Bank of Jackson County v. Cherry
| Citation | 980 F.2d 1362 |
| Decision Date | 11 January 1993 |
| Docket Number | No. 91-3547,91-3547 |
| Parties | BANK OF JACKSON COUNTY, Plaintiff-Appellant, v. L. James CHERRY; Raymond G. Naeyaert, Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (11th Circuit) |
Stone & Sutton, Pamela Dru Sutton, Michel L. Stone, Jerry W. Gerde, Panama City, Fla., for plaintiff-appellant.
Benjamin Beard, Pensacola, Fla., Barbara L. Herwig, Michael S. Raab, U.S. Dept. of Justice-Appellate Staff, Civ. Div., Washington, D.C., for defendants-appellees.
Appeal from the United States District Court for the Northern District of Florida. (Opinion On Petition for Rehearing July 27, 1992, 11th
Before HATCHETT and DUBINA, Circuit Judges, and GODBOLD, Senior Circuit Judge.
In this appeal, we affirm the district court's ruling that Farmers Home Administration (FmHA) officials did not deprive a bank of First Amendment, liberty, or property rights when they debarred the bank.
The Bank of Jackson County (BJC) is a small bank in northwest Florida. In September, 1981, BJC loaned money to Elmer and Shirley Ferris to purchase forty-six dairy cows. The Farmers Home Administration, a federal agency, guaranteed the loan. In 1982, when the Ferrises began surreptitiously removing their cattle from Florida, BJC took possession of the cows remaining at the Ferrises' farm. BJC and FmHA sold the cows jointly and put the proceeds into a joint account.
In September, 1984, BJC informed FmHA that it had begun applying funds from the joint account to its debts. FmHA objected, and a dispute followed. In July, 1986, FmHA informed BJC that it would not negotiate further over ownership of the funds until BJC restored the amounts that it had withdrawn from the account.
For nearly two years, FmHA did not communicate again with BJC regarding the Ferris cow dispute. Then, on April 14, 1988, Raymond G. Naeyaert, Florida chief of FmHA farmer programs, instructed the FmHA supervisor in Holmes County not to issue a conditional commitment for an FmHA guarantee on a BJC loan to a local farmer named Adron Miller. Naeyaert told the supervisor that he was not to conduct any further business with BJC because of the unresolved dispute over the Ferris proceeds.
The same day, an Assistant United States Attorney for the Northern District of Florida, Benjamin Beard, wrote a letter to the General Counsel's Office of the U.S. Department of Agriculture in Atlanta. In relevant part, Beard stated:
[A]s I understand the facts of this case, [BJC] officials intentionally and with knowledge misrepresented their actions in the case and thereafter flatly refused to comply with their represented agreement. At the very least that is civil fraud and in my view demonstrates that the bank officials do not believe that they are required to deal in a forthright and ethical manner with the government.
If that is their belief, then I believe it is exceedingly unwise to enter into any financial transaction with them wherein the FmHA would have to rely on these officials to conduct servigin [sic] and to deal honestly with the FmHA.... [Emphasis added.]
On May 5, 1988, Ted Elders, an Agriculture Department attorney, wrote to L. James Cherry, Florida state director of the FmHA, agreeing with Beard's opinion. Elders suggested that Cherry consider withdrawing from pending transactions involving BJC and refuse to undertake any new transactions with the bank.
On June 1, 1988, Cherry wrote to BJC stating that (1) FmHA would not "enter into any loan guaranty submitted by [BJC]"; (2) FmHA would honor existing guaranties; and (3) FmHA was terminating its Treasury Limited Account with BJC on July 1, 1988. The reason for these actions, according to Cherry, was BJC's refusal to negotiate in "good faith" over the Ferris cow dispute. Cherry and Naeyaert, the appellees, admitted that the purpose of the letter was to discontinue all further dealings with BJC in Florida, except those relating to existing guaranties. FmHA's Alabama office, however, continued to issue guaranties on new BJC loans.
In July, 1988, Glen Walden, the acting Florida director of the FmHA, wrote to BJC rejecting its latest settlement offer in the dispute over the Ferris proceeds. Walden reaffirmed FmHA's earlier settlement offer and encouraged BJC to accept it. In doing so, Walden stated I am confident that when you consider the alternatives you will agree to a settlement more in line with what we are able to accept so we may discontinue the proposed litigation and resume normal relations between the bank and FmHA.
BJC did not accept FmHA's settlement offer, and on September 9, 1988, FmHA sued BJC over the Ferris proceeds.
FmHA's Florida office continued to refuse to issue new guaranties on BJC loans. In February, 1989, Naeyaert wrote the Jackson County FmHA supervisor, rejecting his request for a guaranty on a BJC loan to Charles M. Patrick, a local farmer. Naeyaert stated that FmHA would not issue new guaranties on BJC loans because of the bank's failure to negotiate in "good faith" in the Ferris cow dispute. Around this same time, Cherry approved two BJC loan renewals, but reiterated that his office would not issue any new guaranties.
Appellees also continued to use the guaranty program as a lever to force resolution of the Ferris dispute. On May 5, 1989, Cherry met with Thomas W. Wilder, BJC's president, at a "fish fry" for Agriculture Secretary Clayton Yeutter in Marianna, Florida. Wilder stated his belief that FmHA had "debarred" BJC without following the proper procedural requirements for that penalty. Cherry responded that the Florida FmHA office would resume its business relationship with BJC as soon as the Ferris cow litigation was settled.
In April, 1990, the District Court for the Northern District of Florida entered judgment in the Ferris cow litigation, finding BJC entitled to $25,000 and FmHA entitled to $62,000. Although the dispute was thereby resolved, FmHA did not resume its business relationship with BJC.
BJC brought this Bivens action against Cherry and Naeyaert alleging that termination of the business relationship with FmHA ("debarment") deprived BJC of its constitutional rights. See Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971). In particular, the complaint alleged that termination of the business relationship, without following procedural requirements contained in FmHA regulations, deprived BJC of liberty and property without due process of law. The complaint further alleged that the debarment penalized BJC for exercising its First Amendment right to petition the government for a redress of grievances in the Ferris cow dispute. BJC sought damages against appellees in their individual capacities and injunctive relief in their official capacities.
The district court entered summary judgment for appellees on the damages claims and for BJC on the injunctive claim. The court found that FmHA failed to follow its own debarment regulations, and ordered BJC reinstated "as a viable participant in the Florida FmHA programs." The court found, however, that the debarment did not deprive BJC of a liberty or property interest. In the alternative, the court held that appellees were immune from suit under the qualified immunity doctrine, because any deprivation did not violate BJC's clearly established constitutional rights. Similarly, the court held that appellees' actions did not violate BJC's clearly established First Amendment rights.
BJC appealed from the district court's entry of summary judgment for appellees on the damages claims. Appellees do not cross-appeal from the injunction ordering BJC reinstated in FmHA lending programs.
The issues presented are:
(1) Whether the debarment deprived BJC of clearly established liberty or property rights without due process of law; (2) whether the debarment violated BJC's clearly established First Amendment rights.
The government may not deprive any person of "life, liberty or property without due process of law." U.S. Const. amend. V. BJC argues that it had a property interest in FmHA's loan guaranty program. Moreover, BJC argues that appellees deprived it of liberty when they debarred it from that program on the basis of "stigmatizing" allegations. Because appellees deprived BJC of these constitutionally protected interests without affording it the process due under the Fifth Amendment, BJC argues it is entitled to damages.
To prevail upon its procedural due process claim, BJC must establish: (1) a constitutionally protected interest in life, liberty or property; (2) governmental deprivation of that interest; and (3) the constitutional inadequacy of procedures accompanying the deprivation. See Lehr v. Robertson, 463 U.S. 248, 256, 103 S.Ct. 2985, 2990, 77 L.Ed.2d 614 (1983); Greenholtz v. Inmates of the Nebraska Penal and Correction Complex, 442 U.S. 1, 7, 99 S.Ct. 2100, 2103, 60 L.Ed.2d 668 (1979); Board of Regents v. Roth, 408 U.S. 564, 570-71, 92 S.Ct. 2701, 2705-06, 33 L.Ed.2d 548 (1972). Failure to establish any one of these elements is fatal to BJC's due process claim.
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