PORT ANGELES — Port of Port Angeles commissioners and staff touted the Dec. 8 rehiring of David Hagiwara as the selection of the best man for the job of trade and economic development director.

But there was more to it than that, and it cost the port more than $200,000.

It was just 11 weeks after the commissioners had eliminated Hagiwara’s position of deputy executive director, saying they were cutting costs by eliminating his estimated $108,000-a-year salary.

Commissioners denied the existence of a link between Hagiwara being rehired for $98,000 a year ¬­– the position had been budgeted but left unfilled — and any settlement that put to rest Hagiwara’s legal challenge over his Sept. 22 termination.

They accomplished that by taking the unusual step of suspending the authority of Hagiwara’s boss, Executive Director Bob McChesney, before eliminating Hagiwara’s job.

“This wasn’t a matter of a lawsuit or anything like that,” McChesney told the Peninsula Daily News on Dec. 8. “It just worked together.”

“They are not connected actions,” Commission Chairman John Calhoun said for the same article.

But they were.

No one disputes the fact that Hagiwara was a competent and valued employee of the port.

Hired in 1983, he was director of finance and administration before being named director of trade and economic development in 1994 and deputy executive director in 1998.

But his challenge would cost the port more than $200,000, not including his new salary or the port’s own legal expenses to fight the action.

The quid pro quo

Once his deputy executive director position was eliminated, Hagiwara invoked a clause of his contract under which if he challenged a termination, the port would be obligated to pay unlimited legal expenses and still be liable for damages from a budget-draining lawsuit.

So on Dec. 5, three days before commissioners brought Hagiwara back, he signed an agreement with Port Angeles lawyer Steve Oliver, representing the port, that he would drop the challenge in exchange for the new job.

A copy of the agreement was obtained by the Peninsula Daily News under a Freedom of Information request.

“In consideration of this agreement, Mr. Hagiwara releases the Port of Port Angeles, its officers, employees, and agents from any and all claims and causes of action . . .” the agreement said.

The phrase “in consideration of” means “in exchange for,” Oliver said last week.

In return for Hagiwara’s promise, the port agreed to pay him $201,400 to buy out his old contract and $98,000 in salary for his new job.

The port also agreed to pay $10,000 in legal fees for his $325-an-hour Everett lawyer, Mitch Cogdill, who worked 32.3 hours on Hagiwara’s behalf.

The port also agreed to pay $16,385 to the law firm of Lane Powell Spears Lubersky of Seattle to fight Hagiwara’s challenge, supplementing the port’s legal staff of Oliver and Port Angeles lawyer Dave Neupert.

In an interview last week, McChesney said Hagiwara’s challenge of the firing did have bearing on him being rehired but refused to elaborate.

Calhoun’s Dec. 8 assertion about the lack of linkage between rehiring Hagiwara and settling his grievance “was not meant to mislead anyone,” Calhoun said last week.

“You could nail me for saying they were separate,” he added.

“Nobody was lying about anything,” he said. “They were two separate personnel actions.”

“We were lucky to get him for that job. It could very well have gone the other way under the grievance, if he was not interested in coming back to the port.”

Calhoun had voted against firing Hagiwara, but commissioners Jim McIntire and George Schoenfeldt carried the day.

Open-ended payments

A different trio of commissioners approved the contract Aug. 29, 2000, in a 2-1 vote.

Then-commissioners Jack Waud and Glenn Beckman favored the contract, while Len Beil opposed it.

Then-port Executive Director Christine Anderson said at the time that Hagiwara and current port Director of Budget and Finance Bill James needed the protection afforded by the contracts because they could not be represented by a union.

Calhoun said that, because of the contract, the port faced the prospect of paying “any and all legal fees” incurred by Hagiwara.

He said the provision is included in Paragraph 4 of the contract.

Paragraph 4 says, “If the request by the employee is found to be valid and this contract is involuntarily terminated, the port agrees to pay any legal fees or other cost incurred by the employee in defense of the claim or as a result of any and all actions by the port to dispute the employee’s claim and rights as outlined in paragraphs 3 and 4.”

Paragraph 3 guarantees the employee nine months’ pay and one month of salary for each year worked to a maximum of 12 additional months of salary.

James’ contract gives him the same latitude if he is fired as Hagiwara’s contract gave him.

“It’s just as ironclad as David’s was,” Calhoun said.

The potential bottomless pit of legal fees in Hagiwara’s contract “was just one item” the port considered in rehiring him, Calhoun said.

The port also faced “the total financial liability of removing an employee who has a contract like that.”

“Our attorney did advise the commission of the universe of things that might occur,” Calhoun said. “A suit against the port was certainly one of the considerations.”

That potential came in the form of a letter from Cogdill to Oliver a month after Hagiwara was fired.

Cogdill said he wanted to “inquire as to the grievance process that is available to implement Paragraph 4 of David’s Employment Contract,” according to his Oct. 23 letter.

“I sensed the port, after they did what they initially did, wished they had not done that in the sense that they lost David as a valuable employee, that they came to the conclusion that it was not in the best interests of the port,” Cogdill said in an interview, claiming the port violated its bylaws by terminating Hagiwara.

Decision reconsidered

Calhoun indicated the port began to have second thoughts after receiving Cogdill’s letter.

“As David began to exercise his rights under the contract, one of the issues that came up with Oliver was the possibility of him becoming re-employed,” said Calhoun.

Hagiwara said that “shortly” after his job was eliminated, McChesney asked him if he would be interested in filling the trade and economic development position.

Hagiwara said he never submitted an application for the position.

McChesney said Dec. 8 that “we didn’t really like the pool of candidates” for the trade and economic development director job, open since February, and said none of the other 14 candidates had nearly the level of Hagiwara’s experience.

McIntire, who had made the motion to fire Hagiwara Sept. 22, blaming tight finances, said the trade and economic development position had already been budgeted “for a number of years.”

McIntire was also behind the move to suspend McChesney’s authority because McChesney resisted eliminating Hagiwara’s position.

“That’s kind of how it turned out,” McIntire said.

“It seemed to me that we had one too many people at the top.”

McChesney’s response: “I don’t feel comfortable commenting any more than I have,” he said. “The story’s the story.”

McIntire would not discuss why the port decided to rehire Hagiwara other than to say he was the most qualified candidate for the position.

“It’s my policy not to comment on personnel matters,” he said.

“Personnel matters are pretty much self-explanatory on their face.

“All I’ll say is, there was an employment contract, and the port fully carried out its obligation that it had with Hagiwara,” he said.

“I believe the port acted in good faith.”

‘Glad to be back’

Schoenfeldt did not return repeated calls for comment last week on the rehiring of Hagiwara.

“That is a lot of money for that position, and I’m not crazy about that,” he said Dec. 9 of the trade and economic development post.

“But it has been advertised for quite some time, and we are not finding anyone who could fulfill that position.”

Hagiwara has returned to the same Port of Port Angeles office he occupied when he was trade and economic development director the first time around.

He doesn’t have a contract as he did while he was deputy executive director.

“I’m glad to be back,” he said Friday, dropping a stapled sheaf of papers with a list of projects he’s working on onto his desk.

They include working with a “Community Leadership Team” of representatives of the port, city of Port Angeles, Harbor-Works Public Development Authority and other organizations that are putting together a proposal for the National Oceanic and Atmospheric Administration to relocate its Pacific research fleet along the city’s waterfront, including the Rayonier pulp-mill site.

The deadline for applications is Jan. 25.

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Staff writer Paul Gottlieb can be reached at 360-417-3536 or at paul.gottlieb@peninsuladailynews.com.