The Madison Square Garden Co., which owns The Forum, says Inglewood Mayor James Butts essentially pulled a bait-and-switch on the company.
MSG's attorney, Marvin Putnam, said the city convinced the company to give up its lease on part of a parking lot near Yukon and Century Blvd so Inglewood could build a technology park.
However, the city later announced the land was part of a new deal with Clippers owner Steve Ballmer to build an 18,000-seat basketball arena just about a mile and a half from The Forum.
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"The mayor and the city looked MSG in the eye: 'We want to do business with you and we promise we'll act accordingly.' And then they turn around and don't and moreover out-and-out lie," Putnam said.
MSG has filed a claim for damages with the city, the precursor to a lawsuit.
The new Clippers arena could compete for concerts and other events with The Forum. MSG said that is another direct violation of the city's agreement with the company not to create direct competition.
Butts said he believes the situation can be resolved.
"In the end, I believe that we will be able to come together and find an amicable resolution," Inglewood mayor James Butts said in a statement Thursday.
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The Inglewood City Council has called a special meeting for Friday to discuss its approval of the deal with Ballmer for the new arena.