Reid v. Key Bank Of Southern Maine, Inc.

821 F.2d 9 (1987)

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Nature of the Case

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Facts

Reid (P) had a three-year credit relationship with Depositors Bank, the predecessor to Key Bank (D). P used the credit to run his painting business. On March 2, 1979, P was granted a $25,000 line of credit primarily to finance work Bucksport Housing Project. By mid-May, the bank phoned P and told him they would no longer grant him further advances under the March agreement. D claimed a letter of termination was sent, but P denied having received any. On May 29, 1979, the Bucksport contractor sent a check to D and to Pro Paint pursuant to an agreement with D and P whereby P assigned his accounts receivables as security for the March loan. D credited $2,500 to the account of P's business Pro Paint and applied the remaining $4,007.90 to offset part of the outstanding balance on P's March loan. P claims that D undertook this activity without his approval. P alleged the same type of conduct on another check. On September 20, 1979, P got a past due notice on the March loan. On November 5, 1979, D repossessed P's personal car and one of his vans. P alleged that he discovered one of the vehicles in a lot and attempted to drive it away and was arrested; he had not known it was repossessed and thought it was stolen. P was put in jail for a time. Eventually, P's business collapsed, and he lost four vehicles and his home. P filed Chapter 13 and was converted to Chapter 11. P claims racial prejudice and bad faith (P was black). The jury found for P on their pendent state claim for breach of the March loan agreement. It awarded P $100,000 and $500,000 in exemplary damages. D appealed.