OTTAWA — The battle between Ottawa Senators owner Eugene Melnyk and business partner John Ruddy over a proposed new downtown arena has escalated.

Ruddy and Trinity Development Group Inc., are seeking more than $1 billion in damages from Melnyk and Capital Sports Management Inc., after filing a counterclaim on Tuesday.

Last month, Melnyk filed a $700-million lawsuit against Ruddy, Trinity and others after the two sides couldn't come to terms on a plan to redevelop land at LeBreton Flats, which was slated to include a new NHL arena as well as other developments.

In the counterclaim, Trinity calls Melnyk's lawsuit "meritless" and says "the claim against John Ruddy is especially scandalous."

It goes on to say "CSMI's and Melnyk's true aim is to have the City of Ottawa or Trinity fund and build the $500 million Event Centre for the Ottawa Senators hockey team, with the Senators getting 30 years' free rent. CSMI also wants the valuable naming rights and an unreasonable degree of control over the LeBreton project."

Melnyk's group, in its lawsuit, claimed Trinity was developing an adjacent property that was in direct competition with LeBreton.

The National Capital Commission, the crown corporation that controls the land at LeBreton, said last month that the Melnyk-Ruddy RendezVous LeBreton group had until January to resolve internal partnership issues, or it would look for other options to develop the site.

Ruddy, in a statement, said he hopes to continue working on LeBreton.

"Let me be clear, I am committed to moving this project forward," he said. "The vision we've brought forward is the right one. I will work with the NCC, the City of Ottawa, and the community at large to advance solutions that will make this project a reality, and avoid losing these important lands for another generation."

The Senators currently play in the Canadian Tire Centre in Kanata, well outside the Ottawa downtown core.