In re Hodge

307 Kan. 170

407 P.3d 613

In the MATTER OF Rickey Edward HODGE, Jr., Respondent.

No. 116,542

Supreme Court of Kansas.

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.

ORIGINAL PROCEEDING IN DISCIPLINE

Per Curiam:

This is 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.

After 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.

Before 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.

PROCEDURAL BACKGROUND

On July 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 violations.

The 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

....

"11. 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.

"12. 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.

"13. 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.

"14. 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 ranch.

"15. 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.

"16. 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.

"17. 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.

"18. 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 representation.

"19. 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 litigation.

"20. On June 11, 2013, the respondent and L.A. met in the respondent's office to discuss CLS' collection matters.

"21. 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.

"22. 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.

"23. 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.

"24. 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.

"25. 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 check.

‘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.’

"26. 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

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