Court Opinion

ID: 6338799
Source: CourtListenerOpinion
Date Created: 2022-05-09 15:02:42.126266+00
Date Added: 2024-06-11T15:49:09.046768
License: Public Domain

2022 IL App (1st) 201316
                                                                                 FIRST DISTRICT
                                                                                 FIRST DIVISION
                                                                                 May 9, 2022

     No. 1-20-1316

     MARIA STAISZ, M.D.,                                  )      Appeal from the
                                                          )      Circuit Court of
            Plaintiff-Appellant,                          )      Cook County, Illinois.
                                                          )
     v.                                                   )      No. 18 CH 06072
                                                          )
     RESURRECTION PHYSICIANS                              )      The Honorables
     PROVIDER GROUP, INC., an Illinois                    )      Franklin U. Valderrama and
     Corporation; MSO GREAT LAKES, INC.,                  )      Allen Price Walker,
     a Delaware Corporation; PAUL GHILARDI;               )      Judges Presiding.
     JOHN BELLO, M.D.; and DARA ELLINGSON,                )
                                                          )
            Defendants-Appellees.                         )

            JUSTICE COGHLAN delivered the judgment of the court, with opinion.
            Justices Pucinski and Walker concurred in the judgment and opinion.

                                                OPINION

¶1          Plaintiff-appellant Maria Staisz, M.D., commenced an action against defendants-appellees

     Resurrection Physician Provider Group, Inc. (RPPG), MSO Great Lakes, Inc. (MSOGL)

     (corporate defendants), Paul Ghilardi, John Bello, M.D., and Dara Ellingson (individual

     defendants), for shareholder oppression under section 12.56 of the Business Corporation Act of

     1983 (Act) (805 ILCS 5/12.56 (West 2018)) and breach of fiduciary duty, relating to RPPG’s

     termination of her participating physician provider agreement and shareholder status. Staisz

     appeals the circuit court’s dismissal of her complaint for lack of standing under section 2-619 of

     the Code of Civil Procedure (Code) (735 ILCS 5/2-619 (West 2018)). For the following reasons,

     we affirm.
     No. 1-20-1316

¶2                                             I. BACKGROUND

¶3             Staisz is a licensed physician in Illinois. RPPG is an independent physician association

     comprised of approximately 150 contracted physicians that provide medical services to patients

     in the Chicagoland area. MSOGL, which was formed by RPPG and a group of private equity

     investors, “manages risk-based insurance contracts on behalf of independent and hospital owned

     physician organizations.”

¶4             On April 17, 1985, Staisz became a “participating provider” with RPPG and a shareholder

     of RPPG pursuant to its bylaws. On March 1, 1997, Staisz entered into a “Participating Primary

     Care Physician Agreement” (Agreement) with RPPG. Section 9.1.2 of the Agreement was later

     amended on November 1, 1999, 1 to allow for the termination of a participating provider without

     cause.

¶5             Around 1999, RPPG purchased all shares of MSOGL, resulting in RPPG becoming

     MSOGL’s sole shareholder. 2 Ghilardi served as RPPG’s Chief Financial Officer and a director

     of MSOGL, Bello served as RPPG’s Chairman of the Board and an officer of MSOGL, and

     Ellingson served as RPPG’s Chief Operating Officer and a director of MSOGL.

¶6             On January 26, 2018, Staisz received a “termination letter,” informing her RPPG was

     terminating her Agreement under the termination without cause provision of section 9.1.2,

     effective May 1, 2018. 3 The same letter also informed Staisz that her status as a shareholder with

     RPPG “had been revoked by conclusive determination by the Board of Directors,” effective

     immediately. Under section 2.3 of RPPG’s bylaws, an individual’s shareholder status was subject

               1
                Staisz was present at the board meeting where the termination without cause amendment was
     passed.
               2
             Staisz was never a shareholder of MSOGL.
               3
             During the period between the passage of the amendment and Staisz’s termination, 10 RPPG
     shareholders were terminated without cause.
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     No. 1-20-1316

     to termination for the “shareholder’s voluntary or involuntary withdrawal from the Corporation

     or as otherwise conclusively determined by the Board of Directors.” As part of Staisz’s

     termination as a shareholder, RPPG would purchase her shares for $35 per share within 30 days

     of the letter. 4

¶7            On May 10, 2018, Staisz filed a complaint against defendants, raising, as relevant here, a

     count for breach of fiduciary duty and shareholder oppression under section 12.56 of the Act.

     Staisz alleged that the individual defendants breached their fiduciary duties by “operat[ing]

     MSOGL in a manner that would generate no profits or dividends for its shareholder RPPG” and

     “used their control of MSOGL to increase compensation to unreasonable levels” for Ghilardi and

     Ellingson, which denied RPPG’s shareholders substantial dividends. 5 As to the shareholder

     oppression count, Staisz claimed that the individual defendants engaged in “illegal, oppressive

     and fraudulent conduct” as defined under section 12.56 of the Act by terminating “her as a

     Participating Provider with RPPG and a shareholder of RPPG” because she “consistently

     questioned the operations of MSOGL,” “requested that financial statements for MSOGL be

     presented to the board of directors of RPPG,” and “threatened to expose” the individual

     defendants’ wrongful conduct.

¶8            Defendants moved to dismiss based, in part, on standing grounds, arguing that Staisz

     lacked standing to bring the breach of fiduciary duty claim because her injury was derivative,

     rather than individual, and she had no standing to bring the shareholder oppression claim because

     she was no longer a shareholder of RPPG and was never a shareholder of MSOGL.

              4
              On April 17, 1985, Staisz purchased 10 shares of RPPG for $250.
              5
              Staisz also sought a declaratory judgment “that her termination without cause was invalid because
     the purported amendment to the [Agreement] under which she was terminated was null and void” and
     “that her right and eligibility to hold stock in RPPG [were] in full force and effect” because she was
     improperly terminated. The circuit court granted summary judgment on those counts in favor of
     defendants, finding that defendants properly terminated Staisz as a RPPG shareholder.
                                                       -3-
       No. 1-20-1316

¶9            On May 29, 2019, the circuit court granted defendants’ motion to dismiss the breach of

       fiduciary duty count with prejudice for lack of standing and the shareholder oppression count

       without prejudice for failing “to adequately allege facts in support of this claim.” Staisz filed an

       amended complaint, 6 adding to the shareholder oppression count allegations identifying the

       purported mismanagement of MSOGL and claiming that “the shareholders of RPPG [had] been

       denied the right to govern MSOGL in a manner reflecting their determination of RPPG’s best

       interests, including the payment of substantial dividends.”

¶ 10          Defendants again moved to dismiss the shareholder oppression count, asserting that Staisz

       was “a former RPPG shareholder,” who “lacks standing to assert a shareholder oppression claim”

       and contending that “RPPG had no duty to issue dividends under RPPG By-Laws.” The circuit

       court granted the dismissal with prejudice, finding that under section 12.56 of the Act, “you have

       to be a shareholder in the corporation at the time the lawsuit is filed, and it appears, throughout

       the continuation of the lawsuit.”

¶ 11                                                II. ANALYSIS

¶ 12          Staisz appeals the circuit court’s dismissal with prejudice of her shareholder oppression

       and breach of fiduciary duty counts for lack of standing.

¶ 13          Standing is a component of justiciability, requiring a party to have “a sufficient stake in

       the outcome of the controversy.” (Internal quotation marks omitted.) State ex rel. Leibowitz v.

       Family Vision Care, LLC, 2020 IL 124754, ¶¶ 26-27. “In Illinois, standing is shown by

       demonstrating some injury to a legally cognizable interest.” Village of Chatham v. County of

       Sangamon, 216 Ill. 2d 402, 419 (2005). An individual “lacking an interest in the controversy has

       no standing to sue.” Family Vision Care, LLC, 2020 IL 124754, ¶ 26.

              6
               Staisz realleged the breach of fiduciary duty count to preserve it for appeal.
                                                         -4-
       No. 1-20-1316

¶ 14             Section 2-619(a)(9) of the Code allows dismissal of an action if “the claim asserted against

       defendant is barred by other affirmative matter avoiding the legal effect of or defeating the claim.”

       735 ILCS 5/2-619(a)(9) (West 2018). The plaintiff’s lack of standing “is an ‘affirmative matter’

       that is properly raised as grounds for involuntary dismissal under section 2-619(a)(9) of the Code

       [citation].” Family Vision Care, LLC, 2020 IL 124754, ¶ 30. A section 2-619 dismissal based on

       a lack of standing is reviewed de novo. Id. ¶ 31.

¶ 15             Regarding the shareholder oppression count, Staisz argues that she had standing because

       “Section 12.56 does not expressly state that the party seeking relief must be a shareholder at the

       time the action is filed, as opposed to being a shareholder at the time the oppressive action was

       taken.”

¶ 16             Section 12.56 of the Act, titled “Shareholder remedies: non-public corporations,” states,

       in relevant part:

                                “(a) In an action by a shareholder in a corporation that has no shares listed

                        on a national securities exchange or regularly traded in a market maintained by

                        one or more members of a national or affiliated securities association, the Circuit

                        Court may order one or more of the remedies listed in subsection (b) if it is

                        established that:

                                                               ***

                                        (3) The directors or those in control of the corporation have acted,

                                are acting, or will act in a manner that is illegal, oppressive, or fraudulent

                                with respect to the petitioning shareholder whether in his or her capacity

                                as a shareholder, director, or officer[.]” (Emphases added.) 805 ILCS

                                5/12.56(a) (West 2018).

                                                        -5-
       No. 1-20-1316

       Under section 1.80 of the Act (id. § 1.80(g)), a “ ‘[s]hareholder’ ” is defined as “one who is a

       holder of record of shares in a corporation.” (Emphasis added.)

¶ 17          In interpreting the language of section 12.56 of the Act, we are guided by the fundamental

       rule of statutory interpretation, which is “to ascertain and give effect to the legislature’s intent,

       and the best indicator of that intent is the statutory language, given its plain and ordinary

       meaning.” Family Vision Care, LLC, 2020 IL 124754, ¶ 34. Statutory language that is clear and

       unambiguous “is given effect as written without resort to other aids of statutory interpretation.”

       Id. In doing so, “[e]ach word, clause, and sentence of a statute must be given a reasonable

       meaning, if possible, and should not be rendered superfluous.” Id. ¶ 35. We will not read into the

       plain language of the statute “exceptions, limitations, or conditions that conflict with the

       expressed intent of the legislature.” Gaffney v. Board of Trustees of the Orland Fire Protection

       District, 2012 IL 110012, ¶ 56.

¶ 18          We interpret the clear and unambiguous language of section 12.56(a) of the Act as

       requiring an individual to be a shareholder when commencing an action seeking “shareholder

       remedies.” Staisz’s proposed interpretation that a former or nonshareholder may bring an action

       seeking relief under section 12.56 of the Act is refuted by the reasonable and ordinary meaning

       of the phrase “in an action by a shareholder” and directly contradicts the Act’s definition of

       “shareholder.” Because the designation of “shareholder” is expressly delineated to be an

       individual “who is,” not who is or was, “a holder of record of shares in a corporation,” the

       remedies provided in section 12.56 of the Act must apply exclusively to an action by “a holder of

       record of shares in a corporation.” To adopt Staisz’s interpretation that section 12.56 of the Act

       affords relief to individuals who are not shareholders at the time the action was commenced

       requires this court to render superfluous the first clause of subsection (a), stating “in an action by

                                                       -6-
       No. 1-20-1316

       a shareholder,” which we cannot do under the well-established canons of statutory interpretation.

       See Family Vision Care, LLC, 2020 IL 124754, ¶ 35.

¶ 19          As support for her position, Staisz argues that “Defendants cited no case under Section

       12.56 holding that a shareholder, like Plaintiff in this case whose shareholder status was revoked

       as part of the scheme of oppression, loses the right to proceed under Section 12.56 when her

       shares are revoked.” We do not find the absence of any such case surprising, given the statute’s

       clear language, stating “in an action by a shareholder.” See Donahue v. Demma, 2021 IL App

       (1st) 201279-U, ¶ 93 7 (finding an individual had no standing to bring an action for breach of

       fiduciary duty and shareholder oppression under sections 12.56(a)(3), (a)(4), and 12.56(d) of the

       Act because he was not a shareholder). Nothing in section 12.56 of the Act precludes a former or

       nonshareholder from pursuing any other available remedy; rather, that statutory provision

       provides the remedies available to “the petitioning shareholder” in “an action by a shareholder”

       of a closely held corporation. See, e.g., Osaghae v. Oasis Hospice & Palliative Care, Inc., 2021

       IL App (1st) 200515, ¶ 1 (a current shareholder of a closely held corporation commenced an

       action seeking resolution to the existing shareholder deadlock).

¶ 20          Here, Staisz was not “a holder of record of shares in a corporation” and cannot establish

       her status as a “petitioning shareholder” entitled to the enumerated “shareholder remedies”

       provided in section 12.56 of the Act. Because Staisz was not a “shareholder” when she

       commenced her action for shareholder oppression under section 12.56 of the Act, she lacked

       standing to pursue that claim. Therefore, the circuit court properly dismissed her action for lack

       of standing.

              7
               This decision was issued after the parties filed their briefs and is cited only for persuasive
       purposes under Illinois Supreme Court Rule 23(e) (eff. Jan. 1, 2021).
                                                       -7-
       No. 1-20-1316

¶ 21          Regarding the dismissal of her breach of fiduciary duty count, Staisz argues “the gravamen

       of [her] complaint is that the termination of her Participating Provider Agreement and the

       revocation of her stock, which are individual injuries to her, were part and parcel of Defendants’

       shareholder oppression scheme.” She claims she had standing to pursue the breach of fiduciary

       duty claim because those injuries were individual to her and not a derivative claim that belonged

       to the corporation or all shareholders.

¶ 22          Staisz’s standing to bring the breach of fiduciary duty claim depends on the classification

       of that claim as either individual or derivative. In deciding whether a claim is individual or

       derivative, a court first determines “if the ‘gravamen’ of the pleadings states injury to the plaintiff

       upon an individual claim as distinguished from an injury which indirectly affects the shareholders

       or affects them as a whole.” Zokoych v. Spalding, 36 Ill. App. 3d 654, 663 (1976). Reaching that

       determination “requires a strict focus on the nature of the alleged injury, i.e., whether it is to the

       corporation or to the individual shareholder that injury has been done.” Sterling Radio Stations,

       Inc. v. Weinstine, 328 Ill. App. 3d 58, 62 (2002). The same set of facts may give rise to both an

       individual and a derivative claim where a shareholder has suffered an injury different from his

       fellow shareholders. Davis v. Dyson, 387 Ill. App. 3d 676, 690 (2008).

¶ 23          Here, Staisz’s breach of fiduciary duty claim is derivative. She pled an indirect injury in

       the form of lost dividends and diversion of corporate funds to pay the salaries of certain MSOGL

       directors, instead of distributing funds to RPPG for the ultimate benefit of all RPPG shareholders.

       Those claimed losses were indirect losses common to all RPPG shareholders, not direct, personal

       losses to Staisz. See RS Investments Ltd. v. RSM US, LLP, 2019 IL App (1st) 172410, ¶ 37

       (mismanagement causing corporate waste is a wrong to the corporation); Sarno v. Thermen, 239

       Ill. App. 3d 1034, 1048-49 (1992) (diminished share value is a byproduct of an injury to the

                                                        -8-
       No. 1-20-1316

       entity). Likewise, Staisz’s claim that MSOGL failed to elect the board of directors and conducted

       no shareholder or board of director meetings were not injuries individual to her.

¶ 24          Although Staisz claims that the invalid termination of her Agreement and shareholder

       status were direct injuries individual to her, those alleged injuries related to her shareholder

       oppression action under the Act. In contrast, Staisz’s breach of fiduciary duty allegations related

       to defendants’ operation of MSOGL, which she claimed resulted in “financial loss” to her. The

       gravamen and true nature of the alleged breach of fiduciary duty was an injury to RPPG, as

       MSOGL’s sole shareholder, and constituted a “wrong to the corporate body” but not a direct,

       individual injury to her. See Weinstine, 328 Ill. App. 3d at 62 (the relevant consideration is

       “whether it is to the corporation or to the individual shareholder that injury has been done”).

¶ 25          Turning to whether Staisz had standing to bring the derivative breach of fiduciary duty

       claim, “the law in Illinois is well-settled that, to bring a derivative claim, the plaintiff must have

       been a shareholder at the time of the transaction of which he complains and must maintain his

       status as a shareholder throughout the entire pendency of the action.” (Emphasis in original.)

       Stevens v. McGuireWoods LLP, 2015 IL 118652, ¶ 23. Because it is undisputed that Staisz was

       not “a shareholder throughout the entire pendency of the action,” she had no standing to bring the

       derivative breach of fiduciary duty claim. Therefore, the circuit court properly dismissed this

       count with prejudice. See Demma, 2021 IL App (1st) 201279-U, ¶ 93 (an individual did “not

       ple[a]d sufficient facts establishing himself as a shareholder, and thus lack[ed] standing to bring

       both individual and derivative claims on behalf of [the corporation]”).

¶ 26          Because we find that Staisz lacked standing to pursue her action, we need not determine

       whether her complaint otherwise stated a cause of action for shareholder oppression and breach

       of fiduciary duty.

                                                       -9-
       No. 1-20-1316

¶ 27                                         III. CONCLUSION

¶ 28          Staisz’s shareholder oppression and breach of fiduciary duty counts were properly

       dismissed based on her lack of standing.

¶ 29          Affirmed.

                                                  - 10 -
No. 1-20-1316

                                  No. 1-20-1316

Cite as:                 Staisz v. Resurrection Physicians Provider Group, Inc., 2022 IL
                         App (1st) 201316

Decision Under Review:   Appeal from the Circuit Court of Cook County, No. 18-CH-
                         06072; the Hon. Franklin U. Valderrama and the Hon. Allen Price
                         Walker, Judges, presiding.

Attorneys                Anthony S. DiVincenzo and John Wickert, of Lustig & Wickert,
for                      P.C., of Northbrook, for appellant.
Appellant:

Attorneys                Jacob D. Radecki and Christopher F. Allen, of McDonald Hopkins
for                      LLC, of Chicago, for appellees.
Appellee:

                                      - 11 -