $14 milli on (this figure increases to $19 million if a longer average loan life is used). Id

. at 4503 & n.6. Then, applying a discount rate of 13%, the resulting damages in pr esent (April 1, 2001) dollars, depending on the average loan life and other variab les, are from $6.7 million to $9.3 million. Id. at 4503-04. The district court held that this fourth damages mo del (1) was unduly speculative because it was not sufficiently based o n LifeWise’s past, (2) failed to meet the requirements of Daubertand Rule 702 because Mr. Livingston was not qualified as an expert on the methodology employed in the statement, the methodology was not reliable, Livingston’s testimony did not “fit” the case, and the statement was not helpful to a jury, and (3) wa s inadmissible under Rule 403 because any probative value was outweighed by the d anger of being misleading and confusing to the jury and unnecessarily time-co nsuming. a. Mr. Livingston’s Testimony LifeWise argues that the district court erred in fa iling to admit Mr.- 22 -

Livingston’s damages testimony as an expert opinionunder Rule 702, and as a lay witness opinion under Rule 701. i. Rule 702 Rule 702 allows expert testimony only where the “wi tness [is] qualified as an expert by knowledge, skill, experience, training , or education” to offer such opinions. To qualify as an expert, Mr. Livingston was required to possess “such skill, experience or knowledge in that particular f ield as to make it appear that his opinion would rest on substantial foundation an d would tend to aid the trier of fact in his search for truth.” Graham v. Wyeth Labs. , 906 F.2d 1399, 1408 (10th Cir. 1990) (quoting Bridger v. Union Ry. Co. , 355 F.2d 382, 387 (6th Cir. 1966)). The heart of expert testimony is the found ation . Whether a witness can parrot the results of a model does not mean that he is qualified to e xplain how the model works or to opine on the statistical vali dity or interpretation of the results. See Wilkins v. Univ. of Houston , 662 F.2d 1156, 1157 (5th Cir. Dec. 1981) (“Since multiple regression analysis is subje ct to misuse, courts cannot be expected to accept at face value conclusions derive d from such a model absent expert testimony concerning the validity of the mod el itself.”) (emphasis added). However, Mr. Livingston was not an expert in damage s analysis or in any of the techniques used to create the September 13, 2002, damages model. He admitted that he had never used the methods used to create the September 13,- 23 -

2002, damages model; he even confessed that “I am n ot a [damages] modeler.” IX Aplt. App. at 3994; see also XI Aplt. App. at 4850 (“I’m not an accountant and I’m not an academic”); id. at 4851 (“I’m not an expert on regression analysis.”); id. at 4852 (“I am not a statistician and I’m not an e xpert about regression analysis.”). Indeed, Mr. Livingston too k a single undergraduate class in economics. But he took no accounting or finance courses, had no training in damage analysis, had never testified as a damages e xpert or prepared an expert damages report, had never taught a course or lectur ed on damages, and has never been published in the field. Id. at 4855-56. As the district court noted, Mr. Livingston is “not a trained economist and cannot l egitimately educate a jury on many of the complex economic aspects of [the damage s model] such as ‘Scurves.’” XIII Aplt. App. at 5634 n.10; see also TK-7 Corp. v. Barbouti , 993 F.2d 722, 728 (10th Cir. 1993) (affirming exclusionof witness who was not qualified as an expert); Broadcourt Capital Corp. v . Summa Med. Corp. , 972 F.2d 1183, 1195 (10th Cir. 1992) (holding that witn ess with some general experience and education in the field lacked suffic ient qualifications to qualify as expert in the area); Brown v. Am. Honda Motor Co. , 939 F.2d 946, 952 (11th Cir. 1991) (concluding that statistics, “without ananalytic foundation, are virtually meaningless.”). Given Mr. Livingston’s utter lack of any familiarity, knowledge, or experience with damages analysis, the district court did not abuse- 24 -

its discretion in ruling that he could not testify as an expert regarding such a complex subject matter as LifeWise’s fourth damages model. Moreover, the district court also held that LifeWis e’s fourth damages model failed to meet the standard set forth in Daub ert v. Merrell Dow Pharmaceuticals , 509 U.S. 579 (1993), and Kumho Tire Co. v. Carmic hael , 526 U.S. 137 (1999), because (1) Mr. Livingston was notqualified as an expert in most of the methodology used in the statement, (2) the methodology is misleading, not reliable, and unsupported by use inany other comparable setting, (3) the methodology does not fit the present case b ecause three month rolling averages are not appropriate for making profit pred ictions beyond one period, and S-curves are not appropriate for a young company such as LifeWise that claims to have a vast untapped market in need of it s unique loan product, and (4) the model was not helpful to a jury but would tend to confuse, mislead, and waste time. XIII Aplt. App. at 5634-35. Lifewise does not challenge any of the district cou rt’s bases for excluding the damages model itself under Daubertand Kumho Tire except by arguing that the district court improperly weighed evidence. Ap lt. Br. at 55-56. However, the court found that LifeWise’s use of three-month rolling averages, step-down methodologies, compounded monthly growth rates, S-C urves, and a 13% discount rate was “unique to this case and not base d on any recognized- 25 -

standard.” XIII Aplt. App. at 5630. Moreover, the methodology was not in regular usage for predicting future profits, was no t peer reviewed, has no uniform usage in any known industry, and is capable of manipulation to achieve virtually any desired result. Id. LifeWise does not challenge any of these points. The district court did not abuse its discretion. ii. Rule 701 The district court did not analyze Mr. Livingston’s testimony as lay opinion testimony under Rule 701. LifeWise, howeve r, argues that Mr. Livingston’s position as CEO of LifeWise gives him personal knowledge to testify as to its lost profits. When the subject matter of proffered testimony cons titutes “scientific, technical, or other specialized knowledge,” the wit ness must be qualified as an expert under Rule 702. Rule 701 applies only “[i]f the witness is not testifying as an expert.” Fed. R. Evid. 701. Indeed, the rule expressly prohibits the admission of testimony as lay witness opinion if itis based on “specialized knowledge.” Id. In other words, “a person may testify as a lay wi tness only if his opinions or inferences do not require any speci alized knowledge and could be reached by any ordinary person.” Doddy v. Oxy USA, Inc. , 101 F.3d 448, 460 (5th Cir. 1996). In this case, Mr. Livingston testified only regardi ng LifeWise’s fourth- 26 -

damages model. The model concerned moving averages , compounded growth rates, and S-curves. Mr. Livingston could not test ify about these technical, specialized subjects under Rule 701. The cases string-cited by LifeWise allowing a busin ess owner to opine as to value do not support its position. In one group of cases, the courts found business owners’ testimony admissible under Rule 70 1 because the owners had sufficient personal knowledge of their respective b usinesses andof the factors on which they relied to estimate lost profits. See Malloy v. Monahan , 73 F.3d 1012, 1015-16 (10th Cir. 1996); Lightning Lube, Inc. v. W itco Corp. , 4 F.3d 1153, 1174-75 (3d Cir. 1993); In re Merritt Logan, Inc. , 901 F.2d 349, 360 (3d Cir. 1990); MCI Telecomms. Corp. v. Wanzer , 897 F.2d 703, 706 (4th Cir. 1990). In other cases, the owners offered valuations based onstraightforward, common sense calculations. See Securitron Magnalock Corp. v. Schnabolk , 65 F.3d 256, 265 (2d Cir. 1995) (business owner calculated past lost profit damages for defamation based on actual decrease in sales); Stat e Office Sys, Inc. v. Olivetti Corp. of Am. , 762 F.2d 843, 847 (10th Cir. 1985) (business owne r calculated that its lost profits equaled its lost profit per comput er times 29 lost sales); Teen-Ed, Inc. v. Kimball Int’l, Inc. , 620 F.2d 399, 402-03 (3d Cir. 1980) (plaintiff, an authorized dealer of defendant’s product for five y ears, used historical gross profit margin and historical gross sales to determi ne lost profits). Mr.- 27 -

Livingston’s proposed expert testimony does not fiteither circumstance. In the present case, although Mr. Livingston was th e president of the company, he does not have personal knowledge of the factors used by LifeWise’s fourth damages model to estimate its lost profits. On the other hand, the district court acknowledged that Mr. Livingston could have t estified solely as a businessperson based on his personal knowledge and his experience as president of the company. He could have given a straightforw ard opinion as to lost profits using conventional methods based on LifeWise’s actu al operating history. Indeed, the court essentially invited LifeWise to h ave him so testify. See XIII Aplt. App. at 5639. Instead of limiting Mr. Livingston’s testimony to h is experience as a businessperson and president of the company, howeve r, LifeWise had him “enter[] into the realm of rolling averages, S-curv es, and compound growth rates that appear to be an amalgam of logic, hope, and ec onomic jargon.” Id. at 5636- 37. But Mr. Livingston himself admitted that he “c an’t recall any prior instances” where he used such methods at LifeWise. XI Aplt. App. at 4961. Such subject matters fail to be rationally based on Mr. Livingston’s perception, and therefore cannot be admissible as lay opinion t estimony. b. New York Law Even were we to find that Mr. Livingston was qualif ied to testify about the- 28 -

intricacies of LifeWise’s September 13 damages mode l, we nevertheless agree with the district court that the model itself fails to satisfy New York’s prohibition of speculative damages. Loss of future profits as damages for breach of contract are allowed under New York law only if (1) it is demonstrated with certainty that such damages have been caused by the breach, (2) the alleged loss is capable of proof with reasonable certainty, and (3) the particular damages were fairly within the contemplation of the parties to the contract at the time it was made. Kenford Co. v. County of Erie , 493 N.E.2d 234, 235 (N.Y. 1986). Under the second prong, damages may not be “merely speculative, possible or imaginary.” Id. The district court found that LifeWise’s damages mo del was too speculative. LifeWise claims that its damages were reasonably certain and not speculative because (1) it had an established busin ess, (2) it was profitable, (3) its damages statements were based on an analysis of historical operations, (4) it was not based on a deficient scientific formula, an d (5) determination of the appropriate discount rate is for the jury. Under New York law, evidence of lost profits by newbusinesses must be received with greater scrutiny. Schonfeld v. Hilli ard , 218 F.3d 164, 172 (2d Cir. 2000); see also Trademark Research Corp. v. Maxwell Online, Inc. , 995 F.2d 326, 332 (2d Cir. 1993); Kenford , 493 N.E.2d at 234-35. This is because they do- 29 -

not have a “reasonable basis of experience–i.e. his toric profits–upon which to estimate lost profits with the requisite degree of reasonable certainty.” Schonfeld v. Hilliard , 62 F. Supp. 2d 1062, 1071-72 (S.D.N.Y. 1999). LifeWise argues it was not a new business because the concept was devised, assets were acquired, and loans were being issued three years before the Facility was signed. Aplt. Br. at 61. In addition , since the inception of its loan program, LifeWise made credit available to borrower s totaling more than $33 million. IV Aplt. App. at 1698. Finally, the Faci lity was in effect for well over a year before E*TRADE first denied funding in April 2000. XV Aplt. App. at
6667-68. While its history of operations clearly does not make LifeWise as firmly established as some other businesses, we think it p robably places LifeWise outside of the scope of “new businesses” contemplat ed by Schonfeldand Kenford . Generally, cases applying a higher evidentiary s tandard for new businesses involve businesses that had not yet begu n to operate, or have been running for just a few months. See, e.g. , Lovely Peoples Fashion, Inc. v. Magna Fabrics, Inc. , No. 95 Civ. 8450, 1998 WL 422482, at *1-2 (S.D.N. Y. July 22, 1998) (plaintiff dressmaker had only completed one single order for dresses); Kenford , 493 N.E.2d at 235 (stadium, which would provide r evenue, was never constructed); Zink v. Mark Goodson Prods., Inc. , 689 N.Y.S.2d 87, 88 (N.Y.- 30 -

App. Div. 1999) (proposed television game show was to feature a host not well known to American audiences who had never previousl y hosted a game show); Lee Kin Chiu v. City of N.Y. , 666 N.Y.S.2d 872, 874 (N.Y. App. Div. 1997) (plaintiffs were involved in new business for less than two months). However, although the evidentiary standard may be h eightened for new businesses, “[w]hether the claim involves an establ ished business or a new business, . . . the test remains the same, i.e., wh ether future profits can be calculated with reasonable certainty.” Ashland Mgm t. Inc. v. Janien , 604 N.Y.S.2d 912, 916 (N.Y. 1993); see also Coastal Aviation, Inc. v. Commander Aircraft Co. , 937 F. Supp. 1051, 1066 (S.D.N.Y. 1996) (“The NewYork Court of Appeals has instructed that the key issue is whethe r damages can be proven to ‘reasonable certainty.’”) (quoting Kenford , 493 N.E.2d at 235). Thus, rather than focus on whether LifeWise should be labeled a “new business” or an established one, we address the issue of whether LifeWise can e stablish lost future profits with reasonable certainty. LifeWise argues that despite the district court’s f indings, its business was profitable. Specifically, LifeWise claims that the second half of 2001 would have been a profitable period if its litigation exp enses against E*TRADE were excluded. Aplt. Br. at 62. However, LifeWise shutdown its operations in April 2001 and thus severely cut its advertising, payroll , and other costs, yet continued- 31 -

to generate revenue as borrowers died. X Aplt. App . at 4511, 4522. Other than the second half of 2001, LifeWise concedes that it incurred five years of straight losses. Aplt. Br. at 62. LifeWise argues, however, that a history of losses does not necessarily preclude an award of future profits. In support of this argument, LifeWise cites two cases, Yusef Ahmed Alghanim & Sons, W.L.L. v. T oys “R” Us, Inc. , 126 F.3d 15, 23-24 (2d Cir. 1997), and Lamborn v. Dittm er , 873 F.2d 522, 533 (2d Cir. 1989). Contrary to LifeWise’s assertion, Yuse f Ahmeddid not “apply[] New York Law to uphold lost profits of $46 million even though plaintiff had substantial losses.” Aplt. Br. at 62. Instead, th e court held that an arbitrator’s decision to award that amount did not meet the high standard for overruling a decision under the Federal Arbitration Act–“manifes t disregard of the law.” 126 F.3d at 23-24. That case is therefore not applicab le. Similarly, Lamborndid not involve lost profits damages, but rather concerned the proper methodology in estimating the value of an entire business. 873 F. 2d at 533-34. It is thus distinguishable from the present case. Even assuming that LifeWise could show lost profits damages despite never having been profitable, it has not done so he re in a manner that satisfies New York’s prohibition of speculative damages. In its damages report, LifeWise has failed to connect its past losses with its prop osed future earnings. It remains- 32 -

a fact that LifeWise sustained losses in every yearof its over five years of existence, and frequently experienced capitalizatio n problems, yet the damages model predicted only uninterrupted future growth. For instance, according to its audited financial st atements, LifeWise lost at least $12 million from February 1996 to April 2001, for an average yearly loss of over $2.2 million. XI Aplt. App. at 4934. However , the damages model turns LifeWise into a successful company with over $14 mi llion in net profits from April 2001 to December 2005, for an average yearly net profit of approximately $3 million. Similarly, during LifeWise’s history, the number of loan originations fluctuated each month: 28 months show a decline in originations while 33 months show an increase. X Aplt. App. at 4647, XII Aplt. App. at 5244. However, under the LifeWise’s damages model, Mr. Li vingston anticipated not a single future setback. In LifeWise’s actual history, its average monthly change in loan originations was an increase of $18,288. X I Aplt. App. at 4906-07, 4945. However, under its fourth damages model, LifeWise’s average monthly increase is $44,992–nearly two and a half times more. Id. at 4922. Finally, over its fiveyear history, LifeWise originated approximately $24 million in loans. X Aplt. App. at 4647. Now, it claims that in a shorter per iod, it will originate over $167 million–over seven times more. LifeWise has simplyfailed to show any sort of link between its past history and its future predic tions.11 The district court also found that LifeWise’s fourt h damages report was

more likely to confuse and mislead a jury than to h elp it, and thus excluded the report under Federal Rule of Evidence 403. XIII Ap lt. App. at 5635. LifeWise has failed to adequately respond to this alternativ e basis for excluding its fourth damages report, see Aplt. Br. at 69 n.39, and the issue is therefore w aived, Eateries, Inc. v. J.R. Simplot Co. , 346 F.3d 1225, 1232 (10th Cir. 2003). Even were the argument not waived, we have reviewed Life Wise’s fourth damages report, which consists of nearly 500 pages includin g exhibits, X Aplt. App. at 4501-647; III Aplt. App. at 1026-106; VII Aplt. App . at 3055-149, 3151-56, 3173-74; VIII Aplt. App. at 3758-88, 3792, 3848-64; XIII Aplt. App. at 5796-899, and we believe the district court did not abuse its discretion in determining that - 33 - The two cases LifeWise cites in support of its posi tion are distinguishable. In Merlite Industries, Inc. v. Valassis Inserts, In c. , 12 F.3d 373, 374 (2d Cir. 1993), the plaintiff had been operating for over fo rty years, and was an established, profitable company. LifeWise, on the other hand, has never been profitable, and its attempt to use a small slice of its short operating history to show that enormous profits were expected from an un substantiated turnaround in business is unacceptable. Similarly, in Travellers International, A.G. v. Trans World Airlines, Inc. , 41 F.3d 1570, 1579 (2d Cir. 1994), the parties ha d a 20- year joint venture agreement. The court found thatthe long-term course of dealings between the parties, coupled with demonstr able profit margins and a verifiable pricing structure permitted lost profits to be calculated with reasonable certainty. This is a far cry from LifeWise’s compa ratively disappointing history of operations. The district court properly exclude d LifeWise’s fourth damages model as overly speculative under New York law. 11the danger from confusion of the issues, misleading the jury, and waste of time

presented by the model substantially outweighed its probative value. Macsenti v. Becker , 237 F.3d 1223, 1240 (10th Cir. 2001). - 34 - 2. Reliance Damages In light of its disposition of the case on the lien s issue and lost profits damages, the district court did not reach LifeWise’ s claim for reliance damages. XIII Aplt. App. at 5666. LifeWise now argues that even if this court affirms the district court on the issue of lost profit damages, we should still remand the case to the district court to determine what, if any, re liance damages it may recover. Based on the jury’s finding that E*TRADE’s disconti nuation of funding was not in breach of the Funding Agreement, see id. at 5593, we disagree. In order to recover reliance damages for breach of contract, the plaintiff must demonstrate with certainty that there was a br each and that such damages have been caused by the breach. See Kenford Co. v. County of Erie , 493 N.E.2d 234, 235 (N.Y. 1986). In other words, there must b e a “definite and logical connection between what is proved and the damages ajury is asked to find.” Berley Indus., Inc. v. City of New York , 385 N.E.2d 281, 283 (N.Y. 1978). As noted above, the jury found that (1) E*TRADE hada good faith basis for denying funding because it was not satisfied wi th the general business operations of LifeWise, but (2) E*TRADE did not ade quately disclose in writing the reasons for its dissatisfaction with LifeWise’s business operations. XIII- 35 -

Aplt. App. at 5592-93. However, upon the district court’s issuance of its Memorandum Opinion and Order granting E*TRADE’s Mot ion for Summary Judgment Regarding Lost Profits Damages and E*TRADE ’s Motion for Judgment as a Matter of Law on the Basis of LifeWis e’s Failure to Satisfy Conditions Precedent Relating to Liens, the distric t court entered judgment in favor of E*TRADE and vacated the jury verdict. Id. at 5667. LifeWise argues that because the jury’s verdict was vacated, its finding that E*TRADE did not deny the funding in bad faith cannot be used to argue that no causal link connects E*TRADE to LifeWise’s damag es. We disagree. A judge “continue[s] to be bound by a jury’s findings even if its verdict is vacated, so long as the underlying factfinding is not impugn ed.” Artis v. Hitachi Zosen Clearing, Inc. , 967 F.2d 1132, 1138 (7th Cir. 1992); cf. Lytle v. Household Mfg.,
Inc. , 494 U.S. 545, 550 (1990). Here, the jury verdictwas vacated not because it was thought to be unreliable, but rather because th e district court’s decision as to a matter of law made the verdict moot. Compare Dranchak v. Akzo Nobel, Inc. , 88 F.3d 457, 459 (7th Cir. 1996) (when events durin g trial and improper omission from jury instructions contributed to reas ons for setting aside verdict, the verdict’s factual accuracy is impugned, and ver dict has no implications in court’s analysis of non-jury issues). Thus, as the jury’s finding that E*TRADE denied funding in good faith was not appealed, it m ust stand. Such a finding- 36 -

removed any causal connection between E*TRADE’s den ial of funding and LifeWise’s reliance damages. Alternatively, LifeWise argues that E*TRADE, by ref using to provide adequate grounds for its dissatisfaction, “deprivedLifeWise of the ability to cure and resulted in the loss of the Facility and destru ction of LifeWise’s business.” Aplt. Reply Br. at 26. This argument presupposes aright to cure, a right that we do not see in the agreement documents, and which wa s not pinpointed in LifeWise’s briefs. When pressed in oral argument about where such a right originated, counsel for LifeWise first pointed to § 4.10 of the Funding Agreement, I Aplt. App. at 259. In his rebuttal ar gument, counsel corrected himself, stating that the right to cure was not in the Funding Agreement, but in sections 6.1(c) and 11.3 of the Trust Indenture. X V Aplt. App. at 6583, 6609. Finally, in a letter to the court after oral argume nt, counsel stated that he “misread” the proper references. According to coun sel, (1) § 11.1 of the Funding Agreement, I Aplt. App. at 270, refers to the TrustIndenture for events of default; (2) § 6.1(c) and (d) of the Trust Indentur e, XV Aplt. App. at 6583, defines “Events of Default” for breach of covenant and breach of warranty; and (3) § 11.3 of the Trust Indenture, XV Aplt. App. at6609, further refers to breaches of warranty. We do not read either the Funding Agreement or the Trust Indenture to- 37 -

provide an opportunity for LifeWise to cure its bre ach of § 4.10 of the Funding Agreement. Sections 6.1(c)-(d) and 11.3 allow 30 d ays to cure a breach of certain representations or warranties. XV Aplt. Ap p. at 6583, 6609. Section 4.10 is a condition precedent to each funding, not a representation or warranty. I Aplt. App. at 257-59. Accordingly, the provisions in the Trust Indenture cited by LifeWise do not give a contractual right to cure a breach of section 4.10. As a last resort, LifeWise essentially claims that a cure provision is implied in § 4.10 because (1) such notice would be useful only if LifeWise can address the alleged concerns, and (2) E*TRADE in fa ct requested LifeWise to cure its dissatisfaction before it declined to fund . We disagree. First, LifeWise does not oppose the district court’ s statement of undisputed facts, which indicates that the notice p rovision grew out of E*TRADE’s desire to have the ability to be released from the contract in its sole discretion. See XIII Aplt. App. at 5598. The provision ensures th at a decision by E*TRADE to terminate funding is objectively reas onable and in good faith. It does not, explicitly or implicitly, confer any righ t whatsoever to LifeWise to cure any defect identified by E*TRADE. Second, the factthat E*TRADE requested that LifeWise address E*TRADE’s dissatisfaction bef ore E*TRADE declined to fund does not create a contractual right to cure af terE*TRADE declined to fund. Finally, even if a cure provision existed, it could not be a basis for causation.- 38 -

LifeWise has offered no evidence that within 30 day s, it could have improved its business operations to meet E*TRADE’s good faith satisfaction. LifeWise therefore cannot claim reliance damages re sulting from E*TRADE’s failure to fund or failure to provide ade quate reasons for its refusal to fund.
AFFIRMED.