Red McCombs settle long-running legal feuds

San Antonio billionaire B.J. “Red” McCombs and former executives of his oil and gas investment partnership have settled the legal battles that they’ve been fighting for more than four years.

Attorneys for the parties said this week that litigation in Bexar and Harris counties has been resolved, but declined to provide any details. One of the lawyers cited a confidentiality order.

The settlement comes just days before a trial was set to begin in state District Court in San Antonio.

The feuds involved McCombs Energy, an entity created to make investments in oil and gas ventures on behalf of Red McCombs and his family. Forbes calculates McCombs has a $1.6 billion net worth.

The four former McCombs Energy Ltd. executives, including President William Forney Jr., had sued the partnership, its general partner and Red McCombs in March 2017 in Harris County alleging they were owed “revenue distributions” under different agreements.

Later that same month, McCombs Energy responded by suing the the executives and other parties in San Antonio. The lawsuit accused them of taking “trade secrets” to launch a competing business.

The group was “driven by greed” when they started F4 Resources in Houston using McCombs Energy’s confidential and proprietary information, the suit alleged.

Forney and some of the other executives had worked with McCombs for decades.

According to court papers filed by the executives in Houston, McCombs and William Forney Sr. and his family had a business relationship that began around 1960 when the two met. They began investing together in oil and gas exploration projects, participating in the cost on a 50-50 basis.

Forney Sr., who had started developing oil and gas projects in the 1940s, oversaw drilling and operations. The relationship continued with his family following his death in 1985.

By the late 1990s, the executives’ lawsuit in Harris County said, McCombs was in a position to make larger investments in oil and gas projects.

McCombs formed Houston-based McCombs Energy LLC in 1998 by merging his 50 percent interest in the partnership of Forney & McCombs with newly purchased assets of Forney Oil, the Express-News reported at the time.

All Forney Oil managers and staff became employees of McCombs Energy LLC. The company converted to McCombs Energy Ltd. in 2006 for tax purposes, the suit said.

Forney Jr. learned in late 2016 that McCombs intended to shut down McCombs Energy offices, the executives’ suit added. An executive with McCombs’ holding company had said it moved McCombs Energy to San Antonio. Forney Jr. resigned at the end of that year.

Shortly after Forney Jr.’s departure, the complaint said, McCombs Energy stopped making all revenue distributions to the executives — including $2 million related to a property sale. So the executives filed suit.

In the Bexar County suit filed against the four executives, two others and F4 Resources, McCombs Energy alleged that F4 Resources intended to replicate its business model and used proprietary information in capital-raising efforts. McCombs Energy even accused two defendants of committing computer crimes to get information.

The suits triggered counterclaims by each side.

In 2019, state District Judge Peter Sakai in San Antonio ruled McCombs Energy was on the hook for the legal fees its foes were incurring for defending themselves against its lawsuit.

Court records show those legal fees and expenses have exceeded $1 million.