According to Donaghy, the drawn out legal battle between her and the city was about to come to a close after city lawyers sent her attorney an agreement to dismiss the suit against her. Donaghy promptly signed the agreement, which her attorney, Mark Small, returned to city attorneys. Donaghy says she confronted the city's chief legal counsel, Kobi Wright, and mayoral spokesman Justin Ohlemiller at the tax forum hosted by the Light of the World Church on Sunday, August 26, 2007 about allegations IFD Fire Chief Jim Greeson had called her a dyke before the Mayor's budget presentation to the City-County Council last month. According to Donaghy, city attorney Teri Kendrick called her attorney the next day and told him the settlement agreement was being taken off the table, even though it had already been executed by Donaghy.
At today's hearing, Donaghy says Judge Keele ordered the city to sign the settlement agreement under Indiana Trial Rule 70. The rule reads, in part:
If a judgment directs a party to execute a conveyance of land, or other property or to deliver deeds or other documents or to perform any other specific act and the party fails to comply within the time specified, the court may direct the act to be done at the cost of the disobedient party by some other person appointed by the court and the act when so done has like effect as if done by the party . . . The court may also in proper cases adjudge the party in contempt and may award damages for disobedience of the order . . .