936 F.2d 459 (9th Cir. 1991), 89-55365, Lund v. Albrecht
|Citation:||936 F.2d 459|
|Party Name:||William S. LUND, Plaintiff-Appellee, v. Donald H. ALBRECHT, Defendant-Appellant.|
|Case Date:||June 26, 1991|
|Court:||United States Courts of Appeals, Court of Appeals for the Ninth Circuit|
Argued and Submitted May 11, 1990.
Robert A. Olson, Irving H. Greines, Greines, Martin, Stein & Richland, Beverly Hills, Cal., for defendant-appellant.
John J. McCauley, Donald A. Daucher, Paul, Hastings, Janofsky & Walker, Costa Mesa, Cal., for plaintiff-appellee.
Appeal from the United States District Court for the Central District of California.
Before HUG, and D.W. NELSON, Circuit Judges, and REED, [*] District Judge.
HUG, Circuit Judge:
This diversity action concerns the dissolution of a partnership and the alleged breach of fiduciary duties by each of the two partners to the other. Lund's claim is that the partners reached a general format for dissolution of the partnership that was memorialized in an April 6 letter, but that the partnership was not dissolved until the formal agreement of dissolution was executed by the parties on June 4. Between those dates, Albrecht received offers on a parcel of real property for amounts considerably greater than the value placed on the parcel in their negotiations. He did not reveal this to Lund. The district court entered a summary judgment, concluding that the partnership was not dissolved until June 4 and that Albrecht breached his fiduciary duty as a partner in not revealing the offers. A jury found Lund entitled to $1.8 million in damages. The district court imposed a constructive trust on one-half of the proceeds of a later sale of the property by Albrecht, making the total judgment approximately $2.2 million.
Albrecht's counterclaim alleged a breach of fiduciary duty by Lund in his failing to reveal his interest in a piece of real property competing with the partnership property. The district court entered summary judgment for Lund, concluding that this interest was specifically stated in the June 4 agreement and that any claims concerning it were expressly waived in the agreement.
Albrecht appeals these judgments. We affirm.
The principal issues are:
(1) Whether the partnership dissolution was consummated in April or on June 4.
(2) Whether Albrecht continued to owe a fiduciary duty as a partner to Lund until June 4, and breached it by failing to disclose the offers.
(3) Whether Lund failed to disclose to Albrecht his interest in competing real property and, thus, breached his fiduciary duty to Albrecht.
(4) Whether the court erred in excluding certain opinion testimony on the value of a parcel of partnership land.
(5) Whether the court erred in imposing a constructive trust as a remedy.
I. Facts and Procedural Background
In 1971, Lund and Albrecht entered into a written partnership agreement and formed Terramics Associates. Terramics owned a variety of assets including a wholly owned corporation, Sunterra, Inc., which was involved in real estate acquisitions, development, and sales. Among the properties that Sunterra owned was a 190-acre parcel known as Parcel D. In August 1983, Lund and Albrecht discussed the possibility of dissolving Terramics and Sunterra by having one of the partners purchase the other's interest in these entities. Lund and Albrecht reached a tentative agreement in September 1983, whereby Albrecht would purchase Lund's interest for $2 million. However, the closing of the deal never took place, and the parties began renegotiating in early 1984.
On April 6, 1984, the parties reached what Lund characterized as "an agreement to agree" and what Albrecht called a final agreement. That same day, Albrecht sent Lund the following letter:
William S. Lund
910 Cagney Lane
Newport Beach, California 92663
Re: Settlement Discussions
In accordance with our discussions at breakfast this morning and subject to the same caveat about the litigation settlement privilege, I have prepared two schedules to reflect alternative ways of resolving our differences over the purchase and sale of your interest in Sunterra, Newport View-Wyoming and all of the other Terramics related assets.
We agreed to give you a final notice by Friday, April 20, 1984, of my decision as to the terms or the cash alternative. Under either scenario there is a one year note secured by a mortgage for the purchase
of your interest in the Wyoming assets of Newport View. The proposal excludes Villa Balboa and all other assets or entities related to The Newport Development Company, but otherwise contemplates the transfer to me of all of your interest in Terramics, Sunterra and related companies or entities.
If the schedules correctly reflect our agreement about the alternative methods of completing the transaction, please sign and return a copy of this letter together with the schedules. Please initial each of the schedules.
We will ask the lawyers and accountants to work out the details of the transfers as soon as we notify you of the alternative method that I have selected.
Read and agreed:
William S. Lund
April ____, 1984
Attached to the April 6 letter were two schedules which set forth in two-column skeletal form the two possible buy/sell approaches. One schedule was labeled "Cash Settlement Summary," the other "Terms Settlement Summary." On April 11, 1984, Lund signed and returned the letter and initialed the two schedules. On the same day, Albrecht informed Lund that he chose the cash settlement proposal.
On June 4, 1984, after two months of negotiations, the parties executed a formal agreement setting forth in detail the terms of the partnership dissolution. Lund contends the June 4, 1984 document entitled "Agreement" was, in fact, the actual agreement between the parties...
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