Khan rebutted the allegation in a strongly worded letter of his own to Mayor Alvin Brown's office, according to the newspaper.
The city on Wednesday withdrew the default claims, chalking it up to a "misunderstanding."
According to the newspaper, the incident revolved around confusion regarding the process for selecting a company to oversee operations at the Jaguars' stadium. The original contract between the city and team specified that the sides should choose such a company jointly, while an amendment said the picks can be made separately and then negotiated.
In a letter withdrawing the city's claim, general counsel Cindy Laquidara explained to Khan that the city hadn't known about the amendment. Mayor Brown also wrote a letter to Khan, in which he emphasized that the city values its relationship with the team.
"Let me be crystal clear: The city of Jacksonville has absolutely no intention whatsoever of terminating its lease with the Jacksonville Jaguars," Brown wrote in the letter, according to the newspaper.
Khan's initial letter was forceful.
"Mayor, I hope you can understand that I am shocked and perplexed at the city's actions," Khan wrote in his letter. "I am at a loss to understand the purpose of this drastic and unprecedented action."
The incident arose when the Jaguars sent a letter to the city declaring they had picked a company to manage the facilities. Two companies -- SMG and Global Spectrum -- had submitted requests for proposals.
Khan expressed concern that uncertainty over the team's lease with the city would affect ticket sales and had asked Mayor Brown to withdraw the letter.
"The result of the delivery of the letter to the newspaper was a front page headline stating that the Jaguars were in a contract dispute with the city," Khan wrote. "The timing of the headline from the city's media activity could not have been timed worse for our ticket sales effort. The comments by city representatives and the story have created uncertainty and concern by our fan base. ...
"I am hopeful that the letter is as a result of an overzealous lawyer and not the result of the philosophy of your administration in dealing with the partnership between the City of Jacksonville and the Jaguars."