Cartilage Society Wins Again at Court of Appeals
The International Congress for Joint Reconstruction (ICJR) is entitled to receive monetary restitution from its former management company, Center for Healthcare Education and Research, Inc. (CHE) and its President Mark Sacaris, according to a decision from the California Court of Appeal, Fourth Appellate District, Division One (Court of Appeal).
The relationship between ICJR and Sacaris began in 2009 when ICJR retained Sacaris to assist ICJR in producing joint reconstruction surgery medical education conferences. During their relationship, Sacaris provided services through CHE. He set rates for these services, marked up labor costs, and created a profit for CHE and himself. He used ICJR money to pay CHE invoices, without informing the board members of the amounts CHE was charging.
Over time Sacaris also “increased the scope of CHE’s services to include developing ICJR’s websites and broadcasting live surgeries to ICJR conferences (despite CHE employees’ lack of necessary experience in these areas), and he arranged for CHE to manage symposia for pharmaceutical companies during ICJR conferences.” Sacaris did not disclose his interest in these financial arrangements to ICJR.
In 2016, Sacaris informed the ICJR board that ICJR had accumulated a $2 million debt to CHE. In 2017, CHE filed a complaint against ICJR for breach of contract, seeking $2,400,000 in damages.
ICJR filed a cross-complaint against CHE and Sacaris, claiming that Sacaris, through CHE, had secretly profited from its relationship with ICJR. ICJR “sought to recover damages as well as ‘disgorgement and restitution of all profits and gains obtained by [CHE and Sacaris’s] illegal and improper acts and omissions.’”
The trial court found that “CHE and Sacaris breached their fiduciary duties to ICJR.” However, the trial court ruled that “ICJR was required to present evidence it suffered monetary harm or loss from the breach in order to recover.” ICJR appealed this decision.
On appeal, the Court of Appeal agreed with ICJR. It found that ICJR’s evidence including its expert accountant’s testimony “was sufficient to meet ICJR’s burden of proof and establish a right to a recovery.” The Court of Appeal remanded so the trial court could “determine the amount of profits to be disgorged from CHE and Sacaris.”
OTW will continue to follow this matter as a date is set for the trial court to determine ICJR’s award amount.