Ricci v. Key Bancshares of Maine, Inc., s. 85-1052

• Decision Date: 24 July 1985
• Docket Number: Nos. 85-1052,85-1309,s. 85-1052
• Parties: Joseph J. RICCI, et al., Plaintiffs, Appellees, v. KEY BANCSHARES OF MAINE, INC., et al., Defendants, Appellees. Gary E.W. Barnes and Patricia A. Crate, Personal Representative of the Estate of William F. Crate, Third Party Defendants-Appellants.
• Court: U.S. Court of Appeals — First Circuit

Page 456

768 F.2d 456

Joseph J. RICCI, et al., Plaintiffs, Appellees, v. KEY BANCSHARES OF MAINE, INC., et al., Defendants, Appellees Gary E.W. Barnes and Patricia A. Crate, Personal Representative of the Estate of William F. Crate Third Party Defendants-Appellants.

Nos. 85-1052, 85-1309.

United States Court of Appeals First Circuit.

Argued April 5, 1985.

Decided July 24, 1985.

Paula D. Silsby, Asst. U.S. Atty., Portland, Me., with whom Joseph H. Groff, III, Asst. U.S. Atty., and Richard S. Cohen, U.S. Atty., Portland, Me., were on brief, for third party defendants-appellants.

Gael Mahony, Boston, Mass., with whom John A.D. Gilmore, Richard M. Zielinski, Janet Sanders, Hill & Barlow, Boston, Mass., Thomas E. Peisch, Thomas D. Burns, Burns & Levinson, Boston, Mass., David C. King and Rudman & Winchell, Bangor, Me., were on brief for appellees.

Before CAMPBELL, Chief Judge, BOWNES and BREYER, Circuit Judges.

BOWNES, Circuit Judge.

This is an appeal of the district court's denial of third-party defendants' motions for summary judgment. The third-party defendants, FBI Agents William F. Crate and Garry E.W. Barnes, asserted in their motions for summary judgment that they were absolutely immune from liability on the pendent state common-law claims and that they were entitled to the defense of qualified immunity on the federal statutory claims. The motions were denied because the district court found that there were disputed issues of material fact which precluded a ruling on the immunity of Crate and Barnes as a matter of law. Crate and Barnes appeal these summary judgment denials under the rule of Krohn v. United States, 742 F.2d 24 (1st Cir.1984), where we announced that we would take interlocutory jurisdiction of denials of claims of absolute and qualified immunity. Id. at 27-29. The Supreme Court has recently put its imprimatur on this procedure. Mitchell v. Forsyth, --- U.S. ----, ----, 105 S.Ct. 2806, 2815-2818, 86 L.Ed.2d 411 (1985).

I. THE FACTS

Crate and Barnes were brought into court as third-party defendants by three banks, Key Bancshares of Maine, Inc., Key Bank of Central Maine, Inc. and Key Bank of Southern Maine, Inc., and two bank officers, Wallace M. Haselton and Bernard K. Holdsworth. The banks and their officers had been sued by Joseph J. Ricci, Gerald Davidson, and their wholly owned corporations on a number of federal and state claims stemming from the banks' refusal to continue to loan money to Ricci and Davidson. Claiming, inter alia, that their refusal to continue loaning money to Ricci and Davidson was due to derogatory information about Ricci and Davidson provided by the FBI agents, the defendants brought a third-party action for contribution and indemnity against Crate and Barnes.

During the four-year period prior to the events which led to the lawsuit, Ricci, Davidson and their various corporations had been major customers of the banks. Their businesses, which included a harness racetrack in Southern Maine (Scarborough Downs), residential programs for adolescents with behavioral problems, and a multi-unit apartment building, were heavily dependent upon the availability of credit and, over the four-year period from 1977 through 1981, Ricci and Davidson had borrowed more than a million dollars from the banks, some of it under a million-dollar line of credit agreement covering the period from July 1979 through September 1981. At least two additional loans were made to Ricci and Davidson during October and December of 1981.

Sometime in October of 1981, Depositors Trust Company of Southern Maine, now Key Bank of Southern Maine, became aware of questionable loan transactions involving its President, Marco DeSalle, and a customer of the bank, Gerald Sneider. As a result of this discovery, DeSalle resigned as president in eary November. Around the same time, Conrad Bernier, a bank auditor, contacted the Maine Attorney General's office and the FBI in relation to these questionable transactions and these two agencies began a joint investigation into possible criminal wrongdoing at the bank. In early December, the investigator from the Maine Attorney General's office, Owen Colomb, asked Bernier to compile a list of bank customers with loan balances in excess of $100,000 so that he could sit down with the FBI and determine if the bank's transactions with any other customers ought to be investigated. Colomb was particularly interested in Ricci because he thought his name "rang a bell."

On December 17, 1981, Colomb and another investigator from the Maine Attorney General's office met with FBI Agents Barnes and Crate and they reviewed the list of large borrowers. Colomb stated in his deposition that, after reviewing the list of names, Crate said that the FBI had information tying Ricci to organized crime, that there had been an investigation into race fixing at Scarborough Downs, and that there was unsubstantiated information that Ricci may have set up "Joey Napolitano" when he was hit. ¹ According to Barnes, prior to his review of the list, Colomb indicated to him that some interesting names had turned up, including Joe Ricci of Scarborough Downs. In his deposition, Barnes testified that at the December 17 meeting, Crate told Colomb that he was familiar with Joe Ricci as the owner of Scarborough Downs and that "the word was that a Ricci was associated with the death of Little Joe Napolitano." Barnes stated that either he or Crate said at this point that there was no way of knowing whether this was the same Ricci. Barnes also testified that either he or Crate clearly stated that there was no FBI investigation of Ricci. In his deposition, Crate testified that he told Colomb that he had heard that Ricci was connected to organized crime. He also said that he had heard that a Ricci had something to do with the murder of Little Joe Napolitano in New York City a few years earlier.

According to an internal FBI document written by Barnes, Bernier (the bank auditor) called him the next day, December 18, and told him that he had received information that Joe Ricci was connected to organized crime and that the bank was concerned that if they did not approve loans to Ricci that there might be some retaliation. Barnes wrote in the memo that he told Bernier that the FBI could not furnish this kind of information and that this was a problem that the bank would have to handle. No such conversation was reported by Bernier.

According to Colomb's deposition, however, he did not pass the information concerning Ricci on to Bernier until December 21. Bernier immediately reported this information to Wallace Haselton, the president of Depositors Corporation, now Key Bancshares of Maine. Haselton phoned Colomb and Colomb repeated this information to him. Later on that day, Joel Stevens, the new president of Depositors Trust Company of Southern Maine, also spoke to Colomb about Ricci. On December 21, Haselton instructed Stevens to terminate any lending relationship with Ricci, Davidson, or their corporations. Ricci has claimed that this decision was based upon the information provided by the FBI. The bank has claimed that its decision to terminate the lending relationship was due to a change in lending philosophy resulting from the appointment of a new president and the failure of the Ricci/Davidson corporations to file financial statements with the bank. In any event, Ricci was not informed of this decision until January 8, 1982.

In late December, the bank told Ricci's lawyers about the information they had received from the FBI ² asking the attorneys not to reveal to Ricci the source of the information. Ricci met with his attorneys on December 29 and vehemently denied the allegations of organized crime connections and race fixing. Within the next week, Ricci's attorney informed the bank officers that Ricci had denied the truth of the FBI allegations. He also contacted Agent Barnes to complain about the allegations and Lawrence Sarhatt, Special Agent in Charge at the Boston FBI office, to arrange a conference to clear Ricci's name and a conference was set for January 19, 1982. On January 11, 1982, Ricci received a letter from Joel Stevens, President of Depositors Trust Company, stating that the bank would not continue to satisfy Ricci's credit needs due to a "shift in ... lending policy."

On January 19, 1982, Agent Crate and his superior, Agent Thomas McGeorge, met with Ricci and his attorney to discuss the allegations made by Crate. At this meeting both McGeorge and Crate told Ricci that they had no personal knowledge that Ricci was connected to organized crime or that he had any involvement in the murder of Little Joe Napolitano. They also indicated that they could not either confirm or deny whether the FBI had a pending investigation of Ricci. Ricci requested that the FBI inform the Portland financial community that the prior allegations were false. This was never done. After this meeting, McGeorge wrote a memo dated February 2 to Special Agent in Charge Sarhatt summarizing the meeting with Ricci. He went on to say:

It appears that any statements made to banking officials concerning Ricci's reputation could possibly have emanated from other law enforcement personnel. The writer feels that no adverse administrative action is required against any of our people in regards to this matter.

However, the writer has discussed, at length, the matter with those Agents involved and reminded them that we must constantly exercise extreme caution when engaging other law enforcement people in discussions concerning FBI business.

On the bottom of the memo is a handwritten notation, signed "JS," which says, "I concur. No further action necessary."

At some point it became clear that most of the information about Ricci, in particular the allegations that he was connected to organized crime and the murder of Little Joe Napolitano, pertained to a different Joe Ricci who lived in Massachusetts. It is not clear from...