Opinion ID: 3052575
Heading Depth: 3
Heading Rank: 4

Heading: The Tesoro Transaction

Text: At some point, Tesoro agreed to enter into a lease/option to buy agreement with BFG. On September 20, 2001 (the day after the Bertelsens signed the September 2001 corporate resolution), Harris faxed to Tesoro executed signature pages of the “Tesoro/Bertelsen Agreement to Lease.”3 Tesoro agreed to lease BFG’s six gas stations for ten years, for more than $60,000 per month.4 It also paid $1 million for an option to purchase the gas stations for $8.5 million. Tesoro never exercised the option. The transaction closed on October 31, 2001. Harris determined the contingency fee under the agreement would be $142,500, which he calculated by taking 1.5% of $9.5 million —the $1 million Tesoro paid for the option plus the $8.5 million option price (even though Tesoro never exercised the option). Jeffrey and Amy Bertelsen received correspondence from Harris prior to the October 31, 2001 closing that showed this $142,500 contingency fee. At the October 31, 2001 closing, Jeffrey and Amy Bertelsen did not object to the fee. The 3 Also on September 20, 2001, Harris faxed McPherson a cover sheet stating: “Hallelujah! Please find attached the signed Power of Attorney and corporate resolution authorizing our work. I will move ahead and execute the Tesoro documents.” 4 This is according to the district court’s findings of fact. An executed copy of the lease agreement is not in the record before this court. Instead, the parties have included a September 15, 2001 draft of the agreement; according to that draft, the lease was a triple net lease, with a fixed annual rate of $722,500 for years 1 through 5, increased by 10% to $794,750 annually for years 6 through 10. BERTELSEN v. HARRIS 10259 Bertelsens do not claim they were afraid the Tesoro transaction would not go forward if they did not agree to the contingency fee or if they had not agreed to the terms of either of the May or September 2001 corporate resolutions. The invoice Harris’s firm sent to BFG described the services billed as “Services rendered from June 1, 2001 through October 31, 2001 pursuant to that Limited Power of Attorney and Terms of Engagement as revised and extended, including services rendered by consultant, Ron McPherson.” The space under the heading on the invoice for “Hours” was blank. Under “Amount,” the invoice simply stated “$142,500.” The invoice did not explain how the amount of the contingency fee was calculated; nevertheless, the Bertelsens paid the fee. Harris’s firm paid McPherson $70,000 as his part of the fee. Harris received $72,500. Jeffrey Bertelsen testified he “did not feel that Mr. McPherson did anything improper and that Mr. McPherson earned his $70,000 of this $142,500 payment.”5 Written records showing the exact number of hours Harris spent on marketing and putting together the gas station transaction no longer exist. Harris testified he recalled that, during the period from May 29, 2001 to October 31, 2001, he spent approximately 400 hours on the matter. Based on his hourly rate of $195, his fee on an hourly basis would have been at least $78,000—more than his half of the contingency fee.