Acclaimed $300 Million Museum Square Project In Old Town Scottsdale Seeks Millions in Damages Over Fruitless, Untimely, Frivolous, and Failed Litigation
Developers say neighboring HOA’s spurious legal challenges have stalled the Old Town Scottsdale project despite previous court defeats and unpaid legal fees to Museum Square
(SCOTTSDALE, Ariz.) The developers of the anticipated Museum Square in Old Town Scottsdale, ARC Scottsdale Holdings, on September 21st filed a complaint accusing a neighboring condominium association and several of its leaders of abusing the legal process, spreading falsehoods, and needlessly stalling the $300 million mixed-use development designed to enhance part of the Scottsdale Arts District around 2nd Street and Marshall Way. Pending evaluation and confirmation by expert witnesses, damages against the HOA could be many millions of dollars. The HOA has lost a series of lawsuits and already owes unpaid legal fees, costs, and interest to Museum Square.
Museum Square would transform a former city transit site into a vibrant anchor for Scottsdale’s Arts District, with plans for five buildings, including a luxury hotel, upscale condominiums and apartments, and public open spaces. The project received the permits needed to begin construction and was unanimously approved by the Scottsdale City Council over six years ago.
The Gateway at Main St. Plaza Scottsdale Condominium Association previously sued the City of Scottsdale and the developers in an attempt to undo a 2019 termination of development restrictions. The court dismissed all four counts, denied the Association’s motion for reconsideration and awarded the developer more than a hundred thousand dollars in attorneys’ fees and costs, plus interest.
The new complaint of ARC against the Gateway HOA states: “The Association used the 2025 Lawsuit to accomplish an improper use, namely, to coerce ARC into conveying an unearned and untimely ‘economic benefit’ on the Association.”
ARC Scottsdale Holdings filed the new lawsuit in Maricopa County Superior Court against the Gateway association residents, Terry and Beth Rogers, and Daniel and Jane Doe Conroy. The complaint alleges abuse of process, interference with business opportunities, injurious falsehood and wrongful institution of civil proceedings. It also seeks declaratory relief.
According to the complaint, the Association joined the City of Scottsdale in an agreement terminating seven sets of development restrictions in 2019, clearing the way for Museum Square before ARC purchased the property in 2022. Yet six years later, the HOA sued to reverse that agreement, despite allegedly receiving a warning from an independent law firm that its claims were weak and unlikely to succeed, not to mention the period for making such claims had already passed and were time barred.
The court dismissed all four counts of the HOA’s lawsuit without allowing the HOA to amend its claims. It also rejected the Association’s request for reconsideration and ordered it to pay ARC legal fees and costs, plus interest.
ARC contends the continuing legal battle has done far more than generate legal bills. The developer says the litigation has delayed Museum Square, disrupted discussions with prospective hotel operators and business partners, and resulted in lost business opportunities, revenue and goodwill. ARC is seeking damages at trial including the millions of dollars lost by the development due to the HOA’s time barred lawsuit that was ultimately dismissed with prejudice. If found liable, the HOA, its residents, and each of the named defendants would be impacted by the judgment and millions of dollars in damages.
“This lawsuit is about holding the HOA and its leaders accountable for abusing the civil process with meritless litigation that they all knew was legally time barred,” said Rick Erickson, an attorney for ARC. “ARC will protect Museum Square, its business relationships and the public benefits of this fully permitted and approved project while seeking recovery for the substantial damage these delays have caused.”
The lawsuit also raises questions about how the HOA decided to appeal its earlier court defeat. ARC alleges the board made that decision improperly, prevented one board member from voting and denied homeowners a meaningful say. The developer is asking the court to invalidate the appeal decision under Arizona’s open-meeting requirements.
ARC’s complaint against the Gateway HOA was filed Sept. 21, 2026.
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