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Judge Rules in City’s Favor in Virginia Beach Arena Lawsuit

New Virginia Beach Arena

Virginia Beach officials did not breach their contract when they ended an agreement with the developer of a proposed arena in 2017, a judge ruled on Wednesday.

Mid-Atlantic Arena previously worked with the city on a proposed arena project, which called for the construction of an 18,000-seat facility near the city’s convention center. At one point, the two sides were working under terms that required the company to raise $70 million in private equity and obtain a loan by a set deadline.

A deadline of November 7, 2017 was eventually set, and the Virginia City Council ultimately voted during a meeting on that date to terminate the agreement. When making this decision, the city claimed that Mid-Atlantic Arena had failed to secure financing by its deadline.

Mid-Atlantic Arena later filed a $165 million suit against the city, seeking to recover expenses and a loss of future profits. In a decision made on Wednesday, a judge sided with the city, determining that it walked away from the deal in good faith and agreeing with the city’s contention that Mid-Atlantic Arena failed to prove it had obtained sufficient funding. More from The Virginian Pilot:

Mid-Atlantic Arena said it closed on a $170 million loan with JPMorgan Chase and Sumitomo Mitsui Bank on the night of the Nov. 7 deadline. The developer was required to contribute $70 million before it could begin drawing from that loan.

City Attorney Mark Stiles said the developer had not proven it had sufficient funds to build the arena.

Judge H. Thomas Padrick Jr. agreed. He also said the city had a right to review documents related to the loan’s closing that the developer had withheld.

The trial lasted a week and a half. Both sides took about an hour each to deliver closing arguments on Wednesday. The judge dismissed the lawsuit around 1:30 p.m.

The two sides pointed to different parts of the contract in their arguments, but Padrick said the agreement was not ambiguous. He said the city acted in good faith when it walked away from this deal.

Over the years it was discussed, the proposed Virginia Beach Arena was envisioned as a venue that could host sports, major touring acts, and other events. Construction of the facility was to be privately financed, with the city providing land and taxes generated within the facility.

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