updated 8:57 p.m. ET Sept. 19, 2007

NEW YORK - A Madison Square Garden executive was ready to quit her high-salaried position — and was nearly fired over her inability to handle work responsibilities — in the months before she sued New York Knicks coach Isiah Thomas for sexual harassment, a top MSG official testified Wednesday.

Steve Mills, MSG Sports president and CEO, was the first witness called as Thomas and MSG opened their defense in federal court against the charges made in a $10 million lawsuit by Anucha Browne Sanders.

Mills, who attended Princeton with Browne Sanders’ sister Ruth, testified that he never heard a single complaint from the plaintiff about Thomas using profanity or making inappropriate sexual contact until a Dec. 15, 2005, e-mail.

By then, Mills testified, Browne Sanders had already approached him in tears to say she was overwhelmed by work and wanted to leave her position as vice president of marketing and business operations. In the meeting a month earlier in his office, Mills said, a weepy Browne Sanders “told me she’s lost the confidence of the people she worked with, and she can’t do this anymore. I agreed.” Mills said he also agreed to keep her on the job while she looked for a position outside MSG.

Their conversation came three months after a disastrous financial forecast meeting where Browne Sanders could not answer questions posed by Garden chairman James Dolan, Mills said.

After that August 2005 meeting, MSG vice chairman Hank Ratner said, “We should fire her right now,” Mills recalled.

Dolan, whose deposition in the case was played Tuesday by the plaintiff, stepped in and saved Browne Sanders’ job, Mills said during 2½ hours of direct testimony. A smiling Thomas seemed buoyed by the testimony after four days of sitting through the plaintiff’s case.

CNBC video Knicks harassment trial gets even tawdrier Sept. 19: Team executives step up to defend themselves in depositions, and may do more harm to their case than good. "On the Money’s" Lee Hawkins reports. CNBC

Browne Sanders, a married mother of three and former Northwestern basketball star, was hired by the Knicks in late 2000. She was fired in January 2006, and claimed the dismissal came after she complained to MSG management about her mistreatment.

Under cross-examination, Mills was asked if the emotional November 2005 meeting was sparked by an e-mail containing allegations that Knicks star guard Stephon Marbury had called Browne Sanders a “black bitch.”

“No, that’s not accurate,” Mills testified, although he recalled Browne Sanders referring to a potentially “explosive situation” within the Knicks organization.

Browne Sanders has alleged that Thomas initially treated her with disdain, including a litany of profanity, before becoming inappropriately physical and encouraging her to take their relationship “off site.”

But Mills said the only mention of the two going “off site” came from Browne Sanders, who wanted the Knicks coach to attend an overnight off-season meeting in Connecticut. And Mills said when Thomas was told not to hug Browne Sanders after a December 2005 incident, the basketball Hall of Famer replied, “OK, cool.”

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The Garden claims she was dismissed for a failure to “fulfill professional responsibilities,” and Mills testified to a number of problems that occurred on her watch.

Prior to Mills’ appearance, presiding U.S. District Court Judge Gerard Lynch said Browne Sanders’ attorneys had presented a “weak case” that the Knicks coach was involved in the woman’s firing — one of the allegations made in her suit.

“Of all the claims in this case, this is the one that looks to be a stretch,” Lynch said before he nonetheless denied a defense motion to dismiss that claim. He said it was an issue better left to the jury at this point.

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