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Sargon Enterprises, Inc v. University of Southern California et al

May 2, 2013

SARGON ENTERPRISES, INC., PLAINTIFF AND APPELLANT,
v.
UNIVERSITY OF SOUTHERN CALIFORNIA ET AL., DEFENDANTS AND APPELLANTS.



(Los Angeles County Super. Ct. No. BC209992) APPEAL from a judgment of the Superior Court of Los Angeles County, Terry A. Green, Judge.

The opinion of the court was delivered by: Johnson, J.

CERTIFIED FOR PUBLICATION

Affirmed.

Sargon Enterprises, Inc. (Sargon) appeals judgment in its breach of contract action against the University of Southern California (USC) arising out of a clinical trial of Sargon's dental implant under study at USC. In a previous appeal, this court reversed as an abuse of discretion the trial court's eve-of-trial exclusion of the trial testimony on lost profit damages of Sargon's principal expert witness, James Skorheim. The Supreme Court granted review and reversed, concluding the trial court acted within its discretion in excluding the evidence, and remanded the matter to this court for further proceedings.

On remand, Sargon submitted a supplemental brief*fn1 arguing that the Supreme Court announced a new rule of evidentiary procedure, and asking this court to remand the matter to the trial court for a new trial to permit Sargon to present lost profit damages in conformity with this new standard. USC has requested that we dismiss its cross-appeal. We affirm the judgment of the trial court, and dismiss USC's cross-appeal.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

1. Procedural Summary

(a) Sargon's First Appeal

In 1992, Sargon obtained patents on a dental implant that could be implanted immediately following extraction and contained both the implant and a full restoration. Sargon wanted USC to teach the implant at its dental school, and USC requested a clinical study be conducted to allow USC to provide academic support for the device.*fn2 In November 1996, the parties entered into a Clinical Trial Agreement (CTA), intending to conduct a five-year study of the implant. Over a year into the study, Sargon contended USC failed to timely deliver the promised reports and otherwise breached the CTA.

On May 7, 1999, Sargon initiated this action against USC and faculty members of USC's Dental School involved in the study. Sargon asserted claims for breach of contract, fraud, and other torts. USC cross-claimed for breach of contract. After Sargon's tort claims and claims against the individuals were eliminated by demurrer and summary judgment, the remaining contract action against USC was tried in 2003. Before trial, the court ruled in limine and excluded evidence of Sargon's lost profit damages on the grounds they were not foreseeable to defendants. The jury awarded Sargon $433,000 compensatory damages on its breach of contract claim, and found for it on USC's cross-complaint for breach of the CTA.

Sargon appealed the judgment and this court reversed, finding the trial court erred in excluding evidence of Sargon's lost profits on the grounds of foreseeability and remanded for a new trial on that issue. This court also reversed the judgment of dismissal on Sargon's fraud claims. (Sargon Enterprises, Inc. v. University of Southern California (Feb. 25, 2005, B167519, B163707) [nonpub. opn.], p. 26 (Sargon I).)

(b) Exclusion of Sargon's Expert on Remand

On remand, in April 2006, Sargon filed a second amended complaint based on two contract and four tort theories. Sargon's breach of implied covenant claim was dismissed by demurrer, its tort claims by summary adjudication, and the case again proceeded to trial on the breach of contract claim for lost profits.

Trial commenced in July 2007. Sargon's principal proof of lost profits was to be based upon the testimony of James Skorheim, who used a market-share hypothesis to compare Sargon to six multi-national companies (Big Six) that were the dominant market leaders in the industry, with collectively in excess of 80 percent of global sales of dental implants. Sargon used three core factors to evaluate the basis of the six companies' respective market shares: innovation, clinical studies, and outreach to general practice dentists. Skorheim concluded that Sargon had ...


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