Tasty One, LLC v. Earth Smarte Water, LLC

Opinion

1 JOSEPH A. GUTIERREZ, ESQ. Nevada Bar No. 9046 2 JEAN-PAUL HENDRICKS, ESQ. Nevada Bar No. 10079 3 MAIER GUTIERREZ & ASSOCIATES 8816 Spanish Ridge Avenue 4 Las Vegas, Nevada 89148 Telephone: (702) 629-7900 5 Facsimile: (702) 629-7925 E-mail: jag@mgalaw.com 6 jph@mgalaw.com

7 Attorneys for Plaintiff/Counterdefendant Tasty One, LLC d/b/a Earth Smarte Water of Las Vegas 8

10 UNITED STATES DISTRICT COURT

11 DISTRICT OF NEVADA

12 TASTY ONE, LLC d/b/a EARTH SMARTE Case No.: 2:20-cv-01625-APG-NJK 13 WATER OF LAS VEGAS, Foreign Limited- Liability Company; 14 JOINT PRETRIAL ORDER Plaintiff/Counter-Defendant, 15 vs. 16 EARTH SMARTE WATER, LLC d/b/a 17 DENCOH20, LLC, an Arizona company; DOES I through X; and ROE CORPORATIONS I 18 through X, inclusive, 19 Defendant/Counter-Claimant.

21 Following pretrial proceedings in this case pursuant to LR 16-3 and LR 16-4, 22 IT IS SO ORDERED: 23 I. 24 STATEMENT OF THE NATURE OF THE ACTION, RELIEF SOUGHT, IDENTIFICATION AND CONTENTIONS OF THE PARTIES 25 26 A. PLAINTIFF’S VIEW: This action involves the breach of a Territory License Agreement (“Agreement”) between 27 Plaintiff and Counter-Defendant Tasty One, LLC d/b/a/ Earth Smarte Water of Las Vegas (“Plaintiff” 28 1 or “Tasty One”), and Defendant and Counter-Claimant Earth Smarte Water, LLC d/b/a DencoH20 2 (“Defendant” or “ESWLLC”). Tasty One and ESWLLC entered into the Agreement on January 4, 3 2016, granting Tasty One exclusive license to sell ESWLLC’s PhSmarte 1000 water system in Clark 4 County, Nevada, for a period of seven years. 5 Pursuant to the Agreement, Tasty One began selling ESWLLC’s products in Las Vegas and 6 paid substantial sums in advertising and other set up costs to drive customers to the Earth Smarte 7 Water website and branding itself as the exclusive dealer of ESWLLC’s products in Clark County, 8 Nevada. Over the next three years, Tasty One sold and installed hundreds of ESWLLC water systems 9 in the Las Vegas area. 10 In addition to exclusive rights, the Agreement provided that ESWLLC could only increase 11 prices charged to Tasty One if the systems cost more for ESWLLC to produce, and then only the 12 direct amount of the cost increase, if any, known as a “pass through” increase. Between 2017 and 13 2020, ESWLLC raised its prices to Tasty One two times under the Agreement. ESWLLC represented 14 to Tasty One that both of these price increases were “pass through” increases as permitted by the 15 Agreement. However, Tasty One learned through its vendor, Nelson Corporation, the same vendor 16 that supplied ESWLLC with the components for its systems, that the price increases were more than 17 tariff increases as ESWLLC claimed. 18 In fact, Tasty One ordered many of the same parts from Nelson Corporation that ESWLLC 19 did, including but not limited to identical mineral tanks and mineral valves. During the same time 20 period, Tasty One had price increases on the products it purchased directly from Nelson Corporation 21 of approximately $20. Inexplicably, the increases ESWLLC “passed on” to Tasty One were $80 to 22 $100, much more than the $20 tariff increases. Tasty One later learned that these price increases also 23 included increases for modifications and upgrades made to the systems in violation of the Agreement. 24 On March 25, 2020, ESWLLC unexpectedly informed Tasty One in writing of its imminent 25 closure and dissolution due to the financial insolvency. In April, 2020, ESWLLC rescinded its earlier 26 threat of dissolution and informed Tasty One that it was continuing operation but that Tasty One no 27 longer had exclusive right to the Clark County, Nevada area because it had failed to meet a 12-unit 28 quota under the Agreement, labeling Tasty One an “unauthorized dealer” of ESWLLC products. It is 1 important to note here that the Agreement and the addendum thereto called for Tasty One to sell 8 2 units per month, not 12. Even if Tasty One did not meet its 8 unit per month quota, the sole remedy 3 for ESWLLC under the Agreement was to remove the exclusive right to sell and continue on this basis 4 for the remainder of the contract, not label Tasty One as an “unauthorized dealer” or attempt to 5 terminate the contract. 6 Based on ESWLLC’s actions, the relationship between Tasty One and ESWLLC continued to 7 deteriorate over the next weeks and months until ESWLLC informed Tasty One that it would no 8 longer have access to the ESWLLC ordering portal. Throughout the parties’ contract, ESWLLC had 9 required that any order for equipment be paid in full prior to shipment of the merchandise. When 10 ESWLLC announced that it was insolvent, would cease operations, and then rescinded this threat, this 11 requirement became untenable because Tasty One was concerned that it would be charged and not 12 receive any merchandise. In an attempt to remedy this situation, Tasty One offered to pay Nelson 13 Corporation directly for all purchases making them a de facto escrow agent that would send the 14 product to Tasty One and ESWLLC’s profits to ESWLLC; ESWLLC flatly refused. 15 Since that time, ESWLLC has nearly cut off all communications and put in place multiple 16 unnecessary barriers when Tasty One has attempted to request customer support or warranty service. 17 From January, 2017 when the contract was signed, until mid-2020 when ESWLLC cut off access to 18 the ordering portal, Tasty One continued to meet each and every one of its obligations under the 19 contract, including providing warranty service to its customers, notwithstanding the fact that 20 ESWLLC was actively and improperly trying to terminate the contract. 21 Tasty One filed its Complaint on July 17, 2020, asserting claims against ESWLLC for (1) 22 declaratory relief; (2) breach of the Agreement; (3) breach of the covenant of good faith and fair 23 dealing implied in the Agreement; and (4) injunctive relief. ESWLLC only sought to refute and 24 produce evidence against one allegation – that it did not increase contract prices for reasons other than 25 “pass through tariff increases.” To that end, ESWLLC produced correspondence from its 26 manufactures detailing when the tariff increases occurred and the corresponding price increase on 27 each unit; however, ESWLLC later admitted that it increased the prices for tariff increases and product 28 upgrades, expressly violating the Agreement. 1 On June 9, 2022, this Court filed an Order granting Tasty One’s motion for summary judgment 2 on ESWLLC’s counterclaims and request for punitive damages because there was no evidence that 3 Tasty One breached the agreement or intentionally interfered with a business relationship, or that 4 ESWLLC was damaged as a result, and the Agreement waives the parties’ right to seek punitive 5 damages against each other. See Order (ECF No. 84). 6 Consistent with this Court’s order granting partial summary judgment in favor of Tasty One, 7 the claims proceeding to trial are Tasty One’s claims for (1) breach of contract; (2) breach of the 8 implied covenant of good faith and fair dealing; and (3) declaratory relief. Id. Tasty One is seeking 9 all allowable civil damages, including restitution damages, special/consequential damages, and 10 attorneys’ fees and costs, as well as declaratory relief regarding the parties’ rights and responsibilities 11 under the Agreement. ESWLLC denies that it breached the Agreement and the covenant of good faith 12 and fair dealing implied in the Agreement, and it denies that Plaintiff is entitled to recover any 13 damages. 14 B. DEFENDANT’S VIEW: 15 Consistent with this Court’s June 9, 2022 Order granting partial summary judgment, Tasty 16 One’s claims, as addressed in the Complaint, in the Motion for Summary Judgment, and reiterated 17 above, are now limited in scope. This Court has already held, as a matter of law that a majority of 18 Tasty One’s claims fail as a matter of law. Because the Court, in its purview, has already established 19 that these claims fail as a matter of law, those claims cannot not proceed to a trier of fact. Based upon 20 the ruling in the June 9, 2022 Order, and a recital of the vertically identical facts that this Court 21 reviewed in reaching its decision, Tasty One’s claims which should proceed to trial under questions 22 of material fact over whether some of ESWLLC’s actions breached the agreement and whether Tasty 23 One was damaged as a result, are limited to the following claims: 24 1) Price Increases 25 Whether price increases resulting from technology improvements are direct increases or 26 are otherwise allowed as a pass through under the Agreement. Tasty One needs to establish 27 evidence justifying its argument that the Agreement defines a “direct increase” as one that 28 is only outside of ESWLLC’s control. 1 The Court, in its June 9, 2022 Order indicates that Tasty One has the burden of proof in 2 establishing the definition of what is a “direct increase”. Tasty One has not, to date, 3 produced any evidence or expert testimony on this issue and as such, will not likely met 4 the burden of proof needed. 5 2) Premature Termination 6 Whether ESWLLC’s attempt to terminate the Agreement by insolvency violates the 7 Agreement, whether the Agreement was terminated, and whether Tasty One was damaged 8 as a result. 9 The Agreement was not terminated, and therefore no breach occurred. Additionally, 10 because Earth Smarte provided reasonable assurances that it was an ongoing concern with 11 the ability to meet Tasty One’s future Orders, tasty One has no damages. Tasty One has 12 presented no evidence, other than its tax returns, from which damages could be calculated. 13 Earth Smarte will object to the introduction of any reference to tax returns as the June 9, 14 2022 Order held that as a matter of law, that tasty One has not established that the alleged 15 losses established in the tax returns are causally connected to any of ESWLLC’s alleged 16 breaches. 17 Pursuant to Federal Rules of Evidence 403, “The court may exclude relevant evidence if 18 its probative value is substantially outweighed by a danger of one or more of the following: 19 unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or 20 needlessly presenting cumulative evidence.” 21 Even if Tasty One is able to establish that the Agreement was terminated, and that there 22 was a breach, it cannot present any evidence of damages necessary to sustain the cause of 23 action as Arizona law requires that the elements of (1) the existence of a contract, (2) 24 breach, and (3) resulting damages. See First Am. Title Ins. Co. v. Johnson Bank, 372 P.3d 25 292, 297 (Ariz. 2016) be present for a breach of contract claim. 26 3) Good Faith and Fair Dealing 27 Whether the claimed misrepresentation(s) regarding Earth Smarte’s insolvency violates the 28 covenant of good faith and fair dealing. 1 The Court, in its June 9, 2022 Order has already concluded, as a matter of law, that Tasty 2 One’s remaining claims fail. As the Court noted in the June 9, 2022, Order, Arizona law governs the 3 parties’ disputes arising under the Agreement. Under Arizona law, the elements of a breach of contract 4 claim are: (1) the existence of a contract, (2) breach, and (3) resulting damages. See First Am. Title 5 Ins. Co. v. Johnson Bank, 372 P.3d 292, 297 (Ariz. 2016). Contract interpretation is a question of law 6 for the court. Hadley v. Sw. Props., Inc., 570 P.2d 190, 193 (Ariz. 1977) (en banc). “Where the 7 language of the contract is clear and unambiguous, it must be given effect as it is written.” Id. But if 8 the language is ambiguous and it is necessary to consider the circumstances in determining its 9 meaning, then determining those circumstances is a question for the trier of fact. Ash v. Egar, 541 10 P.2d 398, 401 (Ariz. Ct. App. 1975). (ECR #83, pg. 7, lns. 5-13). Because the Court determined as a 11 matter of contract interpretation that at least one of the three necessary elements are missing, the 12 following issues fail as matter of law and do not need to be tried: 13 1) Price Increases 14 The Court held that no evidence was presented which would indicate that Tasty One sold an 15 ESWLLC product at the increased price within 60 days of the newsletter, so it does not demonstrate 16 that ESWLLC breached the Agreement or damaged Tasty One in this way. 17 The Court, within its purview, has already determined that under Arizona law, the elements of 18 (2) breach, and (3) resulting damages, are missing. See First Am. Title Ins. Co. v. Johnson Bank, 372 19 P.3d 292, 297 (Ariz. 2016). Therefore, this claim does not need to proceed to a trier of fact as the 20 claim does not exist as a matter of law. 21 2) “Unauthorized Dealer” Label 22 The Court has held that Tasty One did not demonstrate that ESWLLC’s “unauthorized 23 dealer” label breached the Agreement. Tasty One also has not demonstrated that it was damaged 24 by ESWLLC’s label. It does not demonstrate what, if any, consequences flowed from ESWLLC’s 25 email or that it lost credibility or goodwill from customers. 26 The Court, within its purview, has already determined that under Arizona law, the elements of 27 (2) breach, and (3) resulting damages, are missing. See First Am. Title Ins. Co. v. Johnson Bank, 372 28 1 P.3d 292, 297 (Ariz. 2016). Therefore, this claim does not need to proceed to a trier of fact as the 2 claim does not exist as a matter of law. 3 3) Online Product Portal 4 Tasty One does not identify the Agreement provision requiring ESWLLC to maintain an 5 online sales portal, and it does not demonstrate that it lost customers’ sales as a result of losing 6 access to the portal. Though Kaplan testified that he was reluctant to email sales directly to ESWLLC 7 after it closed its portal, Tasty One presented no evidence that closing the portal actually caused 8 lost sales. And though Tasty One presents its tax returns showing a decrease in gross sales and a net 9 loss for the first time in 2020, Tasty One has not causally connected those to any of ESWLLC’s 10 alleged breaches. 11 The Court, within its purview, has already determined that under Arizona law, the elements of 12 (1) agreement, and (3) resulting damages, are missing. See First Am. Title Ins. Co. v. Johnson Bank, 13 372 P.3d 292, 297 (Ariz. 2016). Therefore, this claim does not need to proceed to a trier of fact as the 14 claim does not exist as a matter of law. 15 4) Warranty Services 16 Tasty One has not demonstrated ESWLLC breached the Agreement by failing to provide 17 warranty services or that Tasty One was damaged as a result. Tasty One’s claims that it was damaged 18 as a result of by failing to provide warranty services the no evidence substantiating its claim that it 19 suffered $12,500 in unreimbursed warranty expenses. 20 The Court, within its purview, has already determined that under Arizona law, the elements of 21 (2) breach, and (3) resulting damages, are missing. See First Am. Title Ins. Co. v. Johnson Bank, 372 22 P.3d 292, 297 (Ariz. 2016). Therefore, this claim does not need to proceed to a trier of fact as the 23 claim does not exist as a matter of law. 24 5) Breach of Implied Covenant of Good Faith and Fair Dealing 25 The Court has held that Tasty One’s argument that because ESWLLC breached the 26 Agreement, it also breached the implied covenant of good faith and fair dealing. As a matter of law, 27 the Court has held that Tasty One’s conclusion does not follow from Arizona law. See Wells Fargo 28 1 Bank, 38 P.3d at 30 (“A party may breach an express covenant of the contract without breaching the 2 implied covenant of good faith and fair dealing.”) 3 6) Declaratory Relief 4 The Court has previously ruled that Tasty One’s request for declaratory relief is duplicative of its 5 contractual claims. Cf. Swartz v. KPMG LLP, 476 F.3d 756, 766 (9th Cir. 2007) (request for a declaration 6 of defendants’ liability for damages that were sought for plaintiff’s other causes of action was properly 7 dismissed). 8 Additionally, Tasty One materially breached the contract first which relieved Earth Smarte from 9 any further duties under the contract. 10 II. 11 STATEMENT OF JURISDICTION 12 Jurisdiction in this case is based on diversity of citizenship under Title 28 U.S.C. § 1332. 13 Plaintiff is a New Mexico limited liability company doing business in Clark County, Nevada. 14 Defendant is an Arizona limited liability company doing business in Maricopa County, Arizona. The 15 amount in controversy exceeds the sum or value of $75,000.00. 16 Earth Smarte’s Position: Based upon the June 9, 2022, ruling the amount in controversy 17 does not exceed $75,000.00. 18 Venue is proper in this District pursuant to Title 28 U.S.C. § 1391(b)(2), as a substantial part 19 of the events giving rise to the claims in this action occurred in this District. See also Order Denying 20 Motion to Transfer Venue (ECF No. 15). 21 III. 22 THE FOLLOWING FACTS ARE ADMITTED BY THE PARTIES AND REQUIRE NO PROOF: 23 1. On January 4, 2017, Tasty One and ESWLLC entered into a Territory Licensing 24 Agreement granting Tasty One exclusive license to sell ESWLLC’s PhSmarte 1000 water system in 25 Clark County, Nevada, for a period of seven (7) years. 26 2. Excerpted Key Terms of the Agreement: 27 3. Term and Renewal 28 1 Date….

2 4.2 Currently Supplied Product Pricing …. Prices are subject to change from time to time with advance notification 3 to Licensee of a minimum of 60 days. Such price increases shall only be a 4 “pass through” of the direct increase in costs of material or components.

5 5. Authorized Products and Other Services Licensor does not restrict other business activity or other equipment lines 6 offered within Licensee's Protected Territory. In no case may ''competitive" products and/or services sold within the Licensee's 7 Protected Territory be contracted on forms associated with EarthSmarte 8 Water, LLC….

9 10.2 Post Sale Services Licensee will be responsible for providing labor cost associated with 10 preventative, remedial and/or Warranty services of PhSmarte 1000 units. Equipment replacement costs under the terms of the manufacturer’s 11 warranty (Earth Smarte Water, LLC) is paid for by Licensor. 12 17.1 Restriction on Use of Confidential Information 13 …. You will never copy, reproduce, divulge or use any Confidential Information for the benefit of any- other person. Business Entity, or other 14 entity, nor will you directly or indirectly permit the disclosure of imitate or aid any such third party to imitate any of the Confidential Information. 15 "Confidential Information" is defined as information, knowledge, trade 16 secrets or know-how relating to the Licensor and the business of marketing the PhSmarte 1000 or concerning the Licensor's Systems of operation, 17 program, services, products, customers’ materials, books…We acknowledge that, except to the extent required to comply with our 18 obligations under Licensor warranties or to effect product recalls, we have 19 no right to require you to share or otherwise disclose to us the identity of your customers. 20 Minimum Sales Performance Guarantee 21 Within the terms and conditions of this Agreement under the Evaluation of Sales Performance section it is agreed that my Protective Territory will 22 be expected to meet a minimum of Eight (8) sales per month. …Failure to 23 meet the minimum within the terms and conditions of this Agreement will forfeit exclusivity to the protected territory under the terms and conditions 24 within this Agreement.

25 3. On September 1, 2018, ESWLLC issued a newsletter entitled “Waterflow” to its 26 dealers notifying them of price increases. The newsletter notified dealers that price increases from 27 our suppliers on imported descaler parts. The increase was effective October 2018 and was alleged 28 to cover price increases on tariffs. Said increases were $20 on all units. 1 IV. THE FOLLOWING FACTS ARE ALLEGED BY THE PARTIES, WILL BE CONTESTED 2 AT TRIAL, AND WILL REQUIRE EVIDENCE OF PROOF AT TRIAL:

3 A. PLAINTIFF’S FACTS: 4 4. In or around October 2017, Tasty One, in compliance with Section 4.3 of the 5 Agreement, sought prior approval for its advertisements. These requests were approved by Terry 6 Denton, CEO of ESWLLC in October 2017 and July 2018. 7 5. On August 28, 2019, ESWLLC sent correspondence to Tasty One revoking its status 8 as an authorized dealer for failure to meet its monthly sales quota of 12 units per month. This email 9 was factually inaccurate because the Minimum Sales Performance Guarantee provision in the 10 Agreement set the minimum monthly sales quota at 8 units. 11 6. Pursuant to that provision, the sole remedy if Tasty One did not meet its sales quota 12 was forfeit its status as exclusive dealer in the Clark County area. 13 7. On August 30, 2019, Tasty One responded to ESWLLC’s Unauthorized Dealer Email 14 and listed several grievances. Tasty One argued that ESWLLC (1) had no right to label it as an 15 unauthorized dealer pursuant to Section 11.2 of the Agreement; (2) ESWLLC had been overcharging 16 beyond the pass through increases contemplated by the Section 4.2 of the Agreement; and (3) 17 ESWLLC had failed to respond to customer warranty issues. This correspondence also requested a 18 refund of all overcharges. 19 8. On September 14, 2019, Tasty One sent an email to ESWLLC requesting it honor 20 warranty claims of three customers. 21 9. On February 20, 2020, Tasty One sent a second formal request for refund. Specifically, 22 Tasty One noted that ESWLLC had increased the price beyond pass through increases which was in 23 no way sufficient to justify its increase of $105.00 per unit for model #948 and $50.00 per unit for 24 model #1252. This email initiated a dialogue between the parties regarding tariff increases, 25 verification requests directly from ESWLLC’s manufacturers, and the desire to return to civility as 26 the business relationship had soured. 27 10. ESWLLC admitted that price increases resulted from not only tariff increase but that 28 1 11. By Tasty One’s calculation, it was overcharged $24,215.00 as of February 2020. 2 12. Shortly thereafter, on March 25, 2020, ESWLLC – through its counsel Martin W. 3 Saltzman, P.C. – informed Tasty One that, effective immediately, ESWLLC would be closing for 4 business, and dissolving as it had no assets. The letter also informed Tasty One that its online dealer 5 ordering portal would now be closed. This notice of dissolution was patently false as ESWLLC 6 remains operational. 7 13. In response, on April 10, 2020, counsel for Tasty One sent a written request that 8 ESWLLC immediately remedy the situation as the Agreement had no provision which allowed for 9 ESWLLC to terminate its contractual obligations based on its own dissolution. 10 14. A series of correspondence ensued between counsel, each outlining its clients’ rights 11 and remedies under the terms of the Agreement as well as proposed solutions. 12 15. During this time, an email was sent from Terry L. Denton, ESWLLC’s CEO, admitting 13 to Tasty One that ESWLLC had not yet dissolved as a corporation. 14 16. In its first year of operations, 2017, Tasty One’s gross revenue for the sale of ESWLLC 15 product was $736,482 and a net profit or loss of $48,851. In 2018, Tasty One’s revenue increased to 16 $902,337, nearly a 20% increase with a net profit or loss of $4,792. Revenue increased again in 2019 17 to $1,110,897 and a net profit or loss of $338,377, which was again a nearly 20% increase in revenue 18 and a significant increase in profit. 19 17. In late 2019 and early 2020, ESWLLC attempted to declare itself insolvent, notified 20 Tasty One that it did not meet an arbitrary and inflated quota, and cut off Tasty One’s access to the 21 online ordering portal. Plaintiff’s revenue in 2020 subsequently fell to $535,237 and its net profit or 22 loss was $12,878. 23 18. There are no components or configuration of water filtration systems that are 24 proprietary to any one company because all components are designed by or in some cases patented by 25 third party manufacturers who sell these products to companies like ESWLLC and Tasty One on the 26 wholesale market. 27 19. To date, ESWLLC has not refunded Tasty One for the overcharges related to price 28 increases beyond “pass through” increases contemplated under the Agreement. 1 B. DEFENDANT’S FACTS: 2 20. The September 2018 “Waterflow” newsletter also advised the dealers of the 3 opportunity to improve the PhSmarte 1000 with a new innovative water distributor system (The 4 Vortech). The newsletter advised that this distribution system would improve the effectiveness of the 5 cleaning cycle and make the system last much longer and treat water much better. The newsletter 6 stated that the Vortech option also included stainless steel hoses for installation. Finally, the newsletter 7 indicated that Earth Smarte would let its dealers vote on the Vortech Distributor improvement option, 8 advised how to vote, and that results will be posted in the October WaterFlow Newsletter. 9 21. In the October 2018, “Waterflow” newsletter, Earth Smarte notified it’s of the price 10 increase for the tariffs from the stainless steel jackets, descaler parts & Vortech upgrades. The 11 increase was effective November 2018 and was to cover price increases on tariffs. Said increases 12 were $88.00 on Model 948 and $108.00 for Model 1252. 13 22. In an April 2020 correspondence, Tasty One was provided “reasonable assurances” 14 that Earth Smarte Water could and would continue operations and meet Tasty One’s need. 15 23. Based on Tasty One’s order history beginning in late 2019 and early 2020, Tasty One 16 was not buying any product. 17 24. In August 2019, Tasty One had not ordered any of Earth Smarte Water’s product. 18 25. In November 2019, Tasty One did not order any of Earth Smarte Water’s product. 19 26. In June, October, and December 2019, Tasty One only order five (5) units, below the 20 quota amounts. 21 27. Tasty One had not ordered any of Earth Smarte Water’s product in January or February 22 2020, months before the “insolvency” letter was sent. 23 28. Tasty One still ordered one unit in March 2020 and one in April 2020, despite Earth 24 Smarte Water’s alleged “insolvency.” 25 29. Tasty One materially breached the contract first, thereby relieving Earth Smarte from 26 any further performance. 27 / / / 28 / / / 1 V. 2 THE FOLLOWING FACTS, THOUGH NOT ADMITTED, WILL NOT BE CONTESTED 3 AT TRIAL BY EVIDENCE TO THE CONTRARY: 4 1. None at this time. 5 VI. 6 THE FOLLOWING ARE THE ISSUES OF FACT TO BE TRIED AND DETERMINED 7 UPON TRIAL: 8 A. PLAINTIFF’S PROPOSED ISSUES OF FACTS: 9 1. Whether ESWLLC increased the prices of its products fewer than 60 days after 10 ESWLLC issued a newsletter to its dealers notifying them of price increases. 11 Earth Smarte Water’s Response: The Court has already reviewed this fact and made 12 the determination, as a matter of law by virtue of its June 9, 2022 Order, that no claim exists. 13 This should not be a fact presented at trial. 14 2. Whether Tasty One sold an ESWLLC product at the increased price within 60 days of 15 ESWLLC sending the newsletter notice. 16 Earth Smarte Water’s Response: The Court has already reviewed this fact and made 17 the determination, as a matter of law by virtue of its June 9, 2022 Order, that no claim exists. 18 This should not be a fact presented at trial. 19 3. Whether Tasty One and ESWLLC intended for improvements to technology to 20 constitute “direct increases in costs of material or components” or otherwise “pass through” increases 21 at the time of entering the Agreement, when the parties did not include “improvements to technology” 22 in the provision on allowable pass through increases. 23 4. Whether ESWLLC breached the Agreement when it changed the technology of the 24 unit and increased its price to dealers as a “pass through” increase because of the technology change. 25 5. Whether ESWLLC breached the Agreement when it labeled Tasty One as an 26 “unauthorized dealer,” when the addendum states that if Tasty One fails to meet the minimum sales 27 requirement, it will “forfeit exclusivity” to Clark County. 28 Earth Smarte Water’s Response: The Court has already reviewed this fact and made 1 the determination, as a matter of law by virtue of its June 9, 2022 Order, that no claim exists. 2 This should not be a fact presented at trial. 3 6. Whether ESWLLC breached the Agreement when it revoked Tasty One’s access to 4 ESWLLC’s online sales portal, when the addendum states that if Tasty One fails to meet the minimum 5 sales requirement, it will “forfeit exclusivity” to Clark County. 6 Earth Smarte Water’s Response: The Court has already reviewed this fact and made 7 the determination, as a matter of law by virtue of its June 9, 2022 Order, that no claim exists. 8 This should not be a fact presented at trial. 9 7. Whether Tasty One suffered damages through lost sales as a result of ESWLLC 10 denying it access to the online sales portal in 2020, when Tasty One’s revenue subsequently fell 11 $535,237, resulting in a suffered loss of $12,878, despite its consistent near 20% revenue increases 12 and profit increases from 2017 through 2019. 13 Earth Smarte Water’s Response: The Court has already reviewed this fact and made 14 the determination, as a matter of law by virtue of its June 9, 2022 Order, that no claim exists. 15 This should not be a fact presented at trial. 16 8. Whether ESWLLC breached the Agreement when it failed to maintain its online sales 17 portal, when Tasty One’s ability to sell ESWLLC products depends on its ability to access the online 18 sales portal. 19 Earth Smarte Water’s Response: The Court has already reviewed this fact and made 20 the determination, as a matter of law by virtue of its June 9, 2022 Order, that no claim exists. 21 This should not be a fact presented at trial. 22 9. Whether the parties intended for ESWLLC to be responsible for providing warranty 23 services to Tasty One’s customers when the Agreement states that although Tasty One was 24 “responsible for providing labor cost[s] associated with . . . [w]arranty services of ESWLLC’s units,” 25 ESWLLC was to pay for “[e]quipment replacement costs under the terms of the manufacturer’s 26 warranty,” and ESWLLC is the party that was required to fulfill Tasty One’s warranty requests. 27 Earth Smarte Water’s Response: The Court has already reviewed this fact and made 28 the determination, as a matter of law by virtue of its June 9, 2022 Order, that no claim exists. 1 This should not be a fact presented at trial. 2 10. Whether Tasty One suffered damages as a result of ESWLLC’s barriers to servicing 3 the warranty, when Tasty One subsequently suffered $12,500 in unreimbursed warranty expenses. 4 Earth Smarte Water’s Response: The Court has already reviewed this fact and made 5 the determination, as a matter of law by virtue of its June 9, 2022 Order, that no claim exists. 6 This should not be a fact presented at trial. 7 11. Whether ESWLLC intentionally and fraudulently misrepresented to Tasty One that it 8 was insolvent. 9 12. Whether ESWLLC attempted to prematurely terminate the Agreement when it 10 misrepresented to Tasty One that it was insolvent. 11 13. Whether Tasty One was damaged as a result of ESWLLC’s attempt to prematurely 12 terminate the Agreement by intentionally and fraudulently misrepresenting its insolvency and closing 13 access to the online dealer portal, when Tasty One was forced to expend time and resources to 14 correspond with ESWLLC’s counsel and CEO to find out that ESWLLC had not actually dissolved, 15 and when Tasty One could no longer make further orders for equipment or parts through the online 16 dealer portal. 17 Earth Smarte Water’s Response: The Court has already partially reviewed this fact 18 and made the determination, as a matter of law by virtue of its June 9, 2022 Order, that no 19 claim exists. The only genuine fact that should be presented is “Whether Tasty One was 20 damaged as a result of ESWLLC’s attempt to prematurely terminate the Agreement by stating 21 it was insolvent.” 22 B. DEFENDANT’S PROPOSED ISSUES OF FACT: 23 1. Whether the price increases resulting from technology improvements are direct 24 increases or are otherwise allowed as a pass through under the Agreement. 25 2. Whether technology improvements are costs of material or components. 26 3. Whether Tasty One can establish its definition that “direct increase” is one that is 27 outside of ESWLLC’s control. 28 4. Whether Earth Smarte Water represented insolvency in order to preliminarily and 1 improperly terminate the Agreement. 2 5. Whether the April 2020 letter provided reasonable assurances that Earth Smarte Water 3 was still an ongoing concern and had the ability to meet Tasty One’s sales. 4 6. Whether Tasty One’s sales were below the quota minimum or non-existent in the 5 months leading up to the March 2020 alleged “insolvency” letter. 6 7. If the so-called “insolvency” letter was a breach of the Agreement. 7 8. If the so-called “insolvency” letter was an alleged breach, what, if any, are the extent 8 of Tasty One’s damages. 9 9. Whether the Agreement was terminated. 10 10. Whether Tasty One materially breached the contract first and relieved Earth Smarte of 11 any further performance. 12 VII. 13 THE FOLLOWING ARE THE ISSUES OF LAW TO BE TRIED AND DETERMINED UPON TRIAL: 14 15 A. STIPULATED ISSUES OF LAW: 1. The Agreement is a valid and existing contract. 16 17 B. PLAINTIFF’S PROPOSED ISSUES OF LAW: 1. Which provisions in the Agreement are enforceable, and which provisions are not 18 enforceable? 19 2. What are the parties’ rights and responsibilities under the Agreement? 20 3. Whether ESWLLC was permitted, pursuant to the Agreement, to change the 21 technology of the unit and increase its price to its dealers as a “pass through” increase because of the 22 technology change. 23 Earth Smarte Water’s Response: The Court has already held that as a matter of law: 24 The Agreement does not unambiguously prohibit price increases that resulted from 25 improvements to technology. At a minimum, there is a question of fact about whether price 26 increases resulting from technology improvements are direct increases or are otherwise 27 allowed as a pass through under the Agreement. Tasty One presents no evidence justifying its 28 1 argument that the Agreement defines “direct increase” as one that is outside of ESWLLC’s 2 control. (ECF #83, pg. 8, lns 8-12). 3 4. Whether price increases that result from improvements to technology constitute “direct 4 increase in costs of material or components” and/or “pass through” increases under the Agreement. 5 Earth Smarte Water’s Response: The Court has already held that as a matter of law: 6 The Agreement does not unambiguously prohibit price increases that resulted from 7 improvements to technology. At a minimum, there is a question of fact about whether price 8 increases resulting from technology improvements are direct increases or are otherwise 9 allowed as a pass through under the Agreement. Tasty One presents no evidence justifying its 10 argument that the Agreement defines “direct increase” as one that is outside of ESWLLC’s 11 control. (ECF #83, pg. 8, lns 8-12). 12 5. Whether the Addendum to the Agreement re: Minimum Sales Quota provides that the 13 sole remedy to ESWLLC in the event Tasty One fails to meet the minimum sales requirement is that 14 Tasty One would “forfeit exclusivity” to Clark County. 15 Earth Smarte Water’s Response: The Court has already held that as a matter of law: 16 The Agreement states that if Tasty One fails to meet the minimum sales requirements it will 17 “forfeit exclusivity to” Clark County. Id. at 30. The Agreement does not unambiguously state 18 that this is the sole remedy for this particular breach. (ECF #83, pg. 9, lns 6-8). 19 6. Does ESWLLC labelling Tasty One as an “unauthorized dealer” constitute a breach of 20 the Agreement if the addendum only provides that in the event Tasty One fails to meet the minimum 21 sales requirement, it will “forfeit exclusivity” to Clark County? 22 Earth Smarte Water’s Response: The Court has already held that as a matter of law: 23 Tasty One therefore has not demonstrated that ESWLLC’s “unauthorized dealer” label 24 breached the Agreement. Tasty One also has not demonstrated that it was damaged by 25 ESWLLC’s label. It does not demonstrate what, if any, consequences flowed from ESWLLC’s 26 email or that it lost credibility or goodwill from customers. (ECF #83, pg. 9, lns 8-12). 27 7. Does ESWLLC’s refusal to maintain the online sales portal constitute a breach of the 28 Agreement when the addendum states that if Tasty One fails to meet the minimum sales requirement, 1 it will only “forfeit exclusivity” to Clark County? 2 Earth Smarte Water’s Response: The Court has already held that as a matter of law: 3 Tasty One does not identify the Agreement provision requiring ESWLLC to maintain an 4 online sales portal, and it does not demonstrate that it lost customers’ sales as a result of losing 5 access to the portal. Though Kaplan testified that he was reluctant to email sales directly to 6 ESWLLC after it closed its portal, Tasty One presented no evidence that closing the portal 7 actually caused lost sales. And though Tasty One presents its tax returns allegedly showing a 8 decrease in gross sales and a net loss for the first time in 2020, Tasty One has not causally 9 connected those to any of ESWLLC’s alleged breaches. (ECF #83, pg. 9, lns 13-19). 10 8. Whether the Agreement requires ESWLLC to provide warranty services to Tasty 11 One’s customers when the Agreement states that although Tasty One was “responsible for providing 12 labor cost[s] associated with . . . [w]arranty services of ESWLLC’s units,” ESWLLC was to pay for 13 “[e]quipment replacement costs under the terms of the manufacturer’s warranty.” 14 Earth Smarte Water’s Response: The Court has already held that as a matter of law: 15 The Agreement provides that Tasty One was “responsible for providing labor cost[s] 16 associated with . . . [w]arranty services of” ESWLLC’s units, while ESWLLC was to pay for 17 “[e]quipment replacement costs under the terms of the manufacturer’s warranty (Earth Smarte 18 Water, LLC).” Id. at 8. The Agreement unambiguously states that ESWLLC must pay for 19 equipment replacement costs under the manufacturer’s warranty. But the Agreement is 20 ambiguous as to which party is responsible for facilitating customers’ warranty claims. 21 Therefore, Tasty One has not demonstrated that ESWLLC’s actions breached the Agreement. 22 And though Tasty One argues that ESWLLC’s barriers to servicing the warranty damaged 23 Tasty One, Tasty One presents no evidence substantiating its claim that it suffered $12,500 in 24 unreimbursed warranty expenses. (ECF #83, pg. 10, lns 6-15) 25 9. Whether ESWLLC’s attempt to prematurely terminate the Agreement by intentionally 26 and fraudulently misrepresenting its insolvency prior to the 7-year expiration date of the Agreement 27 constitutes a breach of the Agreement, when the Agreement provides that ESWLLC can terminate the 28 Agreement upon Tasty One’s dissolution but does not provide for ESWLLC’s ability to terminate the 1 Agreement based on its own dissolution. 2 Earth Smarte Water’s Response: The Court has already held that as a matter of law: 3 Tasty One has not met its burden to identify where the Agreement provides that an attempt to 4 terminate the Agreement through insolvency breaches the Agreement. Questions of fact 5 remain, including whether ESWLLC’s attempt to terminate the Agreement in this way violates 6 the Agreement, whether the Agreement was terminated, and whether Tasty One was damaged 7 as a result. (ECF #83, pg. 11, lns 2-8) 8 10. Whether ESWLLC’s attempt to terminate the Agreement by intentionally and 9 fraudulently misrepresenting its insolvency well before the expiration date of the Agreement 10 constitutes a termination of the Agreement. 11 Earth Smarte Water’s Response: The Court has already held that as a matter of law: 12 Tasty One has not met its burden to identify where the Agreement provides that an attempt to 13 terminate the Agreement through insolvency breaches the Agreement. Questions of fact 14 remain, including whether ESWLLC’s attempt to terminate the Agreement in this way violates 15 the Agreement, whether the Agreement was terminated, and whether Tasty One was damaged 16 as a result. (ECF #83, pg. 11, lns 2-8). 17 C. DEFENDANT’S PROPOSED ISSUES OF LAW: 18 1. Defendant addresses issues of law on pages 4-8 above, including price increases, 19 premature termination, good faith and fair dealing regarding alleged insolvency, “unauthorized 20 dealer” label, online product portal, warranty services, breach of implied covenant of good faith and 21 fair dealing, and declaratory relief. 22 2. As addressed throughout this Joint Proposed Pretrial, the issues of law directly on point 23 in this matter have already been decided by virtue of the June 9, 2022 Order, ECF #83. Trial should 24 proceed on those issues of fact, this Court could not rule on directly from a review of the Agreement 25 and evidence presented. The remaining issues are those of fact for the trier of fact. 26 3. Is Tasty One’s material breach such that Earth Smarte would be excused from any 27 further performance under the contract? 28 The parties may be filing various motions in limine. As the motions in limine are filed, this 1 section of the Joint Pretrial Order will be amended accordingly. 2 VIII. 3 EXHIBITS 4 A. The following exhibits are stipulated into evidence in this case and may be so 5 marked by the clerk: 6 The parties have conferred on multiple occasions regarding stipulations, and they anticipate 7 that the Territory License Agreement and many other exhibits will be admitted into evidence by 8 stipulation. The parties will continued to work together in good faith to eliminate exhibits that will 9 be unnecessary in light of evidentiary stipulations. 10 B. As to the following additional exhibits, the parties have reached the stipulations 11 stated: 12 1. Set forth stipulations as to Plaintiff’s exhibits. 13 Exhibit Date Date Number Bates No. Exhibit Description Offered Objection Admitted 14 PLTF000001 Correspondence dated March Stipulate 15 25, 2020 to all Dealers from Law Office of Martin W. 16 Saltzman P.C. in regards to DENCOH20, Inc. & Earth 17 Smarte Water, LLC closing for business 18 PLTF000150 EarthSmarte Water Stipulate Advertisement (“Deliver 19 After March 12th”) PLTF000152 Certificate of Liability Stipulate 20 Insurance, dated April 28, 2020 21 PLTF000410 EarthSmarte Water Territory Stipulate – License Agreement 22 PLTF000438 PLTF001215 Various EarthSmarte Water of Stipulate 23 – Las Vegas, and Pure Water PLTF001382 Technology Ads 24 PLTF002141 Various EarthSmarte Water of Stipulate – Las Vegas Advertising 25 PLTF002182 Agreements with The Home Mag 26 PLTF002189 Certificate of Liability Stipulate – Insurance dated September 9, 27 PLTF002190 2019 28 1 PLTF002191 Certificate of Liability Stipulate Insurance dated September 1, 2 2016 PLTF002192 Certificate of Liability Stipulate 3 Insurance dated September 1, 2017 4 PLTF002193 Certificate of Liability Stipulate Insurance dated September 1, 5 2018 PLTF002194 Certificate of Liability Stipulate 6 Insurance dated December 5, 2019 7 PLTF002195 Certificate of Liability Stipulate Insurance dated December 11, 8 2019 PLTF002196 Certificate of Liability Stipulate 9 Insurance dated May 24, 2021 PLTF002197 Ad Approval Emails and Stipulate 10 – Attached Ads PLTF002203 11 PLTF002204 Refund Correspondence Stipulate – 12 PLTF002213 PLTF002214 Tasty One Email to Terry Stipulate 13 – Denton, dated September 24, PLTF002215 2019 14 PLTF002216 Email exchange Terry Denton Stipulate – – and Adam Kaplan September see 15 PLTF002219 11, 2019 comment PLTF002232 Email from Tasty One to Stipulate 16 – Terry Denton re: “Leaking PLTF002233 Valve Issue,” dated 17 November 6, 2017 PLTF002234 Email from Tasty One to Stipulate 18 – Terry Denton re: “Descalers PLTF002236 and Valve need warranty 19 repair work” dated September 14, 2019 20 PLTF002237 Email Correspondence Stipulate – Between Terry Denton and per 21 PLTF002250 Earth Smarte Water of Las comments Vegas, dated December 8, 22 2017 PLTF002255 Email Correspondence re: Stipulate 23 – “Dealer agreement,” dated PLTF002256 January 16, 2018 24 PLTF002260 Email Correspondence re: Stipulate 25 – “RED light,” dated May 22, PLTF002263 2018 26 PLTF002264 Email Correspondence re: Stipulate – Warranty Repair Work, dated 27 PLTF002271 September 14, 2019 PLTF002272 Email Correspondence re: Stipulate 28 – “Revised ad approval,’ dated 1 PLTF002275 Email Correspondence re: Stipulate – “Revised ads for review,” 2 PLTF002276 dated October 27, 2017 PLTF002277 Email Correspondence re: Stipulate 3 – “Teresa Togo Descaler Pic PLTF002278 and Serial Number,” dated 4 December 8, 2017 PLTF002279 Email Correspondence re: Stipulate 5 – “UPS Delivery Notification,” PLTF002284 dated December 29, 2017 6 PLTF002285 Email Correspondence re: Stipulate – “Warranty Card,” dated 7 PLTF002286 December 27, 2017 PLTF002287 Email Correspondence re: Stipulate 8 – “Zepeda Descaler Pix and PLTF002288 serial number,” dated 9 December 8, 2017 PLTF002296 Various Ad Approval Emails Stipulate 10 – with Ad Attachments PLTF002301 11 PLTF002291 Email Correspondence Stipulate – Between Terry Denton and 12 PLTF002295 Earth Smarte Water of Las Vegas, dated December 11, 13 2017 ESW0053 – Waterflow Newsletter, dated Stipulate 14 ESW0055 September 1, 2018 ESW0085 – Unauthorized Dealer Email, Stipulate 15 ESW0086 dated August 28, 2019 ESW0087 – Email Correspondence re: Stipulate 16 ESW0098 Warranty Repair Work, dated September 14, 2019 17 N/A Defendant’s Responses to Stipulate Plaintiff’s First Set of 18 Requests for Admission to Defendant Earth Smarte 19 Water, LLC D/B/A DencoH20, LLC 20 N/A Defendant’s Amended Stipulate Responses to Plaintiff’s First 21 Set of Requests for Production of Documents to 22 Defendant Earth Smarte Water, LLC D/B/A 23 DencoH20, LLC N/A Defendant’s Responses to Stipulate 24 Plaintiff’s First Set of Interrogatories to Defendant 25 Earth Smarte Water, LLC D/B/A DencoH20, LLC 26 PLTF 2254 Email dated January 16, 2018 Stipulate between Denton and A. 27 Kaplan

28 1 2. Set forth stipulations as to Defendant’s exhibits. 2 Exhibit Date Date Number Bates No. Exhibit Description Offered Objection Admitted 3 ESW0031 Letter dated September 18, Stipulate 2018, regarding the 4 impending price 5 increase from Krystal Clear Water to Terry Denton at 6 Earth Smarte Water ESW0032 Undated letter from Krystal Stipulate 7 Clear Water explaining the 8 $20.00 price increase on the Descaler product due to the 9 tariffs placed on imported products from China 10 ESW0053- DenCoH20 Waterflow Stipulate 0054 Newsletter for September 11 2018 12 ESW0056- DenCoH20 Waterflow Stipulate 0058 Newsletter for October 10, 13 2018 ESW0060 March 13, 2020, letter from Stipulate 14 Nelson Corporation regarding price increases due to tariffs 15 and Vortech technology 16 ESW0061 Email dated March 9, 2020, Stipulate from Royal Metal regarding 17 price increases due to tariffs ESW0062- March 30, 2020 letter from Stipulate 18 0063 Terry Denton to Mike Kaplan 19 ESW0069- Letter dated May 2, 2020, Stipulate 0071 from Earth Smarte’s former 20 attorney Saltzman to Tasty One’s attorney regarding the 21 low order numbers N/A Defendant’s Amended Stipulate 22 Answers to Tasty One, LLC 23 dba Earth Smart Water of Las Vegas’ Second Set of 24 Requests for Production of Documents (8/16/2021) 25 N/A Defendant’s Answers to Stipulate Plaintiff’s First Set of 26 Interrogatories (3/8/2021) 27

28 1 N/A Defendant’s Answers to Stipulate Plaintiff’s First Set of 2 Requests for Admission (2/11/2021) 3 N/A Defendant’s Answers to Tasty Stipulate 4 One, LLC dba Earth Smart Water of Las Vegas’ Second 5 Set of Requests for Production of Documents 6 (7/16/2021) 7 N/A Defendant’s Answers to Stipulate Plaintiff’s First Set of 8 Requests for Production of Documents (3/8/2021) 9 10 C. The parties intend to offer the following exhibits into evidence in this case, subject 11 to the objections of the parties (as stated below): 12 Exhibit Date Date 13 Number Bates No. Exhibit Description Offered Objection Admitted 14 PLTF000002 – Correspondence dated April Object: PLTF000004 10, 2020 to the Law Office Relevance 15 of Martin W. Saltzman P.C. Hearsay and DENCOH20, Inc. & Settlement 16 Earth Smarte Water, LLC discussion from Maier Gutierrez & 17 Associates in regards to dissolution of contractual 18 relationship PLTF000036 – Correspondence dated April Object: 19 PLTF000038 21, 2020 to Maier Gutierrez Relevance & Associates from the Law Hearsay 20 Office of Martin W. Settlement Saltzman P.C. in regards to discussion 21 agreement PLTF000039 – Correspondence dated April Object: 22 PLTF000044 23, 2020 to the Law Office Relevance of Martin W. Saltzman P.C. Hearsay 23 and DENCOH20, Inc. & Settlement Earth Smarte Water, LLC discussion 24 from Maier Gutierrez & Incomplete Associates in regards to document 25 email to Mike Kaplan on April 17, 2020 26

28 1 PLTF000076– Correspondence dated May Object: PLTF000078 1, 2020 to the Law Office of Relevance 2 Martin W. Saltzman P.C. and Hearsay DENCOH20, Inc. & Earth Settlement 3 Smarte Water, LLC from discussion Maier Gutierrez & Incomplete 4 Associates in regards to document resolution proposal 5 PLTF002183 – Various EarthSmarte Water Relevance PLTF002188 of Las Vegas Advertising Hearsay 6 Agreements with Authenticati HomeConcepts on/ 7 foundation PLTF002252 – Email Correspondence re: Relevance 8 PLTF002253 upset customer, dated April 19, 2018 9 PLTF002304 – Tasty One Schedule C tax Hearsay PLTF002307 forms 2017 – 2020 Foundation 10 Relevance Federal 11 Rules of Evidence 12 403 – Unfair 13 Prejudice E. Allan Horner CWS-VI, CI Relevance 14 Expert Report Hearsay Competence 15 Foundation

16 1. Defendant’s Exhibits with Plaintiff’s Objections: 17 Exhibit Date Date Number Bates No. Exhibit Description Offered Objection Admitted 18 ESW0001- Territory Licensing Objection: 19 0030 Agreement dated January 4, incomplete 2017 document 20 ESW0033- Invoices from Krystal Klear Objection: 0050 Water Enterprises from Relevance 21 March 26, 2018; 401 (a)(b), authenticity, August 29, 2018; October 9, 22 2018; November 19, 2018; foundation. January 15, 2019; and 23 January 30, 2019 showing 24 the $20.00 manufacturing increase beginning in 25 November 2018 ESW0051- DenCoH20 Waterflow Objection - 26 0052 Newsletter for August 2018 Relevance 401 (a)(b), 27

28 1 ESW0068 Email dated April 27, 2020, Objection - from Tracy Lavenant Relevance 2 regarding 401 (a)(b), authenticity, Las Vegas’ low order 3 foundation. numbers for 2019 4 ESW0083- Email correspondence Objection: 0086 between Terry Denton to not properly 5 Adam Kaplan disclosed under FRCP 6 26(a); Relevance 7 401 (a)(b), ESW0087- September 14, 2019 email Objection: 8 0095 correspondence between not properly Terry Denton to Adam disclosed 9 Kaplan with photos under FRCP 26(a) 10 ESW0096- Email correspondence Objection: 0101 between Terry Denton to not properly 11 Adam Kaplan with photos disclosed under FRCP 12 26(a) ESW0102- March 14, 2020 email Objection: 13 0103 correspondence between not properly Terry Denton to Adam disclosed 14 Kaplan under FRCP 26(a); 15 Relevance 401 (a)(b), 16 ESW0104- Documents regarding Tasty Objection: 0106 One’s unauthorized use of not properly 17 Earth Smarte’s order forms disclosed under FRCP 18 26(a); Relevance 19 401 (a)(b) ESW0111- Email correspondence Objection: 20 0112 between Terry Denton to not properly Judy Stallings disclosed 21 under FRCP 26(a) 22 ESW0107- February 11, 2021 letter Objection: 0110 from Nelson Corporation not properly 23 regarding Tasty One’s orders disclosed under FRCP for 2020 24 26(a) ESW0113- Tasty One’s unapproved Objection: 25 0166 advertising not properly disclosed 26 under FRCP 26(a); 27 Relevance 401 (a)(b), 28 1 ESW0167- Certificate of Insurance Objection: 0168 not properly 2 disclosed under FRCP 3 26(a) ESW0169- Documents regarding leads Objection: 4 0259 sent to Tasty One from Earth not properly Smarte’s national website disclosed 5 under FRCP 26(a); 6 Relevance 401 (a)(b) 7 ESW0260- Documents regarding Objection: 0281 advertising or promotion of not properly 8 “Counter-claimants national disclosed under FRCP 9 website” 26(a); ESW0282- Chart of Dealer issues Objection: 10 0283 not properly disclosed 11 under FRCP 26(a); 12 ESW0284- August 6, 2021 letter from Objection: 0285 Krystal Klear Water to Terry not properly 13 Denton disclosed under FRCP 14 26(a) ESW0286 Undated letter from Krystal Objection: 15 Klear Water to Terry Denton not properly disclosed 16 under FRCP 26(a); 17 Relevance 401 (a)(b), 18 authenticity, foundation. 19 ESW0287 September 5, 2018 letter Objection: 20 from Krystal Klear Water to not properly Earth Smarte Water disclosed under FRCP 21 26(a); Relevance 22 401 (a)(b), authenticity, 23 foundation. ESW0288- September 18, 2018 letter Objection: 24 0289 Krystal Klear Water to Terry not properly 25 Denton disclosed under FRCP 26(a); 26 Relevance 401 (a)(b), 27 authenticit, foundation. 28 1 ESW0290- Documents regarding the Objection: 1053 purchases of components, not properly 2 equipment, and/or materials disclosed under FRCP used in the manufacture of 3 26(a); DenCo water filtration Relevance 4 systems 401 (a)(b), authenticity, 5 foundation. ESW1054- Documents related to all Objection: 6 1553 dealers or licensees of the not properly Earth Smarte Water disclosed 7 under FRCP 26(a); 8 Relevance 401 (a)(b), 9 authenticity, foundation. 10 PLTF 2222- Email from Mike Kaplan Objection: 2227 2222 11 Attorney client 12 privilege

13 Tasty One has the burden of proof to establish that: 14 1) The Agreement defines a “direct increase” as one that is only outside of ESWLLC’s 15 control; and 16 2) Tasty One sustained damages that can be calculated by other documents than its taxes 17 returns as this Court has already held that the tax returns did not establish damages causally related to 18 any alleged breach. 19 To date, no evidence has been presented that establishes Tasty One will be able to meet its 20 burden of proof on these two issues. Earth Smarte anticipates motion practice on these two issues, 21 including Motion in Limines will be necessary. 22 D. ELECTRONIC EVIDENCE: 23 1. Plaintiff does not anticipate presenting evidence in electronic form at this time. 24 Plaintiff’s counsel will utilize trial presentation software and/or the courtroom evidence display 25 equipment system (overhead projector) to display paper exhibits to the jury during trial. Plaintiff’s 26 counsel’s office will contact the Courtroom Administrator prior to Calendar Call consistent with Judge 27 Andrew P. Gordon’s Order Regarding Trial (standing order). 28 2. Defendant does not anticipate presenting evidence in electronic form at this 1 time. Defendant’s counsel will utilize trial presentation software and/or the courtroom evidence 2 display equipment system (overhead projector) to display paper exhibits to the jury during trial. 3 Defendant’s counsel’s office will contact the Courtroom Administrator prior to Calendar Call 4 consistent with Judge Andrew P. Gordon’s Order Regarding Trial (standing order). 5 E. DEPOSITIONS: 6 The parties anticipate using live witness testimony in lieu of deposition testimony unless a 7 witness is, or becomes, unavailable. 8 F. OBJECTIONS TO DEPOSITIONS: 9 The parties reserve all objections to the use of depositions testimony at trial at this time. 10 IX. 11 THE FOLLOWING WITNESSES MAY BE CALLED BY THE PARTIES UPON TRIAL: 12 A Plaintiffs’ Witnesses: 13 1. NRCP 30(b)(6) witness and/or designee Tasty One, LLC d/b/a Earth Smarte Water of Las Vegas 14 c/o Jean-Paul Hendricks, Esq. Joseph A. Gutierrez, Esq. 15 MAIER GUTIERREZ & ASSOCIATES 8816 Spanish Ridge Avenue 16 Las Vegas, Nevada 89148 (702) 629-7900 17 2. Adam Kaplan 18 c/o Jean-Paul Hendricks, Esq. Joseph A. Gutierrez, Esq. 19 MAIER GUTIERREZ & ASSOCIATES 8816 Spanish Ridge Avenue 20 Las Vegas, Nevada 89148 (702) 629-7900 21 3. Mike Kaplan 22 c/o Jean-Paul Hendricks, Esq. Joseph A. Gutierrez, Esq. 23 MAIER GUTIERREZ & ASSOCIATES 8816 Spanish Ridge Avenue 24 Las Vegas, Nevada 89148 (702) 629-7900 25

26 / / /

27 / / /

28 / / / 1 4. NRCP 30(b)(6) witness and/or designee Earth Smarte Water, LLC d/b/a DENCOH20 2 c/o John P. Aldrich, Esq. ALDRICH LAW FIRM, LTD. 3 7866 W. Sahara Avenue Las Vegas, Nevada 89117 4 (702) 853-5490

5 5. Walt Kemmer c/o Jean-Paul Hendricks, Esq. 6 Joseph A. Gutierrez, Esq. 7 MAIER GUTIERREZ & ASSOCIATES 8816 Spanish Ridge Avenue 8 Las Vegas, Nevada 89148 (702) 629-7900 9 6. Mackenzie Davis 10 c/o Jean-Paul Hendricks, Esq. Joseph A. Gutierrez, Esq. 11 MAIER GUTIERREZ & ASSOCIATES 12 8816 Spanish Ridge Avenue Las Vegas, Nevada 89148 13 (702) 629-7900

14 7. E. Allen Horner c/o Jean-Paul Hendricks, Esq. 15 Joseph A. Gutierrez, Esq. 16 MAIER GUTIERREZ & ASSOCIATES 8816 Spanish Ridge Avenue 17 Las Vegas, Nevada 89148 (702) 629-7900 18

19 B. The following witnesses will be called at trial by Defendant in its case in chief: 1. Terry Denton 20 c/o Aldrich Law Firm, Ltd. 21 7866 West Sahara Avenue Las Vegas, Nevada 89117 22 2. Adam Kaplan 23 c/o Maier Gutierrez & Associates 8816 Spanish Ridge Avenue 24 Las Vegas, Nevada 89148

25 4. Mike Kaplan c/o Maier Gutierrez & Associates 26 8816 Spanish Ridge Avenue 27 Las Vegas, Nevada 89148

28 / / / 1 4. Person(s) Most Knowledgeable for Royal Metal Building Components 2031 Amistad Drive 2 San Benito, TX 78586 (956) 399-2271 3 5. Tracy Lavenant 4 Nelson Corporation 3250 Barber Road 5 Norton, OH 442030 6 800-362-9686

6. Person(s) Most Knowledgeable for Krystal Klear Water Enterprises 7 8829 Main Street 8 Williamsville NY 14221 716-332-4400 9

10 X. 11 PROPOSED TRIAL SETTINGS 12 Given multiple scheduling conflicts between the parties due to travel, trials, prescheduled 13 vacations for parties and/or witnesses, and in order to allow adequate time for the parties to participate 14 in a settlement conference, and receive rulings on pretrial motions, the parties propose the following 15 trial dates: 16 1. Monday June 26, 2023 17 2. Monday July 17, 2023 18 3. Monday August 21, 2023 19 It is expressly understood by the undersigned that the Court will set the trial of this matter on 20 one (1) of the agreed-upon dates if possible; if not, the trial will be set at the convenience of the Court’s 21 calendar. 22 The parties anticpate that based on the anticipated motion practice on the issues and the Motion 23 in Limines, that it will not be ready for Trial until June 2023. 24 / / / 25 / / / 26 / / / 27 / / / 28 / / / 1 XI. 2 PROPOSED TRIAL LENGTH 3 It is estimated that the trial herein will take a total of 5 days. 4 APPROVED AS TO FORM AND CONTENT: 5 DATED this 4th day of November, 2022. DATED this 4th day of November, 2022. 6 MAIER GUTIERREZ & ASSOCIATES ALDRICH LAW FIRM, LTD. 7 /s/ Jean Paul Hendricks /s/ John P. Aldrich

8 JOSEPH A. GUTIERREZ, ESQ. JOHN P. ALDRICH, ESQ. Nevada Bar No. 9046 Nevada Bar No. 68777866 West Sahara Avenue 9 JEAN-PAUL HENDRICKS, ESQ. Las Vegas, Nevada 89117 Nevada Bar No. 10079 Attorneys for 10 8816 Spanish Ridge Avenue Defendants/Counterclaimants/Third-Party Las Vegas, Nevada 89148 Plaintiffs Earth Smarte Water, LLC d/b/a 11 Attorneys for Plaintiff/Counterdefendant DENCOH20, LLC Tasty One, LLC d/b/a Earth Smarte Water 12 of Las Vegas

14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 XI. 2 ACTION BY THE COURT 3 || This case is set for Bench Trial on the June 26, 2023 trial stack at 9:00 a.m. in Courtroom 6C. 4 || Calendar call shall be held on June 23, 2023 at 9:00 a.m. in Courtroom 6C. 5 ) 6 □□ □□□ e __________§., 7 {2} — Surytrials: 8 9 shall_be submitted to the Clerk for filing on-or pe □□□ 10 @Q) Anoriginal and two-(2)-copies-of all suggested questions of the parties_to- 11 12 Clerk for filing on-or before __ i, 13 (da) = Court trials: 14 Proposed findings of fact and-conclusions of law shall be filed on or before 15 The foregoing pretrial order-has_been-approved_by_the_parties tothis-action-as-evidenced b 16 || the signatures of their counsel hereon, the order is hereby entered and will govern the trial of th 17 case. This-order shall not be amended except by_order_of the Court pursuant to agreement of tt 18 . ‘fest injustice. 19 DATED this 7th day of November, 2022. 20 6 a 21 U.S. DISTRICT JUDGE 22 23 24 25 26 27 28