## Facts

- Gerald L. Lawlis was a senior partner in an Indiana law firm operating under a written partnership agreement that allocated profits through annually assigned “units.”
- In 1982, Lawlis developed alcoholism and was unable to practice for extended periods in 1983 and 1984 while obtaining treatment.
- After Lawlis disclosed his alcoholism in 1983, the firm implemented a written “Program Outline” governing his continued association, including a “no second chance” condition if he drank again.
- Lawlis relapsed in 1984, but the firm allowed him to remain a senior partner with reduced workload and conditions aimed at permanent sobriety.
- By 1986, Lawlis reported recovery and requested a substantial increase in units; the firm’s finance leadership instead indicated it would recommend ending his senior partnership by mid-1987.
- Under the 1984 partnership agreement, senior partners could be involuntarily expelled by a two-thirds vote without a stated cause.
- The senior partners (other than Lawlis) voted to terminate his senior partnership and proposed an addendum providing a transition period; Lawlis refused to sign.
- The senior partners then voted to expel Lawlis pursuant to the agreement’s no-cause expulsion procedure.
- Lawlis sued the firm and individual partners alleging breach of the partnership agreement, breach of fiduciary duty, constructive fraud, and breach of an oral agreement, claiming the expulsion was predatory and aimed at increasing remaining partners’ profits.

## Issues

1. Whether the firm breached the written partnership agreement by expelling Lawlis under the agreement’s no-cause expulsion clause.
2. Whether the expulsion breached fiduciary duties owed among partners, including by acting in bad faith or for a predatory purpose.
3. Whether the expulsion constituted constructive fraud.
4. Whether the firm breached an oral agreement allegedly limiting its ability to expel Lawlis or promising continuation/restoration of his status.

## Decision

- The Indiana Court of Appeals affirmed summary judgment for the firm and the individual partners.
- The court held the no-cause expulsion clause was enforceable and was exercised in accordance with the agreement’s procedures.
- The record did not support an inference of bad faith, predatory conduct, or fraud sufficient to create a triable issue.
- Lawlis failed to present evidence of an enforceable oral agreement modifying or superseding the written partnership agreement.

## Legal Principles

- A partnership agreement may authorize expulsion of a partner without cause if the agreement’s procedural requirements are met.
- Even where no cause is required, partners must exercise contractual expulsion rights in good faith and consistent with fiduciary obligations.
- In this setting, bad faith or predation is principally shown by conduct such as wrongful withholding or appropriation of money or property owed to the expelled partner, or other fraudulent conduct.
- Courts generally will not second-guess internal business reasons for expulsion when the contract authorizes no-cause expulsion and there is no evidence of wrongful deprivation of the expelled partner’s accrued rights.
- Alleged oral modifications to a written partnership agreement require evidentiary support sufficient to create a genuine issue of material fact.

## Conclusion

The court upheld the firm’s expulsion of a senior partner under a contractual no-cause clause because the firm followed the agreement’s voting procedure, there was no evidence that it wrongfully withheld property or compensation or acted fraudulently, and the asserted oral limitations on expulsion were unsupported.


Lawlis v. Kightlinger & Gray, 562 N.E.2d 435 (Ind. Ct. App. 1990)