In a final settlement battle against a custom faction the Sovereign did not fight in the battle but I still got the Empire Destroyed message.

• Furthermore, after the Empire Destroyed icon appeared there was one unit in the field from the destroyed empire and on the right side menu, the one that lets you know of new developments, I received a message that I had trained that unit, which was an enemy unit.  I suspect the settlement was a turn away from training the unit when I took it over and for some reason I finished training their unit, doubly odd since their empire was destroyed.