Peoria files lawsuit against former city attorney, mayor

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City of Peoria

Peoria City Hall

The city of Peoria filed a lawsuit against the former mayor and city attorney, alleging the attorney received payments she wasn’t entitled to on her way out the door. 

Former City Attorney Vanessa Hickman left Peoria in January 2023 to join Arizona Attorney General Kris Mayes’ office. The city paid her over $218,000 in severance pay and other benefits from the city, according to the lawsuit.

But months later, the city — now under a new mayor and city manager — claimed those payments were made in error.

“Through an outside legal review, the city of Peoria determined that the $138,795 payment issued to Vanessa Hickman was not made in accordance with her employment contract, or city code, and that the city had received nothing in return for the payment issued to her,” according to a city statement.

The dispute centers on differing interpretations of language in Hickman’s employment contract.

In the lawsuit, the city alleged Hickman was entitled to receive only $80,000 under her employment contract, because she voluntarily resigned. The additional $139,000 should only have been paid out if Hickman was fired or resigned “in lieu of termination.”

The city cited a clause in the contract that states, “In the event the city attorney is terminated by the City Council, or separates in lieu of termination, during the time that Employee is willing and able to perform the duties of city attorney, then in that event the City Council shall pay Employee a lump sum cash payment.”

The Arizona Republic reported Hickman responded to the initial allegations by threatening to sue the city for $1 million after city officials contacted her new employer, the Attorney General’s Office, about the issue.

The city also alleged former Mayor Cathy Carlat sent an email to city staff telling them that Hickman was resigning in lieu of termination in order to facilitate the larger payment. The lawsuit alleged that the email was sent on Jan. 3, 2023, just two hours before a new mayor was sworn in to office.

Carlat denied there was anything untoward about the severance payment, saying it complied with the terms of Hickman’s employment agreement that was approved by the City Council in 2022, which did not specifically define what resigning in lieu of termination means.

“Separation in lieu of termination, that means separation for any reason … there was no fraud, no collusion,” Carlat said.

She alleged the lawsuit was politically motivated.

Peoria Mayor Jason Beck was elected in 2022 and succeeded Carlat in office. 

In August 2023, Chad F. Campbell, an attorney for Carlat and Hickman, wrote a letter to the city claiming Beck likely would have moved to fire Hickman when he took office. 

The letter pointed out that Hickman, as city attorney, was involved in the firing of Rick Buss, a Beck ally. Buss was fired from the city in 2021. He later worked on Beck’s campaign and is now an assistant city manager.

“Ms. Hickman had no question that [Beck] would act vindictively towards her at the first opportunity,” Campbell wrote.

Campbell argued the resigning “in lieu of termination” clause was designed to protect employees like Hickman, who was a city charter officer hired directly by the City Council.

“The city attorney and city manager are employed at will by a political body,” he wrote. “In politics, elected officials change, and political bodies set out in different directions.”

But the city disagreed, arguing in the lawsuit that the clause should only apply if Hickman stepped down because she was going to be fired. The city claims that at no time did the City Council or city manager take steps to fire Hickman.

Attorney Paul Weich, who is not involved in the case, said there is not a lot of caselaw to draw on to determine whose definition of “in lieu of termination” is correct.

Arizona State University law professor Michael Selmi, who also is not involved in the case, agreed.

“That’s not a phrase that has common meaning in contract law, generally,” Selmi said.

Calling it a “weird little mess,” Selmi said the issue should have been resolved when the agreement was negotiated and he was surprised the contract did not include a clause requiring arbitration in the event of such disputes.

“If I were a resident of Peoria, it wouldn’t give me a lot of confidence in how things are run, because this obviously, I would think, should have been resolved without a lawsuit,” Selmi said.

Ultimately, he said the city’s chances of recouping the money aren’t good if it comes down to differing interpretations of contractual language by the old and new city administrations.

“They can’t, you know, approve it with one interpretation, one administration, and then try and change the interpretation later. …A very high percentage of contract cases involve regrets of the contract, and that’s usually not a good basis for proceeding,” Selmi said.

The case is complicated by the fact that the city is alleging Hickman and Carlat engaged in fraud and proceeded with the payment knowing it violated the contract.

“With the politics, the retaliation, the defamation, the contractual  language – there’s a little bit of everything going on in this case, and it looks like it’s gonna get messy,” Weich said.

If the case goes to trial, Weich said the judge will have to consider all facts of the case surrounding how Carlat communicated with city staff and how the payment was authorized.

“And if she did not do anything improper in how she handled it, then it’s going to be hard for the city to hold the former mayor responsible or claw it back from the former city attorney,” he said. 

The city is seeking a judgment requiring Hickman to repay about $139,000 of the money she received when she resigned.  

A spokesman for the Attorney General’s Office declined to comment.

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