COEUR d'ALENE - A former Coeur d'Alene police officer was awarded $3.7 million on Wednesday, the result of a wrongful termination suit against the city of Coeur d'Alene.

Daniel C. Dixon, a 17-year veteran of the force before his 2009 departure, was granted $2.7 million in compensation by a federal jury, which includes lost wages, and $500,000 for emotional pain and suffering.

Dixon's wife, Heidi Dixon, received $500,000 for pain and suffering on behalf of the family.

"A huge, huge, relief," said Larry Beck, Dixon's attorney, on his clients' reaction to the judgment. "It's the first step for them to start rebuilding their family, and for him to start rebuilding his reputation, his integrity and his self pride."

The city of Coeur d'Alene expects to appeal the decision.

"Based on all evidence that was gathered and presented, I was shocked," said Mike Gridley, city attorney. "I was very surprised by the verdict."

It's the fifth federal court case the city's police department has been involved in this year. It won the other four cases, although a different attorney brought those claims forward. The $3.7 million figure is the biggest verdict against the city in Gridley's 10 years as city attorney, he said.

The suit was filed in early 2010 after Dixon was demoted from his lieutenant's position in August 2009 after a six-month internal police investigation found that Dixon had engaged in conduct unbecoming an officer.

The investigation concluded that Dixon had cheated on his timecard in order to receive pay for hours he didn't work, falsified another officer's timecard as a means to harass and intimidate, and was untruthful at times during the investigation, according to court files.

Dixon was demoted to patrol, per city personnel rules. When he did not show up for work following the demotion, he was fired, according to Mike Haman, the attorney who represented the city.

Beck said the investigation was never warranted, and the demotion was a firing. He classified it as a smear campaign against his client that would prohibit him from working in law enforcement again.

"It was just a sham investigation," Beck said. "It was done with the clear intent to get rid of Dan Dixon."

According to the court file, the complaint was the fourth filed by the same subordinate officer, the previous three of which were dismissed by the department. Beck said Dixon never cheated on his timecard, and that Dixon had prevented the other officer from working overtime because it wasn't necessary for the officer to log those extra hours.

The jury's ruling found that he had been arbitrarily fired, and that the department was inadequately trained to handle the situation.

"I think the jury was shocked the city had branded Mr. Dixon as a liar," Beck said.

Gridley said the city plans to appeal the decision within the 42-day window it has to notify its intent with the court. The appeal process could take a year.

Magistrate Judge Larry M. Boyle ruled that results from two polygraph tests administered by Spokane Police couldn't be submitted because they would prejudice the jury. The results indicated that Dixon showed "levels of deception" when he denied the timecard accusations

"He failed twice and we were not able to use that evidence in the court case. It was huge," Gridley said. "I would recommend that being one of the points" to appeal.

The city also said the case shouldn't have been handled at the federal level. The motion to move it to state court was denied because the federal court handles liberty interest in employment cases, and Dixon claimed he was closed off to all future law enforcement jobs - basically blacklisted - as a result of the Coeur d'Alene Police Department's decision.

The city denied that because it offered Dixon a patrol job, which he refused.

Dixon was earning around $150,000 a year, including benefits, at the time his employment ended.

Gridley said the city hasn't yet calculated how it will pay for the judgment should it be upheld. The city has an insurance fund and a rainy day fund.

He said the city stands by its decision to discipline the officer, and the city will continue to take action or fire employees when warranted.

"We owe it to the public," Gridley said.

Beck said Dixon endured financial and marital hardship during the entire litigation process. The Coeur d'Alene Police Association did not financially support Beck's case, the attorney said.