Ex-City Manager Sues Over Retirement Cut : Manhattan Beach: David J. Thompson saw his $139,000 pension reduced by $60,000. He says the move was taken to ‘preserve the individual political careers of the council members.’

Former Manhattan Beach City Manager David J. Thompson, whose hefty retirement deal stirred such controversy that council members later reduced it by $60,000 a year, sued the city this week to win back his original pension.

The lawsuit, filed in U.S. District Court in Los Angeles on Monday, also seeks unspecified damages for defamation, breach of contract and federal civil rights violations.

The defendants named in the suit are the city of Manhattan Beach, Mayor Daniel Stern, council members Connie Sieber and Steve Barnes, former Mayor C. R. (Bob) Holmes and former council member Pat Collins.

Stern, who was elected to the Manhattan Beach council shortly before Thompson’s departure, said he was surprised and disappointed by the legal action.

“I didn’t think we did any of the things we are accused of,” he said. “We tried to be careful and fair, but I guess it’s up to a court to decide whether, in a technical sense, we did something wrong.”

Thompson, 63, who had been city manager for 16 years when he stepped down in 1990, retired with an annual pension of $139,000--about $50,000 a year more than he earned as city manager. About $82,000 a year in pension payments were to be made by the city, while the remaining $57,000 was to come from the California Public Employees Retirement System (PERS).

Although the City Council approved the deal, council members later said they did not realize until after his departure that they had given him permission to include accumulated sick leave, vacation and fringe benefits in the base salary figure used to calculate his pension.

After city officials raised questions about the deal, the council tried to negotiate a settlement with the former administrator. But their talks stalled, and the council voted last August to cut the city’s portion of Thompson’s annual retirement benefit by nearly $60,000.

The council also decided to deduct money from his retirement check over the next five years as reimbursement for $78,000 in “excess payments” he had received since his retirement 15 months earlier.

In a series of audits of the public retirement system last year, the state controller’s office concluded that Manhattan Beach was among several cities in the region that had improperly calculated the retirement benefits of various city administrators. Although auditors recommended that PERS reduce Thompson’s base salary by $29,000, the agency is reviewing the matter and has not yet taken any action, according to Thompson’s attorney and a PERS official.

Meanwhile, the Los Angeles County district attorney’s office is still reviewing whether the city or Thompson violated any criminal laws in formulating his retirement package.

In his lawsuit, Thompson said city officials had “every opportunity to question, challenge, change or modify” his benefit package before he left the city. He described their decision to reduce his pension as a violation of his constitutional right to due process.

The council move was made in part to “preserve the individual political careers of the council members,” Thompson says in the suit, as well as to deflect public criticism over their failure to read and understand the terms of his retirement package.

Thompson also alleges in his lawsuit that former Councilwoman Collins made maliciously false statements about him to the press that suggested he is dishonest, untrustworthy, corrupt and had possibly committed a crime.

“I think the city has clearly violated (Thompson’s) rights--both constitutionally and his contract rights--and generally abused him,” Thompson’s attorney Richard Shinee said Wednesday.