The opinion of the court was delivered by: Justice Gordon
Appeal from the Circuit Court of Cook County. The Honorable Moshe Jacobius, Judge Presiding.
This is an appeal from the denial of a motion for Supreme Court Rule 137 (155 Ill. 2d R. 137) sanctions against petitioner-appellee Bradley Baker, M.D., and his counsel. Underlying this appeal are two lawsuits brought by Baker. The first is a federal action filed on September 7, 1999, against Daniel Berger, M.D. (Berger), respondent-appellant Daniel S. Berger, M.D., Ltd. (the Berger Corporation), and an entity bearing the name of North Star Medical Center (North Star). In the federal complaint, Baker sought damages for sexual harassment, discrimination, and breach of a purported partnership agreement, presumably generated by the conduct of Berger with respect to Baker. The second suit, a state court action for declaratory judgment, was filed on November 16, 1999, while the federal suit was still pending. *fn1 In the declaratory judgment action, which named the Berger Corporation and Health Professionals, Inc. (HPI), as respondents, *fn2 Baker sought a declaration as to the unenforceability of certain non-competition clauses contained in three contracts, one of which purported to be an employment agreement between Baker and the Berger Corporation.
In April 2000 the trial court dismissed the Berger Corporation from the declaratory judgment suit, on the ground that none of the contracts had been signed by the Berger Corporation. Following its dismissal, the Berger Corporation moved for sanctions against Baker and his counsel, which motion, as noted, was denied by the trial court.
The three entities involved in this case are the Berger Corporation; Health Professionals, Inc. (HPI); and the Center for Special Immunology (CSI), which was a subsidiary of HPI. CSI operated a medical facility at 2835 North Sheffield in Chicago, where it employed Baker as a treating physician. Baker's immediate supervisor was Berger, who was the medical director for the CSI facility. Berger also is the president, sole shareholder and director of the Berger Corporation, a medical practice with offices at the same 2835 North Sheffield address as the CSI facility.
Baker worked for CSI from July 27, 1997, until April 7, 1998. According to Baker's federal complaint, it was in July 1997 (while Baker was employed by CSI) that he and Berger first discussed forming an independent partnership. Baker alleges that in April 1998 he, Berger and the Berger Corporation verbally formalized the terms of an agreement under which Baker was to be a full and equal partner with Berger by the fourth year of the partnership. For the time being, the partnership was to operate under the name "Daniel S. Berger, M.D., Ltd." and/or "Berger-Baker, Ltd.," but eventually it was to operate under the name "North Star Medical Center." *fn3
Baker further alleges in his federal complaint that in July 1998 he and Berger attended a conference on Acquired Immunodeficiency Syndrome (AIDS) in Geneva, Switzerland. According to Baker, during this two-week conference trip, "defendant [Berger] repeatedly pressured [Baker] to have sex with him," but Baker refused. In September 1998, after they had returned to Chicago, Berger allegedly "advised [Baker] that [Baker] was no longer going to be a partner, and instead offered [Baker] an employment agreement." On March 5, 1999, Baker tendered his resignation, effective April 9, 1999.
Baker filed his single-count complaint for declaratory judgment against the Berger Corporation and HPI on November 16, 1999. As noted, the complaint sought a judgment declaring unenforceable certain non-compete provisions contained in three contracts. Baker's alleged reason for seeking declaratory relief was that he "wishe[d] to practice medicine within the City of Chicago and would be prevented from doing so if any of the contracts is found to be enforceable."
Copies of the contracts were attached to the complaint. Two of them, both dated July 1, 1997, purported to be employment agreements, one between Baker and the Berger Corporation (the Berger Corporation Agreement), and the other between Baker and CSI. The copy of the CSI contract was signed by Baker and by Berger as CSI medical director, but the Berger Corporation Agreement was unsigned. The third contract, which was dated July 28, 1997, was a "Confidentiality and Non-Competition Agreement" between Baker and HPI, through HPI's subsidiary, CSI. This agreement (hereinafter the HPI agreement) was signed only by Baker.
Under the non-compete provisions in the Berger and CSI agreements, which are nearly identical, Baker was prohibited from competing as a practicing physician within five miles of the CSI Chicago facility "for eighteen months following the date of termination." The restrictive covenant in the HPI agreement restricts Baker from competing within 50 miles of the CSI clinic "for one (1) year immediately following the termination" of his employment.
Baker dealt with the Berger Corporation Agreement in a separate section of his single-count declaratory judgment complaint, alleging that the contract "was presented to him by [the Berger Corporation]" and that "[t]he parties to the contract were to be [the Berger Corporation] and [Baker]." (Emphasis added.) Also in this section, Baker explicitly alleged that his employer was CSI, not the Berger Corporation. The complaint stated that:
"[The Berger Corporation] did not employ [Baker] upon his relocation to Chicago from Washington[, D.C., where Baker had completed his residency]. [The Berger Corporation] did not pay [Baker's] salary or provide [Baker] with any benefits. From the time of [Baker's] hire on July 27, 1997[,] until the time all relations with CSI were severed on April 7, 1998[,] it was CSI who employed [Baker], paid his salary and provided his benefits. *** It was the CSI facility in Chicago that was [Baker's] place of employment for nearly a year after he was retained by CSI."
Attached to Baker's declaratory judgment complaint was his 1997 W-2 form showing CSI as his employer.
On January 7, 2000, the Berger Corporation moved to dismiss Baker's declaratory judgment complaint pursuant to sections 2-615 and 2-619(a)(9) of the Code of Civil Procedure (735 ILCS 5/2-615 & 5/2-619(a)(9) (West 1998)). According to the Berger Corporation, the only one of the three contracts which related to the Berger Corporation was the unsigned Berger Corporation Agreement. The Berger Corporation argued that the "Berger [Corporation] Agreement attached to the Complaint [was] not executed by either party" and thus was not operative. Hence, there was no actual controversy to be adjudicated, as required by section 2-701 of the Code of Civil Procedure (735 ILCS 5/2-701 (West 1998)), and Baker's complaint therefore should be dismissed.
In support of its motion, the Berger Corporation attached an affidavit of Berger stating that "[t]o the best of [his] knowledge and recollection[,] neither [he] nor anyone else ever signed the purported [Berger Corporation Agreement]." Berger further stated that he had "never seen an original or even a copy" of this agreement, adding that he was the only person who would have been authorized to sign it on behalf of the Berger Corporation. The affidavit also stated that Berger never told Baker or his attorneys that he would enforce the Berger Corporation Agreement against Baker.
The Berger Corporation also alleged in its motion that Baker "manufactured" the alleged controversy as to the enforceability of the Berger Corporation Agreement and the other contracts in a "belated attempt" to justify his failure to seek employment following termination, with respect to his action for damages in his federal lawsuit. According to the Berger Corporation, Baker was attempting to establish (through his declaratory judgment complaint) that he was prevented from seeking employment, and thus from mitigating damages, by the non-compete provisions in the Berger Corporation Agreement and the other contracts.
The Berger Corporation further alleged in its motion that a second motive for Baker's declaratory judgment complaint was to harass Berger and the Berger ...