Sahuarita’s former assistant town manager has settled out of court more than a year after filing a lawsuit alleging retaliation after she reported the former town attorney attended a council meeting in 2021 with alcohol on his breath.
Teri Bankhead filed the lawsuit in December 2021, and the case was scheduled for a jury trial this month. In January, she signed a settlement agreement with the town that gives her $55,000 to end the case. According to the agreement, $20,000 of that will go to her attorneys and $35,000 goes to Bankhead for “compensatory injuries.”
Bankhead, who was hired in 2014 and became assistant town manager in 2019, claimed the town interfered with her rights under the Family Medical Leave Act (FMLA) and that she was wrongfully terminated. She sought compensation for lost income and emotional distress; back pay; attorneys’ fees; and other damages.
Bankhead’s lawsuit shed light on the abrupt retirement announcement by former Town Attorney Dan Hochuli, the unorthodox search for his replacement, and Hochuli’s ultimate rehiring as a contract employee after the Town Council voted to offer him a generous severance package shortly after Bankhead’s allegations.
The town’s lawyer in the case, Justin S. Pierce, denied Bankhead’s key claims in a February 2022 filing, and an earlier settlement conference was unsuccessful.
Hochuli is not referred to by name in court documents but he had been Sahuarita’s town attorney for more than 27 years, and the only one in its history before retiring in 2022.
The allegation
According to the lawsuit, Bankhead attended a council meeting on Jan. 25, 2021. During the public comment period, the town attorney “got out of his chair, approached Ms. Bankhead and squatted down beside her,” according to the suit. Though both wore masks, Bankhead “noticed a strong smell of alcohol on the Town Attorney’s breath.”
After the meeting she noticed the smell of alcohol again on his breath, “that he was acting giddy and that he repeated himself three times,” according to the suit.
Bankhead “reasonably believed” Hochuli was under the influence while working at a Town Council meeting, that he would be driving home from the meeting impaired and may have driven to the meeting under the influence, according to the lawsuit.
Bankhead called then-Town Manager Kelly Udall on her way home that night and reported her concerns. Udall said he would call Mayor Tom Murphy, and Bankhead later was told there would be an investigation “with respect to the Town Attorney’s conduct.”
After Bankhead’s report, two closed-door executive sessions were held, Feb. 22, 2021, and March 1, 2021. After the second session, Hochuli was offered a severance agreement, according to the lawsuit.
At the time, the council announced Hochuli wanted to retire. While a severance package was not part of the town attorney's contract, Murphy told the Sahuarita Sun/Green Valley News at the time that it was offered because of Hochuli’s “historic knowledge” and to ease the transition to a new town attorney.
No mention was made of Bankhead’s allegations or a possible investigation into Hochuli’s behavior. The severance deal gave him nearly $94,000 and six months of paid health and dental insurance. There was no exit date set.
According to the lawsuit, despite an active investigation into Hochuli and his severance deal, “the Town Attorney controlled the recruitment for his position and was the only person to receive applications for the position.” Udall, who oversaw all aspects of running Town Hall, was excluded, as was Bankhead.
According to the lawsuit, Bankhead and Udall told Murphy that “proceeding without any checks and balances on the Town Attorney’s recruitment for his own position was not a best practice.” That advice was not heeded.
The investigation
In March 2021, the town hired independent investigator LaCoya Shelton to conduct a workplace investigation following Bankhead’s allegation against Hochuli. A month later, and with the investigation not finished, Hochuli proposed that the Town of Sahuarita hire him as a contract employee through Educational Services Inc.
ESI contracts allow entities such as cities and school districts to rehire retired workers under a contract without having to pay benefits. The employees, in return, can begin collecting state retirement benefits while working as a contractor, often at the same pay. In Hochuli’s case, the deal would save the town about $10,000 per year.
The town OK’d the ESI contract for Hochuli in May 2021, though Shelton’s investigation was not finished. Bankhead told Shelton that her and Udall’s exclusion from recruiting for the position was retaliatory, according to the suit.
The search Hochuli was leading for his own successor quickly went dormant, and in a later council meeting Hochuli said there were simply not many applicants interested in a town attorney position. His ESI contract ended June 30, 2022.
The focus shifts
On May 5, 2021, Shelton told Bankhead that the Town Council had refocused her investigation “to include an allegation regarding management behavior” and that her conduct as a manager was in question. Bankhead also called that action retaliatory in the lawsuit.
In June 2021, Shelton told Bankhead two facts about the investigation, which now targeted the town manager and assistant town manager: Hochuli made the allegation that Bankhead “intentionally falsified her allegation” from the Jan. 25 council meeting, which shifted the focus. And, after interviewing 23 people, Shelton found allegations against Bankhead to be unsubstantiated.
The report, obtained by the Green Valley News, found the allegations against Hochuli to be unfounded. It also outlines what Hochuli called efforts by Bankhead and Udall to oust him from his job. The interactions among the three often involved yelling by Udall that left employees uneasy, according to the report.
Taking leave
On May 24, 2021, Bankhead “had to take intermittent FMLA due to anxiety and high blood pressure as a result of the hostile work environment she was being subjected to for disclosing violation of the law,” according to the lawsuit.
In July, Udall’s contract was not renewed by the council and Finance Director A.C. Marriotti was named interim town manager, typically an appointment that would go to the sitting assistant town manager.
On Aug. 3, Marriotti met with Bankhead and, according to the lawsuit, “presented Ms. Bankhead with a Separation Agreement and asked her to meet with him the next day regarding her ‘exit strategy.’”
On Aug. 27, Bankhead was terminated.
Getting answers
The Town of Sahuarita responded to Bankhead’s complaint in February 2022. In that document, the town acknowledged that Shelton’s investigation “was broadened to include allegations of mismanagement, inappropriate behavior, and sabotage” — presumably by Bankhead and Udall.
The town also said that when Hochuli asserted that Bankhead “had concocted the allegation against him illegally as a way of getting him fired,” the investigation expanded.
According to a Joint Case Management Report dated May 19, 2022, “The investigation ultimately revealed concerns about the Town Manager, which also implicated (Bankhead), as the assistant.”
The report said Marriotti talked to Bankhead about “ongoing concerns” about her performance “and ultimately determined that those concerns were such that Plaintiff should be separated from the organization.”
Bankhead claimed the town interfered with her rights under FMLA and that she was wrongfully terminated.