Staisz v. Resurrection Physicians Provider Group, Inc.

2022 IL App (1st) 201316FIRST 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.
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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.
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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).
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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
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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).
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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
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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.
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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.
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No. 1-20-1316
Cite as: Staisz v. Resurrection Physicians Provider Group, Inc., 2022 IL
App (1st) 201316Decision 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:
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