Osaghae v. Oasis Hospice & Palliative Care, Inc.
| Docket Number | 1-20-0515 |
| Decision Date | 30 December 2021 |
| Citation | 2021 IL App (1st) 200515,203 N.E.3d 286,461 Ill.Dec. 132 |
| Parties | Vincent OSAGHAE and Mabel Osaghae, Plaintiffs-Appellants, v. OASIS HOSPICE AND PALLIATIVE CARE, INC., Defendant and Counterplaintiff-Appellee, (Olufolasade Bello, Third-Party Plaintiff-Appellee; Mabel Osaghae, Plaintiff, Counterdefendant, and Third-Party Defendant-Appellant). |
| Court | United States Appellate Court of Illinois |
Samuel J. Schumer and Jason M. Metnick, of Meltzer, Purtill & Stelle LLC, of Chicago, for appellants.
William J. Arendt and Nicola K.B. Latus, of William J. Arendt & Associates, P.C., of Burr Ridge, for appellees.
¶ 1 This appeal involves section 12.56 of the Illinois Business Corporation Act of 1983 (Act) ( 805 ILCS 5/12.56 (West 2016) ). This section of the Act provides remedies to shareholders of closely held nonpublic corporations when, as in this case, the shareholders of the corporation are deadlocked and it has been established that the corporation will be irreparably harmed by the continuation of the deadlock. Id. § 12.56(a)(2).
¶ 2 We are asked to decide the following questions on appeal: (1) whether the nonexclusivity provision of section 12.56(c) of the Act, which provides that the remedies set forth in the Act "shall not be exclusive of other legal and equitable remedies which the court may impose" (id. § 12.56(c)), permits a trial court to order an involuntary buyout of a nonpetitioning party's shares as an alternative remedy to dissolution; (2) whether the involuntary buyout of a nonpetitioning party's shares, as an alternative remedy to dissolution, constitutes an illegal forfeiture; (3) whether the corporation at issue in this case had standing to seek relief under section 12.56 of the Act; and (4) whether the trial court failed to conduct an evidentiary trial on the counterclaim brought under section 12.56 of the Act. Our answers to these questions lead us to affirm the trial court's ruling.1
¶ 4 Oasis Hospice and Palliative Care, Inc. (Oasis) is a nonpublic, closely held Illinois corporation that provides in-home hospice care and similar health care services to patients in the Chicago area. Mabel Osaghae (Mabel) and Olufolasade Bello (Bello) are each 50% shareholders of Oasis. Bello is the president and administrator of the corporation. Mabel is the corporate vice president. Bello's husband, Hakeem Bello, is the secretary. Mabel's husband, Vincent Osaghae, is the treasurer.2
¶ 6 Initially, we briefly summarize the history leading to the formation of Oasis. Mabel and Bello, who are both from Nigeria, shared a social and business relationship prior to forming Oasis. Mabel is a registered nurse, and Bello holds an MBA from Purdue University. The two women met at church and became friends in 1997 or 1998.
¶ 7 Mabel owns and operates a health care business called Ultimate Home Healthcare (Ultimate). Ultimate provides in-home nursing services to patients in the Chicago area. Bello accepted a job offer from Mabel to work at Ultimate. Bello served as director of operations and performed billing services for Ultimate from 2001 to 2006. After leaving Ultimate, Bello worked at her aunt's hospice business as director of operations and human resources from 2007 through 2013.
¶ 8 In 2013, Bello began making plans to start her own hospice business. Bello lacked the medical education and training required to obtain a hospice license. In addition, she also lacked the start-up capital to open the business and therefore began searching for a suitable business partner. In the summer of 2013, Bello received an offer from potential investors, both of whom were registered nurses, offering to invest in Bello's hospice business in exchange for an ownership interest.
¶ 9 On November 6, 2013, Bello and Hakeem met with the Osaghaes to discuss the business offer from the two nurses. Bello sought Vincent's advice based on his experience as a certified public accountant who operated his own accounting business. Previously, Vincent had assisted Bello's aunt in setting up her hospice business. Vincent warned Bello to be wary of entering into a partnership with people she did not know very well. Mabel advised Bello to open the hospice business on her own, without any partners. Bello responded that when the time came to start her hospice business, she would use Vincent's services to assist in setting up the business.
¶ 10 A few days later, Vincent contacted Bello and informed her that he wanted to meet with her again to discuss a business proposal he had prepared for her consideration. On November 10, 2013, Vincent met with Bello at her home and proposed that Bello enter into a partnership agreement with his wife, Mabel, to start a new hospice business. Vincent offered that, in exchange for his wife receiving a 50% ownership share in the new hospice business, he would provide the following: (1) $50,000 start-up capital and additional funding to keep the business operational until it became self-sustaining, (2) rent-free office space with all utilities paid for approximately six to nine months, and (3) full accounting and business services. Mabel would provide clinical experience as a registered nurse. She would also provide marketing services.
¶ 11 Bello requested that Vincent memorialize the terms of his business offer in writing. Vincent sent Bello a text message containing the terms of his offer. Bello reviewed the offer and agreed to its terms and conditions.
¶ 12 Later that November, Vincent prepared and submitted articles of incorporation for Oasis with the Illinois Secretary of State. Bello and Mabel each paid $1025 for their respective 50% ownership share in Oasis. Shortly after Oasis was incorporated, Bello began the process of making the new hospice business operational.
¶ 13 On January 2, 2014, Bello started working full-time at Oasis. Bello began drafting policies and procedures for the new hospice business. Mabel assisted Bello with these tasks. Bello also started the process of applying for a hospice license from the State of Illinois. Mabel was not involved with this process but was listed as the corporation's registered nurse for licensing purposes. As part of his role as accountant, Vincent installed accounting software QuickBooks on the office computers to track expenditures and deposits.
¶ 14 In January 2014, Vincent deposited $50,000 into the corporation's bank account. The Osaghaes subsequently deposited additional amounts into the corporation's bank account on the following dates: $25,000 on May 14, 2014; $25,000 on July 3, 2014; and $10,000 on August 18, 2014.
¶ 15 On September 16, 2014, Oasis received its hospice licensure from the State of Illinois and began administering in-home hospice care. Thereafter, the Osaghaes deposited additional amounts into the corporation's bank account on the following dates: $25,000 on October 29, 2014; $30,000 on December 10, 2014; $25,000 on January 16, 2015; and $25,000 on March 16, 2015.
¶ 16 In January 2015, the Osaghaes called a meeting to discuss Vincent's concerns regarding the way in which Bello was spending the corporate funds. The meeting led to a dispute concerning whether the funds the Osaghaes deposited into the corporation's bank account constituted oral loans to be paid back or capital investments. Despite subsequent meetings and discussions over the ensuing months, the parties failed to resolve their dispute.
¶ 17 In August 2015, Vincent resigned his position as accountant for Oasis. Thereafter, Bello continued to operate Oasis without any participation or input from either Vincent or Mabel.
¶ 19 On April 25, 2016, the Osaghaes filed a two-count verified complaint against Oasis in the circuit court of Cook County. In count I, the Osaghaes alleged the existence of an oral loan agreement for the amounts they deposited into the corporation's bank account and subsequent breach of that agreement to repay the loan. The Osaghaes sought judgment for $241,872.91, plus interest, costs, all additional sums accruing through the date of judgment, and any additional relief the court deemed equitable and just. In count II, the Osaghaes pled quantum meruit as an alternative theory to their claim for breach of the oral loan agreement. See Weydert Homes, Inc. v. Kammes , 395 Ill. App. 3d 512, 522, 334 Ill.Dec. 467, 917 N.E.2d 64 (2009) .
¶ 20 In response, Oasis filed a motion to dismiss the Osaghaes’ verified complaint pursuant to section 2-615 of the Code of Civil Procedure (Code) ( 735 ILCS 5/2-615 (West 2016) ). Oasis argued that the Osaghaes failed to sufficiently allege the essential terms of a valid and enforceable oral contract to loan money. The circuit court subsequently denied the section 2-615 motion to dismiss.
¶ 21 After Oasis answered the verified complaint, the Osaghaes filed a motion for summary judgment as to count I of their verified complaint for breach of the oral loan agreement. The Osaghaes alleged that Oasis's admissions and internal business records established that the Osaghaes loaned Oasis $233,654.39 and that the corporation failed to repay said amount. The circuit court denied the Osaghaes’ motion for summary judgment, finding that genuine issues of material fact remained concerning the terms of the alleged oral loan agreement.
¶ 22 On August 2, 2017, Oasis filed a two-count verified counter-complaint against the Osaghaes.3 The counter-complaint asserted that the parties’ ongoing dispute over the breach of the alleged oral loan agreement had resulted in a shareholder-director deadlock. Count I of the...
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