CINCINNATI - Kenwood Towne Place investor Hank Schneider sued his former attorney and the Keating Muething & Klekamp law firm for malpractice Friday, alleging “conflicts of interest and professional misconduct” cost him more than $20 million.
It’s the latest bombshell in a five-year saga of foreclosure claims, counterclaims and criminal proceedings that flowed from the half-finished retail and office building at I-71 near Montgomery Road.
Schneider’s lawsuit, filed in Hamilton County Common Pleas Court, seeks unspecified compensatory and punitive damages against the Keating firm and its retired partner Herb Weiss. He assembled the development partnership that built one of the region's most famous eyesores next to Kenwood Towne Centre.
“Weiss allowed his personal interest in the project and the competing interests of his other clients to dilute the duty of loyalty he owed to Schneider,” said the complaint. “In the absence of Weiss’ acts of malpractice and misconduct, Schneider would never have personally guaranteed the project.”
Dayton attorney Charles Faruki, who represents Weiss, said the Keating partner disclosed all conflicts to Schneider in writing before the Kenwood project began.
“This notion that Mr. Schneider was helpless or led astray is simply fiction,” Faruki said. “The law firm was not the project manager or the cost accountant or the financial analyst or in charge of project budgeting. Mr. Schneider is now trying to avoid the financial consequences of his own failures of due diligence and shift his financial losses to his former law firm.”
Kenwood Towne Place was a $175 million development where unpaid contractors walked off the job in late 2008, leaving a rusty shell of an office tower that mars the Kenwood landscape to this day. The Bank of America sued for foreclosure in 2009. An investment affiliate of Phillips Edison & Co. bought the project out of foreclosure last summer and hopes to lure new retail and office tenants to the site, renamed Kenwood Collection this year.
Lead investor Matt Daniels is facing a bank fraud trial in September. Schneider and other investors agreed to a confidential settlement last month. Former investor Tim Baird agreed to a judgment of $5 million, which his attorney said Baird is unable to pay.
Schneider, a local nursing home developer, lost “tens of millions of dollars” in settlements, legal fees and his original investment in Kenwood Towne Place, according to his Aug. 1 lawsuit.
The complaint alleges that Weiss concealed from Schneider an ownership interest that the attorney held in Kenwood Towne Place through a family investment company. According to the complaint, Weiss relinquished the ownership in March, 2009, a few months before BofA filed for foreclosure.
The lawsuit also alleges that Weiss assured Schneider that Matt Daniels had an overall net worth of at least $50 million, but failed to disclose that almost all of his assets were held in a trust that Weiss established in 2001.
“Weiss’ assurances were false and specifically designed to mislead Schneider into personally guaranteeing the loan,” the complaint alleged.