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Guccione v. United States

decided: May 26, 1988.


Appeal from a judgment of the District Court for the Southern District of New York (Constance Baker Motley, Judge) dismissing plaintiff's claim for damages in a suit alleging negligence by the Federal Bureau of Investigation in conducting its Abscam operation. 670 F. Supp. 527 (S.D.N.Y. 1987). Affirmed.

Oakes, Newman, and Miner, Circuit Judges.

Author: Newman

JON O. NEWMAN, Circuit Judge:

Robert C. Guccione appeals from a judgment of the District Court for the Southern District of New York (Constance Baker Motley, Judge) dismissing his claim for damages against the United States allegedly resulting from the negligence of the Federal Bureau of Investigation (FBI) in conducting its highly publicized Abscam operation in the late 1970's. Guccione's complaint charges that the FBI negligently failed to prevent a paid operative, Melvin Weinberg, from defaming Guccione to potential lenders and otherwise tortiously interfering with his attempt to secure financing for completion of a casino and hotel project in Atlantic City, New Jersey. The complaint seeks $400 million in damages. The District Court, in an opinion reported at 670 F. Supp. 527, entered judgment for the United States on the ground that the action is barred by sovereign immunity under the "intentional tort exception" to the Federal Tort Claims Act ("FTCA"), 28 U.S.C. § 2680(h) (1982), and alternatively that the action is time-barred under the applicable two-year statute of limitations. We affirm on the immunity ground.


Plaintiff-appellant Guccione, a businessman and publisher of Penthouse Magazine, initiated plans in the late 1970's to build a Penthouse Casino and Hotel in Atlantic City, New Jersey. The project's success depended in part upon securing financing and a casino license. Guccione alleges that an entity operating as Abdul Enterprises, Ltd. ("Abdul") was among the numerous potential lenders with which he was in contact during this time to secure financing for his project. Melvin Weinberg acted as the agent and representative of Abdul for these purposes. Abdul was not in fact a prospective lender, but an FBI undercover organization created by the FBI to carry out the Abscam sting operations.*fn1 Through Abdul, FBI operatives sought to uncover criminal activities by holding themselves out as the representatives of two wealthy Arab sheiks in search of American "investment opportunities" in the nascent casino and gambling industry in Atlantic City. Weinberg worked undercover in the Abscam investigation as an FBI operative and informant. His background and general role in Abscam have been described as follows:

Abscam began after Melvin Weinberg in 1977 was convicted in the Western District of Pennsylvania on his plea of guilty to fraud. In return for a sentence of probation Weinberg agreed to cooperate with the FBI in setting up an undercover operation similar to the London Investors, Ltd. "business" that Weinberg had used with remarkable success before his arrest and conviction in Pittsburgh.

For most of his life Weinberg had been a "con man" operating in the gray area between legitimate enterprise and crude criminality. For a number of years in the 1960s and early 1970s, he had been listed as an informant by the FBI and had provided his contact agent from time to time with intelligence about various known and suspected criminals and criminal activities in the New York metropolitan area and elsewhere, for which he had received in return occasional small payments of money. When he was arrested on the charge that led to his guilty plea, his informant status was cancelled, later to be reinstated after his guilty plea and agreement to cooperate with the FBI.

United States v. Myers, 692 F.2d 823, 829 (2d Cir. 1982), cert. denied, 461 U.S. 961, 103 S. Ct. 2437, 77 L. Ed. 2d 1322 (1983), (quoting United States v. Myers, 527 F. Supp. 1206, 1209 (E.D.N.Y. 1981)).

It is undisputed that Weinberg, acting as Abdul's representative, met or spoke with Guccione on at least three occasions during the course of the Abscam investigation to discuss the possibility of providing financing for Guccione's casino and hotel project. In these conversations Weinberg unsuccessfully sought to induce Guccione's participation in a scheme to secure a casino license through bribery or other illegal means. The tortious conduct alleged in the complaint arises out of Weinberg's initial attempt to create conditions that would compel Guccione's participation in the scheme, and his subsequent campaign to "punish" Guccione for refusing to cooperate. Weinberg allegedly told Guccione's business associates false stories about Guccione's ailing financial condition, his organized crime connections, and his unlikely prospects for receiving a casino license. When Weinberg recognized that Guccione would not join the illegal scheme, he told a Guccione business associate: "The best way to punish him [Guccione], he doesn't get the [casino project] built--that punishes more than anything else." Weinberg allegedly carried out this vindictive campaign by further maligning Guccione in statements to prospective lenders, influential politicians, and other business associates. The complaint claims that as a direct result of Weinberg's defamation and interference with Guccione's business interests, Guccione was unable to secure the necessary financing for the project between 1979 and 1983, when an exculpatory Senate Report*fn2 was published and disseminated to lenders.

The District Court dismissed Guccione's complaint for lack of subject matter jurisdiction because of sovereign immunity. The Court held that Guccione's claims against the United States, though pleaded in negligence, were claims "arising out of" the alleged intentional torts of the FBI operative, Weinberg, and were therefore barred by the "intentional tort" exception to the general waiver of sovereign immunity contained in the FTCA, 28 U.S.C. §§ 1346(b) (general waiver), 2680(h) (intentional tort exception) (1982). Alternatively, the District Judge granted the Government's motion for summary judgment on the ground that Guccione had failed to bring his action within the applicable two-year limitations period. Judge Motley found that plaintiff's claim was not first presented until November 28, 1984, or at the earliest July 18, 1984, but had accrued no later than March 1982. Judge Motley rejected Guccione's contention that he did not have notice of the defamatory conduct underlying his claim until the release of the Senate Report, supra n.2.


Under the FTCA, the Government has waived immunity from suit for claims of property damage or personal injury caused by the "negligent or wrongful act or omission" of its employees "under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred." 28 U.S.C. § 1346(b). Section 2680(h) of the FTCA, the so-called intentional tort exception, excludes from this limited waiver of sovereign immunity "[a]ny claim arising out of assault, battery, false imprisonment, false arrest, malicious prosecution, abuse of process, libel, slander, misrepresentation, deceit, or interference with contract rights."*fn3 The task of maintaining the FTCA's jurisdictional boundary has been more difficult in practice than is suggested by the statute's facially neat distinction between claims sounding in negligence and those "arising out of" the enumerated intentional torts. Difficulty has arisen primarily in situations in which intentionally inflicted harm may have occurred in significant part because of the negligence of Government personnel. Appellant contends that this is such a case, and that his "negligent supervision" claim is actionable notwithstanding the apparent applicability of section 2680(h) to Weinberg's conduct.

Appellant's claim initially encounters a rather inhospitable line of cases broadly interpreting the scope of section 2680(h) in the context of "mixed" claims of negligence and intentional tort. United States v. Shearer, 473 U.S. 52, 87 L. Ed. 2d 38, 105 S. Ct. 3039 (1985), was an action brought by the survivor of a serviceman who, while off duty and away from his base, had been kidnapped and murdered by another serviceman. The suit alleged that the Army knew of the assailant's dangerousness and negligently failed to warn others that he was at large. ...

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