Opinion ID: 4471276
Heading Depth: 1
Heading Rank: 2

Heading: facts

Text: Brothers Wayne Kaup and Kurt Kaup operate several ­farming-related businesses in the O’Neill and Atkinson area. In the 7 years before the 2003 real estate transaction at the heart of this disciplinary action, Chvala regularly provided legal serv­ices to Wayne and Kurt and represented them in a variety of matters, including the purchase of farmland, the handling of crop liens, and the organization of business entities for hay operations, livestock operations, and hauling grain. Chvala also performed a variety of legal services for Wayne and Kurt’s mother, Diane Kaup, during this time period. 1. Morrison Land On January 2, 2003, Wayne and Kurt signed a contract to purchase a section of prime farmland in Holt County, Nebraska, known as the Morrison Land. The purchase price was $996,880.50. They put 5 percent down and sought private financing for the remainder of the purchase price. Their mother, Diane, agreed to finance a quarter section of the land, and their aunt, Rita Olberding (Rita), agreed to finance another quarter section. Wayne and Kurt contacted Chvala at her law office and asked if she would be interested in hearing about an investment proposal regarding the Morrison Land. She said she was, and on January 12, 2003, Wayne and Kurt met with Chvala and her husband, Gary Chvala (Gary), at Chvala and Gary’s home. - 518 - Nebraska Supreme Court Advance Sheets 304 Nebraska Reports STATE EX REL. COUNSEL FOR DIS. v. CHVALA Cite as 304 Neb. 511 (a) January 12, 2003, Meeting It is undisputed that during the January 12, 2003, meeting at Chvala and Gary’s home, Wayne and Kurt discussed their need to finance the Morrison Land purchase. But Chvala and the Kaup brothers disagree as to what specifically was said during the meeting. According to Chvala, the meeting was primarily between Gary and the Kaup brothers. Chvala testified she merely introduced Wayne and Kurt to Gary, and then explained: “He’s buying the property if he decides to do this. And I have done work for you in the past. And I cannot represent you in any capacity because God willing, he’s always going to be my husband.” According to Chvala, she was not otherwise involved in the January 12, 2003, meeting. Wayne and Kurt testified that Chvala actively participated in the meeting and that she was the one with whom they negotiated. They denied that Chvala made any statement about it being only Gary’s deal. Wayne testified that Chvala did most of the talking during the meeting and that Gary remained mostly silent. Wayne explained that although he and Kurt had approached Chvala about financing a quarter section, Chvala told them she was interested in two quarter sections (which total a half section) and did not want to loan them money. Instead, Chvala offered to purchase a half section of the Morrison Land and then lease it back to Wayne and Kurt with an option to purchase the land at the end of the lease term. The parties discussed several ways to structure the arrangement. One proposal, made by the Kaup brothers, was that Chvala and Gary would receive a guaranteed 5-percent rate of return and the Kaup brothers would have an option to purchase for the fair market value of the land at the end of the lease term. However, they ultimately agreed Chvala and Gary would purchase the half section of the Morrison Land and lease it back to Wayne and Kurt pursuant to a 10-year triple-net lease that would guarantee a 7-percent rate of return to Chvala and Gary, with an option for the Kaup brothers to purchase the land - 519 - Nebraska Supreme Court Advance Sheets 304 Nebraska Reports STATE EX REL. COUNSEL FOR DIS. v. CHVALA Cite as 304 Neb. 511 at the end of the lease term for the original purchase price. Both Wayne and Kurt testified that near the end of the meeting, Chvala told them the half section of land would be titled in Gary’s name for estate planning purposes. A few days after the January 12, 2003, meeting, and in reliance on the agreement reached with Chvala and Gary, Wayne and Kurt assigned their rights under the purchase agreement to Gary so he could purchase the half section of the Morrison Land. Wayne and Kurt executed similar assignments in favor of Diane and Rita for the respective quarter sections of the Morrison Land they planned to purchase. Gary was a high school teacher and coach, and a respected member of the community. Prior to January 2003, he had not been involved in purchasing or leasing farmland. Gary died unexpectedly before the evidentiary hearing in this disciplinary case. But his deposition was taken in a related civil case filed by Wayne and Kurt against Chvala and Gary, and a transcript of that deposition was received as an exhibit during the disciplinary hearing. In his deposition, Gary testified he did not remember how the Morrison Land deal was first presented to him, but he consistently described it as “my land” and insisted that “[i]t has nothing to do with [Chvala], she’s got her own situation.” Gary testified he and Chvala decided the Morrison Land would be titled in his name, but admitted that their “joint funds” were used to purchase the land and that Chvala was obligated on a promissory note for a substantial portion of the purchase price. Gary’s deposition testimony also showed he was unfamiliar with virtually all the details of the deal. When asked whose idea it was to lease the property back to Wayne and Kurt, Gary said, “Well, I’m not really sure.” Gary did not understand and could not explain the triple-net lease provisions, and when asked why he chose such a lease arrangement for the deal, Gary testified he got the idea from forms he had seen around Chvala’s law office. Gary was not able to explain how he planned to make a profit on the investment as it was - 520 - Nebraska Supreme Court Advance Sheets 304 Nebraska Reports STATE EX REL. COUNSEL FOR DIS. v. CHVALA Cite as 304 Neb. 511 structured. When pressed, he testified, “Well, my intent was that eventually I thought with a lease option that with the price of land going the way it was that eventually that I was going to make a profit on the whole situation. I wasn’t going to run the thing just to break even.” The referee found, based on Gary’s testimony, that it was hard to believe that Gary, who had no experience in buying and leasing farm ground, initiated the idea of not loaning the Kaups the money, but rather buying the land and then leasing it to the Kaups on a 10-year triple net lease with an Option to Purchase at the end of 10 years. The referee further found that Wayne and Kurt’s testimony about the discussions and agreements reached during the January 12, 2003, meeting was credible, and he expressly found that Chvala’s testimony was not credible. (b) Closing on Morrison Land Closing on the Morrison Land occurred in February 2003. Gary became the titled owner of a half section of the Morrison Land, which he purchased for $497,637. To finance the purchase, Gary used approximately $240,000 from Chvala’s personal savings account, and he and Chvala jointly borrowed the balance of the purchase price. Both Gary and Chvala signed the promissory notes and loan agreements. Rita became the titled owner of a quarter section of the Morrison Land, and Diane took title to the other quarter section through Sandyland, LLC, an entity formed by Chvala expressly for that purpose. Chvala prepared the deeds, transfer statements, and bills of sale for Gary, Sandyland, and Rita. (c) Termination of Prior Leases After the closings, Chvala drafted lease termination notices on behalf of all of the new owners of the Morrison Land— Gary, Sandyland, and Rita. In the notices, Chvala represented herself as the attorney for each Morrison Land owner. In a subsequent letter dated February 28, 2003, and addressed - 521 - Nebraska Supreme Court Advance Sheets 304 Nebraska Reports STATE EX REL. COUNSEL FOR DIS. v. CHVALA Cite as 304 Neb. 511 collectively to “Diane, Rita, Wayne and Kurt,” Chvala provided copies of the lease termination notices she had sent to the former tenants, explaining: I felt like the owner needed to terminate the lease in order to prevent an argument by a tenant that we as owners could only terminate if the property was sold to another third party. Therefore, I think we are covered in that both Morrisons and us have forwarded notices of termination of the existing lease to the current tenants and sub-tenant. If you have any questions regarding this matter, please let me know. Chvala testified that she prepared the termination notices “for all of the parties to ensure that the previous tenants were not going to show up and try to farm this property.” (d) Lease and Option Agreements on Morrison Land At the time of closing, the leases and option agreements governing the Morrison Land had not yet been prepared. Wayne testified that he and Kurt were not concerned by the delay because “[w]e trusted that what we talked about [with Chvala] is what was going to happen.” Eventually, Chvala prepared all of the lease and option agreements that governed Wayne and Kurt’s relationship with the three Morrison Land owners. The agreements were similar, but we focus primarily on the terms of the agreements that governed the half section of the Morrison Land titled in Gary’s name. (i) Lease Agreement Chvala prepared a 10-year triple-net lease agreement which Gary signed as the lessor, and Wayne and Kurt signed as the lessees. Paragraph 3 of the lease agreement provided that base rent was “a sum that constitutes a net net net seven percent (7%) annual return on the total cost to LESSOR of the land,” which amounted to “an annual rental of $34,835.00 per year.” The lease agreement also contained paragraph 21, which provided: - 522 - Nebraska Supreme Court Advance Sheets 304 Nebraska Reports STATE EX REL. COUNSEL FOR DIS. v. CHVALA Cite as 304 Neb. 511 21. REPRESENTATION. The law firm of STROPE, KROTTER & GOTSCHALL, P.C. has prepared this Lease Agreement. The law firm of STROPE, KROTTER & GOTSCHALL, P.C. has in the past and presently performs legal services for both LESSOR and LESSEE in unrelated matters. LESSOR AND LESSEE, by sign- ing this document, hereby acknowledge and agree that STROPE, KROTTER & GOTSCHALL, P.C. is not acting as an attorney for either party to this contract. LESSOR and LESSEE expressly acknowledge and agree that they have had an opportunity to have an attorney of their choosing review this Lease Agreement and freely and voluntarily sign this Agreement without reliance upon any representations or advice from STROPE, KROTTER & GOTSCHALL, P.C. All parties agree that they have not relied on the legal representation or advice of . . . CHVALA in this matter and that they have had an opportunity to have any attorney of their choosing review this Agreement and sign the same voluntarily and without reliance upon any representation or advice from . . . CHVALA. Despite the representation in paragraph 21 that Chvala “[was] not acting as an attorney for either party to this contract,” she admitted during the evidentiary hearing that she was advising Gary in the transaction “as his spouse.” None of the other lease agreements on the Morrison Land indicated on whose behalf the agreement was prepared. (ii) Option Agreements Chvala prepared separate option agreements for Wayne and Kurt to sign with all three Morrison Land owners. None of the option agreements indicated whether they were prepared on behalf of the respective Morrison Land owner, or Wayne and Kurt, or both. Again, we focus primarily on the terms of the option agreement involving the half section of the Morrison Land titled in Gary’s name. - 523 - Nebraska Supreme Court Advance Sheets 304 Nebraska Reports STATE EX REL. COUNSEL FOR DIS. v. CHVALA Cite as 304 Neb. 511 That option agreement identified Gary as the “seller” and identified Wayne and Kurt as the “purchasers” of the half section of the Morrison Land. It gave Wayne and Kurt an exclusive option to purchase the half section of land for $497,637. They could exercise the option any time after November 1, 2010, until 5 p.m. on March 1, 2013, by providing written notice thereof to Gary either in person or by registered mail at the Atkinson address where Chvala and Gary resided at the time the option agreement was executed. The option agreement contained no disclaimer similar to that in paragraph 21 of the lease agreement. At the time the option agreement was signed, the assessed value of the Morrison Land was $528 per acre. Ten years later, due to a significant rise in land values, the assessed value was $2,167 per acre, and the market value was significantly higher. (e) Modification of Rents Bill Gaines is a certified public accountant who, at all relevant times, represented Wayne and Kurt and their various businesses, Diane and her businesses, and Chvala and Gary and their businesses. Chvala’s files indicate that in July and November 2003, she talked with Gaines about the Morrison Land leases and the impact of the “passive activity rules” governing related parties. After meeting with Gaines in November 2003, Chvala learned that modifying the Morrison Land lease agreements to a modified crop-share arrangement would result in more favorable tax treatment for the landowners. On November 25, 2003, Chvala sent a letter to Wayne and Kurt on her firm letterhead. The other Morrison Land owners were copied on the letter. Chvala reported that Gaines had suggested “on all of the leases we use a modified crop share arrangement and have you pay a dollar amount for the crops produced on the real estate and then reimburse you for fertilizer, chemicals, seed and machine hire to arrive at the same net.” Chvala’s letter advised, “This income will still not be subject to social security tax but then would be considered as - 524 - Nebraska Supreme Court Advance Sheets 304 Nebraska Reports STATE EX REL. COUNSEL FOR DIS. v. CHVALA Cite as 304 Neb. 511 active income or loss and not subject to the passive activity rules.” Her letter also advised Wayne and Kurt, “Before we go any further, please check with the FSA Office to insure the two of you can still receive all government payments if a crop share arrangement is in place.” She added, “If you would rather I contact them, please let me know.” Kurt testified that he understood this change in rents was designed to provide a tax benefit to the owners of the Morrison Land. He and Wayne did not object to the change, because they had “trust and confidence” in Chvala. According to Kurt, because Chvala had asked for the change, they were “willing to do it.” Regarding the rent modification, the referee found: [Chvala] determined that for income tax purposes it would be advantageous if the Kaups’ cash lease was changed to a modified crop share. However, there was no benefit to Wayne and Kurt to make this change if it meant that their annual rental amount could increase. To address that concern, [Chvala] told Wayne and Kurt that even though they would call the arrangement a modified crop share, the annual cash rental amount would not change. All Wayne and Kurt had to do was manipulate the input expense numbers and crop sale numbers to arrive at the same net rental amount. The record shows that after November 2003, Wayne and Kurt, doing business as K & W Farms, paid rent using the modified crop-share arrangement suggested in Chvala’s letter. To facilitate the modified rents, Chvala instructed Wayne and Kurt to complete an annual “[r]ent [w]orksheet,” which they did. No written changes or addenda were made to the previously executed lease agreement. 2. Transfer of Ownership to TTC Enterprises In December 2003, Chvala and Gary formed TTC Enterprises, LLC, and Gary transferred title of the half section of the Morrison Land to TTC Enterprises. Chvala prepared the legal - 525 - Nebraska Supreme Court Advance Sheets 304 Nebraska Reports STATE EX REL. COUNSEL FOR DIS. v. CHVALA Cite as 304 Neb. 511 documents necessary to both create TTC Enterprises and to effectuate the title transfer of the Morrison Land. Gary owned 99 percent of the shares in TTC Enterprises, and Chvala owned the remaining 1 percent. Chvala notified Wayne and Kurt that ownership of the half section of the Morrison Land had been transferred to TTC Enterprises, but she did not advise them of her ownership interest in the entity. Throughout the 10-year lease term, Wayne and Kurt farmed the Morrison Land as part of their farming operation, K & W Farms, which Chvala reorganized as a partnership in 2006. Wayne and Kurt delivered to Chvala at her law office rent checks for the half section of the Morrison Land owned by TTC Enterprise. The first year the rent was made payable to Gary, and thereafter, the checks were made payable to TTC Enterprises. When the Kaup brothers received checks from TTC Enterprises regarding the Morrison Land, they were signed by Chvala and made payable to “K & W Farms.” 3. Premier Pork, LLC, Builds Hog Facility Premier Pork, LLC, is an entity Chvala created for Wayne and Kurt in 1998. At all relevant times, Chvala was the attorney for Premier Pork. Wayne, Kurt, Diane, and Rita were all members of Premier Pork when it was organized. In late 2004, Wayne and Kurt met with Chvala to discuss plans for Premier Pork to construct a hog finishing facility on nonirrigated portions of the Morrison Land. Their plan was to construct the facility on a 5-acre triangle of the Morrison Land owned by TTC Enterprises and an adjacent 5-acre triangle of the Morrison Land owned by Rita. Because it was essential to the hog finishing business that manure generated by the hogs could be spread across the entire section of the Morrison Land, Premier Pork also needed to obtain manure easements from all of the owners of the Morrison Land. Wayne testified they would never have proposed building the hog confinement facility on the Morrison Land if there was any question they were not going to “own - 526 - Nebraska Supreme Court Advance Sheets 304 Nebraska Reports STATE EX REL. COUNSEL FOR DIS. v. CHVALA Cite as 304 Neb. 511 the land later.” He testified that Chvala and Gary were “[v]ery accommodating” of their plan. Wayne and Kurt asked Chvala to assist them with the land transfers and easements needed to start the hog finishing operation on the Morrison Land. Wayne testified that he and Kurt obtained the necessary measurements of the 5-acre tracts and provided the information to Chvala so she could prepare legal descriptions and warranty deeds conveying the tracts from TTC Enterprises and Rita to Premier Pork. Chvala admitted she communicated with Wayne about these transactions, and she further admitted that Wayne asked her office to prepare the necessary warranty deeds, real estate transfer statements, and manure easements. But Chvala denied preparing the necessary legal documents, testifying instead that her legal assistant prepared the documents under her supervision. TTC Enterprises transferred the 5 acres from its half section of the Morrison Land to Premier Pork on April 19, 2005. Wayne and Kurt’s annual rent on the remaining half section of the Morrison Land owned by TTC Enterprises did not change after the transfer. As part of the TTC Enterprises transaction, Chvala also prepared a “Real Estate Transfer Statement Form 521.” This form stated TTC Enterprises was the grantor, and Chvala signed the form as the representative for the grantee, Premier Pork. After acquiring the 5 acres from both TTC Enterprises and Rita and obtaining manure easements from all owners of the Morrison Land, the Kaup brothers spent nearly $1 million dollars to build the hog finishing facility on the Morrison Land. 4. Legal Representation of Kaup Brothers The referee found that throughout the 10-year term of the leases on the Morrison Land, Chvala continued to represent Wayne and Kurt in their personal and business matters. We summarize just a fraction of the evidence of that representation: - 527 - Nebraska Supreme Court Advance Sheets 304 Nebraska Reports STATE EX REL. COUNSEL FOR DIS. v. CHVALA Cite as 304 Neb. 511 • From 2002 to 2009, Chvala provided ongoing representation to K & W Trucking, Inc., an entity owned by Wayne and Kurt and used to haul grain; • From 2003 to 2011, Chvala provided ongoing representation to Green Valley Hay & Mulch, LLC, a hay brokerage business owned by Wayne; • From 2004 to 2006, Chvala provided ongoing representation to Wayne and Kurt regarding their various business and farming operations, including K & W Farms; • From 2006 through 2011, Chvala provided ongoing representation to K & W Farms after it was reorganized as a partnership; • From 2004 through 2007, Chvala provided ongoing representation to Premier Pork, the hog finishing business owned by Wayne and Kurt and others; • From 2004 through 2009, Chvala provided estate planning services to Wayne; • In 2005 and 2006, Chvala provided estate planning services to Kurt; and • In 2007, Chvala and her law partner represented Wayne in his divorce. Moreover, during the 10-year term of the Morrison Land leases, Chvala regularly communicated with Wayne and Kurt regarding a variety of legal matters, including some relating to the Morrison Land. For instance, in October 2004, Chvala met with Wayne and Kurt to discuss and coordinate their various land, farming, and livestock matters. Chvala’s notes from that meeting show they discussed the Morrison Land, including the Kaup brothers’ plan to construct the hog finishing facility on that land. In July 2006, Chvala met again with Wayne and Kurt to discuss their business planning needs, and Chvala’s notes from that meeting included reference to K & W Farms’ farming operation on the Morrison Land and Premier Pork’s new hog finishing facility on the Morrison Land. - 528 - Nebraska Supreme Court Advance Sheets 304 Nebraska Reports STATE EX REL. COUNSEL FOR DIS. v. CHVALA Cite as 304 Neb. 511 5. February 23, 2010, Meeting On February 23, 2010, Wayne and Kurt met with Chvala and discussed at least three matters: certain buy-sell arrangements involving their businesses, the operating structure of their businesses, and the option to purchase the half section of the Morrison Land owned by TTC Enterprises. With respect to the option to purchase, Chvala’s notes from that meeting say “R/E / Lease - documents control, their option - OK to continue lease.” Chvala kept a personal file titled “Chvala/Kaup Option and Lease,” and during the evidentiary hearing, she offered a memorandum to that file dated February 25, 2010, which she prepared concerning the February 23 meeting. This memorandum stated in part: We discussed the Lease Agreement and Purchase Option that Gary/TTC have with Wayne and Kurt. I told them that Gary had no problem continuing the lease arrangement for the time being. We also discussed the fact that I do their work on other legal matters and we have differing interests on this matter and that I cannot represent them on this issue, as I will be protecting Gary and my interests, and they should feel free to obtain separate, other representation on this arrangement. They said they understood that and then asked if we intended to honor the agreements and I responded “certainly, they are legally binding documents, we made the deal and we intend to follow the terms of the agreements.” Wayne testified that the statements described by Chvala in this memorandum never happened. Specifically, he testified Chvala “[n]ever” discussed that her interest in the lease and option agreements differed from theirs and “[n]ever” told them to consult other legal counsel regarding the Morrison Land. According to Wayne, when they discussed the option agreement during the February 23, 2010, meeting, the focus was on whether Chvala and Gary were interested in selling at least a portion of the half section of the Morrison Land owned by - 529 - Nebraska Supreme Court Advance Sheets 304 Nebraska Reports STATE EX REL. COUNSEL FOR DIS. v. CHVALA Cite as 304 Neb. 511 TTC Enterprises early, before the option opened. Wayne testified that Chvala told them they were not interested in splitting the land, but did want to find other land to invest in when the time came to exercise the option. The referee’s report indicates he found Wayne’s testimony on this issue more credible than Chvala’s. 6. April 15, 2011, Letter In January 2011, during a time when the option period was open, Kurt contacted Chvala’s office and asked for signed copies of the agreements he and Wayne had with the Morrison Land owners. Approximately 3 months later, on April 15, Chvala responded to this request in a letter to Kurt, enclosing a copy of the option agreement between Gary and the Kaup brothers. Her letter advised that she checked her files but could not find signed copies of the option agreements with either Rita or Sandyland. The April 15 letter also stated: As you know, I perform various legal work for you and your entities as needed or directed by you. We have previously discussed the Lease Agreement and Purchase Option and I have informed you that we have differing interests and I cannot represent you on those matters, and you should feel free to obtain separate, other representation on that arrangement. It is our intention to continue the lease arrangement this year as in the past. If you wish to discuss further, please feel free to contact me. 7. November 12, 2012, Telephone Call On November 12, 2012, Kurt telephoned Chvala at her office. He knew the option was open at this time, and he testified that he called to “relay[] to her again that we were wanting to buy their ground.” During the call, Kurt told Chvala they were “ready and willing” to purchase the half section of the Morrison Land. He testified that Chvala responded by saying that she was busy, that she and Gary were looking for other land to invest in, and that she was looking “to do something - 530 - Nebraska Supreme Court Advance Sheets 304 Nebraska Reports STATE EX REL. COUNSEL FOR DIS. v. CHVALA Cite as 304 Neb. 511 more towards the end of the year.” Kurt testified Chvala did not tell him they needed to do anything else to exercise the option, and after the November 12 telephone conversation, Kurt expected they would be able to purchase the half section of the Morrison Land from TTC Enterprises at the end of 2012. When asked whether he relied on that telephone conversation with Chvala, Kurt testified, “Very much so.” He also testified that because he always dealt with Chvala with respect to the Morrison Land, he never even thought about communicating directly with Gary. Chvala agreed that Kurt telephoned her office on November 12, 2012, but she testified it was to discuss settling up the modified rent amounts for that year. She admitted that during the call Kurt mentioned they were working on financing for the option, but she denied that Kurt said, “I want to exercise the option.” She also denied telling Kurt that she and Gary were looking for other investment property. The day after this telephone call, Wayne and Kurt wrote a check to TTC Enterprises for the 10th and final annual rent payment due under the lease agreement. The referee found that, at this point, Chvala and Gary had “received the 7% annual return on their investment as agreed to in January 2003.” Kurt subsequently learned of some land for sale known as the Waldo Quarters. On or about December 12, 2012, Kurt called Chvala to inform her the Waldo Quarters land was available. Chvala responded in a text message to Kurt the same day: “Not interested in Waldo Qtrs . . . probably nothing this year . . . .” 8. Communication With Bank and Title Company On or about December 13, 2012, 1 day after Chvala told Kurt she was not interested in buying the Waldo Quarters, Kurt contacted Jon Schmaderer, president of the local bank, to arrange financing to purchase the half section of the Morrison Land owned by TTC Enterprises. Kurt told Schmaderer the deal would be done by the end of the year. That same day, - 531 - Nebraska Supreme Court Advance Sheets 304 Nebraska Reports STATE EX REL. COUNSEL FOR DIS. v. CHVALA Cite as 304 Neb. 511 Schmaderer asked bank employee Nicole Cadwallader to “order a $500,000 title commitment on K&W Farms” and provided a legal description of the half section of the Morrison Land owned by TTC Enterprises. Schmaderer told Cadwallader he thought Chvala would do the closing. Cadwallader replied that she would contact the title company to find out the relevant information. Cadwallader did so on December 18, 2012, and the title company told her it needed the seller’s name, sale price, and the legal description of the property or a copy of the purchase agreement to order the title insurance. During this conversation, Cadwallader told the title company that Chvala was handling the closing. On December 19, 2012, the owner of the title company called Chvala and left a message with her secretary asking Chvala to call him “ASAP.” Chvala knew the owner and had done business with him in the past. The secretary told Chvala that the owner of the title company had received “a note from [Cadwallader] . . . something about K&W Farms. He doesn’t have any info to go on. [Cadwallader] said you were handling!” Chvala testified that she read the message, but did not understand it to be referencing the purchase option with Wayne and Kurt. She did not respond to the message. 9. December 19, 2012, Telephone Call Also on December 19, 2012, Cadwallader telephoned Chvala to discuss the information she needed to order the title insurance. Cadwallader testified that the conversation lasted 1 minute or less and that she “asked if [Chvala] was handling the [K & W Farms] closing.” According to Cadwallader, Chvala seemed to recognize what she was talking about and did not seem confused. Chvala told Cadwallader the closing was not going to happen before the end of the year, but was “‘[l]ooking more towards March.’” Chvala recalled Cadwallader asking whether she had a purchase agreement and saying Wayne and Kurt needed to close by the end of the year. But according to Chvala, she did - 532 - Nebraska Supreme Court Advance Sheets 304 Nebraska Reports STATE EX REL. COUNSEL FOR DIS. v. CHVALA Cite as 304 Neb. 511 not realize Cadwallader was referencing the Morrison Land and instead thought she was referring to the Waldo Quarters, which Chvala understood Wayne and Kurt were interested in buying. 10. Title Commitment Email After the telephone call with Chvala on December 19, 2012, Cadwallader sent an email to the bank stating: I just talked to [Chvala] and the deal between her and K&W is not happening this year. She said she cannot get it done and is looking more toward March for a closing date. I have talked to [the loan officer] and he was going to let Kurt know. McCarthy is working on the title insurance and will have that to us but no closing for now. A title commitment was sent via email from the title company to both Cadwallader and Chvala on December 21. The title commitment clearly showed the land to be purchased by Wayne and Kurt was the half section of the Morrison Land owned by TTC Enterprises. Chvala testified she did not open this email until sometime in January 2013. Once she opened the email and saw the title commitment, she admits she knew Wayne and Kurt were trying to move forward with closing on the half section of the Morrison Land owned by TTC Enterprises. Despite this knowledge, Chvala did nothing. Instead, she waited until after the option period closed to contact Wayne and Kurt. When asked why, Chvala testified, “I thought having communication with them would have been a violation of the ethical rules. I distanced, advised I could not represent them, and I did not want to give them any communication or advice at all.” Wayne testified that he and Kurt both knew Chvala was aware they wanted to buy the half section of the Morrison Land, so when the closing did not occur at the end of 2012 they simply “trusted it was going to happen” based on “how [Chvala’s] schedule” worked. Wayne was not concerned when the option period closed on March 1, 2013, because he had “an immense amount of trust” in Chvala. - 533 - Nebraska Supreme Court Advance Sheets 304 Nebraska Reports STATE EX REL. COUNSEL FOR DIS. v. CHVALA Cite as 304 Neb. 511 11. March 2013 Communications By its terms, the option terminated at 5 p.m. on March 1, 2013. Kurt called Chvala’s office on March 6, but Chvala did not take his call, even though she was in the office. On March 8, Kurt sent an email to Chvala which stated: I know I have talked to you about our intent to pur- chase the S 1⁄2 of Section 6-31-14 a couple of times back in the spring of 2011 and again in December of 2012. . . . Schmaderer told me he was going to order the Title Commitment back in December. I believe that has been delivered to the bank and they are just waiting for a Purchase Agreement. I was wondering if we could get together with you hopefully this week and get this finished up or if that won’t work at least get something done here in the month of March. The same day this email was received by Chvala, it was faxed by Gary to an attorney he had retained to represent him in the matter. Gary’s attorney then sent Wayne and Kurt a letter by certified mail advising that the purchase option and lease had expired, but that Gary was willing to enter into a new lease agreement with them. After receiving this certified letter, Kurt telephoned Gary because he was “confused about why we were getting [the letter] after everything I had been doing towards the end . . . of 2012.” According to Kurt, Gary told him, “‘That’s [Chvala’s] deal.’ . . . ‘You’ll have to talk to her about that.’” On March 12, 2013, Chvala wrote a letter to Wayne and Kurt. She acknowledged they had been attempting to reach her for several days, and then stated: Years ago, when the leases were drafted, I handled those matters and included disclosure and obtained your consents to my doing so. Now, I think changes in the law make it prudent that I refrain from providing services to you in connection with new contracts or legal matters with my husband or our company. I prefer not to continue to provide service even with consents and waivers of possible conflicts. - 534 - Nebraska Supreme Court Advance Sheets 304 Nebraska Reports STATE EX REL. COUNSEL FOR DIS. v. CHVALA Cite as 304 Neb. 511 In response, Wayne and Kurt hired another attorney who, on March 15, 2013, sent Gary a letter via registered mail to the address listed in the option agreement, notifying him that Wayne and Kurt were exercising their option to purchase the half section of the Morrison Land. Gary’s attorney rejected this as a “nonconforming attempt to exercise the option at issue.” On April 2, Wayne and Kurt tendered a cashier’s check for the option purchase price to Gary and TTC Enterprises. This too was rejected. 12. Civil Suit and Settlement On April 8, 2013, Wayne and Kurt filed a civil lawsuit in the district court for Holt County against Gary, Chvala, and TTC Enterprises. Gary died unexpectedly in July, and the civil suit was revived with Chvala as Gary’s personal representative. The parties eventually settled the civil suit, and as a result of the settlement, Wayne and Kurt purchased the half section of the Morrison Land owned by TTC Enterprises for $1.8 million— more than 31⁄2 times the purchase price of $497,637 set out in the option agreement. 13. Procedural History of Disciplinary Action While the civil lawsuit was pending, Chvala contacted the Counsel for Discipline to self-report that there had been “some suggestion” her actions with respect to the Morrison Land may have violated the disciplinary rules. Wayne and Kurt subsequently filed a grievance against Chvala with the Counsel for Discipline, also regarding the Morrison Land. The Committee on Inquiry of the Third Judicial District reviewed the matter and determined there were reasonable grounds for discipline against Chvala. Formal charges were filed on July 26, 2017, and amended formal charges were filed on January 29, 2018. Prior to September 1, 2005, the conduct of Nebraska attorneys was governed by Nebraska’s Code of Professional - 535 - Nebraska Supreme Court Advance Sheets 304 Nebraska Reports STATE EX REL. COUNSEL FOR DIS. v. CHVALA Cite as 304 Neb. 511 Responsibility. Since that date, the conduct of Nebraska attorneys has been governed by the Nebraska Rules of Professional Conduct. Because the alleged disciplinary violations against Chvala span from 2003 through 2013, Chvala was charged with violations of various provisions under both the code and the rules. Some of the sections of the Nebraska Rules of Professional Conduct have been amended after 2013, but for purposes of this opinion, the current version of the rules will be referenced, because the amendments do not impact the applicability of the rules to Chvala’s alleged disciplinary violations. Chvala denied all charges. Retired Judge Paul W. Korslund was appointed as referee, and a 4-day evidentiary hearing was held. The referee issued a 99-page report and recommendation finding multiple violations of the disciplinary provisions and recommending Chvala be disbarred. Chvala timely filed exceptions to the referee’s report and recommendation.