Partners’ spat leads to $2 billion suit
Dallas developer claims property in W. Bexar being held ‘hostage’ in bid to renegotiate pact
A fallout between partners in a 2,400-acre master-planned community in western Bexar County has led one to file a lawsuit seeking more than $2 billion in damages.
Dallas developer George “Chip”
A. Field III has sued partner Bill Knight of Fort Worth for breach of fiduciary duty, alleging Knight and other defendants are holding properties “hostage” in an effort to renegotiate the terms of their partnership.
Field, 70, and Knight, 80, formed their partnership in 2004 to develop commercial real estate in Texas.
The far West Side masterplanned community, at the northeast corner of Potranco Road and Texas 211, is known as Stevens Ranch. The project has more than 4,000 residential lots, with 538 acres earmarked for commercial development, an online brochure shows.
The pair also are developing the Orchard, a 565-acre project on the west side of Texas 211 at Highway 90 across from Briggs Ranch.
Knight receives 90 percent of net cash flow generated by the partnership, while Field receives the remaining 10 percent. That is supposed to become a 50/50 split when the partners achieve a return of their investment.
Knight and related entities have received more than $70 million from the partnership, Field’s lawsuit says.
Knight has demanded 100 percent of the net cash flow from the sale of two parcels at Stevens Ranch, says the complaint, filed Dec. 31in state District Court in San Antonio.
The arrangement would leave Field “with nothing to show for the cash equity and sweat equity he has built up over the past16 years,” the suit says.
It adds that it would bankrupt
him and cause him to forfeit the entire enterprise to Knight and the other defendants.
Knight and two other defendants — son David Knight and Jason Brown — did not respond to a request for comment Thursday.
Lamont Jefferson, a San Antonio attorney representing Field, declined to comment.
As land developers, Field and Knight invest in undeveloped real estate and then obtain the entitlements for specific uses on the property and build the infrastructure. They then sell parcels to builders and others for construction.
For example, in 2017 they sold 24 acres at 14325 Potranco Road to H-E-B for a grocery store that opened in October.
Knight controls the partnership’s finances and has been the primary source of funding. Field — who runs its day-to-day operations — has contributed millions of dollars that now represent about $15 million in partnership equity, the suit says.
Field alleges Knight wants to make changes to their partnership as its investments “are coming to fruition.”
“Bill has betrayed the partnership, seeks to usurp the partnership opportunities for himself, and in doing so threatens to undermine over two billion dollars in partnership value,” the suit says.
Knight and the other defendants’ actions “killed two major sales ($15 million) and resulted in the purchasers filing two lawsuits seeking specific performance for the sale of the two parcels” at Stevens Ranch, Field alleges in his lawsuit.
Court records show both home builder Horton Capital Properties LLC of Southlake and SRSA One LLC of Houston sued Stevens Ranch-related entities on the same day in February to enforce purchase agreements.
Both companies later were able to complete their purchases, property records show, and the lawsuits were dismissed.
Other potential buyers “chose to walk away,” costing the partnership nearly $30 million in sales, Field alleges. As much as $265 million in sales could face a similar fate, he says.
Stevens Ranch is a public improvement district, where property owners pay taxes to finance improvements.
The partnership gets a share of that tax money. However, Field says the closing delays have caused damages in the form of lost future PID revenue of more than $47 million.
Knight and the other defendants “have poisoned the market with respect to future sales of the Stevens Ranch properties because potential purchasers are reluctant to conduct business with the partnership that is certain to end up in litigation or costly delays,” the suit says. “Over $750 million in appraised present value of partnership assets has effectively been reduced to zero.”