Lawlis v. Kightlinger & Gray

• Decision Date: 14 November 1990
• Docket Number: No. 73A04-9002-CV-101,73A04-9002-CV-101
• Citation: 562 N.E.2d 435
• Parties: Gerald L. LAWLIS, Appellant (Plaintiff Below), v. KIGHTLINGER & GRAY, an Indiana Partnership; Robert J. Wampler; John N. Thompson; John T. Lorenz; Donald L. Dawson; Ronald A. Hobgood; Mark William Gray; and Peter G. Tamulonis, Appellees (Defendants Below).
• Court: Indiana Appellate Court

Page 435

562 N.E.2d 435

59 USLW 2386

Gerald L. LAWLIS, Appellant (Plaintiff Below), v. KIGHTLINGER & GRAY, an Indiana Partnership; Robert J Wampler; John N. Thompson; John T. Lorenz; Donald L Dawson; Ronald A. Hobgood; Mark William Gray; and Peter G. Tamulonis, Appellees (Defendants Below).

No. 73A04-9002-CV-101.

Court of Appeals of Indiana Fourth District.

Nov. 14, 1990.

Rehearing Denied Dec. 13, 1990.

Robert G. Barker, Jerry Garau, Price & Shula, Indianapolis, for appellant.

Arthur P. Kalleres, Ice, Miller, Donadio & Ryan, Indianapolis, for appellees.

CONOVER, Judge.

Plaintiff-Appellant Gerald L. Lawlis (Lawlis) appeals the Shelby Circuit Court's entry of summary judgment in favor of Defendants-Appellants Kightlinger & Gray, an Indiana partnership, Robert J. Wampler, John N. Thompson, John T. Lorenz, Donald L. Dawson, Ronald A. Hobgood, Mark William Gray, and Peter G. Tamulonis (partnership) in a suit for wrongful expulsion of a partner from the partnership.

We affirm.

This appeal presents the following issues:

1. whether there are genuine issues of material fact as to whether the partnership

a. breached the partnership agreement,

b. breached a fiduciary duty owed to Lawlis,

c. was guilty of constructive fraud as to Lawlis, and

d. breached an oral contract by expelling Lawlis.

The partnership for many years has practiced law in Indianapolis and Evansville under various firm names. Lawlis initially became an associate of the partnership in 1966 but resigned after three years to join the staff of Eli Lilly and Company as an attorney. In early 1971, the partnership offered Lawlis a position as a general partner and Lawlis accepted. He signed his first partnership agreement as a general partner in 1972. That agreement remained effective until a new one was executed by the partners, including Lawlis, in 1984. Both these agreements provided for partnership compensation based upon a unit system, i.e., partners participated in the profits according to the number of units assigned to them each year by the partnership. Lawlis became a senior partner in 1975 and continued to practice law with the firm without interruption until 1982.

In that year, Lawlis became an alcohol abuser, and due to that affliction did not practice law for several months in early 1983 and in mid 1984. During each of these periods, he sought treatment for his alcoholism. (R. 11). Lawlis did not reveal his problem with alcohol to the partnership until July of 1983 when he disclosed it to the partnership's Finance Committee. When he did so, it "promptly contacted and met as a group with a physician who had expertise in the area of alcoholism." It then drafted "a document entitled 'Program Outline' which set forth certain conditions for Lawlis' continuing relationship with the Partnership." (R. DeTrude Aff., p. 4 p 12-13). That document, signed by Lawlis in August, 1983, contained the following understanding: "3. It must be set out and clearly understood that there is no second chance." (R. Lawlis Aff., Exh. B-1). By March, 1984, Lawlis had resumed the consumption of alcohol. Lawlis again sought treatment, and the firm gave Lawlis a second chance.

Its Finance Committee then decided Lawlis would be required to meet specified conditions in order for his relationship with the partnership to continue. These conditions included meetings with specialists selected by the partnership, treatment and consultation regarding his problem, and the obtaining of favorable reports from the specialist as to the likelihood of a favorable treatment outcome. Lawlis was told he would be returned to full partnership status if he complied with the conditions imposed. He has not consumed any alcoholic beverages since his second treatment in an alcoholic clinic in March, 1984.

Two written partnership agreements embodying primarily the same provisions were in effect in 1982 and thereafter, executed in 1972 and 1984, respectively. Lawlis executed both agreements and each annual addendum thereto along with all the other partners of the firm. Under the 1984 agreement, the senior partners by majority vote were to determine (a) the units each partner annually received, (b) the involuntary expulsion of partners, and (c) the involuntary retirement of partners. (R. 24-26).

As Lawlis battled his problem, his units of participation yearly were reduced by the annual addendum to the partnership agreement. Because he had not consumed alcohol since his second trip to a clinic and had been congratulated by senior partner Wampler, a member of the Finance Committee, and several others as to his "100% turn around," Lawlis felt "a substantial restoration of my previous status was past due." So believing, he met with the Finance Committee on October 1, 1986, and proposed his units of participation be increased from his then 60 to 90 units in 1987.

On October 23, 1986, Wampler told Lawlis the firm's Finance Committee was going to recommend Lawlis's relationship as a senior partner be severed no later than June 30, 1987. Two days later, all the firm's files were removed from Lawlis's office. The severance recommendation was presented at the 1986 year-end senior partners meeting. All except Lawlis voted to accept the Finance Committee's recommendation. At that time, as the Finance Committee also had recommended, Lawlis was assigned one unit of participation for the first six months of 1987 to a maximum total value of $25,000 on a weekly draw. This arrangement permitted Lawlis to retain his status as a senior partner to facilitate transition to other employment and to give him continuing insurance coverage.

Lawlis refused to sign the 1987 addendum containing those provisions and retained counsel to represent his interests. In consequence, he was expelled by a seven to one vote of the senior partners at a meeting held on February 23, 1987. (Lawlis cast the lone dissenting vote.) Article X of the 1984 agreement requires a minimum two-thirds vote of the senior partners to accomplish the involuntary expulsion of a partner. (R. 28). Lawlis filed suit for damages for breach of contract. From the entry of an adverse summary judgment, Lawlis appeals.

When reviewing the grant of summary judgment, we stand in the shoes of the trial court and apply an identical standard. Ayres v. Indian Heights Volunteer Fire Department (1986), Ind., 493 N.E.2d 1229, 1234. Summary judgment is appropriate only where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Beckett v. Clinton Prairie School Corporation (1987), Ind., 504 N.E.2d 552, 553. Any doubt as to the existence of a genuine issue of fact must be resolved in favor of the nonmovant. Morgan v. Southern Indiana Bank & Trust Co. (1985), Ind.App., 473 N.E.2d 158, 160. In determining whether there is a genuine issue of material fact precluding summary judgment, all doubts must be resolved against the moving party and the facts set forth by the party opposing the motion must be accepted as true. Progressive Construction & Engineering Co., Inc. v. Indiana & Michigan Electric Co., Inc. (1989), Ind.App., 533 N.E.2d 1279, 1284. Even if the facts are undisputed, summary judgment is inappropriate when evidence before the Court reveals a good faith dispute as to the inferences to be drawn from such facts. Four Winns, Inc. v. Cincinnati Insurance Co., Inc. (1984), Ind.App., 471 N.E.2d 1187, 1189.

However, factual disputes that are irrelevant or unnecessary will not be considered. Owen v. Vaughn (1985), Ind.App., 479 N.E.2d 83, 87. A factual issue is "genuine" only when it cannot be foreclosed by reference to undisputed facts and requires a trier of fact to resolve the opposing parties' differing versions. Perry v. NIPSCO (1982), Ind.App., 433 N.E.2d 44, 46.

Lawlis first claims ¹ his notification by Wampler on October 23, 1986, that the Finance Committee would recommend his severance as a partner coupled with the removal of all partnership files from his office two days later constituted an IND. CODE 23-4-1-29 dissolution of the partnership. At that time, he posits he ceased "to be associated in the carrying on as distinguished from the winding up of the business." Deeming such expulsion wrongful because not authorized by a two-thirds vote of the senior partners at that time, Lawlis asserts he has a claim for damages against the partners under IC 23-4-1-38(a)(2) for dissolution in contravention of the partnership agreement. We disagree.

It is readily apparent Wampler merely told Lawlis what the Finance Committee proposed to do in the future. No dissolution occurred on that account. That the firm's files were removed from Lawlis's office two days later is immaterial. After their removal, Lawlis still participated in the partnership's profits through a weekly draw even though he evidently had nothing to do.

Finally, the undisputed facts clearly demonstrate there was a meeting of the minds he would remain a senior partner after October 23, 1986. The partnership continued to treat Lawlis as a senior partner after that date. The Finance Committee's memorandum of November 25, 1986, regarding Lawlis's partnership status, proposed for 1987 he be given a weekly draw on one unit of participation until June 30, 1987, at which time his relationship with the firm would terminate, unless he withdrew earlier. Further, that committee's minutes for its December 23, 1986 meeting regarding the change in letterhead show Lawlis's name was not to be removed from the letterhead, it was to be placed at the bottom of the list of partners.

Also, Lawlis considered himself to be a senior partner after October 26, 1986. He refused as a senior partner to sign the proposed 1987 addendum "which implemented the decisions made by the Finance Committee concerning Lawlis," Appellant's Brief, p. 8; (R. at Exhibit 1, Lawlis Aff., p. 5), and cast the lone dissenting vote on his expulsion at the meeting of the senior...