v3.22.1
Commitments and Contingencies
12 Months Ended
Dec. 31, 2021
Commitments and Contingencies.  
Commitments and Contingencies

Note 14 - Commitments and Contingencies

Legal Proceedings

On October 27, 2021, CJ’s Yardworks, Inc. filed a lawsuit against the Company’s then-subsidiary, Zodega Landscape Services, LLC. Currently, CJ’s Yardworks, Inc. (plaintiff and counter-defendant in the case) asserts claims against Zodega Landscape Services, LLC (defendant, counter-plaintiff, and third-party plaintiff in the case), two of Zodega’s employees (defendants in the case), and Zodega’s current owner (defendant in the case) in connection with Zodega’s purchase of assets related to the CJ’s Yardworks business in February 2021 (the “CJ Acquisition Transaction”).

CJ’s Yardworks asserts claims of breach of contract, conversion, and fraudulent conveyance. CJ’s Yardworks alleges that Zodega has collected and failed to remit accounts receivables that still belong to CJ’s Yardworks, and that Zodega is late on payments under a promissory note owed to it by Zodega. CJ’s Yardworks seeks monetary damages, prejudgment and post-judgment interest, and other remedies deemed appropriate by the court on a joint and several liability basis. One of the owners of CJ’s Yardworks has also asserted that Zodega has breached the consulting agreement and real property lease entered into in connection with the CJ Acquisition Transaction and seeks monetary damages.

Zodega counter-sued CJ’s Yardworks and its owners (as third-party defendants) for breach of contract, fraud, negligent misrepresentation, and unjust enrichment. Zodega’s counter-claims assert that CJ’s Yardworks and its owners misrepresented financial and other material information to Zodega in connection with the CJ Acquisition Transaction to inflate the purchase price of the acquisition and breached contractual representations, warranties, covenants, and obligations under the transaction documents for the CJ Acquisition Transaction. Zodega seeks monetary damages, attorneys’ fees, exemplary and treble damages, and any other relief deemed appropriate by the court.

Zodega and CJ’s Yardworks have filed answers to the respective complaints, and discovery has begun. The lawsuit is currently pending in the District Court of Harris County, Texas, 152nd Judicial District (Case No. 2021-70626).

From time to time, we are also a party to certain legal proceedings incidental to the normal course of our operating businesses. While the outcome of these legal proceedings cannot at this time be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.