So here's the basic details... Was doing Maggie's Ring Quest, went to the location and attempted to fight the wolf. It defeated my Sovereign. I received the message that he'd used 100 mana and was incapacitated for 5 turns. Then, immediately after, I got a message that he was under attack, from the same wolf that had defeated him in the first place... I hit auto-resolve, just to see what would happen. The wolf proceeded to run about 10 tiles West, to a piece of empty land where apparently my sovereign was hanging out after having gotten spanked...
I got a message that my Sov had used 50 mana to escape, was out of commission for five turns... And my nearby city was razed for what I can only assume is no reason what-so-ever... Even stranger, I still have the Champion I'd recruited and the generic Observer I'd bought still alive, next to the now razed city...