Arthur State Bank v. Broom

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE
CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING
EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

Arthur State Bank, Respondent,

v.

Quentin S. Broom, Jr., Amy B. Broom a/k/a Amy
Broom, Ann G. Broom, and Russell A. Broom,
Appellants.

Appellate Case No. 2013-001967

Appeal From Spartanburg County
J. Derham Cole, Circuit Court Judge

Unpublished Opinion No. 2015-UP-092
Submitted November 1, 2014 – Filed February 25, 2015

AFFIRMED

Larry Lee Plumblee, of Eppes & Plumblee, PA, of
Greenville, for Appellants.

Louise Myers Johnson, of Columbia, and Sarah Patrick
Spruill, of Greenville, both of Haynsworth Sinkler Boyd,
PA, for Respondent.
PER CURIAM: In this foreclosure action, Defendants Quentin S. Broom, Jr.
(Quentin), Amy Broom (Amy), Ann G. Broom (Ann), and Russell Broom
(Russell) appeal the grant of summary judgment on their amended counterclaims
for violation of the Gramm-Leach-Bliley Act (the Act),1 breach of contract, and
negligence. We affirm.2

Respondent Arthur State Bank (Bank) filed this action against Defendants seeking
foreclosure of two notes. Defendants answered and counterclaimed, alleging that
Bank breached its statutory and common law duties to maintain their privacy by
disclosing their personal financial information in response to a subpoena issued in
the lawsuit that Quentin had filed against other parties who are not involved in this
appeal. After Bank moved under Rule 12(b)(6) of the South Carolina Rules of
Civil Procedure to dismiss the counterclaim, Defendants moved to amend their
responsive pleadings by clarifying their allegations and adding additional defenses
and counterclaims. In their proposed amended pleadings, Defendants asserted that
Bank, in response to a subpoena in the prior lawsuit, provided their personal bank
account information to a third party without informing them. Defendants alleged
Bank's actions constituted: (1) violation of the Act, (2) breach of contract, and (3)
negligence.

The matter came before the trial court on Bank's motion to dismiss. Immediately
before the hearing, Bank consented to Defendants' motion to amend, and the
parties agreed that the trial court's adjudication of Bank's motion to dismiss would
apply to the amended counterclaims. Several months after the hearing, the trial
court issued an order dismissing the amended counterclaims. In the order, the
court noted it considered evidence outside the pleadings and thus treated Bank's
motion as one for summary judgment. See Rule 12(b), SCRCP ("If, on a motion
asserting the defense . . . to dismiss for failure of the pleading to state facts
sufficient to constitute a cause of action, matters outside the pleading are presented
to and not excluded by the Court, the motion shall be treated as one for summary
judgment and disposed of as provided in Rule 56 . . . .").

1. The trial court ruled Defendants could not proceed on their counterclaim for
violation of the Act for two reasons: (1) the Bank provided Defendants' bank

1
15 U.S.C. §§ 6801-6809.
2
We decide this case without oral argument pursuant to Rule 215, SCACR.
account information in response to a duly issued subpoena in a judicial proceeding
and (2) there is no private right of action for an alleged violation of the Act. We
agree with both rulings.

The Act prohibits a financial institution from disclosing to nonaffiliated third
parties a consumer's nonpublic information unless the institution provides notice of
the disclosure to the consumer. This prohibition does not apply to disclosure of
such information "to comply with a properly authorized . . . subpoena . . . by
Federal, State, or local authorities." 15 U.S.C. § 6802(e)(8). Furthermore, under
Rule 45(a)(3), SCRCP, "[a]n attorney as officer of the court may also issue and
sign a subpoena on behalf of a court in which the attorney is authorized to
practice." (emphases added). Therefore, although Defendants correctly noted that
the subpoena to which Bank was responding was served by a private attorney in
the lawsuit, that attorney's acts of issuing and signing the subpoena were
undertaken in the attorney's capacity as an officer of the court and on behalf of the
court rather than in the attorney's capacity as the advocate for an adverse party in
the case.

As to Defendants' right to file a private action for an alleged violation of the Act,
15 U.S.C. § 6805 expressly provides that it "shall be enforced by the Bureau of
Consumer Financial Protection, the Federal functional regulators, the State
insurance authorities, and the Federal Trade Commission . . . . ." See also Dunmire
v. Morgan Stanley DW, Inc., 475 F.3d 956, 960 (8th Cir. 2007) ("No private right
of action exists for an alleged violation of the [Act]."); Wells Fargo Bank, N.A. v.
Jenkins, 744 S.E.2d 686, 687 (Ga. 2013) (recognizing there is no private right of
action for an alleged violation of the terms of the Act).

2. Because Bank's release of the information pursuant to a subpoena did not
violate the Act, we agree with the trial court's dismissal of Defendants'
counterclaim for breach of contract. In the privacy notice included in the loan
documents on which Defendants based their counterclaim, Bank agreed not to
"disclose information about [the borrower] to anyone except as disclosed in this
policy or as permitted by law." (emphasis added). Because Bank's compliance
with the subpoena was proper under the Act, Bank did not breach any provision in
the loan documents restricting its release of Defendants' information.

3. Finally, we agree with the trial court's determination that Defendants'
counterclaim for negligence failed as a matter of law because Bank, in releasing
Defendants' nonpublic information, was merely obeying a duly issued subpoena.
In reaching this conclusion, the trial court cited Rycroft v. Gaddy, 281 S.C. 119,
124, 314 S.E.2d 39, 43 (Ct. App. 1984), for the proposition that "[c]ommunications
in judicial proceedings are absolutely privileged and are immune from an action
for an invasion of privacy" and further noted that there was no motion or order to
quash the subpoena, leaving Bank no other choice than to comply with it.

Defendants contend the trial court's reliance on Rycroft was misplaced because that
decision pre-dated both the Act and the adoption of the South Carolina Rules of
Civil Procedure. They also contend Bank's own policy concerning protection of
their private banking information prohibited the disclosure of this information
except as "permitted by law."

We disagree with their argument that Rycroft has ceased to be controlling authority
following the enactment of the Act and the adoption of the South Carolina Rules of
Civil Procedure. As we have noted, the restriction in the Act against disclosure of
nonpublic information does not apply to disclosures pursuant to a valid subpoena.
Although, as Defendants correctly point out, Ann, Amy, and Russell were not
litigants in the action in which the subpoena was issued and thus were neither
served with the subpoena nor afforded the opportunity to have it quashed, we have
not found any legal authority or evidence in the record to support a finding that
Bank had a duty to advise these individuals that it had been served with a subpoena
for their records. The principle for which the trial court cited Rycroft was not
affected by the adoption of the South Carolina Rules of Civil Procedure, which
provide only for "Protection of Persons Subject to Subpoenas" from "undue burden
or expense." Rule 45(c)(1), SCRCP. Finally, as we noted in our discussion of
Defendants' counterclaim for breach of contract, the disclosure of Defendants'
private banking information was "permitted by law" because it was in response to a
subpoena; therefore, Bank did not violate its own policy regarding protection of its
customers' private banking information.

AFFIRMED.

FEW, C.J., and THOMAS and LOCKEMY, JJ., concur.