A Northern Virginia Travel Agency, which recently agreed to pay a $60,000 civil penalty and to refund $250,000 to passengers in a settlement with the Civil Aeronautics Board concerning the handling of charter flights, has sued the First American Bank of Virginia, alleging it improperly managed the agency's charter account and refused to pay refunds to Davis' clients.

The Davis Agency seeks $10 million in damages in the case, filed in Fairfax County Circuit Court against First American. A bank spokesman said the Davis Agency complaint "has no merit whatsoever" and said it "will defend itself vigorously against Davis' frivolous allegations."

The CAB enforcement division announced at the time of the settlement with Davis that it was requesting that the board seek a $500,000 civil penalty against First American because, the division alleged, First American had permitted money advanced by vacationers to be deposited in the travel agency's operating accounts instead of a protected escrow account, as CAB regulations require. First American called those allegations "unique and unfounded."

In its civil suit against First American, Davis claimed that the bank "failed to establish a separate escrow account" and to deposit in it advances from charter passengers.

The refunds at issue have been sought by passengers who canceled their flights voluntarily, according to Charles W. Sutherland, president of Davis. Some of those canceled after being offered new bookings because of schedule changes, he said.