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02/21/97 MORRIS FRYDMAN v. HORN EYE CENTER

February 21, 1997

MORRIS FRYDMAN, PLAINTIFF-APPELLANT,
v.
HORN EYE CENTER, LTD., DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County. Honorable Paddy McNamara, Judge Presiding.

Rehearing Denied March 21, 1997. Released for Publication March 31, 1997.

Presiding Justice Greiman deliver the opinion of the court. Theis and Zwick, JJ., concur.

The opinion of the court was delivered by: Greiman

PRESIDING JUSTICE GREIMAN delivered the opinion of the court:

Plaintiff Morris Frydman, who is not a physician, filed a complaint against defendant Horn Eye Centers, Inc., a medical corporation, alleging breach of an employment contract. The trial court dismissed plaintiff's complaint with prejudice, finding that the agreement upon which plaintiff based his claim for breach of employment contract was illegal and unenforceable because it contravened the Medical Corporation Act (805 ILCS 15/1 et seq. (West 1992)), the Medical Practice Act of 1987 (225 ILCS 60/1 et seq. (West 1992)), and the public policy of Illinois.

On appeal, plaintiff primarily asserts that the trial court erred in finding that the agreement provided for plaintiff to be president of defendant and have an ownership interest in defendant which were the bases of determining there was a violation of the Medical Corporation Act. Plaintiff also contests the trial court's findings that his compensation as stated in the agreement constituted illegal fee splitting under the Medical Practice Act of 1987 and public policy, and that he impermissibly participated in management activities. Lastly, plaintiff contends that the trial court's ruling results in inequity and unjust enrichment.

We affirm the dismissal with prejudice of plaintiff's complaint, finding that the agreement on which plaintiff relies clearly provides for plaintiff to be president of and have an ownership interest in defendant. Section 13 of the Medical Corporation Act prohibits a nonphysician from being an officer or director of a medical corporation and from having any ownership interest in such a corporation. 805 ILCS 15/13 (West 1992).

Defendant, formerly known as Laser and Ocular Surgery Associates of Chicago, was incorporated in 1986 and is a medical corporation registered in Illinois that provides medical and surgical ophthalmology services. Gerald Horn is a physician and has been the only president, director and shareholder of defendant since its incorporation. Plaintiff is not a physician and is not licensed to practice medicine.

Plaintiff bases his cause of action on a June 6, 1989, letter, which he authored and addressed to Gerald Horn. The letter provides in pertinent part as follows:

"As we discussed, this letter is intended to reduce to writing the general understanding and agreement we have reached regarding my association with the Horn Eye Centers. Starting on May 16, 1989 and through December 31, 1989 I will devote no less than sixty percent of my time executing my responsibility as President of Horn Eye Centers. My direct compensation for this will be in two forms - $6,000 per month and an equity position in the company. The monetary compensation shall accrue until such time as the liquidity of the company permits payment. The equity position shall consist of five percent initially and shall be increased as follows:

an additional five percent on the occurrence of equity funding to Horn Eye Center acceptable to you or the completion of financing a minimum of $150,000 working capital fund;

an additional five percent on the anniversary of my first year of employment;

an additional five percent on the anniversary of my second year of employment;

All of the equity awarded to me shall be prefinancing equity subject to dilution as a result of financing. Beginning January 1, 1990 I will devote full time to the duties of being President of Horn Eye Centers when my ...


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