With a lawsuit from ousted City Manager Lori Ann Farrell Harrison wending its way through court, Costa Mesa officials Tuesday agreed to negotiate a contract for Interim City Manager Cecilia Gallardo-Daly to permanently replace her predecessor.

City Atty. Kimberly Hall Barlow announced the news in a report out of Tuesday's closed session meeting.

"The City Council gave direction to the city attorney to negotiate a city manager contract with [Gallardo-Daly]," Barlow said, receiving a modest round of applause from those in the audience.

No details or timeline was shared at Tuesday's regular meeting, and Costa Mesa officials Wednesday declined to comment further.

The move comes months after Farrell Harrison was terminated in a controversial 4-2-1 vote taken during a May 6 closed session meeting. Mayor John Stephens recused himself from voting, while Councilmembers Andrea Marr and Arlis Reynolds opposed the firing.

While no reason was given for the city manager's abrupt departure, a July 7 legal complaint filed by Farrell Harrison in Orange County Superior Court alleged she was retaliated against after accusing Stephens of conflicts of interest, illicit interference and undue influence.

The document claimed Farrell Harrison and others in her department had cataloged their complaints against the mayor in a 14-page document circulated to city leaders that has not been shared with the public.

Discussions about the lawsuit continued in multiple subsequent closed session meetings, and on May 20, the council retained employment attorney Greg Labate of Sheppard Mullin Richter & Hampton LLP to represent the city in anticipated litigation.

Despite those developments, Farrell Harrison delayed officially serving the lawsuit to Costa Mesa City Hall -- until recently. Court records indicate proof of service was delivered on Sept. 5, giving city officials 30 days to file a response with the court.

Gallardo-Daly's June 3 appointment as interim city manager came nearly 18 months after she was hired on as assistant in December 2023, having come from the same position at the city of San Clemente. The promotion came with a pay increase, from $277,932 annually to $330,216, according to city figures.

Prior to serving as assistant city manager in San Clemente, Gallardo-Daly was the city's community development director, responsible for implementing policies pertaining to land use, economic development, environmental and historic preservation and coastal resiliency.

She also contracted as a planning and permitting consultant for local agencies from 2001 to 2013 and worked with officials in San Diego, Rosemead, Sierra Madre, Rancho Cucamonga and Austin, Texas, according to a June 4 city news release.

Costa Mesa officials seek to promote interim city manager to permanent role