Connelly v. Comptroller of the Currency

• Decision Date: 07 July 1989
• Docket Number: No. 87-6187,87-6187
• Citation: 876 F.2d 1209
• Parties: David A. CONNELLY, Plaintiff-Appellee, v. COMPTROLLER OF THE CURRENCY, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1209

876 F.2d 1209

David A. CONNELLY, Plaintiff-Appellee, v. COMPTROLLER OF THE CURRENCY, et al., Defendants-Appellants.

No. 87-6187.

United States Court of Appeals Fifth Circuit.

July 7, 1989.

Robert D. Kamenshine, Peter D. Maier, John F. Cordes, U.S. Dept. of Justice, Washington, D.C., and Hays Jenkins, Jr., Asst. U.S. Atty., Houston, Tex., for defendants-appellants.

Joan M. Lucci Bain, Stuart M. Nelkin, and Nelkin & Nelkin, Houston, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before GARZA, JOLLY and JONES, Circuit Judges:

EDITH H. JONES, Circuit Judge:

At issue is the qualified immunity of officials who work for the Comptroller of the Currency and who opined that Connelly was unqualified to be president of a proposed national bank. The district court denied summary judgment on the officials' defense of qualified immunity, and they filed this interlocutory appeal. Mitchell v. Forsyth, 472 U.S. 511, 105 S.Ct. 2806, 86 L.Ed.2d 411 (1985). We reverse, concluding that the Privacy Act does not create individual liability and that the alleged violations of the Fifth Amendment and Administrative Procedure Act were not sufficiently clear to subject the Comptroller's officials to individual liability.

BACKGROUND

The relevant facts described by the district court are largely undisputed. ¹ Connelly v. Comptroller of the Currency, 673 F.Supp. 1419, 1422-23 (S.D.Tex.1987). In the fall of 1983, Connelly signed a contract to become the president of a proposed national bank, Westwood National Bank in Houston. The bank's organizers submitted his name to the Comptroller of the Currency ("Comptroller") for approval with the rest of their application. The application included a resume and list of references, "Confidential Biographical and Financial Report," signed by Connelly. ²

Defendant Arthur Oliver, a national bank examiner in Dallas, instructed Marcia Oley to investigate Connelly's past performance, for seven years, as president of two related banks in Texas. A review of one bank's loan records revealed that Connelly had initiated a number of "weak" loans that were on the bank's "watch list." In response to a request for more information, the president of the parent bank, Fred McMahen, telephoned Oley's supervisor, Mr. Golden. McMahen expressed dissatisfaction with Connelly's administrative abilities and did not recommend Connelly for a chief executive officer position. These facts were communicated to Oliver.

Oliver then interviewed Connelly. Connelly acknowledged that there had been problems with some loans and tried to explain them. Connelly was not, however, told that his nomination might be jeopardized because of his loan performance or McMahen's unfavorable evaluation. On the basis of the interview and Oley's memorandum Oliver drafted a letter for the signature of defendant John Bodnar, District Administrator of the Comptroller of the Currency. Bodnar signed the letter informing the organizers of Westwood Bank that their charter would not be approved with Connelly as president. The letter stated: "We are of the opinion that Mr. Connelly does not possess the qualifications required for the position of President of Westwood National Bank ..." The bank organizers then cancelled their agreement for Connelly to become president of the bank.

Connelly filed this suit against the Comptroller, Bodnar and Oliver in their official and individual capacities. He alleges that the determination that he was unqualified (1) violated the Privacy Act, 5 U.S.C. Sec. 552a(g)(1), (2) deprived him of property and liberty interests without adequate procedural safeguards under the Fifth Amendment due process clause, and (3) violated the Administrative Procedure Act's protection against arbitrary agency actions, 5 U.S.C. Secs. 706(2)(A), (D). ³ The defendants moved to dismiss the complaint for failure to state a claim. Treating the motion as one for summary judgment after some limited discovery, the district court denied the motion on all three of Connelly's claims. The court also rejected the officials' motion seeking immunity from personal liability. We review only this last determination on interlocutory appeal. ⁴

I. ANALYZING AN IMMUNITY DEFENSE

The defendants' right to qualified immunity is to be assessed according to the approach articulated by the Supreme Court in Anderson v. Creighton, 483 U.S. 635, 107 S.Ct. 3034, 97 L.Ed.2d 523 (1987). The Court held that qualified immunity shields government officials "from civil damages liability as long as their actions could reasonably have been thought consistent with the rights they are alleged to have violated." Id. 107 S.Ct. at 3038. Thus, for a plaintiff to prevail, the rights that are claimed to have been violated must be " 'clearly established' at the time [the action] was taken." Id. (citing Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 2737, 73 L.Ed.2d 396 (1982)). In Anderson, 107 S.Ct. at 3038-39, the Court explained what is meant by "clearly established," using a claimed violation of the due process clause as an example:

The operation of the standard, however, depends substantially upon the level of generality at which the relevant "legal rule" is to be identified. For example, the right to due process of law is quite clearly established by the Due Process Clause, and thus there is a sense in which any action that violates that Clause (no matter how unclear it may be that the particular action is a violation) violates a clearly established right.... But if the test of "clearly established law" were to be applied at this level of generality, it would bear no relationship to the "objective legal reasonableness" that is the touchstone of Harlow. Plaintiffs would be able to convert the rule of qualified immunity that our cases plainly establish into a rule of virtually unqualified liability simply by alleging violation of extremely abstract rights. Harlow would be transformed from a guarantee of immunity into a rule of pleading.... It should not be surprising, therefore, that our cases establish that the right the official is alleged to have violated must have been "clearly established" in a more particularized, and hence more relevant, sense: The contours of the right must be sufficiently clear that a reasonable official would understand that what he is doing violates that right. This is not to say that an official action is protected by qualified immunity unless the very action in question has previously been held unlawful, but it is to say that in the light of preexisting law the unlawfulness must be apparent. (citations omitted) (emphasis added).

Accordingly, as to Connelly's constitutional claims, we must determine whether his clearly established constitutional property right or liberty interest was implicated in the Comptroller's actions and whether the Comptroller's officials plainly knew they were violating those interests.

The district court denied summary judgment on Connelly's claims against the appellants in both their individual and official capacities by concluding that Connelly "arguably" had a constitutionally protected property interest in his contract with Westwood's organizers, 673 F.Supp. at 1425, and that there was a genuine, material factual issue whether his professional reputation was damaged. Id. Specifically, with respect to the immunity defense, the court seems to have assumed that the existence of an "arguable" right to property or liberty triggered due process protections, for its analysis deals only with the inadequacy of the "hearing" afforded Connelly. Due process analysis requires first a finding of a property or liberty interest and then an assessment of what process must attend a particular deprivation. We must disagree with the court's implicit assumption that the existence of an "arguable" property or liberty interest may thwart an immunity defense.

It is a common failing in qualified immunity decisions that courts avoid deciding exactly what constitutional violation might have occurred if the facts are as a plaintiff alleged. We have previously required a plaintiff to allege the facts underlying his claimed violation of constitutional rights with sufficient specificity to demonstrate that defendants' qualified immunity should be revoked. See Geter v. Fortenberry, 849 F.2d 1550 (5th Cir.1988); Elliott v. Perez, 751 F.2d 1472 (5th Cir.1985). Based on those alleged facts, or facts that may develop after discovery pertaining to qualified immunity, see Lion Boulos v. Wilson, 834 F.2d 504 (5th Cir.1987); Geter, 849 F.2d at 1554, the court must be able to characterize the plaintiff's claim precisely as a matter of constitutional law before ruling upon an immunity defense. It is not enough that the court concludes that a violation arguably occurred. Rather, the court must be certain that if the facts alleged by plaintiff are true, notwithstanding any credibility disputes with defendants, then a violation has clearly occurred. The purpose of requiring careful characterization of plaintiff's claim at the outset of a qualified immunity analysis is to effectuate the goal of that defense, which is immunity from suit, not just from trial. Mitchell v. Forsyth, 472 U.S. at 526, 105 S.Ct. at 2815.

Stating that a plaintiff's claims must be precisely characterized does not necessarily make the task easy, because of the nuances that have developed in various areas of constitutional law. See e.g., Noyola v. Texas Dept. of Human Resources, 846 F.2d 1021 (5th Cir.1988). This case exemplifies the nuances that permeate the due process clauses. Mangaroo v. Nelson, 864 F.2d 1202 (5th Cir.1989) (qualified immunity upheld against claim of procedural due process violation). Connelly alleged violations of his "property" interest in the presidency of the proposed Westwood National Bank; a "liberty" interest in his reputation and his ability to pursue a position as a chief...