Winston & Strawn on Thursday filed a lawsuit in New York federal court seeking nearly $1 million in attorney fees and costs it says it’s owed by a developer that sought to build an ocean-side sports arena in Virginia Beach, Virginia.
The lawsuit, which seeks $833,790 in attorney fees plus damages, is part of a broader legal shakeout stemming from the failed effort by Mid-Atlantic Arena LLC to build an 18,000-seat arena in Virginia Beach.
MAA, which Winston sued on Thursday, in January filed a complaint against Virginia Beach, seeking $140 million in damages after the company said the city backed out of the project.
Leading up to Winston’s lawsuit, MAA had told Winston the firm would not be paid its legal bills related to work on a loan until the developer’s lawsuit with the city was completed, the complaint says. That was after Winston was told by MAA executives that they understood they would have to pay lawyer fees regardless of the project’s success, the firm says.
“As I am sure you understand … if for some reason the transaction does not move forward, we would still need to be paid for all the work performed,” Winston partner Alan Hoffman wrote in an email to MAA executives on Nov. 6, 2017, according to court documents.
“We understand,” replied an executive for the company that owned MAA, The ESG Companies, which did not immediately return a request for comment on the lawsuit.
Winston says its lawyers spent nearly 1,000 hours representing JPMorgan Chase & Co. in closing a $167 million loan related to the project.
Work on the loan agreement was ultimately for naught, however.
The Virginia Beach city council voted on Nov. 7, 2017, to terminate its development with MAA unless the loan closed before midnight that day, Winston says in its complaint. Despite the loan closing “several hours” before that deadline, the city terminated the agreement the next day and failed to convey to MAA the land where the arena was to be built.
Winston’s lawsuit says MAA is nearing insolvency in the wake of the failed arena project. The company said in its lawsuit against the city that it had been forced to refund deposits for personal seat licenses at the arena worth over $15 million, in addition to losing income from the naming rights of the stadium worth $10 million. The company said it lost future profits from the stadium of more than $140 million.