VIRIGNIA BEACH, Va. (WVEC) -- The City of Virginia Beach said in a news release Friday that it planned to fight a lawsuit filed by Mid-Atlantic Arena LLC, its former partner in building an arena on city-owned property at the Oceanfront.

Mid-Atlantic Arena LLC filed the lawsuit this month, claiming Virginia Beach refused to honor its legal commitment to the developer.

"We are disappointed that Mid-Atlantic has chosen this path," City Attorney Mark Stiles said. "The City did everything it reasonably could to support Mid-Atlantic's development of an arena in Virginia Beach."

The lawsuit is asking for $165 million in damages.

The City of Virginia Beach maintains that Mid-Atlantic failed to provide all required closing documents and sufficient assurances of its financing and equity commitments before the loan closing deadline expired.

"The City had the right, and the obligation to its taxpayers, to ensure that the loan documents committed the lenders to fund the loan necessary for the construction of the arena. The incomplete set of documents provided to the City did not do so," said Stiles. "The City will vigorously defend this lawsuit. We are confident that the actions taken by the City were in good faith and in full compliance with its contract rights and its obligations to the public."

Virginia Beach retained Willcox & Savage, P.C. to help in its defense.