San Antonio law firm Langley & Banack sued after Southwestern Texas ranch deal goes awry

Hancock lived on the larger of the two ranches he bought in 2006 — the 12,572-acre Weston Ranch, where he hunted white-tail deer and other game and worked on the property.

Though a Mississippi native, Hancock appeared Texan.

“Little bit of cowboy in him, I would say,” said Catherine Hancock McMahan, Hancock’s oldest daughter, 42. “He enjoyed hunting and riding around seeing what he could see. He loved the wildlife, the different plants and all that the land had to offer. He liked everything about it.”

Hancock, 71, no longer roams the ranch. He has dementia and resides in an assisted-living facility in Tupelo, Miss.

The Weston Ranch has been sold, disposed under duress to avoid a foreclosure by the company his father started and that held a note on the property.

Fights over various Weston Ranch transactions erupted in Mississippi and San Antonio courts, including a couple that pitted McMahan — as her father’s court-appointed conservator, watching over his estate — against various parties, including the family company and Hancock’s three sisters.

Last month, McMahan sued San Antonio’s largest law firm, Langley & Banack, for more than $27 million, accusing it of legal malpractice and defrauding Hancock, a longtime client, in connection with the ranch transactions.

The transactions involved partnerships — whose partners included John Petry, a senior lawyer at Langley & Banack — that acquired the Weston Ranch’s land and its water and mineral rights, with the idea of flipping them for a huge profit, McMahan alleges.

Hancock also was a partner in the partnerships, holding about a 44.5 percent stake. But McMahan alleges her father’s signature was forged on various documents. He ultimately was stuck with debt owed by the partnerships when they couldn’t find a buyer, she says.

Shane Langston, a Jackson, Miss., lawyer for McMahan, called it “the most egregious” legal malpractice case he’s ever seen.

Langley & Banack hasn’t filed a response to the complaint yet, but San Antonio lawyer Henry Gonzalez, who is defending the firm, disputed McMahan’s allegations.

“Suffice it to say, I am confident that actual facts will disprove Ms. McMahan’s theories and claims that L&B caused damages to the plaintiffs,” Gonzalez said in an email.

Petry also is named in the lawsuit against his firm. His lawyer didn’t respond to a request for comment.

Fabric fortune

Larry Hancock is the youngest of four children and only son of Lawrence Doyce “L.D.” and Elaine Hancock.

L.D. Hancock was the founder of Hancock Textile, a fabric store chain that had about 80 company stores and 265 franchise stores in 19 states before it was sold to California-based Lucky Stores for more than $50 million in 1971. That’s about $325 million in today’s dollars.

Lucky Stores later took the company public, renaming it Hancock Fabrics.

Larry Hancock, born in 1949, worked in his father’s Tupelo store and earned a business degree at the University of Mississippi.

Eventually, he embarked on his own venture — Warehouse Liquidators, which bought assets of shuttering businesses and sold them at a Tupelo store. He also operated a plant nursery in front of the business.

Pursuing his ‘passion’

Hancock, though, preferred the outdoors.

“That was his passion, and he wanted to turn his passion into a job,” said Tupelo lawyer Michael Greer, who also represents McMahan. “Speculating on Texas ranches. It was something he thought he could make money at.”

Hancock bought a 40,000-acre Laredo ranch, and added big-game fences and made other improvements to the property. Rather than setting up his own commercial hunting operation, he struck deals with a few hunting guides who brought their clients on the property to hunt, Greer said.

After four or five years, Hancock sold the property and then bought the Weston and Tyra ranches in Val Verde and Kinney counties. His mother gave him $12.5 million to buy the Weston Ranch, McMahan says in her complaint against Langley & Banack.

L.D. Hancock Co. and Hancock’s three sisters say Elaine Hancock loaned her son $22 million to buy the two ranches, with his promise to repay her. That agreement would later become the subject of litigation.

Langley & Banack’s Petry represented Hancock in the purchase.

“From the outset of the representation, Petry expressed a desire to own the ranch in some fashion because of its valuable water rights,” McMahan alleges in her suit.

The 2013 deal

Nothing came of Petry’s interest until three partnerships were formed to purchase the ranchland, as well as the water and mineral rights, in 2013. The partners were Petry, through a trust; real estate broker Brady Kimble; Hancock; and a now-defunct North Texas company.

Texas Real Estate Commission records listed Kimble as the broker for Petry, identified as a sales agent. Kimble is not a defendant in the lawsuit.

With Petry getting into business with a client, Langley & Banack managing director Steven Brook prepared a letter “waiving conflicts of interest” for each of the partners to sign.

“Although it is not common for an attorney to enter into a business transaction with a client, such relationships are permitted if the transaction and terms on which the attorney acquires the interest are fair and reasonable to the client and fully disclosed,” Brook’s letter stated.

Brook added, “L&B believes that your interests in this transaction are presently substantially aligned.”

The letter is an exhibit in the lawsuit, which was originally filed March 3 in state District Court in San Antonio but has since been removed to federal court here.

More than five years later, when the partnerships failed to make payments under the sale agreement and arranged to deed the land and water and mineral rights back to Hancock in lieu of foreclosure, Brook would write another conflict waiver letter.

This time, he wrote, “The interest of the various parties is not aligned.”

The original letter was deficient because it didn’t disclose the nature and extent of the conflicts, according to Langston, McMahan’s lawyer.

Forgeries alleged

Regardless, Langston said, that’s not Hancock’s signature on the letters or the deed in lieu of foreclosure.

“We do have a detailed report from a handwriting expert that claims that these documents … were forged,” Langston said.

Brook’s letters advised the partners in bold letters, “If you wish to speak to another attorney concerning this conflict or the terms of this Letter Waiving Conflicts of Interests, please do so. It is your sole decision in your sole discretion whether or not to waive this conflict.”

Randy Pulman, a San Antonio lawyer not involved in the case, said his firm requires an independent lawyer representing the client to sign off on a transaction that creates a conflict of interest. After all, the point of a conflict waiver letter is to protect the firm in case the deal goes sideways.

“I find it hard to believe that someone at Langley & Banack would have forged a client’s signature, but all of that would have been dispensed with if another lawyer had signed off” for Hancock on the conflict, Pulman said.

The agreement shows Petry, Kimble and Hancock were represented in the transaction by Langley & Banack lawyers J. Patrick Rouse and Robert Werner, who also are being sued by McMahan.

Robert Valdez, Rouse’s lawyer, said, “All of the allegations in the petition are in dispute.”

Richard Espey, Werner’s attorney, denied the allegations.

“I assure you that the allegations are baseless and likely legally slanderous,” Espey said in an email. “Anyone who knows Bob and the degree to which he has served his community, Church and others will know that something smells. It is a shame that such a good person can be defamed solely for the purpose of getting a payday.”

Werner, Shavano Park’s mayor, is no longer with Langley & Banack.

McMahan has also sued Brook, but he has not yet retained an attorney.

‘One-sided’ deal

Langley & Banack lawyers convinced Hancock to sell the Weston Ranch and the water and mineral rights for about $22.5 million, McMahan’s lawsuit says. But the transaction was “one-sided,” with the partnerships receiving owner financing and a below-market interest rate, and not having to make a down payment, it adds. No payment was due for four years, and the full purchase price didn’t have to be paid for 15 years.

The interest rate on the $22.5 million note was 2.31 percent, below the prime rate of 3.25 percent that commercial banks charged their most creditworthy customers at the time.

Petry and Kimble also collected real estate commissions of $225,380 and $450,760 on the deal, the suit says.

Hancock was slated to get more than $8 million from the sale to the partnerships. The balance, about $14.5 million, would go to L.D. Hancock Co., the family company headed by his mother. The $14.5 million was comprised of a $7.1 million lien on the property and a $7.4 million payment for a more than one-third interest in a partnership that owned the ranch. The interest had been transferred to L.D. Hancock Co. by Hancock’s mother before he reacquired it.

The agreement explicitly removed any obligation for Hancock to pay debt on the property, McMahan says in her lawsuit. L.D. Hancock Co., however, alleges in a lawsuit it filed last year in San Antonio that it never released Hancock’s debt.

The partnerships planned to sell the land and water and mineral rights for $100 million before their obligations became due to Hancock and L.D. Hancock, McMahan alleges.

Dementia symptoms

In 2015, Hancock started showing symptoms of dementia, his daughter says. The “disease robbed Larry of his mental faculties and comprehension.” Langley & Banack’s lawyers “were fully aware of his condition,” she adds in the complaint.

McMahan, though, wasn’t appointed Hancock’s temporary conservator by a court until 2018. She became permanent conservator in late 2019.

Also, in 2015, Hancock’s mother died at age 93.

The partnerships that bought the Weston Ranch had their first payment coming due in 2017. No sale of the land, or the water or mineral rights, had occurred. As a result, the partnerships were facing a default under the deal, McMahan says in her suit.

So the defendants offered to give up Hancock’s share of his mother’s inheritance, about $7.5 million, McMahan alleges in her suit, even though she says it was the partnerships that owed the money.

A confidential settlement ultimately was reached in 2016. The defendants’ “influence” over Hancock resulted in him owing about $15 million in debt that previously did not exist, his daughter says.

“Any lawyer who would advise his client, especially when mentally incompetent, to sign a document obligating his client to owe approximately $15 million that he did not owe amounts to the worst example of legal negligence, and breach of fiduciary duty, imaginable,” McMahan alleges.

The purpose was to bail out the partnerships from their obligations to pay $22.5 million under the terms of the 2013 agreement, she adds.

Taken twice?

By 2018, McMahan says, her father’s health was deteriorating rapidly. He was confused, disoriented and suffering from hallucinations. He was admitted in April 2018 to a mental health ward in Baptist Memorial Hospital in Booneville, Miss.

McMahan took Hancock from his Texas home “under threat of force and against his will” and “removed” him to Mississippi, L.D. Hancock Co. and his three sisters alleged in an October court filing in San Antonio.

Petry had called McMahan with concerns about Hancock, saying the sheriff had to be called to the ranch house because “he thought there were a bunch of (people) in there with guns drawn trying to kill him,” Greer said. No one was at the ranch when the sheriff arrived, however.

The event led McMahan, her husband and Greer to go to Texas to take Hancock back to Mississippi where he could get medical treatment.

Hancock stayed at McMahan’s home following his release from the hospital. That is, she alleges, until Petry and Langley & Banack paid a woman to “secretly travel to Mississippi and physically take Larry to Texas without his doctor’s or the family’s knowledge or consent.” She said it happened Father’s Day weekend when she was not at home.

An amended lawsuit McMahan filed March 19 alleges Ronda Hargrove — who had leased Weston Ranch land from Hancock — was the person who took him to Texas.

“That is an absolute lie,” Hargrove said. “I never picked Larry Hancock up.” She added she visited Hancock and attended a court case with him.

An exhibit attached to the lawsuit, identified as a Langley & Banack invoice, shows Hargrove as the payee, with the description “Larry Hancock transportation” and a payment amount of $500.

Asked why a firm invoice shows she was paid $500, Hargrove replied with a laugh, “I’m not sure. I did not transport Mr. Hancock from Mississippi at all.” She ultimately declined to say anything more and hung up.

The invoice also indicates a Langley & Banack lawyer with the initials JPR (the same as J. Patrick Rouse’s) billed for work related to “emails to Ronda Hargrove with documents for Larry’s signature; emails to parties with compiled Deed in Lieu of Foreclosure attached.”

Deed in lieu

Langston, who represents McMahan, said he didn’t know the purpose of taking Hancock to Texas.

“I don’t think he had to be in Texas” to sign documents, Langston said.

On July 20, 2018, the partnerships that owned the Weston Ranch land and water and mineral rights deeded them in lieu of foreclosure to a Hancock partnership that had provided the $22.5 million in financing in the 2013 transaction. The document has been submitted as a court exhibit with McMahan’s lawsuit.

Hancock’s signature on the deed in lieu agreement also is a forgery, Langston said.

Petry wrote Greer in 2018 to say it had two contracts for the ranch land but they fell through because the prospective buyers didn’t obtain a contract to sell the water rights to the city of San Antonio — presumably through the city-owned San Antonio Water System.

“The value of the water is great, provided you can find a person that wishes to buy,” Petry added.

Twenty days after the deed in lieu agreement, on Aug. 9, 2018, a Mississippi chancery court appointed McMahan temporary conservator of Hancock’s affairs. Those who performed physical and mental examinations expressed the opinion that Hancock was “incapable of taking care of his person and his estate,” according to a court document. He was diagnosed with Lewy body dementia.

“However, Larry fought the conservatorship, alleging the Mississippi court lacked jurisdiction over him because he was a resident of Texas,” L.D. Hancock Co. and his sisters alleged in their October court filing in San Antonio. Hancock had opposed the conservatorship but eventually agreed to it before McMahan became permanent conservator in late 2019, Greer said.

L.D. Hancock Co. and Hancock’s three sisters say it was only after McMahan became the temporary conservator that she “suddenly believed Larry lacked the mental capacity” back in 2016.

McMahan had sued L.D. Hancock Co. and Hancock’s sisters in Mississippi, seeking to rescind the 2016 confidential settlement that she says left her father with $15 million in debt. McMahan also has asked the court to reinstate his $7.5 million inheritance, which she says his lawyers gave up without his consent.

In August, the court chancellor overseeing the case dismissed McMahan’s request to have the settlement rescinded and ordered other claims to be litigated in San Antonio under the terms of the 2013 agreement for the sale of the ranch and its water and mineral rights. She appealed the ruling.

Meanwhile, L.D. Hancock Co. and the sisters had asked a state District Court in Bexar County to declare the settlement enforceable, pointing out that a section of the document said Hancock “was legally competent to execute this Agreement and accepts full responsibility therefor.”

The two sides reached an out-of-court settlement of their disputes in the fall. The terms are confidential.

‘Tough days’

McMahan sold the Weston Ranch land and mineral rights for slightly more than $10 million in 2019 to avoid a “pending foreclosure,” according to her suit against Langley & Banack.

Hancock retains the water rights, but Greer said no one can afford the infrastructure costs to get it piped to San Antonio or elsewhere. The estimates have ranged from $300 million up to $1 billion, he said.

Jak Smith, Hancock’s Tupelo lawyer, had no comment for this article.

McMahan seeks to recover from Langley & Banack and its lawyers nearly $12.5 million — the difference between the $22.5 million Hancock sold the ranch for in 2013 and the 2019 sale price, plus more than $15 million — the debt he was allegedly on the hook for.

As for McMahan’s father, he’s now in a assisted-living facility, Magnolia Manor of Tupelo, which is located in a “beautiful country setting surrounded by a forest of oaks and tall swaying pines,” according to its website.

As for how he’s doing, McMahan said, “He has tough days. His condition is plagued by hallucinations. It’s very hard.”