The opinion of the court was delivered by: MILTON SHADUR, Senior District Judge
MEMORANDUM OPINION AND ORDER
Orthodontic Centers of Illinois ("Orthodontic Centers"),
invoking federal jurisdiction on diversity grounds, has sued
Christine Michaels, D.D.S., P.C. and Christine Michaels, D.D.S.
(for convenience collectively "Dr. Michaels," treated as a
singular feminine proper noun), asserting various claims stemming
out of its business relationship with Dr. Michaels. Orthodontic
Centers has moved for partial summary judgment pursuant to
Fed.R.Civ.P. ("Rule") 56 on two of those claims: breach of contract
and default on five promissory notes. In turn Dr. Michaels has
advanced two counterclaims asserting breach of contract and
breach of fiduciary duty, and she has moved for summary judgment
Both parties have submitted statements of undisputed facts as
called for by this District Court's LR 56.1.*fn1 For the
reasons set forth in this memorandum opinion and order, Orthodontic
Centers' motion for partial summary judgment on Dr. Michaels'
liability on five promissory notes is granted, while all other
motions are denied but as explained hereafter, the grounds for
denial of each party's motion for summary judgment on its or her
breach of contract claim also spell doom for that claim itself,
and the same is true as to Dr. Michaels' breach of fiduciary duty
Every Rule 56 movant bears the burden of establishing the
absence of any genuine issue of material fact (Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23 (1986)). For that purpose courts
consider the evidence in the light most favorable to nonmovants
and draw all reasonable inferences in their favor (Lesch v.
Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir. 2002)). But
to avoid summary judgment a nonmovant "must produce more than a
scintilla of evidence to support his position" that a genuine
issue of material fact exists (Pugh v. City of Attica,
259 F.3d 619, 625 (7th Cir. 2001)). Ultimately summary judgment is appropriate only if a reasonable jury could not return a verdict
for the nonmovant (Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986)). Where as here cross-motions for summary
judgment are involved, these principles require the adoption of a
Janus-like perspective: As to each motion, the nonmovant's
version of any disputed and evidence-supported facts is credited.
Orthodontic Centers is a Delaware corporation with its
principal place of business in Metairie, Louisiana (M. St. ¶ 1).
It is a wholly owned subsidiary of Orthodontic Centers of America
(hereafter simply "Centers," to distinguish it from the
subsidiary that has filed this action), which has the same place
of incorporation and principal place of business (id. ¶ 2). Dr.
Michaels (the individual) is an Illinois-licensed dentist
specializing in orthodontics and practicing through her Illinois
professional corporation, Christine Michaels D.D.S., P.C., which
also has its principal place of business here in Illinois (id.
¶¶ 3, 5, 6).
In 1996 Dr. Michaels and Orthodontic Centers entered into a
Business Management Agreement ("Agreement"). Under Agreement §
2.1 Orthodontic Centers was obligated to "provide or arrange for
the provision to [Dr. Michaels] of the business management
services required by [Dr. Michaels] to successfully operate [her]
orthodontic practice" (O. St. ¶ 1). In particular, Orthodontic Centers was responsible for hiring administrative staff,*fn2
leasing and subleasing office space, furnishing and equipment,
providing patient scheduling systems and clinical forms, managing
inventory, producing financial and operational data on the
orthodontic office's operations, designing and executing a
marketing plan and providing Dr. Michaels with a range of
financial services (Agreement §§ 2.2-2.10). That range of
services encompasses accounting and bookkeeping, payment of Dr.
Michaels' accounts payable (including rent under leases and
subleases), monitoring and payment of "Centers Expenses" (a
defined term under the Agreement, including among other things
staff salaries, corporate overhead expenses and licenses and
taxes), payroll administration and billing and collections (id.
§ 2.10). Orthodontic Centers established a bank account on Dr.
Michaels' behalf and was appointed as Dr. Michaels'
attorney-in-fact to carry out those financial management
In return for the services so provided, Orthodontic Centers was
entitled under Agreement § 4.1 to payment of a monthly
"Management Fee," which it withdrew directly from Dr. Michaels'
account. But there was clearly more to the parties' relationship
than mere "management" as dealt with in the Agreement, for the
financial records submitted by the parties shows that Orthodontic
Centers also received 50% of the profits from Dr. Michaels'
practice. There is no argument about that indeed, until Centers
wrote a letter to Dr. Michaels on November 18, 2002 (M. Ex. B at
756), ostensibly to accompany "a substantially new look to your
financial statements," and stating that "[w]e've removed the
antiquated notions of balance sheets and statements of cash flow
as well as arcane accounting concepts such as partner drawing
rollforwards and amortization periods," its financial statements
forthrightly showed Dr. Michaels and Orthodontic Centers as
"partners" and allocated 50% of the calculated net income to each
(among the many statements reflecting that consistent treatment,
see, e.g., M. Ex. B at 741, 743).*fn4 Under the Agreement the parties' relationship was to continue
for 20 years unless earlier terminated on grounds specified in
the Agreement. Those grounds were set out in Agreement §§ 6.2 and
In addition to enlisting the business acumen of Orthodontic
Centers, Dr. Michaels utilized its financial wherewithal by
obtaining cash advances needed for the establishment of her
practice. Between June 30, 1995 and June 30, 1996 Dr. Michaels
executed five promissory notes in favor of Orthodontic Centers,
reflecting advances in the total sum of $193,224 (O. St. ¶ 13;
Paternostro Aff. Exs. B, C & D). Four of those promissory notes
were executed by Dr. Michaels' corporation and one was executed
by Dr. Michaels in her individual capacity (Paternostro Aff. Exs.
B, C & D).
For a number of years the Agreement between Orthodontic Centers
and Dr. Michaels proceeded amicably. It was not until 2003 that
problems started to arise.*fn5 In June Dr. Michaels attended
a meeting in Miami organized by other orthodontists (all of whom
had comparable agreements with subsidiaries of Centers) and by
attorneys from the law firm of Goldstein, Tanen & Trench P.A. to
discuss the orthodontists' rights and options under those agreements. After the meeting Dr. Michaels expressed to Bart
Palmisano ("Palmisano"), Centers' chief operating officer, her
desire to terminate the Agreement (O. St. ¶ 5; M. Resp. ¶¶ 5,
27). Those negotiations ended without a resolution (O. St. ¶ 5;
M. Resp. ¶ 5).
On August 23 Dr. Michaels then attended a second meeting in
Miami to discuss her concerns and complaints and "to explore
whether there was any interest in the orthodontists forming a
group to pool funds to negotiate and/or litigate with [Centers]
on more equal financial footing" (Michaels Aff. ¶ 19). At that
meeting Centers served Richard Goldstein of the law firm and Dr.
Ramos, a member of the orthodontist group, with a lawsuit for
tortious interference with contract (M. Add. St. ¶ 19; M. Resp.
Ex. 1 ¶ 18).
Just a few days later (on August 27) Dr. Michaels' staff
members at her Lombard and Aurora offices discovered that they
could not log on to WALRUS, Orthodontic Centers' patient
scheduling, information and billing system (M. St. ¶ 20). Shortly
after being alerted to the problem, an employee in the
information technology department of Orthodontic Centers restored
access to both offices (M. Resp. Exs. 9, 10). According to one of
Dr. Michaels' staff members in the Lombard office, the
Orthodontic Centers employee advised her that the shutdown was
due to "some kind of litigation" (M. Resp. Ex. 9). On the following day Palmisano called Dr. Michaels to apologize for the
"computer glitch" and explained that the shutdown was the result
of an inexperienced computer technician (O. St. ¶ 6; M. Resp. ¶
On August 29 Palmisano sent what appears to be a form letter to
Dr. Michaels, explaining the pending litigation against Richard
Goldstein and Dr. Ramos, notifying Dr. Michaels that Centers
would defend itself "vigorously" if claims were brought against
it and encouraging Dr. Michaels to alert Orthodontic Centers to
any problems that she may be having with their services (Buchman
Aff. Ex. B). Before she received that letter, on September 5 Dr.
Michaels sent a notice to Palmisano stating that she believed
Centers had interfered with her ability to treat patients and
repudiated the Agreement by "locking [her] practice out of
Walrus." As a result she "no longer deem[ed] the [Agreement] to
be in effect" (Paternostro Aff. Ex. A).
Only a month later Centers and all of its subsidiaries filed
suit in a Texas state court against Dr. Michaels and numerous
other orthodontists and attorneys, charging them with tortious
interference and conspiracy (M. Add. St. ¶ 25). Dr. Michaels
appears to have been dismissed as a party to that litigation,
which ultimately settled out of court (see Orthodontic Centers
of America v. ...