In the Matter of Rickey Edward Hodge, Jr., Respondent.
proceeding in discipline. Opinion filed December 29, 2017.
Deborah L. Hughes, Deputy Disciplinary Administrator, argued
the cause, and Stanton A. Hazlett, Disciplinary
Administrator, was with her on the brief for petitioner.
Charles Davant IV, of Williams & Connolly LLP, of
Washington, D.C., argued the cause, and John K. Villa, of the
same firm, and G. Craig Robinson, of Wichita, were with him
on the briefs for respondent. Rickey Edward Hodge, Jr.,
respondent, argued the cause pro-se.
a contested attorney discipline proceeding against Rickey
Edward Hodge, Jr., who was admitted to practice law in Kansas
in September 2008. A panel of the Kansas Board for Discipline
of Attorneys made lengthy findings of fact and concluded
Hodge violated the Kansas Rules of Professional Conduct
(KRPC) while representing a financially distressed
Wichita-based landscaping company. Highly summarized, Hodge
attempted to purchase the company's assets, as well as an
80-acre ranch held by the company's majority shareholder.
The accusations involve conflict of interest, client
exploitation, and self-dealing.
five days of hearings, spread out between October 2015 and
March 2016, the panel unanimously determined that Hodge
violated KRPC 1.7 (2017 Kan. S.Ct. R. 300) (concurrent
conflict of interest); 1.8(a) (2017 Kan. S.Ct. R. 307)
(conflict of interest arising from entering business
transaction with client), and 1.8(b) (using information to
the client's disadvantage); 4.2 (2017 Kan. S.Ct. R. 353)
(communication with person represented by counsel); and
8.4(g) (2017 Kan. S.Ct. R. 379) (engaging in conduct
adversely reflecting on lawyer's fitness to practice
law). The panel unanimously recommended Hodge be disbarred.
this court, the Disciplinary Administrator's office
endorses the panel's findings and recommends disbarment.
Hodge takes exceptions to the panel's findings, as well
as to the recommended discipline. We hold that clear and
convincing evidence establishes multiple instances of
attorney misconduct and agree disbarment is appropriate.
15, 2014, the Disciplinary Administrator's office filed a
formal complaint against Hodge. On August 15, 2014, Hodge
filed an answer to the formal complaint, admitting many
factual allegations while denying the alleged KRPC
panel conducted hearings on October 20, 2015, December 7,
2015, December 8, 2015, March 3, 2016, and March 4, 2016.
Hodge appeared in person and with counsel. After the hearings
concluded, the panel issued a 65-page Final Hearing Report,
making the following findings of fact and conclusions of law,
together with its recommendation for discipline:
"Findings of Fact and Conclusions of Law
In addition to practicing law, the respondent owns and
operates a number of businesses, including Hodge
Acquisitions, L.C. Hodge Acquisitions holds various
commercial, residential, and agricultural real properties for
lease or for sale.
Complete Landscaping Systems, Inc., (CLS) a Wichita based
landscaping company was owned by P.S. L.A. came to work for
P.S. at CLS. In October, 2010, P.S. married L.A. Later, P.S.
and L.A. divorced. Following their divorce, majority
ownership of CLS was transferred to L.A. L.A. owned a 99%
interest in CLS and P.S. retained a 1% interest in CLS
following the divorce. Additionally, P.S. was to receive
additional financial benefits under the transfer agreement
between L.A. and P.S.
For a period of time in 2006 and 2007 and then again
beginning in 2011, Trinidad Galdean, a Wichita lawyer, served
as outside general counsel for CLS.
In 2009, during their marriage, P.S. and L.A. purchased an
80-acre ranch for $2.25 million from the Michaud Family
Trust. The Michaud Family Trust held the mortgage on the
property. P.S. and L.A. made a substantial down payment and
substantial monthly payments toward the purchase of the
property. After P.S. and L.A. divorced, L.A. remained in the
CLS developed financial difficulties. CLS faced lawsuits in
several states including Arkansas, Florida, Kansas, Michigan,
Missouri, New Jersey, Oklahoma, Pennsylvania, Texas, and
Virginia. Also, L.A. developed personal financial
difficulties. L.A. became past due on the ranch in excess of
$100, 000. In July, 2013, L.A. owed approximately $563, 000
on the mortgage.
On November 20, 2012, a judgment was entered against CLS in
Texas in Hadden vs. CLS. Later, on May 1, 2013, L.A.
was served with an order to appear in aid of execution of
judgment on the Hadden judgment, Sedgwick County
case number 13CV0586. The Sedgwick County case was an attempt
to enforce the Texas judgment.
On May 15, 2013, Mr. Galdean referred CLS to the respondent
for representation in the Hadden collection
litigation to attempt to mitigate the liability through a
workout, a settlement, or some other form of negotiation. On
May 17, 2013, L.A. met with the respondent at his office
regarding the Hadden collection litigation.
At the hearing on this matter, the respondent initially
testified that he never entered his appearance on behalf of
CLS in the Hadden collection litigation. However,
beginning on May 24, 2013, and continuing through July 26,
2013, the respondent's electronic signature block appears
on many agreed orders in the Hadden collection
litigation. Clearly, by approving the agreed orders, the
respondent entered his appearance. The hearing panel finds
that beginning May 24, 2013, the respondent was the attorney
of record for CLS in the Hadden collection
litigation. The respondent never withdrew from the
On June 7, 2013, L.A. entered into a written fee agreement
with the respondent and paid the respondent $2, 500 retainer
for representation in the Hadden collection
On June 11, 2013, the respondent and L.A. met in the
respondent's office to discuss CLS' collection
In the course of representing CLS in the Hadden
collection litigation, the respondent discovered that CLS was
in serious financial difficulty. The respondent learned that
CLS owed money to many subcontractors and vendors for
landscape products. The respondent learned that one of
CLS' largest clients stopped paying CLS due to a dispute.
The respondent learned that CLS lost several other clients to
competitors. The respondent came to understand that CLS did
not have the capital to pay its debts. The respondent learned
that CLS had litigation pending in many jurisdictions and
that CLS had a number of judgments previously entered against
it which remained unpaid.
The respondent also learned that L.A. was several months
behind on payments on the mortgage on the ranch. At that
time, L.A. had a past due balance on the ranch mortgage in
the amount of approximately $113, 000-$120, 000.
On June 25, 2013, the respondent and L.A. met regarding the
financial viability of CLS. L.A. was opposed to filing a
chapter 7 bankruptcy. The respondent advised against filing a
chapter 11 reorganization bankruptcy case because 'the
lack of monthly operating revenue would likely prohibit the
successfully reorganization.' The respondent told L.A.
that sale of the company was unlikely because of the
'substantial tax liabilities and other mounting
debts.' The respondent told L.A. that her last option was
an asset sale.
Previously, in the summer of 2011, the respondent and another
individual started a lawn care business called Yard Concerns.
On July 17, 2011, the respondent registered a website,
yardconcerns.com. Yard Concerns was formed to grow the small
customer base into a steady yard service and sod company. The
client base did not mature, the business did not grow, and
the other individual gained other employment.
On July 16, 2013, beginning at 9:51 a.m., the following
exchange took place between the respondent and L.A.
via text messages:
'R. Are you free to talk in about an hour?
'L.A. I'm in KC working today. Tomorrow????
'R. Ok. I talked to Trinidad this morning and need to
call him at 2 pm today. How is your cash situation right now?
'L.A. I should have the 70K any day. Nothing at the
moment. Made it through payroll yesterday:) I also made the
building loan payment.
'R. According to Trinidad there is approximately 20K per
month due on the existing 5 settlements and the total debt is
about 100K. We will need to sell the national portion of
complete ASAP. I'm going to put together some paperwork
and we can talk about this. As for the local operations, I
have a prospective friendly buyer for that segment. We will
need to address staff/tax issues and start getting you a pay
'L.A. . . . Hadden garnished commerce-got 400.00
'R. I know. I have a call into Carl Davis about a
prospective agreement. . . .
'L.A. . . . Can you say who the potential buyer is?
'R. Yes. The prospective buyer's name is Rick Hodge
and he is a super nice guy.:)
'L.A. I'm speechless! That's not normal. I owe
you my life. Just blinded you on an email to Trinidad.
'R. Ok. We need to meet and talk about how we may
structure this. No obligation, but I got to thinking about
something that may solve several problems.'
Throughout the respondent's testimony, as well as in his
initial response to the complaint and his answer, the
respondent insisted that he was not personally involved in
the transactions, rather the companies that he (solely) owns
were involved. Specifically, the respondent stated and
testified that Yard Concerns attempted to purchase CLS'
assets and Hodge Acquisitions purchased the ranch, not Rick
E. Hodge, Jr., attorney at law. Despite this, the respondent
also testified that his 'name is synonymous with [his]
businesses.' Because the companies have no owners other
than the respondent, the companies are simply extensions of
him. Considering all the evidence together, the hearing panel
finds that the respondent's statements that the actions
taken were not taken by him but rather by his companies are
an attempt to obfuscate the issues at hand.
By July 10, 2013, L.A. believed that the respondent was her
attorney as to CLS matters as well as her attorney regarding
her problems with paying the mortgage on the ranch.
Cameron Michaud, attorney for the Michaud family trust which
held the mortgage on the ranch, scheduled a meeting with
L.A., in Ms. Michaud's office on July 18, 2013. L.A.
asked the respondent to attend the meeting with her. The
respondent agreed to attend the meeting. At the meeting, L.A.
introduced the respondent as an attorney. During the meeting,
the respondent informed Ms. Michaud that a third party was
interested in purchasing the ranch and that the third party
was willing to lease the ranch back to L.A. L.A. pulled Ms.
Michaud aside and told her that the respondent was the third
party interested in purchasing the ranch. Later that day, the
respondent sent Ms. Michaud an email message which provided,
'Fantastic meeting you. I hope that I can facilitate a
quick resolution if at all possible.'
Because L.A. expressed interest in selling CLS' assets to
the respondent, on July 23, 2013, the respondent filed
documents and formed Yard Concerns, L.C., as a limited
Throughout July 2013, litigation and financial troubles,
including tax deficiencies, mounted for L.A. and CLS.
On July 29, 2013, the respondent met with L.A. Following the
meeting, the respondent sent the following email message to
'I wanted to clarify our conversation earlier today. It
is my understanding that you believe Complete Landscaping
Systems, Inc. does not, and will not, have sufficient
operating funds to meet its ongoing operational obligations
such as payroll, tax and mortgage expense. Moreover, you
expressed that Complete Landscaping Systems, Inc. does not,
and will not, have sufficient resources to meet its existing
contractual obligations owed to clients and other states, nor
will it have sufficient resources to meet the obligations
owed to subcontractors for these contracts. Lastly, you
expressed concern that Complete Landscaping Systems, Inc.
does not have sufficient resources to continue ongoing
litigation in Kansas, and in other jurisdictions, in addition
to remitting payment for legal fees incurred by this office
and Hinkle Law.
'For this reason you have requested that this office
discontinue legal representation of Complete Landscaping
Systems, Inc. and any parties thereto related. Please
understand that if you no longer have representation in
Kansas, or any other jurisdiction, you will not have anyone
to litigate the claims brought against you and Complete will
likely face default judgment. If this happens then the assets
of Complete Landscaping Systems, Inc. may be levied to
satisfy obligations owed to creditors. This will put Complete
out of business.
'I also understand that you do not wish to further
explore any form of bankruptcy reorganization or liquidation
at this time, however, you have requested that I make contact
with a prospective party that may have interest in purchasing
part or all of Complete Landscaping Systems, Inc., or its
assets. As stated earlier, I am a member of the organization
that may be interested in purchasing part or all of Complete
Landscaping Systems, Inc. or its assets. Any negotiations
entered into by this organization and Complete must be at
arm's length. In no way can I represent Complete
Landscaping Systems, Inc. or any party affiliated with that
organization because of potential future conflicts. Complete
Landscaping Systems, Inc., would also be required to sign a
Waiver of Conflict of Interest because Rick Hodge, Attorney
At Law, L.C. represents the prospective buyer who would
entertain purchasing Complete Landscaping Systems, Inc. or
its assets. Although this potential purchase transaction does
not directly correlate with the matter at hand, it touches on
the financial matters of Complete to which I have some
'Please reply to my email stating that you do or do not
wish for my office to disengage in representation of Complete
and any of its matters. Also, please reply that you do or do
not wish to discuss the possibility of a third-party
negotiation for the purchase of some or all of Complete or
same day, at 2:44 p.m., L.A. sent the respondent an email
which provided, 'Please disengage as legal representation
for CLS. Please assist with the third-party negations
[sic] as discussed earlier.' Four minutes later,
at 2:48 p.m., L.A. sent the respondent a text message asking
him if her email response was good enough.
On July 30, 2013, in the early afternoon, L.A. questioned the
respondent as to whether he wanted her to participate in a
conference call with Mr. Galdean and Mr. Hubbard regarding
certain litigation. The respondent confirmed that L.A. should
participate in the conference call. L.A. did participate in
the conference call and during [the] conference call with Mr.
Galdean regarding pending litigation, L.A. communicated
privately with the respondent, via text messages. In
those private communications, L.A. indicated that she was
concerned about a case where she was named personally. The
respondent advised L.A. that a certain case needed to be
continued. That same day, the respondent told L.A. that he
did not want her to string out litigation if she could not
afford it. Although the respondent acknowledged that he could
not give L.A. advice, L.A. immediately asked for advice and
the respondent provided it.
On July 31, 2013, L.A. asked the respondent if they wanted to
settle a specific case. The respondent advised L.A. that
certain action would stay the execution of judgment and buy
On August 2, 2013, a hearing on the creditor's order in
aid of execution in the Hadden collection litigation
was held. L.A. did not appear. Following the hearing, the
respondent informed L.A. that the hearing would be reset and
that he needed her to provide him with documents that Carl
Davis, opposing counsel, requested. Additionally, the
respondent asked L.A. whether she received his electronic
mail message about a settlement.
On August 4, 2013, P.S. emailed a letter to L.A. In the
letter, P.S. stated:
'It seems that you have three options that may be
favorable to you . . .
'The third options, [sic] and in my opinion, the
most viable one is for you to sell the house in Derby and
with the proceeds you can buy yourself and your father a nice
home and the rest you can use to pay bills. You have equity
of about 1.5 million dollars; the equity comes from the loans
you have made to yourself from Complete Landscaping. . .
On August 5, 2013, Mr. Galdean sent an email message to L.A.,
the respondent, and others, which provided:
'During the last discussion between, [sic] Paul,
Rick and me, Rick Hodge was handling the discovery responses
and deposition issues for Complete Landscaping and [L.A.] I
have not received any updates on the discovery issues or
depositions other than I was told by [L.A.], on July 25, that
Rick was handling the issues. Rick should have the
that day, L.A. sent an email message to Mr. Galdean, the
respondent, and others, which provided, 'As stated in
recent correspondence, Rick Hodge is not representing CLS as
council [sic] regarding legal issues. With that
said, [P.S.] what do you need me to do?'
In order for the asset sale to move forward, L.A. needed P.S.
to sell his remaining interest and dissolve or waive the
non-compete agreement. On August 12, 2013, L.A. contacted the
Foulston firm in Wichita, Kansas, to assist her with buying
out P.S.' ownership interest and dissolving the existing
non-compete he had as part of the original sale of the
business to L.A. On August 13, 2013, an attorney from the
Foulston firm sent L.A. an electronic mail message requesting
documents and asking for information necessary to complete
the work. L.A. immediately forwarded the electronic mail
message to the respondent and asked him whether he had the
information readily available.
On August 14, 2013, Ms. Michaud sent an electronic mail
message to the respondent regarding the calculations for late
fees on the ranch property. In addition to listing the late
fees, Ms. Michaud stated:
'[L.A.] asked that I cc: her on emails I send to you
regarding payments. I am not sure of your relationship
(attorney/client). I will send this to her, along with the
payout spreadsheet, later this afternoon unless I hear from
On August 15, 2013, L.A. named the respondent the resident
agent of CLS.
On August 16, 2013, an attorney with the Foulston firm sent
L.A. An electronic mail message asking whether L.A. or CLS
was the purchaser. L.A. again forwarded the electronic mail
message to the respondent and asked him whether he had the
answer to the question.
Again, on August 19, 2013, an attorney with the Foulston firm
sent L.A. an electronic mail message asking whether L.A. or
CLS was the purchaser. Additionally, the attorney requested a
number of documents. L.A. asked the respondent to
'ghost' a reply to the attorney.
Later, on August 19, 2013, L.A. informed the respondent that
she received an unexpected $26, 000 and sought the
respondent's advice regarding the income.
On August 19, 2013, Mr. Galdean sent an email message to
L.A., the respondent, and another, which provided as follows:
'Attached is the recent lawsuit received today in Maddox
Irrigation, Inc. It appears service was requested the same
day your other legal counsel, Rick Hodge, was designated as
the Company's Resident Agent. Thus, Rick is being copied
on this email.
'In regards [sic] to this lawsuit, neither I nor
my firm is representing Complete Landscaping Systems, Inc.
Thus, it is necessary that Complete Landscaping Systems
secure other legal counsel to represent it in the lawsuit.
'Any answer to the lawsuit must be filed before September
9, 2013; otherwise a default judgment may be taken in the
lawsuit against Complete Landscaping Systems, Inc.'
response, L.A. sent an email message to Mr. Galdean, Ms.
Calisti, and the respondent as follows, '[l]et's just
clarify for the umpteenth time, Mr. Hodge is not my legal
representation [sic]. His firm is merely accepting
the incoming cases as "Agent".'
On August 20, 2013, L.A. and Hodge Acquisitions entered into
a purchase agreement regarding the ranch. The respondent
agreed to purchase the ranch for $570, 000.00.
L.A. testified that they agreed that the equity in the
residential property would secure his risk of loss in the
purchase of the business. L.A. testified that the respondent
assured her that she could remain in the ranch, that he would
hire her at the lawn maintenance company at a salary which
would permit her to make lease payments on the ranch, and the
lease payments on the ranch would be credited toward her
repurchase of the ranch.
At the hearing on this matter, the respondent testified that
L.A. Was always able to repurchase the ranch for the purchase
price, but that the rents collected would serve as his
profit. The respondent testified that the rents were not to
be counted toward the re-purchase price.
The hearing panel observed the witnesses testify at the
hearing. Based upon the hearing panel's observations of
all the witnesses at the hearing as well as the exhibits
admitted into evidence, the hearing panel accepts L.A.'s
testimony on this point and finds that the respondent's
testimony in this regard lacks credibility.
The day after signing the original purchase agreement
regarding the ranch, on August 21, 2013, Yard Concerns made a
formal offer for the purchase of assets owned by CLS. Yard
Concerns offered to purchase:
'1. All furniture, fixtures, equipment, software, vendor
lists, contractor lists, rights to trade secrets, supplies,
'2. All commercial and residential contracts now existing
and currently renewing; and
'3. All commercial and residential account receivables
accrued from January 1, 2013, to current.'
Concerns also agreed:
'. . . to remit $200, 000.00 to be paid over 60 months at
a rate of interest of 5.00%, for a total monthly payment of
$3, 774.25, commencing October 1, 2013. Yard Concerns, L.C.
reserves the right to prepay the entire purchase price in
full at its discretion and at any time prior to the
expiration of the 60 month term; and'
Yard Concerns agreed to:
'. . . assume secured debt CLS owes to RMI, Inc. in the
amount of $118, 273.10, subject to all RMI's approval of
the transfer of ownership of its collateral and CLS'
respondent made the offer expressly conditioned upon:
'1. Written acceptance of this offer by the board of
directors and all shareholders of CLS;
'2. The dissolution of any existing non-compete
agreements entered into by all shareholders, managers,
operations personnel, and persons with ability to limit the
sale of assets, employment of any and all existing CLS
personnel, and transition of accounts to Yard Concerns, L.C.;
'3. Yard Concerns, L.C. will relocate management to its
corporate offices, however, in an effort to not disrupt
commercial and residential services until the end of the
operating season, Yard Concerns, L.C. is granted the option
to rent CLS's building on a month-to-month basis at the
rate of $1, 800.00 per month until Yard Concerns, L.C. is
able to relocate all acquired assets to its facility;
'4. Full and complete cooperation from CLS shareholders,
CLS management, CLS staff, and controllers of third-party
contracts to effectuate a smooth and undisturbed of
[sic] transition of assets and operations;
'5. Written waiver of conflict of interest with Rick
Hodge, Attorney At Law, L.C., considering it is counsel for
Yard Concerns, L.C. and its parent company, and CLS engaged
Rick Hodge, Attorney At Law, L.C. to represent CLS in one
limited matter in Sedgwick County District Court and to serve
as Registered Agent for CLS;
'6. The execution of a non-disclosure and a non-compete
agreement by each officer and shareholder of CLS for the
benefit of Yard Concerns, L.C.;
'7. Re-application of all staff to Yard Concerns, L.C.
period for employment;
'8. General warranty to Yard Concerns, L.C. of complete
and unfettered transferability of assets being purchased, and
indemnification by CLS and its shareholders as to the same;
'9. The express understanding that this is an asset sale
and not an agreement to purchase CLS stock; and
'10. The express understanding that the real property
assets of CLS are not being purchased by Yard Concerns,
the recitation of conditions, the respondent's offer
provided as follows:
'Please advise within two (2) business days of the date
of this letter of CLS' acceptance or rejection of this
offer. If the same is accepted, please feel free to have your
legal counsel draft the sale and asset transfer documents.
Should you prefer, Yard Concerns, L.C. will do the same and
submit the documents to you and your legal counsel for review
and execution. If this offer is not accepted as of 5:00 p.m.
on Friday, August 23, 2013, the same will be deemed
respondent was aware of L.A.'s dire financial situation
and knew that L.A. would be unable to secure counsel and have
counsel review the agreement within two days.
That same day, on August 21, 2013, the respondent offered to
L.A. To draft the dissolution of the non-compete needed from
P.S. L.A. accepted the respondent's offer to draft the
P.S. agreed to meet with L.A. regarding CLS matters, on
August 22, 2013, at 1:30 p.m. The morning of the scheduled
meeting, L.A. asked the respondent whether he would be able
to provide a dissolution of the non-compete before 1:30 p.m.
that day, in time for the meeting. The respondent agreed. At
1:56 p.m. that afternoon, the respondent forwarded the
following to L.A. via electronic mail:
LANDSCAPING SYSTEMS, INC.
OF A SPECIAL MEETING OF THE BOARD OF DIRECTORS AND
special meeting of the Board of Directors and Shareholders of
Complete Landscaping Systems, Inc. was held on August 22,
2013, at 1:30 p.m. at 1727 E. Second Street, Wichita, KS,
pursuant to written Waiver of Notice fixing the time and
place of said meeting, signed by all of the Directors and
Shareholders, as follows:
the undersigned, being all of the members of the Board of
Directors and Shareholders of Complete Landscaping Systems,
Inc., do hereby waive notice of the time, place, and purpose
of a special meeting of the Board of Directors and
Shareholders and do hereby fix the 22nd day of August, 2013,
at 1:30 p.m., as the time, and 1727 E. Second Street,
Wichita, KS as the place for the holding of said meeting, for
the purpose of considering the advisability of a dissolution
of the mutual covenants not to compete, executed by the
parties hereto, the partial sale of assets of Complete
Landscaping Systems, Inc., to Yard Concerns, L.C., pursuant
to its offer dated August 21, 2013, waiver of conflict of
interest for Rick Hodge, Attorney At Law, L.C., and
transacting other business that may properly come before said
of us hereby waives all of the requirements of the statutes
of Kansas and the By-Laws of this corporation as to notice of
said meeting and formalities for the Board of Directors and
Shareholders, and hereby consents to the transaction of any
and all business which may lawfully come before said meeting.
WITNESS WHEREOF, We have hereunto set our hands this 22nd day
of August 2013.
meeting was called to order by [L.A.], President. Upon roll
call, it was ascertained that [L.A.] and [P.S.] were present
and the same constituted a quorum.
the Chairman stated that the meeting was duly organized and
ready for the transaction of business and that the first
order of business was to consider the advisability of
accepting the offer to purchase partial assets of Complete
Landscaping Systems, Inc., made on August 21, 2013 by Yard
Concerns, L.C., and the second order of business was to
consider the advisability of the dissolution of the
non-compete agreement entered into by [P.S.] and [L.A.] for
their mutual benefit and that of Complete Landscaping
Systems, Inc., and that the third order of business was to
consider the waiver of conflict for Rick Hodge, Attorney At
offer to purchase partial assets made by Yard Concerns, L.C.,
was submitted to the Board of Directors and Shareholders for
their examination. The dissolution and termination of the
non-complete agreement entered into for the mutual benefit of
[P.S.], [L.A.], and Complete Landscaping Systems, Inc., was
brought before the Board of Directors and Shareholders for
discussion. The execution of Waiver of Conflict of Interest
for Rick Hodge, Attorney At Law, L.C., was brought before the
Board of Directors and Shareholders for discussion. After
discussion, the following resolution was introduced:
'"BE IT RESOLVED, that the Board of Directors and
Shareholders of Complete Landscaping Systems, Inc., hereby
declare it to be advisable to ACCEPT the offer made on August
21, 2013, by Yard Concerns, L.C., for the purchase of partial
assets of Complete Landscaping Systems, Inc., that the offer
made by Yard Concerns, L.C., on August 21, 2013, be fully
incorporated by reference herein and the terms therein be
fully and completely agreed to, and that the President of
Complete Landscaping Systems, Inc., be authorized to execute
all transfer and sale documents required for the consummation
of the transaction with Yard Concerns, L.C.; and
'"BE IT FURTHER RESOLVED, that the non-complete
[sic] agreement executed by [P.S.] and [L.A.] for
their mutual benefit, and that of Complete Landscaping
Systems, Inc., is hereby terminated, canceled, and held for
'"BE IT FURTHER RESOLVED, that Complete Landscape
Systems, Inc., hereby waives any and all conflict of interest
with Rick Hodge, Attorney At Law, L.C. for its representation
of Yard Concerns, L.C., the party offering to purchase
assets, and Rick Hodge, Attorney At Law, L.C.'s prior or
current transactions and representation of any sort or kind,
whatsoever, involving Complete Landscaping Systems, Inc., in
a matter in Sedgwick County District Court, and that the
President of Complete Landscaping Systems, Inc., be
authorized to execute all waiver documents to carry out this
motion duly made and seconded, said resolutions were
being no further business to come before the meeting, upon
motion duly made, seconded and carried, the meeting was
Chairman of the Board'___
the respondent sent the minutes and resolution, the
respondent stated: '[y]ou are advised to seek legal
counsel when this is discussed and before it is signed.'
At the time the respondent sent the electronic mail message,
he knew that L.A. and P.S. were meeting and were waiting on
the documents and did not have time to seek and obtain
independent legal counsel.
On August 22, 201, CLS, through L.A. and P.S., accepted
Yard Concerns offer to purchase certain assets.
On August 29, 201, the respondent sent letters to CLS'
existing clients informing them that Yard Concerns had
acquired its account from CLS, using Yard Concerns'
On September 3, 2013, the respondent sent a series of text
messages to L.A., including:
'. . . FYI, I did tell the eagle that yard concerns
purchased about 90% of cls accounts and local operations. Yc
did not buy cls, just some Assets. I did not mention the pm
side. We should keep that for another day. Told her yc did
not buy the building either and that you would still own cls.
Didn't say you were going to work for yc. She's going
to call you.'
L.A. replied, 'She's going to roll with what you
said. And do a follow up with me tomorrow. I don't want
to talk to her unless you've coached me.'
On September 4, 2013, the Wichita Eagle published an article
on Yard Concern's purchase of CLS' assets. The
article was updated later that same day.
'Wichita attorney purchases most of Complete
Landscaping's local assets
'UPDATED - Almost all of Complete Landscaping
Systems' local business has sold.
'"We have purchased 90 percent of their local
operations, " says Rick Hodge, a bankruptcy attorney.
'Hodge owns Yard Concerns, a company that until now has
mainly existed to serve commercial and residential properties
'"Now we're going to try to grow it and branch
out, " Hodge says.
'During a slower season in a month or two, Hodge says
he'll relocate equipment he purchased from Complete
Landscaping to another building.
'"We are not Complete Landscaping by any means,
" he says. "Complete is still in existence."
Complete Landscaping owner [L.A.] didn't have an
'The company, which [L.A.] purchased in 2010, has had a
series of financial and legal issues since then, much of them
stemming from a dispute with Bank of America, which once had
been a large national account for the company.
'"I know that Complete has been having a lot of
problems, " Hodge says. "I knew they had some cash
flow problems. . . . I'm fearful their entire ship is or
'His career as a bankruptcy attorney influenced his
decision to buy most of Complete Landscaping's local
assets and accounts, he says.
'"I would hate to lose more jobs in the Wichita
community, " Hodge says.
'He says Complete Landscaping has some great workers who
have been with the company for a long time.
'"We thought, well, this might be an opportunity to
help out some of the employees, " Hodge says. "Some
of their key employees likely will be transitioning to
'It looks like Complete Landscaping will keep its
headquarters at 1727 E. Second St., where Michael's
Complete Lawn Care began sharing space earlier this year to
save costs for both companies.
'[L.A.] says she will discuss changes at her company
later this week.'
On September 4, 2013, the respondent informed L.A. that he
had reached a tentative resolution with one of CLS'
creditors. The respondent recommended to L.A. that she
attempt to sell the building where CLS was operating. The
respondent told L.A. that if all went well, 'this whole
thing will blow over in a week or two and with minimal
Also on September 4, 2013, the respondent said to L.A. 'I
wouldn't tell anyone a thing right now.' L.A. agreed.
That same evening, the respondent informed L.A. that he
worked 'serious magic' with a creditor. The
respondent told L.A. that he would help her with what to say,
acknowledged that he knows she trusts him, and stated that he
would help her get through this.
On September 4, 2013, the Wichita Business Journal published
an article regarding sale of CLS' assets.
'Bankruptcy attorney Rick Hodge has purchased about 90
percent of the assets of Wichita's Complete Landscaping
Systems, though Complete still exists.
'The Wichita Eagle reports Hodge owns Yard Concerns, a
company that has mainly focused on serving the commercial and
residential properties he owns, but he hopes to expand the
'Complete Landscaping's recent financial troubles
played a role in Hodge's decision. The company was facing
at least six lawsuits from businesses saying Complete owed
them money. Complete CEO [L.A.] told the Wichita Business
Journal the cash flow issues were the result of a dispute
with what was previously a major client for Complete, Bank of
'Hodge said he wanted to try to protect some of the local
jobs by purchasing Complete assets.
'For now, it appears Complete is continuing to operate at
a building it shares with Michael's Complete Lawn
On September 6, 2013, the respondent informed L.A. that Carl
Davis, expected L.A. to be at a hearing in the
Hadden collection matter that day. L.A. told the
respondent that she could not be at the hearing that day.
On September 10, 2013, Mark Lazzo, attorney for the bank
holding the note on CLS' real property, sent a letter to
CLS, P.S., and L.A., which provided:
'This office has been retained by Equity Bank
("Bank") regarding a default on the referenced loan
(the "Loan") owed by Complete Landscaping Systems,
Inc. ("CLS" or "Borrower") to the Bank.
As you know, the Loan is personally guaranteed by you both
(collectively "Guarantors") and secured by four (4)
parcels of real estate owned by CLS located at 1717, 1725,
and 1727 E. 2nd St. Wichita, Kansas, and 1728 E. Mildred,
Wichita, Kansas, 67214 (the "Mortgaged Property")
and rents generated by the property.
'In an article published in the Wichita Eagle late last
week, the Bank learned, for the first time, that CLS sold all
of its personal property assets to local attorney Rick Hodge.
This fact has been confirmed by Mr. Hodge. In addition, the
Bank learned from its own investigation that judgments
exceeding $350, 000 have been entered against CLS, and
federal tax liens have been filed against the company's
'Be advised that the above events constitute a default on
the Loan, and the Bank is hereby declaring the Loan in
default. The May 30, 2013 Promissory Note (the
"Note") and March 30, 2010 Business Loan Agreement
("BLA") between the Bank, CLS and Guarantors
expressly provides that a default on the Loan occurs if: (a)
there is a wholesale transfer of the company's assets;
(b) there is a material adverse change in the company's
financial condition which materially impairs CLS' ability
to perform on the Loan; (c) judgments are entered against CLS
which materially affect its business; (d) there is a change
in control of CLS's business; and/or (e) the Bank's
[sic] holds a good faith belief that CLS will be
unable to perform its Loan obligations. All of the above
events have occurred.
of September 9, 2013, the approximate payoff on the Loan is
a. Principal balance - $292, 046.81;
b. Accrued interest at contract rate of 10% per annum through
September 9, 2013 - $812.85;
c. Interest at default rate of 18% per annum after September
9, 2013 - $144.02 per day until paid in full; and
d. Late fees - $446.16.
'Interest at the default rate and late charges continue
to accrue. In addition, the above does not include
contractual charges which have, or may, accrue under the
agreements between you and the Bank including, but not
limited to, costs of suit, title searches, appraisal fees and
attorney fees and expenses incurred by the Bank.
'As you know, the Bank holds an assignment of rents from
the Mortgaged Property. I understand that CLS is currently
receiving rent payments from tenants Yard Concerns, L.C. and
Michael's Complete Lawn Care. These rent payments