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Behrens v. Behrens6/22/2005
t incorporated the terms of Behrens' March 25, 1997 counteroffer. Although the document included a provision noting that it was an offer open for acceptance until 5:00 p.m. on April 17, 1997, Behrens signed it the same day, April 16, 1997. By its terms, the writing provided that Behrens agreed to sell the entire business (including the mortuary property owned by their fathers and the crematory owned by Don and Jon) for $4.55 million. $2.55 million was to be paid on closing, and the $2 million balance was to be financed by Behrens on a no-interest, unsecured promissory note. The agreement further provided that closing would occur within ninety days. Loewen also had the right to execute a more detailed purchase agreement that included ancillary documents necessary to transfer all of the business assets.
[ .] A central issue in this litigation involved the legal characterization of this written agreement. Behrens contended that it was only a non-binding letter of intent. Therefore, Behrens argued that Wedmore was required to use his legal expertise to change the terms and better collateralize the sale in the event of a bankruptcy . On the other hand, Wedmore contended that it was a binding contract, and that the financing terms, including the $2 million unsecured note, could not have been renegotiated without losing the entire sale. For ease of reference, we refer to this writing as the "Initial Agreement."
[ .] Two days after signing the Initial Agreement, Behrens first consulted Wedmore about legal representation. According to Jon, they took the Initial Agreement to Wedmore and told him: that they were going to sell Behrens Mortuary; that there would be more information forthcoming; that "if you want to make any changes or anything you want to do to [the Initial] agreement, contact [Loewens];" and, that the "deal" was scheduled to close by June 30, 1997. However, according to Wedmore, he was only to close the transaction based on the Initial Agreement. Therefore, Wedmore contended that he was to review the closing documents and update the corporate records. Wedmore specifically contended that he was not hired to renegotiate the Initial Agreement or to change its terms, including the provision that called for the unsecured promissory note.
[ .] Negotiations to close the transaction continued over two months. Changes were made even after the July 15, 1997 stated expiration date of the Initial Agreement. During these negotiations, Wedmore contends that he unsuccessfully asked for additional security (including a guarantee, stock pledge, security interest, and letter of credit). He was successful in obtaining a $500,000 contract for deed for the mortuary. Wedmore also drafted a mortgage and promissory note that included interest. Together, these secured transactions reduced the $2 million unsecured indebtedness called for in the Initial Agreement by approximately $1 million. Wedmore also included bankruptcy -default and cross-default provisions in the contract for deed, promissory note, and mortgage. These provisions were intended to tie the assets together in order to prevent Loewen from defaulting on one, but not all of the assets sold. There was not, however, any cross-collateralization of the contract for deed and the promissory note.
[ .] The transaction finally closed on July 24, 1997. Sometime after closing, Loewen filed for bankruptcy. The evidence reflects that, as a result of Wedmore's involvement, Behrens were better protected in the bankruptcy than they would have been had they only held the $2 million unsecured note described in the Initial Agreement. However, they were oversecured on the contract for deed and unsecured on the promissory note. Furthermore, the cross
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