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Sinkus v. BTE Consulting

Court of Appeals of Illinois, First District, Third Division

March 15, 2017

JOHN SINKUS, Plaintiff-Appellant,

         Appeal from the Circuit Court of Cook County. No. 12 CH 35120 The Honorable Rita Mary Novak, Judge Presiding.

          JUSTICE PUCINSKI delivered the judgment of the court, with opinion. Presiding Justice Fitzgerald Smith and Justice Lavin concurred in the judgment and opinion.



         ¶ 1 These consolidated appeals arise from orders holding the plaintiff, John Sinkus ("Sinkus"), in indirect civil contempt for failing to comply with the trial court's orders directing him, as a shareholder of defendant BTE Consulting ("BTE"), to contribute to the compensation of BTE's court-appointed provisional director. On appeal, Sinkus contends that the trial court lacked authority to order him to compensate the provisional director, because section 12.56(g) of the Business Corporation Act of 1983 ("Act") (805 ILCS 5/12.56(g) (West 2014)) specifically provides that provisional directors are to be compensated by the corporation. We agree that the language of section 12.56(g) of the Act is clear in requiring payment of provisional directors by the corporation and, therefore, reverse.

         ¶ 2 BACKGROUND

         ¶ 3 The procedural history of this case is convoluted, and much of it is not relevant to the issues before us. Accordingly, we include only those facts that are relevant and necessary to the disposition of the questions before us.

         ¶ 4 In September 2012, Sinkus instituted this action by filing his original complaint against defendants BTE, Carl Thomas ("Thomas"), Joyce Thomas ("Joyce"), and 5WYRE, LLC ("5WYRE"). In his complaint, Sinkus alleged that BTE was an Illinois corporation. Sinkus and Thomas are the only two shareholders of BTE, each owning fifty percent of the outstanding equity. In April 2012, after Sinkus and Thomas reached an impasse on the dissolution and liquidation of BTE, Sinkus resigned as an officer and director of BTE and signed a shareholder waiver, leaving Thomas to manage BTE as the sole remaining officer and director. Sinkus further alleged that during this time, Thomas and Joyce formed 5WYRE, which they used to improperly solicit business away from BTE for their own benefit. Sinkus complained that Thomas sold all of BTE's assets without his knowledge or consent. Based on these allegations, Sinkus brought derivative and direct claims against the defendants for breach of fiduciary duties and conspiracy to breach fiduciary duties, and a claim for minority shareholder oppression.

         ¶ 5 Extensive pleading practice followed, including the addition of more parties, multiple motions to dismiss, and several amendments of complaints, answers, and counterclaims. During this time, Thomas and BTE originally shared the same counsel. That counsel later withdrew from representing BTE, and the law firm of Murphy & Hourihane, LLC ("M&H") subsequently appeared on behalf of BTE. Sinkus moved to disqualify M&H on the basis that Thomas was influencing M&H's decision making. On May 5, 2014, the trial court denied Sinkus' motion to disqualify, but instead decided to appoint a provisional director of BTE pursuant to sections 12.56(b)(4) and 12.56(c) of the Act (805 ILCS 5/12.56(b)(4), (c) (West 2014)). According to the trial court, the purpose of the provisional director was to direct the litigation on behalf of BTE and to "ensure that Thomas does not unduly influence counsel for [BTE]." The trial court's order specifically stated that the provisional director would be compensated by BTE.

         ¶ 6 The trial court ordered Sinkus and Thomas to each submit the names of two proposed provisional directors, from which the trial court would make its selection. Sinkus did not submit any names. BTE, although not ordered to do so, submitted two names, which Thomas adopted. From those names, the trial court selected retired judge Daniel J. Kelley ("Kelley") to serve as the provisional director.

         ¶ 7 Three months later, BTE filed a "Motion for Instructions." In that motion, BTE stated that M&H and Kelley reached an agreement under which Kelley would be compensated for his work as provisional director through an advance on his fees. To obtain that advance, Kelley made a capital call to the shareholders-Sinkus and Thomas-of $25, 000.00 each. Thomas responded that he would not contribute the requested amount because he had already contributed capital in excess of the requested $25, 000.00 for payment of outstanding vendor invoices and attorney fees (including M&H's) on behalf of BTE. Sinkus also declined to contribute to the capital call on the basis that he was not responsible for BTE's debts and there was no agreement between him and Thomas to make contributions to BTE. In light of these refusals, BTE requested that the trial court order Sinkus and Thomas to provide the funds necessary to compensate Kelley.

         ¶ 8 On May 4, 2015, after briefing and arguments by the parties, the trial court, pursuant to section 12.56(c) of the Act, granted BTE's motion and ordered Sinkus and Thomas to each pay $25, 000.00 to Kelley. Thereafter, Sinkus refused to comply and requested that the trial court hold him in contempt. The trial court obliged on June 24, 2015, holding Sinkus in indirect civil contempt and ordering him to pay a fine of $10.00 per month. The trial court ordered that the fine be stayed upon Sinkus' depositing $25, 000.00 with the Clerk of the Circuit Court of Cook County. On July 24, 2015, Sinkus filed his notice of appeal, giving rise to appeal number 1-15-2135.

         ¶ 9 While that appeal was pending, Kelley issued a second capital call, this time for $30, 000.00 from each Sinkus and Thomas. When Sinkus did not contribute the requested $30, 000.00, the trial court, on May 3, 2016, ordered him to pay the $30, 000.00 to Kelley. Sinkus again refused and on May 19, 2016, was found to be in indirect civil contempt and was fined $10.00 per month. Again, the fine was stayed pending Sinkus' depositing $30, 000.00 with the clerk of the court. Sinkus timely appealed on June 6, 2016, giving rise to appeal number 1-16-1463.

         ¶ 10 The two appeals were subsequently consolidated, as they ...

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