Former Division Chief Paul Matheis retired in January after 30 years as a firefighter.
Last year, Newport Beach officials launched an investigation after Matheis racked up $26,000 in unpaid toll charges while driving a city-owned SUV.
Matheis is now suing for unspecified damages, claiming the city was aware of, and authorized, his use of the SUV and his non-payment of the tolls.
He also says the city violated his procedural rights when it suspended him and demoted him to captain.
