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McManus v. Richards

Court of Appeals of Illinois, Third District

March 2, 2018

MICHELLE McMANUS, Plaintiff and Counterdefendant-Appellant,
v.
ANNE B. RICHARDS, Defendant and Counterplaintiff-Appellee.

         Appeal from the Circuit Court of the 14th Judicial Circuit, County, No. 16-L-67 Rock Island Illinois Honorable Joseph F. Fackel, Judge, Presiding.

          JUSTICE SCHMIDT delivered the judgment of the court, with opinion. Presiding Justice Carter and Justice McDade concurred in the judgment and opinion.

          OPINION

          SCHMIDT, JUSTICE

         ¶ 1 Plaintiff and counterdefendant, Michelle McManus, filed this interlocutory appeal following the Rock Island County circuit court's grant of summary judgment in favor of defendant and counterplaintiff, Anne B. Richards. McManus challenges the court's (1) decision to assign the contract's term "cause" its simple dictionary meaning rather that "its established and precise legal meaning" and (2) finding that Richards gave her proper written notice of her intent to disassociate. McManus also challenges the court's grant of the motion for summary judgment on the grounds that it failed to consider her claims regarding breach of fiduciary duty or breach of the duty of good faith and fair dealing. Finally, she asserts that the court erred to the extent that it failed to consider the applicability of the buy-sell agreement as it relates to the purchase of her membership interest in the practice. We reverse and remand.

         ¶ 2 FACTS

         ¶ 3 The parties are orthodontists. McManus began working at Richards's practice, Quad City Orthodontic Group, LLC (the practice), as an associate in 2010. The practice has an office in Rock Island, Illinois, and another in Bettendorf, Iowa.

         ¶ 4 On January 1, 2012, the parties entered into an "Agreement for Sale of Membership Interest in Limited Liability Company and Agreement for the Conducting of Professional Business Operations" (Operations Agreement). The parties amended the agreement in December 2012. The agreement provided that Richards, then the sole owner of the practice, would sell a 50% membership interest to McManus, who agreed to purchase her interest over a five-year period. The Agreement further provided for the dissolution of the practice and for the repurchase of McManus's membership interest. In relevant part, it provided for McManus's voluntary disassociation as follows:

"In the event that [McManus] should voluntarily elect to no longer practice dentistry under the joint dental practice with Dr. Richards, all percentages of Membership Interest purchased by [McManus] from [Richards], by way of this Agreement, shall be sold back to [Richards], under the terms of this Agreement, for a discounted price of fifty percent (50%) of the Purchase Price heretofore paid by [McManus] to [Richards]."

         The Operations Agreement also provided McManus's involuntary disassociation from the practice as follows:

"In the event that Richards finds cause to involuntarily disassociate McManus from the Company's dental practice, Richards shall give written notice to [McManus] of said involuntary disassociation decision setting for the last day of McManus' association with the Company and the joint dental practice. [Richards] then, within ninety (90) days of the last day of McManus' association, shall repurchase all of [McManus's] Membership Interest at one hundred percent (100%) of the Purchase Price heretofore paid to [Richards] by [McManus]. [Richards] reserves the right, at her sole discretion, to pay the price to [McManus], for the repurchase of [McManus's] Membership Interest, either as a single payment, or quarterly over a period of three years."

         ¶ 5 The parties also signed an "Insured Purchase Agreement and Member Interest Redemption Plan for Quad City Orthodontic Group L.L.C." (Buy-Sell Agreement), which set out the specific details regarding the sale and purchase of the practice's membership interest.

         ¶ 6 Over time, tensions developed between the parties. On April 27, 2016, Richards and the practice's office manager, Denise Coyne, met with McManus and informed her of Richards's intent to disassociate her from the practice. At that time, Richards owned a 55% interest in the practice and McManus a 45% interest. During the meeting, Richards gave McManus a "Purchase and Sale Agreement" and a document titled "Appendix A Dissolution of Purchase Agreement Entered January 1, 2012[, ] by Seller Anne Bronwen Richards and Purchaser Michelle McManus." Following the meeting, Coyne changed the locks on both offices, reset the passwords to all computer-based information, and excluded McManus's access to patient records.

         ¶ 7 In May 2016, McManus filed a complaint in the circuit court of Rock Island County, requesting injunctive relief (count I) and alleging breach of contract (count II), breach of fiduciary duty (count III), and breach of the duty of good faith and fair dealing (count IV) against Richards.

         ¶ 8 In June 2016, Richards filed a motion for summary judgment. She asserted that the issue before the court involved "mere contract interpretation" as to whether she satisfied the provisions required by the Operations Agreement to disassociate McManus from the practice. Richards maintained that she satisfied those provisions, and thus, did not breach the parties' contract, fiduciary duties, or the duty of good faith and fair dealing. Accordingly, she maintained "there are no genuine ...


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