Donald H. Albrecht, and Joanne Albrecht v. William S. Lund

I.

Donald H. Albrecht (Albrecht) and William S. Lund (Lund) were the general partners of Terramics Associates. In January 1980 they filed a lawsuit against Crocker Bank for fraud; Crocker Bank eventuálly counter-sued. Following a long jury trial, the parties reached a settlement. Albrecht had been opposed to settlement, but Lund convinced him to change his mind just prior to the time the jury was scheduled to announce its verdict. Lund told Albrecht that he had spoken with their attorneys and that based on this conversation he believed an adverse verdict was a “distinct possibility.” Lund informed Albrecht that in the event of an adverse verdict he intended to sue Albrecht for indemnification. According to the settlement reached, Albrecht waived all personal claims against Crocker Bank and paid Crocker a sum of $233,-333.33.

Albrecht later discovered that the jury had intended to award him and Lund several million dollars. In November 1985 Al-brecht filed suit against Lund in California Superior Court for fraud, interference with prospective economic advantage, constructive fraud, and breach of fiduciary duty. Lund filed a petition to remove the case to federal district court.…