Peoria is suing its former city attorney and mayor over severance pay

Peoria is looking to claw back nearly $139,000 in severance money from its previous city attorney as part of a lawsuit against her and former Mayor Cathy Carlat.

The city claims Vanessa Hickman voluntarily resigned in January 2023 and therefore wasn’t entitled to a full payout when leaving to work for Arizona Attorney General Kris Mayes’ office.

In a complaint filed with the Maricopa County Superior Court last month, the city alleges Hickman breached her employment contract when she accepted a severance payment of about $218,715 that she wasn’t fully entitled to because she willingly quit.

The 14-page complaint also accuses Carlat of helping Hickman defraud the city just before her successor, Mayor Jason Beck, took office.

The city argued that Carlat directed Peoria’s finance department to pay Hickman based on a claim that the attorney was leaving “in lieu of termination,” the lawsuit states.

At issue is the city’s interpretation of the contract’s language regarding resignations, and whether Hickman’s departure from the city satisfied the “separation in lieu of termination” clause.

Hickman and Carlat have denied any wrongdoing since the city first raised these allegations and threatened the lawsuit last June.

“It is unfortunate that the present administration brought this lawsuit,” Colin Campbell, Hickman’s attorney, wrote in an emailed statement Tuesday. “It is at best a contract dispute, at worst, ‘politics.’”

Last summer’s legal threat prompted Hickman to file her own $1 million defamation claim against the city. In it, she accused city management of a coordinated effort to use the severance pay issue to discredit her at the Attorney General’s Office.

Hickman, who oversees the State Government Division there, alleges that the city's words to her new employer's office were “intended to be damaging.”

“They were done with intent for vengeance and malice, and support remedies of both compensatory and punitive damages,” Hickman’s claim stated.

Speaking to The Arizona Republic before filing a formal response to the lawsuit in court, Carlat called the city’s complaint “unfounded and full of misrepresentations.”

In a previous statement refuting the city’s claims, Carlat said the severance agreement was "a very standard thing in a leadership position where they serve at the pleasure of the political body.”

The city is seeking to reclaim the $138,795 it paid to Hickman, plus interest, punitive damages and attorneys' fees.

What does the lawsuit claim?

Hickman submitted her resignation in late December 2022, setting her last day on the job as Jan. 4.

It came months after she renegotiated her new contract with the city and just weeks before Beck was sworn in, replacing Carlat, whose term was expiring.

Under the agreement, Hickman would receive half of her earned and unused sick leave and all unused personal leave if she resigned “in good standing.” If the City Council voted to fire her or if she separated “in lieu of termination,” she would be eligible for severance pay.

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The city argues that Hickman’s resignation letter didn’t state she was “separating in lieu of termination or that she was resigning to avoid termination.”

As Hickman was preparing to leave, Carlat and a councilmember, who the lawsuit doesn’t name, spoke about the impending resignation. The former mayor, the city alleges, requested that Hickman receive a higher severance pay.

“The councilmember informed Carlat that Hickman was choosing to resign voluntarily before the new mayor or councilmembers even took office and so Hickman’s resignation could not be considered a separation or resignation in lieu of termination,” the lawsuit states.

Hickman, the lawsuit continued to allege, contacted Peoria’s finance and human resource departments asking that her resignation be treated as a separation.

After the payroll office sought additional information to confirm the request, Carlat emailed city staff authorizing the payment, according to the lawsuit.

That email, the lawsuit notes, was sent hours before Beck officially took his seat as Peoria’s mayor.

For voluntarily leaving, according to the city, Hickman should have only received about $79,920.

Instead, she received $218,715, which included half of her annual salary, as well as holiday, vacation, sick and personal leave payouts.

“Peoria was deprived of possession or use of the monies (and) property misappropriated,” the city stated in the lawsuit.

It added that Hickman knew the “gross pay amount was calculated based on her purported ‘termination’ or ‘separation in lieu of termination’ and not her actual voluntary resignation.”

How has Hickman responded?

Campbell doesn’t deny that Hickman sought her resignation to be treated as a separation. The employment agreement, he claims, entitled her to receive the severance payment.

“There was no attempt by Ms. Hickman to hide what she was doing,” Campbell stated. “She wrote a letter in December 2022 to the mayor and city council that she would be separating.”

From Campbell’s perspective, the contract was vague in that it didn’t clearly define “separation in lieu of termination.”

It also didn’t specify a series of requirements to be met before an employee can use the clause.

“In particular, the employment agreement does not say that a ‘separation in lieu of termination’ can only take place after the city manager has recommended termination,” Campbell stated.

“Indeed, the very purpose of the separation in lieu of termination clause is to allow the employee to leave with dignity, without the stain of a pending termination proceeding,” he continued.

Hickman had negotiated the terms of her 2022 agreement with the understanding that the city would be under a new administration the following year, Campbell said.

“A change in administration often comes with a new mayor who wants to sweep out the old and bring in the new,” he wrote.

Campbell also pointed to the shakeup in the Peoria city manager’s office after Beck was elected in late 2022 to support Hickman’s concern for her job.

After former City Manager Jeff Tyne announced his retirement in November 2022, two of his deputies followed suit.

Tyne’s last day was set for March 3, 2023.

Beck didn’t waste any time finding Tyne’s replacement as one of his first acts as mayor was nominating Henry Darwin for the role.

The council approved Darwin’s appointment in a 4-3 vote in January 2023.

“It was plain to see that the new administration would target the city attorney for replacement as soon as possible,” Campbell stated. “These were exactly the types of politics and circumstances that ‘resignation in lieu of termination’ was intended to cover.”

Shawn Raymundo covers the West Valley cities of Glendale, Peoria and Surprise. Reach him at sraymundo@gannett.com or follow him on X @ShawnzyTsunami.

This article originally appeared on Arizona Republic: Peoria is suing its former mayor and city attorney over severance pay