Donna Hanson, the Medina city manager whose firing of a popular but controversial
police chief led to a $2 million legal judgment against the city, is leaving her position.

Her departure is the latest chapter in a drama that has pitted Hanson against Jeffrey Chen for more than two years.

The City Council on Wednesday night authorized Mayor Michael Luis to sign a separation agreement with Hanson, who became the wealthy lakefront city’s top administrator in 2008.

Luis said in an email he was authorized to execute a “mutually agreed upon separation.”

Hanson, whose last day on the job will be July 12, will receive severance pay equal to about 14 months of her current salary, City Attorney Kari Sand said. Her annual salary is $139,500, according to the 2013 city budget.

Luis and Sand declined to discuss the agreement or release copies until it is signed by all parties. Hanson had no comment.

Hanson angered many citizens and some City Council members in 2011 when she fired Police Chief Jeffrey Chen for allegedly snooping through other city officials’ emails, lying in two investigations, forging police officers’ names on memos voiding traffic tickets, using city money to buy items for his personal use and losing the confidence of his subordinates.

Chen denied all the claims against him, and said he was a victim of Hanson’s bias against him because of his Chinese heritage. Many residents sided with Chen, asking the City Council to fire Hanson and reinstate the police chief.

Chen took his grievance to U.S. District Court, where a jury found he was a victim of discrimination and ordered the city and Hanson to pay $2 million in damages. Of that amount, $25,000 was in the form of punitive damages to be paid by Hanson personally.

The city has asked Judge Thomas Zilly

to reverse the jury’s verdict or order a new trial. Attorneys for the city said among other things there was insufficient evidence of discrimination
.

Chen’s attorneys deny there are legally sufficient reasons for overturning the jury verdict.

Keith Ervin: 206-464-2105 or kervin@seattletimes.com