Peoria threatens to sue ex-city attorney; she files defamation claim
When Peoria paid out its former city attorney $140,000 in January, City Hall insiders hoped it marked a clean break, but new claims that the payment was improper could end up costing the city another $1 million in court.
The matter has mushroomed with claims and counterclaims, recriminations and suspicions. If the disputes aren’t quickly resolved, the city could get mired in costly litigation, even if it doesn’t end up paying the claim.
In June, Peoria threatened to sue its own former city attorney, Vanessa Hickman, and former mayor, Cathy Carlat, for authorizing a severance payment after Hickman decided to leave her city position.
The city says the payment shouldn’t have happened because Hickman essentially quit, making her ineligible for a payout, and that City Council should have been given the opportunity vote on it.
“Ms. Hickman has been unjustly enriched at the city’s expense,” the city’s claim says.
But Hickman and Carlat, based on their attorney‘s response letter, say the council already agreed to the payment when they approved Hickman’s employment agreement in May 2022.
“There was no attempt by Ms. Hickman to hide what she was doing,” Hickman and Carlat’s attorney Colin Campbell wrote. “City Council approved the City attorney‘s contract in open session May 3, 2022.”
Shortly after, Hickman sent her own claim accusing the city of vindictively contacting “high officials at the Arizona attorney General’s office in an effort to defame and discredit (her) and to cause her unemployment.”
Hickman was hired as a division chief at attorney General Kris Mayes’ office after she departed from Peoria in January of this year. In her claim, she said multiple officials from Peoria have called her higher-ups to malign her reputation for ulterior motives.
She did not explain the motives, although she effectively threatened to reveal them should the city advance litigation, according to the claim.
Hickman has requested $1 million to settle with the city of Peoria.
The city now has to respond to Hickman’s claim and reply to Hickman and Carlat’s response to the city’s claim against them.
City manager Henry Darwin said the city hasn’t sent responses yet and is weighing its options. He acknowledged reaching out to the attorney general’s office regarding the claim the city filed against Hickman but denied defamation and malicious or politically motivated intent.
Darwin said the cost to proceed with litigation, no matter how much, is worth it to correct an erroneous payout.
“It’s all just me as a lifelong public servant and someone responsible for the finances of the city of Peoria finding out that we paid $140,000 to somebody that we arguably were not required to pay. And we got nothing in return,” Darwin said. “I think the citizens of Peoria would expect me to pursue (recoupment).”
Hickman, in a statement to The Arizona Republic, said she followed the terms of her contract and did nothing wrong.
“I am stunned that some from the City have intentionally decided to hurt me in an effort to defame and discredit me. Maliciously trying to damage my reputation and integrity and to attempt to get me fired is unconscionable. It has completely unnerved me, causing great stress and anxiety in my professional and personal life,” Hickman wrote.
Carlat also refuted wrongdoing, saying the severance agreement was “a very standard thing in a leadership position where they serve as the pleasure of the political body.”
The impending lawsuits are the latest in a series of controversies that have embroiled the northwest Valley city of nearly 200,000 residents.
Last month, the City Council asked its vice mayor to resign. She fired back accusing the mayor of political retribution, which he denies. Meanwhile, The Republic revealed the city skirted its own protocol for handing allegations of ethical misconduct, which would have made conversations about Dunn accessible to the public.
First dispute: Should Hickman have received a payout?
A core disagreement between the parties is how to define “separation in lieu of termination,” and whether Hickman’s departure satisfied that clause.
Within the contract, Hickman was eligible for a severance if City Council terminated her or if she separated “in lieu of termination,” but she was ineligible if she were terminated due to a felony conviction.
Hickman’s contract does not specify severance pay in the case of voluntary resignation, but it does appear to suggest that termination or separation in lieu of termination occurs “during the time that the employee is willing and able to perform the duties.”
From the city’s point of view, Hickman voluntarily resigned, making her ineligible for severance.
attorney Jessica Post of Fennemore Law, the firm representing the city, argued in her claim for a narrow interpretation of the clause in which “separation in lieu of termination” is only possible in cases where the City Council was planning to terminate the employee.
“There is not evidence … that City Council decided to terminate Ms. Hickman or that it allowed Ms. Hickman the opportunity to resign in order to avoid termination,” Post writes.
The city also argues that if Hickman had legitimately separated, that decision would have needed to have been approved in its own public vote by the City Council, which didn’t happen.
Instead, their claim alleges, Hickman emailed City Council in December announcing her resignation and requested it be treated as a separation, and then Carlat sent an email agreeing and authorizing the payout.
Hickman and Carlat don’t dispute those claims in their response. Instead, their attorney claims their actions were all legal and expected based on Hickman’s council-approved contract.
“Separation in lieu of termination (is) anything except a termination,” Carlat told the Republic.
Hickman and Carlat’s attorney wrote in the legal response that Hickman’s contract does not define “separation in lieu of termination,” nor does it lay out a process by which the separation must be enacted.
Campell, the attorney, also wrote the “political context” of the contract must be taken into account.
Hickman specifically negotiated the clause into her contract in 2022 to shield herself against a new mayor, since Carlat was term limited, he wrote.
“A change in administration often comes with a new mayor who wants to sweep out the old and bring in the new,” the response says.
The letter points to how the city has “terminated or demoted” four women in prominent positions to bolster Hickman’s concerns over job security. It also points to the hiring of Rick Buss, Peoria’s former economic development director whom Hickman played a role in terminating.
“Hickman had no question that he would act vindictively toward her at the first opportunity,” the response says.
Darwin, the city manager, declined to comment on former Deputy City Manager Katie Gregory’s termination. He acknowledged one demotion but declined to explain the cause.
Regarding Hickman’s preemptive concerns over termination, Darwin also pointed to how the City Council handled Jeff Tyne, the city manager under Carlat. Tyne was given space to resign and then provided six months’ worth of consulting in exchange for $142,000, Darwin said.
Campbell also said the contract does not lay out a procedure for how to enact “separation in lieu of termination.”
He noted “in particular” that if the separation clause were required to be carried out publicly, with a prerequisite intent to terminate, then “the very purpose … to allow the employee to leave with dignity, without the stain of a pending termination proceeding” would be defeated.
Second dispute: Did the city defame Hickman to her current employer?
In late August, Hickman sent a $1 million claim to the city, accusing Assistant City Manager Rick Buss of defaming her to officials at the Arizona attorney General’s office where she works.
Buss worked with a city lobbyist and coordinated with City Manager Darwin and Mayor Beck when calling the officials to say Hickman had illegally taken severance pay, Hickman’s claim says.
“The words were intended to be damaging … they were done with intent for vengeance and malice, and support remedies of both compensatory and punitive damages,” the claim says.
Darwin told The Republic he and Buss reached out to attorney General Mayes to schedule a conversation about Hickman.
“I did text Kris Mayes, telling her that we had an issue with one of her executives … and that I would like to have a conversation with her to preserve the relationship between the city of Peoria and the state of Arizona, given this unfortunate circumstance,” Darwin said.
He added that the conversation never ensued but he wanted to discuss concerns over potential retaliation from her office — and how to avoid it — given the city’s claim against Hickman.
Reporter Taylor Seely covers metro Phoenix for The Arizona Republic / azcentral.com. Reach her at tseely@arizonarepublic.com or by phone / Signal at 480-476-6116.
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