KC attorney, law firm ordered to pay developer $18M over failed hotel project
In 2018, a team of Colorado developers declared their intention to build a 13-story Hyatt House hotel on a former parking lot at 900 Broadway Blvd. in downtown Kansas City.
Seven years later, the property sits flat and abandoned, cordoned off with orange barricades and dotted with construction piers that poke out of the concrete base like steel weeds. Lodging is unavailable. But litigation has been abundant.
Earlier this month, one lawsuit related to this failed project came to a conclusion when a Jackson County jury awarded the Colorado developers $18 million against a local attorney and a St. Louis-based firm over the project’s construction loan.
The jury found that James Neeld and the firm Sandberg Phoenix (where Neeld is an attorney and shareholder) made fraudulent misrepresentations to the Colorado developers, a group that included Pedersen Development Co. and Shanahan Development Co., about the lending capabilities of a third-party lender. That lender, Altos Group, filed for bankruptcy in 2023, leaving behind a trail of unfunded projects across the country.
Relying on Neeld and Sandberg’s alleged misrepresentations, Pedersen and Shanahan’s group entered into an agreement for a $24 million loan from Altos Group to finance the bulk of the $36 million Hyatt House project. The developers put down a down payment of nearly $1 million with Altos Group in 2019 and commenced construction, spending about $3 million on initial work. When they sent those invoices for payment, Altos Group informed them the source of the funding had disappeared. With no funding, the project faltered.
“We alleged that AltosGroup made fraudulent misrepresentations about its ability to fund these loans — that they had a $200 million line of credit with J.P. Morgan Chase, among other claims,” said John M. Edgar, who represented Pedersen and Shanahan’s group. “And these claims were repeated and reinforced by Mr. Neeld and therefore his firm. We were pleased to see the jury return a verdict for fraud.”
Sandberg Phoenix is liable for $13.6 million in actual damages and another $5 million in punitive damages in the dispute, the jury found.
“I always hoped during the last five years that I’d be able to restore my reputation and recover monies that my family and friends trusted me with,” Pedersen said of the verdict. “This is a good step toward that end.”
Pedersen’s group previously won a $14.8 million default judgment against Altos Group in 2021 for breach of contract. But when Altos Group later filed for bankruptcy, Pederson’s group joined a long list of creditors seeking to recover what they were owed: Altos Group listed assets of $4 million against liabilities of $121 million, according to the Kansas City Business Journal.
In a statement provided to The Star, Sandberg Phoenix said it was disappointed in the outcome.
“As shown by the facts we shared at trial, there was no written documentation of the alleged oral misrepresentations,” the firm said. “Further, plaintiff presented only one witness on the issue, while in comparison defense presented three witnesses who disputed the claim. We maintain that our firm has advocated with integrity and represented our clients in accordance with the law at all times.”
Neeld, who is based in Kansas City, did not respond to a request for comment. He was publicly reprimanded by the Missouri, Oklahoma and Texas bars in 2011 for falsifying travel reimbursements that were then billed to a former client. “This is not the first time — or even the second time — that Neeld has admitted to or been alleged to have committed fraud,” Edgar wrote in the original complaint.
Neeld and Sandberg Phoenix represented Altos Group to developers on several other failed construction loans, including for a Hard Rock Hotel in Edwardsville and a Marriott in Temecula, California. Edgar’s firm sued Neeld and Sandberg over both those projects as well. Edgar said the Hard Rock Hotel suit settled two years ago, and the Temecula suit had been set for trial this month but settled following the 900 Broadway verdict. The settlement terms were confidential, Edgar said.
David Ingram, founder of Altos Group, was indicted in July after a federal grand jury in Kansas charged him with four counts of wire fraud related to the Hard Rock Hotel, 900 Broadway, an assisted living facility in Ohio and a Springhill Suites in Utah.
Ingram pleaded not guilty in that case, but recent court filings show a Change of Plea Hearing is set for April 24 before U.S. District Court Judge Daniel D. Crabtree.
Future of 900 Broadway
Ownership of 900 Broadway — and the city tax incentives that go along with developing it — has since been transferred from the original Colorado development group to HH KC Partners LLC.
The new group is owned jointly by O’Reilly Hospitality Management and Lotus Hospitality.
O’Reilly is a hotel and restaurant management company based in Springfield. Lotus operates multiple hotels in the Kansas City area, including two Holiday Inns downtown, a Fairfield Inn in Union Hill and Hotel Lotus near the Truman Sports Complex.
Pedersen, one of the original Colorado developers, remains a minority investor in the project “for now,” he told The Star.
“I’m hopeful that the current ownership group will be able to complete the project,” Pedersen said. “It was, and I think still is, a wonderful project for the city — both for its residents and the city officials who have been extremely patient throughout this ordeal.”
Robin Martinez, general counsel for Lotus Hospitality, told The Star that the new group behind 900 Broadway still planned to build a hotel on the property but could not provide details or a timeline.
“We’re committed to the downtown Kansas City market — we have the World Cup coming, and we think it’s a great place for a hotel,” Martinez said. “I don’t know that we’ll be open in time for the World Cup. But we’re still bullish on downtown.”
