SETTLEMENT AGREEMENT AND RELEASE

This Settlement Agreement and Release ("Agreement") is entered into between

the City of Carmel-by-the-Sea ("City") and John Hanson ("Hanson") with respect to the
following facts .
WHEREAS, Hanson began his employment with the City on October 16, 1988
and worked in the Building Department since 1997. In 2007, Hanson became the Chief
Building Official and was terminated by the City on or about August 5, 20 13;
WHEREAS, Hanson raised claims of wrongful termination and violation of due
process of law, disclosure of confidential personnel information, defamation, deprivation
of his property interest, and breach of contract, among others, with the City relating to
his employment with the City and his termination (hereinafter "Claims"), and afterwards
in the case of Hanson v. City of Carmel-by-the-Sea, Monterey County Superior Court
action No. M128436;
WHEREAS, the City and Hanson both now desire to compromise and settle the
aforementioned Claims and all claims, demands, complaints, actions, charges, litigation,
and causes of action, whether now known or unknown that arise from the facts alleged
in the Claims or arising from Hanson's Claims against the City or any of its members of
the City Council, officers, agents, deputies, representatives, servants, employees,
successors, assigns, predecessors, divisions, branches, or attorneys (collectively "The
Releasees");
WHEREAS, the parties hereto acknowledge and agree that neither this
Agreement nor the act of entering into it constitute an admission, stipulation or
concession of liability, express or implied , on the part of any party concerning any fact
or matter in any way connected with the subject matter of this Agreement. Hanson
acknowledges the City is providing him with the consideration mentioned herein for
economic considerations in order to resolve all matters related to his prior employment
and termination which could be the basis of a claim or cause of action or verdict or
judgment based on alleged events occurring before the effective date of this Agreement
by avoiding the costs of litigation and trial.

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John Hanson

NOW, THEREFORE, in consideration of the mutual covenants set forth below,

the parties agree as follows :
1.

All of the recitals listed above are material provisions of this Agreement.

2.

In return for the consideration discussed in this Agreement, Hanson, and

on behalf of his heirs, successors, and assigns, on the one hand, and City, its
successors, assigns, employees, officers, and directors, on the other hand , agree to
forever release and discharge each other and each other's predecessors, successors,
employees, officers, directors, and anyone else acting on behalf of such Releasees
from any and all claims, charges, liabilities, liens, damages and causes of action,
obligations, and duties, known or unknown, which the non-releasing party may have, or
may claim to have, against any of the Releasees arising out of or, in any way related to
Hanson's relationship or involvement with City or any of the Releasees, including any
contractual or employment relationship or involvement, save and except for the
obligations stated in this Agreement. This Agreement specifically extends to, without
limitation, claims or causes of action for defamation , deprivation of property interest,
violation of due process, disclosure of confidential personnel information, breach of
contract, wrongful termination, breach of an express or implied contract, breach of the
covenant of good faith and fair dealing, breach of fiduciary duty or any other duty, fraud,
misrepresentation, interference with a contractual or other business relationship,
infliction of emotional distress, discrimination , harassment, retaliation, disability, loss of
future or past earnings, whistleblower-related claims, and claims brought under the
California State Constitution, the United Sates Constitution, or applicable state and
federal fair employment statutes and regulations, including but not limited to: the Civil
Rights Act of 1964, as amended; the Fair Labor Standards Act, as amended; the
Worker Retraining and Notification Act of 1988, as amended; the Americans with
Disabilities Act of 1990, as amended; the Rehabilitation Act of 1973, as amended; the
Employee Retirement Income Security Act of 1974, as amended; the Age
Discrimination in Employment Act, as amended; and the California Fair Employment
and Housing Act, as amended. Nothing in this Agreement shall affect the U.S. Equal
Employment Opportunity Commission's ("EEOC") rights and responsibilities to enforce

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Page 2 of 8
John Hanson

the Civil Rights Act of 1964, as amended; the Age Discrimination Employment Act of
1967, as amended ; or any other applicable law, nor shall anything in this Agreement be
construed as a basis for interfering with Hanson's protected right to file a charge with, or
participate in an investigation or proceeding conducted by, the EEOC, or any other
state, federal or local government entity; provided , however, if the EEOC or any other
state, federal or local government entity commences an investigation on Hanson's
behalf, Hanson specifically waives and releases his right, if any, to recover any
monetary or other benefits or relief of any sort whatsoever arising from any such
investigation.
3.

City shall reinstate Hanson to a permanent, full-time position as a Building

Official at Step 5, or as otherwise agreed between Hanson and City Administrator, with
compensation and benefits set at the top of the scale associated with Building Official,
Step 5. Back pay and full benefits, including PERS credits, will be provided by the City
to Hanson for the period of August 5, 2013 to the date of Hanson's actual return to
active duty with City, subject to all applicable federal, state and local withholding taxes
and deductions. Hanson and City Administrator shall meet and confer in good faith to
discuss and consider other job assignments to be approved by Hanson.
4.

City also shall pay Hanson the sum of one hundred thousand and no/1 00

dollars ($1 00,000) no later than January 15, 2015, in further consideration for this
release of all claims described herein and as compensation for any and all alleged
injuries or damages or litigation costs, including emotional distress damages, that have
arisen in any way from his employment relationship with the City. The damages are for
emotional distress damages caused by physical sickness. The City, no later than
December 22, 2014, shall pay the sum of one hundred thousand dollars ($1 00,000) to
Stamp 1 Erickson for work performed, and reimbursement of costs not to exceed five
thousand dollars ($5,000) incurred in this matter. City will pay these sums by providing
checks as agreed to by the parties. Within ten business days of the City's final payment
under this Agreement, Hanson and/or his attorneys shall provide the City with an
executed request for dismissal with prejudice of the pending litigation.
5.

City shall report the lump sum paid to Hanson to taxing authorities in

accordance with the applicable tax provisions, on IRS Form W-2 or equivalent. Hanson

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Page 3 of 8
John Hanson

understands and agrees that City will pay the lump sum as other non-wage income
subject to all applicable federal, state and local withholding taxes and deductions. To
the extent reasonably possible, City will assist Hanson in classifying or restoring monies
to Hanson's deferred compensation plan.
City shall report the lump sum paid to Stamp 1 Erickson to taxing
authorities on IRS Form 1099 or equivalent, and Stamp 1 Erickson is responsible for
payment of any and all taxes on this sum, if any.
City is not providing any tax or legal advice, and the City makes no
representations regarding tax obligations or consequences, if any, related to the
payments or the Agreement. If any claim is asserted against the City by any taxing
authority with respect to this sum, Hanson agrees to hold the City harmless, and to
defend and indemnify the City and the Releasees from any cost, loss, liability, expense,
penalty, or attorneys' fees arising from the payments set forth above.
6.

Hanson and the City, and their respective agents, assignees and

successors hereby fully, irrevocably, and unconditionally release and each other from
any and all claims, actions, causes of action, judgments, liens, indebtedness, damages,
obligations, losses, liabilities, costs, claim for attorneys' fees or costs, and all other
claims and rights of action of all kinds and descriptions, which they have or may have,
whether known or unknown, suspected or unsuspected, wh ich were raised or might
have been raised , or arise out of, or are connected with, Hanson's termination of
employment, his reinstatement, and the allegations made in the Claims.
7.

Hanson acknowledges that he enters into this Agreement voluntarily, and

also expressly acknowledges that he has been informed of and is familiar with California
Civil Code section 1542 which provides as follows :
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER
FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY
HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR.

,ULVY
Page 4 of 8
John Hanson

Hanson expressly waives the provisions of California Civil Code section 1542,
and further waives any rights he may have to invoke said provisions now or in the future
with respect to the releases set out in this Agreement. Hanson intends to fully, finally,
and forever settle all of the Claims and hereby agrees to accept and assume the risk
that any fact with respect to any matter in this Agreement may hereafter be found to be
other than or different from the facts he believed at the time of this Agreement to be
true, and agrees that this Agreement shall be and will remain effective notwithstanding
any such differences in fact.
8.

The City acknowledges that the City enters into this Agreement voluntarily,

and also expressly acknowledges that the City has been informed of and is familiar with
California Civil Code section 1542 which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER
FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN
BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR.
The City expressly waives the provisions of California Civil Code section 1542, and
further waives any rights the City may have to invoke said provisions now or in the
future with respect to the releases set out in this Agreement. The City intends to fully,
finally, and forever settle all of the Claims and hereby agrees to accept and assume the
risk that any fact with respect to any matter in this Agreement may hereafter be found to
be other than or different from the facts the City believed at the time of this Agreement
to be true, and agrees that this Agreement shall be and will remain effective
notwithstanding any such differences in fact.
9.

Hanson hereby represents and warrants that he has had adequate

information concerning the Claims to make an informed decision and has,

independently, and without reliance on the City, and based upon such information that
he has deemed appropriate, made his own analysis and decisions to enter into this
Agreement.
10.

The City hereby represents and warrants that the City has had adequate

information concerning the Claims to make an informed decision and has,

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Jo hn Hanson

independently, and without reliance on Hanson, and based upon such information that
they deemed appropriate, made their own analysis and decisions to enter into this
Agreement.
11 .

Hanson understands and expressly agrees that this Agreement shall bind

and benefit his spouse, domestic partner, heirs, agents, attorneys, representatives, and
assigns.
12.

The City understands and expressly agrees that this Agreement shall bind

and benefit its past and present officials, officers, agents, and employees.
13.

Except as provided herein, each party bears its own costs and attorneys'

fees in relation to all expenditures made in regard to the Claims being settled herein.
14.

This Agreement shall supersede and render null and void any and all prior

agreements between the parties hereto, concerning the subject matter hereof.
15.

Hanson represents that he has had a full opportunity to discuss the terms

of this Agreement with representatives of his own choosing, including his attorneys
Michael W. Stamp and Molly Erickson, and that he has carefully read and fully
understands all of the provisions of this Agreement. Hanson represents that he is
voluntarily entering into this Agreement without coercion . Hanson understands that the
waivers he has made and the terms he has agreed to herein are knowing, conscious,
and with the full appreciation that Hanson is forever foreclosed from pursuing any of the
rights so waived . No promise, inducement, or agreement not expressed herein has
been made to either party in connection with this Agreement.
16.

The City represents that the City has had a full opportunity to discuss the

terms of this Agreement with representatives of its own choosing and that the City has
carefully read and fully understands all of the provisions of this Agreement. The City
represents that the City is voluntarily entering into this Agreement without coercion. The
City understands that the waivers the City has made and the terms the City has agreed
to herein are knowing, conscious, and with the full appreciation that the City is forever
foreclosed from pursuing any of the rights so waived . No promise, inducement, or
agreement not expressed herein has been made to either party in connection with this
Agreement.

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Page 6 of 8
John Hanso n

17.

City shall segregate and seal all records from Hanson's personnel file

commencing on January 1, 2013 to date of reinstatement, and it is understood that said

sealed portion may be examined by federal, state or local administrative agencies upon
presentation of a valid Court Order or upon a written request by said agencies with a
copy sent to Hanson. City and Hanson agree that City will expunge and destroy the
sealed records one (1) year from the date of execution of this Agreement, or upon
expiration of the statute of limitations on Hanson's Claims, whichever is later.
18.

This Agreement is executed and delivered in the State of California and

the rights and obligations of the parties hereunder shall be construed and enforced in
accordance with the laws of the State of California.
19.

No waiver by any party of any breach of any term or provision of this

Agreement shall be construed to be, nor shall be, a waiver of any preceding, concurrent
or succeeding breach of the same or any other term or provision of this Agreement.
20.

Hanson and City acknowledge that, by reason of City's obligations

pursuant to the California Public Records Act (Cal. Gov. Code, sec. 6250 et seq.) City is
required to provide a copy of this Agreement, upon request, to members of the public.
21 .

Hanson and City acknowledge and agree that upon full execution of this

Agreement by both parties a joint press release shall be prepared by City and , when
mutually agreed upon by Hanson and City, shall be submitted to the news media.
22.

The obligations imposed by this Agreement are not impaired or diminished

by the execution of the agreement by the parties.

23.

The parties agree that this Agreement has no precedential value and shall

not be introduced as evidence in connection with any claim, legal proceeding,

administrative hearing or proceeding, or lawsuit except in a proceeding to enforce this
Agreement.
24.

This Agreement is deemed to have been drafted jointly by the parties.

Any uncertainty or ambiguity shall not be construed for or against any party based upon
attribution to the drafting party.
25.

This Agreement shall be admissible in counterparts. All executed copies

are duplicate originals and are equally admissible in evidence.

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John Hanson

26.

The parties agree to cooperate in good faith in executing and/or approving

any further documentation necessary to fully and finally resolve these Claims.

Date

'

APPROVED AS TO FORM AND CONTENT:

n,.;t/1 ~.w..

Donald G . Freeman , City Attorney

City of Carmel-by-the-Sea

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Michael W . Stamp
Stamp 1 Erickson

Date

Date

'

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Jo hn Hanson