## Facts

- Terry A. Davis and affiliated real-estate entities entered a February 1993 joint-venture agreement with Thrush Development Company that contemplated financing and a $780,000 payment to Davis.
- Davis retained attorneys P. Michael Loftus and Donald F. Engel of Gottlieb & Schwartz to negotiate and document the transaction.
- Davis alleged the closing documents omitted key provisions from the February 1993 agreement, including provisions governing the $780,000 obligation, and that Thrush later denied any duty to pay.
- Davis sued Thrush and separately sued Loftus, Engel, and numerous lawyers affiliated with Gottlieb & Schwartz for malpractice.
- The malpractice complaint asserted negligence counts and breach-of-contract counts alleging a contract to provide competent legal services, based on the same operative facts as the negligence counts.
- Davis also sought to hold all firm “partners,” including “income partners,” vicariously liable under the Illinois Uniform Partnership Act.
- The circuit court (1) struck the contract counts as duplicative, (2) struck certain categories of damages sought under the negligence counts, and (3) dismissed claims against the income partners on the ground they were not partners for purposes of the Act.
- Davis appealed the striking of the contract counts, the limitation of damages, and the dismissal of the income partners.

## Issues

1. Whether orders striking duplicative contract counts and striking certain categories of damages in surviving malpractice counts were appealable final judgments on separate claims under Illinois Supreme Court Rule 304(a).
2. Whether the firm’s “income partners” were “partners” under the Illinois Uniform Partnership Act such that they could be vicariously liable for alleged malpractice committed by other firm lawyers.
3. Whether the record established that each dismissed defendant was, in fact, an income partner rather than an equity partner.

## Decision

- The appellate court dismissed the appeal challenging the order striking the contract counts for lack of jurisdiction because the order removed only an alternative legal theory, not an entire claim separate from the pending malpractice counts.
- The appellate court dismissed the appeal challenging the order striking certain categories of malpractice damages for lack of jurisdiction because narrowing damages did not finally dispose of a separate claim.
- On the income-partner issue, the appellate court agreed that individuals classified as income partners under the firm’s structure were employees rather than partners for purposes of vicarious liability under the Uniform Partnership Act.
- The appellate court reversed in part and remanded because the record did not adequately establish that all defendants dismissed on that basis were actually income partners (as opposed to equity partners).

## Legal Principles

- Under Illinois Supreme Court Rule 304(a), an appeal lies only from a final judgment that disposes of at least one entire claim or all claims as to at least one party; eliminating an overlapping theory of recovery (e.g., contract duplicating malpractice) is not the disposition of a separate claim.
- An order that merely strikes particular categories of damages, while leaving the underlying cause of action pending, is not a final, appealable judgment under Rule 304(a).
- For vicarious-liability purposes under the Illinois Uniform Partnership Act, “partner” status turns on substantive attributes (including profit-and-loss sharing, ownership interest, and meaningful control), not solely on titles used within a firm.
- Where dismissal rests on a defendant’s alleged classification within an organization (e.g., income partner versus equity partner), the record must support that classification; otherwise, dismissal cannot be sustained as to defendants whose status is not established.

## Conclusion

The court held it lacked appellate jurisdiction to review interlocutory rulings that removed only duplicative contract theories or limited damages within still-pending malpractice claims, and it ruled that “income partners” lacking ownership, profit sharing, and control were not partners subject to vicarious liability under the Uniform Partnership Act, while remanding to determine which defendants actually fit that classification.


Davis v. Loftus, 334 Ill. App. 3d 761, 778 N.E.2d 1144 (Ill. App. Ct. 1st Dist. 2002)