DigiExpress was to replace my iPod Touch battery; after 11wks.,they kept my money & have not returned my iPod Internet

My iPod Touch (8GB), a replacement battery, and a $35.00 personal check (to cover cost of battery replacement) was sent to DigiExpress (and received by them on 5 Feb 2011). This is according to my U.S. Postal Service Insure Mail Receipt.
On 1 Mar, I emailed DigiExpress, inquiring about the status of the battery replacement in my iPod. I even called the company (1-800-440-4693) and left a message. The next day, I received an email about them having such a backlog of work, and they would get busy on my machine soon.
Then on 5 Mar, I was shocked to get an email from them saying that the main electronics board on my iPod was damaged, and it would cost $150.00 to replace it. According to them, this "damage could have occurred from water or moisture...like from being in the bathroom during shower, a fall, a power surge during charging, or damage from self-repair." This is absurd! I am a responsible sixty year old audiophile, and am insulted by these allegations. I have always been careful with my iPod, and have never attempted any self-repairs.
DigiExpress took advantage of me. I am upset and disappointed.
A resolve is for them to send me my iPod Touch (and I have the serial number), my new battery, and my $35.00.