After completing each of the two parts of the final Dragon Eye quest battle I get messages that improvements in one of my cities (Calder) are being destroyed. After winning this battle (both parts) the city in question is totally gone.

When the attached save file is loaded it starts by prompting a quest initiated battle (second part of Dragon Eye/Gem quest), start the battle. Have to manually beat the first group, if you use auto you'll actually be defeated so you have to do it manually. After winning the first fight several prompts will pop on the screen stating the destruction of various city improvements in Calder, then you'll get the prompt to start the second part of this quest battle. Again, you have to manually defeat this army (and it's pretty tough with the group I have but I was able to do it), after this fight you'll again be prompted with messages that various improvements in the city Calder are being destroyed. After getting the final quest pop up info windows you'll see that Calder is totally gone.

I've done this twice and it happened both times. If you try to auto through the fight my army will be destroyed and the city never gets destroyed so it appears that you have to win the fight to get the city destruction messages.

The only other thing that I can think of to note is that this city was an AI city that I defeated earlier in the game. I made numerous improvements to it over time.

Link to save:

http://dl.dropbox.com/u/1670463/2.EleSav