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Behrens v. Behrens6/22/2005
ld know that when one makes a loan there is a risk of nonpayment. Here, by the terms of the Initial Agreement, Behrens clearly agreed to assume the risk of a $2 million unsecured loan. Even after the security Wedmore obtained, Behrens remained saddled with an approximate $1.5 million note secured by a mortgage on property worth only $425,000. Consequently, according to one expert, Behrens "had to know that they weren't fully protected because they've got . . . a note secured by an asset worth" substantially less than the value of the note. Considering all of the evidence, Behrens must be charged with the knowledge that by negotiating a $2 million unsecured loan, they incurred a risk of not being repaid in full.
[ .] We therefore agree that there was sufficient evidence to charge these businessmen with having voluntarily assumed the risk of agreeing to a $2 million unsecured note. Because there was sufficient evidence for Behrens to be charged with knowledge of the risk of making an unsecured loan, the trial court did not err in giving an assumption of the risk instruction. See Vann v. Commonwealth of Pennsylvania, Unemployment Compensation Bd. of Review, 494 A2d 1081, 1086 (Pa 1985) (stating that a layperson who represents himself in legal matters must, to an extent, "assume the risk that his lack of expertise and legal training will prove his undoing"); Morrison v. MacNamara, 407 A2d 555, 567-68 (DCCir 1979) (noting that assumption of the risk as a defense, although difficult to prove and rarely sustained, is a defense to a professional negligence claim).
3. Whether the trial court erred in refusing to instruct on Behrens' theory of breach of fiduciary duty in Wedmore's charging the 1% transaction fee.
[ .] Although Wedmore had represented Behrens for many years, a dispute arose over the reasonableness of Wedmore's attorney fee. Behrens apparently assumed that Wedmore would bill on an hourly basis as he had historically done. However, Wedmore billed both Don and Jon a flat fee of $18,625 each ($37,250), which was a 1% transactional fee on the sale price of the business. Although there are disputes about the fee conversations that took place between the parties, there is no dispute that the transactional fee was not communicated to Behrens until three months after Wedmore was retained and after most of the legal services had been provided.
[ .] Behrens paid the bills and sued, claiming the fee was unreasonable. At trial, Wedmore submitted expert evidence that his bill was reasonable and customary for this type of transaction in that community. Behrens did not introduce contrary evidence suggesting that the fee was unreasonable. Furthermore, Behrens failed to submit expert evidence reflecting an attorney's fiduciary duties in charging fees. Instead, Behrens only argued that: (1) the fee was unreasonable; (2) that they were entitled to a breach of fiduciary duty instruction as a matter of law because the fee was unreasonable and because Wedmore failed to notify them of the fee within the time required by South Dakota Rule of Professional Conduct 1.5(b); and, (3) that they were entitled to have the jury determine the reasonableness of the fee.
[ .] The trial court granted Behrens' latter request by submitting the reasonableness of the fee to the jury. However, the trial court declined to give the requested breach of fiduciary duty instruction, essentially granting a partial directed verdict on one of Behrens' two theories challenging the reasonableness of the fee. The trial court acknowledged that a lawyer has a legal duty under the Rules of Professional Conduct to charge a reasonable fee and to timely communicate the basis for of the fee to the client. Howeve
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