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Former top administrator files lawsuit against City of Trail

Lawsuit claims city’s actions were harsh, vindictive, reprehensible and malicious
Trail City Hall, Aug. 29. The city has three weeks to respond to a civil claim filed by Michelle McIsaac, a former corporate administrator. Photo: Sheri Regnier

After a 20-year career at Trail City Hall, a former top administrator is suing the city for damages related to breach of contract and constructive dismissal.

Michelle McIsaac filed her lawsuit Thursday (Aug. 24) in the Kelowna registry of the BC Supreme Court.

McIsaac alleges she was subjected to months of “unabated bullying and harassment” to the point where — before filing suit — she was required to take medical leave from a “toxic and intolerable work environment.”

She is seeking damages for wrongful dismissal and unpaid accrued vacation pay as well as special damages, general damages for bad faith conduct, and aggravated and punitive damages.

The city has 21 days to respond.

Trail Mayor Colleen Jones’ name appears in the suit. The city’s Chief Administrative Officer is also noted in the court documents, though not by name.

“We have been advised that this is before the courts so we can’t make a comment at this time,” Jones told the Trail Times Monday.

This lawsuit is the latest legal move stemming from turmoil that has plagued city hall since 2021, when Jones was a sitting councillor.

McIsaac filled the role of corporate administrator for most of her years with Trail, then in mid-2021 she became acting CAO (chief administrative officer) after David Perehudoff, the city’s CAO for 26 years, departed.

To clarify, in early 2021 Perehudoff filed a complaint against a former councillor.

His complaint was substantiated by a third party investigator, which resulted in code of conduct violations against the Trail official.

However, there was no resolution between parties.

Thus, Perehudoff was paid out the remaining nine months of his contract.

After Perehudoff left, McIsaac was appointed interim CAO.

According to her statement of claim, only months later in February 2022, McIsaac filed a bullying and harassment complaint with the city, this one involving four city councillors, including then-councillor Colleen Jones.

The claim notes this complaint was substantially the same in nature as the one Perehudoff filed, which was upheld by a third-party investigation.

Read more: Council code of conduct violation has Trail CAO leaving his job

Read more: Trail CAO’s early leave costs the city upwards of $300,000

McIsaac says despite the complaint and commencement of an independent investigation, the bullying and harassment continued unabated, prompting her to submit a supplemental complaint the following month, in April 2022.

“The bullying and harassment which continued unabated created a toxic and intolerable work environment for the Plaintiff to the point where the Plaintiff was required to take a medical leave of absence from work commencing in mid-July 2022,” the lawsuit notes.

(According to McIsaac’s timeline, she held the interim CAO position until June 2022, when the current chief administrator, Colin McClure, was hired.)

Then in September 2022, only weeks before the municipal election, the investigator concluded that a number of McIsaac’s allegations were substantiated and made recommendations to “prevent further occurrences of misconduct.”

According to court documents, the city responded (not publicly) stating it was “committed to maintaining a safe work environment and would address the bullying and harassment that had occurred in the past … and indicated its interest in returning (McIsaac) to work.”

According to McIsaac’s suit, in early October, she believed there would be no improvement in the toxic working conditions and approached the city to negotiate a severance.

McIsaac says (now-former) city council agreed with her proposal for a settlement, “but the Chief Administrative Officer refused or neglected to do so.”

The lawsuit goes on to mention one of the four councillors in her complaint, Colleen Jones, was subsequently elected mayor in mid-October 2022.

McIsaac says “despite the toxic work environment,” she returned to the job in December 2022, working remotely, limiting her contact with Mayor Jones.

Despite the findings and recommendations of the investigator, McIsaac claims the bullying and harassment continued, specifically naming “and in particular Mayor Jones and the Defendant’s Chief Administrative Officer.”

McIsaac’s suit lists eight particular points, including: failure of Jones to abide by the decision that she was not to contact her directly; and she was deliberately excluded from meetings that her role as Corporate Administrator, and the corresponding statutory obligations, required her attendance.

McIsaac also alleges that the city sought, but then ignored, her input for a June 12, 2023 press release relating to the outcome of the complaint investigations she had launched in 2022.

In that release, the city announced Jones was censured by her council over “unbecoming” behavior, for showing “a lack of consideration for an employee” and failing to promote public confidence in relation to the employee’s substantiated complaints. McIsaac was not identified as the employee at the time.

Jones stated in that respective release, “[I] wanted to take this opportunity to apologize for my part in the governance challenges of last term … I am pleased to put this matter behind me.”

McIsaac alleges that within that public statement, Jones was “misrepresenting publicly” whether there had been an apology to her.

Read more: Council releases motion of censure and sanction against Trail mayor

Read more: Trail mayor responds to surfacing of code of conduct violations

McIsaac says on June 23 — a week after Jones’ conduct violations were publicly released — she decided to treat the city’s conduct as a breach of contract and constructive dismissal “effected without just cause and without any notice and constituted an arbitrary and willful breach of contract of employment.”

Furthermore, McIsaac alleges CAO McClure was inappropriately blaming and scapegoating her and other staff; and that he had interfered with her role as the freedom of information coordinator and privacy officer; and she notes the “refusal of the Chief Administrative Officer” to ensure a safe and healthy workplace.

In her lawsuit, McIsaac says she is entitled to her annual pay of $123,967, pension contributions, 35 days of vacation, and benefits. Her contract’s severance clause called for notice, pay in lieu of notice, or a combination of the two amounting to 18 months plus 20 per cent of salary in lieu of benefits.

She accuses the city of failing to act in good faith, causing her to suffer mental distress and embarrassment and is seeking aggravated and punitive damages because she claims the city’s actions were “harsh, vindictive, reprehensible and malicious.”

McIsaac is also seeking special damages, including expenses incurred in attempting to find new employment. She says she has taken all reasonable steps to mitigate her loss by seeking similar employment, but has not yet been successful.

McIsaac has had written employment contracts with the city since May 2002. The most recent contract was dated June 4, 2020, with a fixed term ending April 30, 2025.

Note: In employment law, constructive dismissal, also called constructive discharge or constructive termination, occurs when an employee resigns as a result of the employer creating a hostile work environment. Since the resignation was not truly voluntary, it is, in effect, a termination.

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Sheri Regnier

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