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September 27, 1996


Appeal from the Circuit Court of Cook County. 93 CH 1287. Honorable Edwin M. Berman, Judge Presiding.

Released for Publication October 22, 1996.

The Honorable Justice Gordon delivered the opinion of the court: McNULTY, P.j., and Hourihane, J., concur.

The opinion of the court was delivered by: Gordon

JUSTICE GORDON delivered the opinion of the court:

Plaintiff, Jay Zabel, instituted the instant action against defendants, Martin Cohn and Martin Cohn and Associates, Ltd., seeking to recover monies due him as a past employee of the Cohn law firm. Pursuant to the defendants' motions, the trial court dismissed counts I, II and III of plaintiff's complaint on res judicata grounds and granted summary judgment on count IV. The plaintiff appeals the dismissal of his complaint and the denial of his motion to reconsider; and the defendants cross-appeal from the trial court's denial of their motion for sanctions.

The issues raised in this appeal are whether plaintiff's complaint was properly dismissed based upon res judicata principles and whether the trial court erred in denying defendants' motion for sanctions.

The facts relative to the dismissal of the plaintiff's complaint are as follows. In 1987, Zabel and Cohn began practicing law together under the name of Martin Cohn and Associates, Ltd. In December 1990, Zabel left the Cohn law firm and shortly thereafter filed a four-count complaint against Martin Cohn and Martin Cohn and Associates, Ltd. seeking damages for tortious interference with business relations, libel and slander. A fourth count, which is the count relevant to the instant appeal, alleged the existence of a de facto corporation and sought the appointment of a receiver, distribution of the assets and recovery of client files. As to that count, the defendants denied the existence of a partnership and argued that Zabel was an employee. Thereafter, the parties agreed to have "all matters in controversy" resolved by binding arbitration before former judge, Robert L. Sklodowski. The trial judge, Judge Monica Reynolds, retained jurisdiction solely for the purpose of entering judgment on the arbitrator's decision and award.

On February 28, 1992, after hearing evidence and reviewing the submissions of the parties, Sklodowski rendered a decision and award in favor of the Cohn defendants finding, inter alia, that a partnership did not exist between Cohn and Zabel and that Zabel was an employee of Martin Cohn and Associates, Ltd. The arbitrator specifically found that:

"(1) there is no probative written documentation to indicate that these experienced attorneys agreed to carry on the business of a law relationship; (2) corporate tax returns were filed for the Firm for the years 1987, 1988 and 1989, showing Mr. Cohn as the sole shareholder of the Firm ***; (7) Zabel received a W-2 form for the full amount of his salary."

The arbitrator also found:

"The evidence does not show that profits were split here. Zabel received additional income every year, but it is clear that what he received was compensation or wages in the form of a bonus."

The arbitrator determined that Zabel was not entitled to any assets of Martin Cohn & Associates, Ltd. He also determined that Zabel and Cohn were to share equally in any net fee collected on one pending personal injury case.

On March 6, 1992, Zabel requested that Sklodowski issue a supplemental decision and award regarding certain wages and other items he alleged were due him as a result of the arbitrator's ruling that he was an employee. Those items were: $2,500 that Zabel alleged he advanced for the defense of a case being handled by the Cohn law firm; $5,500 in salary due Zabel for the month of December, 1986 (Zabel had earlier alleged this amount to be a capital contribution to the partnership); and the return of certain documents that Zabel had prepared while at the Cohn firm. The Cohn defendants filed a response. On March 20, 1992, Sklodowski entered a supplemental decision and award which stated, inter alia:

"On March 6, 1992 the plaintiff's attorney requested a supplemental decision on four issues that were not addressed in my initial decision.

The items now at issue were never really addressed by the parties. The main arguments proffered by the parties focused on whether or not Cohn and Zabel were partners and if so, what was the value of the partnership's assets. I find no mention in the plaintiff's initial memoranda concerning any of the four items now in issue. Nevertheless, in order to once and for all conclude this dispute and bring finality to this case, I am rendering a ...

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