Lawyers filed suit against Lubbock City Manager lee Ann Dumbauld, city official Scott Snyder and David Miller, Lubbock's former mayor.
AAG is suing for damages for what they claim was a conspiracy to violate the city's contract with AAG and for slanderous and libel statements that defamed AAG's reputation.
AAG was the Lubbock's third party insurance negotiator.
Current city officials and Miller have accused the company of taking $6 million of city tax money in wrongful commissions.
The FBI is currently investigating the claims.