Bioprime Enterprises Inc., Ramsey Najor v. Phil Lacerte, Quantum Leap, Sam Kalenuik, United States Medical Research Foundation
Published: Apr. 1, 2003 | Result Date: Dec. 2, 2002 | Filing Date: Jan. 1, 1900 |Case number: 807368 Verdict – $1,339,000
Judge
Court
Orange Superior
Attorneys
Plaintiff
Alexis Galindo
(Curd, Galindo & Smith LLP)
Defendant
Experts
Plaintiff
James Lennick
(technical)
Barbara C. Luna
(technical)
James Goddard
(medical)
Defendant
Jeffrey H. Kinrich
(technical)
Cleve Laird
(technical)
Facts
According to the plaintiff: The plaintiffs sought damages for fraud, breach of contract, breach of good faith covenant, unfair business competition, trademark infringement and interference with contractual relations. On or about April 22, 1998, plaintiff Ramsey Najor and defendant Phil Lacerte entered into a Letter of Understanding whereby the defendant agreed to buy and distribute the plaintiff's product, Regenesis, a homophatic growth hormone product. It was sold as a dietary supplement. The Letter of Understanding (LOU) indicated that the defendant would set-up a multi-level marketing company to sell and distribute the product for five years. The defendants initially bought 20,000 bottles of the product and then discovered that they could buy the product for less money from the plaintiff's supplier, United States Medical Research Foundation (USMRF). Under the LOU, the plaintiffs were to supply the defendants with a letter from an attorney indicating that the product was safe and legal, provide the medical studies, insurance binder, marketing material, packaging and the product at an exclusive price. Less than 30 days after signing the LOU, the defendants wrote a letter seeking termination of the LOU to the plaintiffs. The defendants started selling the product nationwide. In less than 9 months, the defendants sold $11 million worth of product, using the plaintiff's name. The defendants' distributors began making illegal claims, such as, the product would cure cancer and other diseases. The Texas State Health Department seized the product from the defendant due to the illegal claims. The plaintiffs discovered that the defendants were purchasing the product from the plaintiff's supplier in breach of the LOU. The plaintiffs alleged that defendant Phil Lacerte intentionally and without excuse wrongfully terminated the LOU. The defendants argued that the purpose of the contract was illegal and that the LOU was never a legally binding contract, that it was merely an agreement to agree. Also, that the plaintiff did not perform his obligations under the contract, specifically, he never got FDA approval to sell the product. Finally, the defendants argued that the multi-level marketing company went out of business and that the founder, Lacerte, lost $2 million in the venture. According to the defendant: The plaintiffs sought damages for fraud, breach of contract, breach of good faith covenant, unfair business competition, trademark infringement and interference with contractural relation. On or about April 22, 1998, the plaintiff Ramsey Najor and the defendants Phil Lacerte and Sam Kalenuik entered into a Letter of Understanding whereby the defendants agreed to buy the plaintiff's growth hormone product Regenesis. It was sold as a dietary supplement. The Letter of Understanding (LOU) indicated that the defendant would set-up a multi-level marketing company to sell and distribute the product for five years. The defendants initially bought 20,000 bottles of the product, but then terminated the LOU. The defendants then purchased the product from the manufacturer, United States Medical Research Foundation (USMRF). The plaintiffs contended that the defendants breached the LOU by purchasing the product from USMRF. The defendants argued that the product was illegal because it contained a controlled substance, that the LOU was an agreement to negotiate, that the plaintiff did not perform his obligations under the LOU and that the plaintiff's misrepresentations justified termination of the LOU.
Settlement Discussions
According to the plaintiff, several mediations and settlement conferences were held. At the last mediation, defendant Lacerte offered $100,000 to settle the case. According to the defendant, Lacerte last offered $800,000 to settle the case.
Damages
The plaintiffs claimed $36 million in future damages under the contract. After a 402 hearing, the judge granted the defendant's motion to exclude testimony regarding the said damages to go to jury. The plaintiffs claimed $1.2 million in compensatory damages under the contract. The defendants stated that the plaintiffs sought $52.2 million in damages under the contract. The judge excluded evidence regarding alleged future damages. The plaintiffs at trial claimed $1.64 million in compensatory damages under the contract, $5 million for trademark infringement and unspecified amounts including punitive damages for fraud.
Result
The jury awarded $493,ooo against Phil Lacerte and $493,000 against Sam Kelenuik on the breach of contract claim. The defendants prevailed on all other causes of action. The court subsequently doubled the jury's findings and entered judgment against Phil Lacerte in the amount of $987,000 based on joint and several liability.
Other Information
Defense expert, Cleve Laird, was impeached at trial. At deposition and at trial, Laird testified that he had attended medical school at Baylor School of Medicine and that he had taken and passed the National Board of Medical Examinations. The plaintiffs introduced evidence that the medical school and the National Board of Examiners had never heard of Laird. On March 3, 2003, the defendant Lacerte's motions for new trial and judgment notwithstanding the verdict were heard and denied. According to the defendant: Defense expert, Clive Laird was impeached at trial on the basis of his medical background. On the defendant Phil Lacerte's cross-complaint against the plaintiffs Ramsey Najor and Phil Lacerte for fraud, the jury found all the elements of fraud against the plaintiffs. The jury, however, did not find any damages. The court denied the defendant's request to rescind the LOU based on the fraud finding against the plaintiffs, Ramsey Najor and Bioprime Enterprises.
Deliberation
two days
Poll
11-1 (liability), 10-2 (damages)
Length
12 days
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