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REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 2261 September Term, 2008

JOHN C. PRICE, ET AL. v. UPPER CHESAPEAKE HEALTH VENTURES, ET AL.

Zarnoch, Graeff, Kehoe, JJ.

Opinion by Zarnoch, J.

Filed: May 27, 2010

In this appeal, we consider whether the Circuit Court for Harford County properly dismissed a purported derivative lawsuit filed on behalf of a Maryland limited liability company ("LLC") whose rights to do business in Maryland and to use its name were forfeited. On September 20, 2007, Dr. John C. Price and Dr. Alan H. Shikani, appellants, filed a complaint against fellow members of The Surgery Pavilion, LLC (sometimes referred to in this opinion as "the company") and members of the company's management committee, alleging that the company and appellants were harmed by the company's 2004 sale of substantially all of its assets. The complaint asserted one count of breach of fiduciary duty against all of the defendants, and four other counts against particular members of the management committee. The defendants, now appellees, were divided into two groups, each represented by separate counsel. Each group moved to dismiss the complaint on various grounds. Although appellants originally asserted their claims individually and derivatively on behalf of the company, they later conceded that they could not sue in their individual capacity. Consequently, the circuit court was called upon to determine only whether to dismiss appellants' derivative lawsuit. On October 29, 2008, the court dismissed the suit. On November 25, 2008, appellants timely noted an appeal. For reasons set forth below, we shall affirm. FACTS AND PROCEDURAL HISTORY In January 2000, Upper Chesapeake Health Ventures, Inc. ("Upper Chesapeake") and a group of physicians, including appellants, formed The Surgery Pavilion, LLC for the

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purpose of operating an ambulatory surgical center in Harford County. Pursuant to the company's "Amended and Restated Operating Agreement," executed on December 31, 2002, the members appointed a management committee to govern the business and affairs of the company. At all relevant times, the members of the management committee were Upper Chesapeake, four individuals the complaint labeled as agents of Upper

Chesapeake--Stephanie Dinsmore, Robin Luxon, Dr. Peggy Vaughan, and Russel Frank--and three physicians who were also members of the company, Drs. Thomas E. Jordan, David L. Zisow, and Jonathan Seidenberg. The other members of the company, who were not part of its management committee, were appellees Drs. C. Winfred Gehris, Robert Hoofnagle, Seidenberg Protzko Eye Associates, P.A.1 ; and non-parties Eric P. Suan and Northern Chesapeake Anesthesia Associates. In September 2004, the management committee approved an agreement to sell substantially all of The Surgery Pavilion's assets to Upper Chesapeake. The agreement provided that, in consideration of the purchase, Upper Chesapeake would pay $936,000 cash, assume the company's $106,253 debts to third parties, discharge the company's $629,489 debt to Upper Chesapeake, and terminate Upper Chesapeake's preferred interest in the company, valued at $2.4 million. The management committee recommended that the company's members ratify the sale. On September 24, 2004, by a six to four vote, the sale

Jonathan Seidenberg was president of Seidenberg Protzko Eye Associates and was on The Surgery Pavilion's management committee. 2

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was ratified.2 Appellants, along with Dr. Suan and Northern Chesapeake Anesthesia Associates, did not consent to the sale. On October 6, 2006, The Surgery Pavilion's "right to do business in Maryland and the right to the use of [its] name" were forfeited pursuant to Maryland law because the company failed to file a tangible personal property tax report for tax year 2005. See Maryland Code (1975, 2007 Repl. Vol.),

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Maryland Law