United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 06-1947
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Delbert L. Dunmire, *
*
Appellant, *
* Appeal from the United States
v. * District Court for the
* Western District of Missouri.
Morgan Stanley DW, Inc., *
*
Appellee. *
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Submitted: November 15, 2006
Filed: February 5, 2007
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Before RILEY, HANSEN, and SMITH, Circuit Judges.
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SMITH, Circuit Judge.
This case arises from the service of a demand letter addressed from Morgan
Stanley DW, Inc. ("Morgan Stanley") to Delbert L. Dunmire upon Dunmire's
estranged wife. Dunmire filed suit against Morgan Stanley, alleging that the letter
disclosed confidential information in violation of the Gramm-Leach-Bliley Act
(GLBA). Based upon this alleged violation, Dunmire pursued state law claims of
negligence per se, breach of contract, fraudulent misrepresentation, negligent
misrepresentation, breach of fiduciary duty, and negligence against Morgan Stanley.
Morgan Stanley filed a motion for summary judgment, and the district court1 granted
the motion, finding that because no violation of the GLBA had occurred, each of
Dunmire's state law claims failed. We affirm.
I. Background
Dunmire opened an investment account at Dean Witter Reynolds, Inc. ("Dean
Witter") with broker John Hoffman in 1982. Hoffman acted as Dunmire's broker until
Matt Hoffman, John's son, took over his father's business. Dunmire's account was an
individual account, and Dunmire did not grant authority for any other individuals to
receive his account information. In fact, Dunmire had signed a Securities Account
Agreement, which provided:
Communications may be sent to me at the mailing address on file with
you, or at such other address as I may hereafter give in writing, and all
communications, so sent, whether by mail, telegraph, messenger or
otherwise, shall be deemed given to me personally, whether actually
received or not.
Dunmire signed documents indicating that the address to be used for purposes of
communicating about his account was 905 E. Pearl in Harrisonville, Missouri ("the
Pearl Address"). In other executed documents, Dunmire promised to notify Dean
Witter of any changes of address. Dunmire never notified Dean Witter, or its
successor Morgan Stanley, of any change of address.
In 1990, Dunmire remarried Deborah Dunmire.2 Prior to the 1990 marriage,
Dunmire and Deborah entered into an antenuptial agreement, which provided that, in
the event of the second marriage's termination, neither party would seek or accept
1
The Honorable Ortrie D. Smith, United States District Judge for the Western
District of Missouri.
2
Dunmire and Deborah had divorced in 1988.
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alimony, maintenance, or support and each party would retain the property that they
owned on the date of the marriage. Additionally, the antenuptial agreement stated that
the parties had "fully disclosed to each other the nature and extent of their respective
property, liabilities and sources of income." According to Dunmire, he disclosed the
nature and extent of his Dean Witter accounts to Deborah at the time of the antenuptial
agreement. Also, while Dunmire and Deborah lived at the Pearl Address, Deborah had
access to Dunmire's mail.
After Dean Witter merged with Morgan Stanley in 1997, Morgan Stanley
adopted a privacy policy pursuant to the GLBA and corresponding regulations. The
policy provided, in relevant part, that Morgan Stanley could "disclose personal
information we collect about you to other Morgan Stanley companies and non-
affiliated third parties as required or permitted by law." (Emphasis added).
Sometime in 2000, Dunmire and Deborah separated, and Dunmire moved out
of the home located at the Pearl Address. Dunmire failed to provide Morgan Stanley
with a new address, so Morgan Stanley continued to send statements, confirmations,
and other correspondence to Dunmire at the Pearl Address.
In October 2003, Dunmire filed for divorce from Deborah. The divorce
proceedings were acrimonious and were protracted by the parties' legal maneuverings.
During the pendency of Dunmire's divorce, Dunmire and Morgan Stanley disputed the
management of Dunmire's account. In April 2004, Morgan Stanley liquidated
Dunmire's silver position because Dunmire failed to meet a margin call. After Morgan
Stanley liquidated the account, Matt Hoffman attempted to contact Dunmire by
telephone but was unsuccessful. Matt Hoffman also wrote to Dunmire to advise him
that he had attempted to contact Dunmire by telephone; Dunmire received this letter
but did not respond. Matt Hoffman then contacted John Hoffman—Dunmire's
previous broker for over 20 years. John Hoffman told Matt to contact Wayne
Davidson, an attorney that he knew had previously represented Dunmire. John
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Hoffman called Davidson because Matt Hoffman did not know Davidson; he left
Davidson a voicemail message. Davidson, however, did not return the call.
In April 2004, Dunmire filed a reparations complaint against Morgan Stanley
with the Commodity Futures Trading Commission (CFTC). The complaint set forth
Dunmire's claim that Morgan Stanley was responsible for the "overall loss in excess
of $2,075,000." Morgan Stanley, however, continued its collection efforts.
To recover the amount that it believed Dunmire owed, Morgan Stanley hired
attorney Jack Malley who, on July 12, 2004, drafted a demand letter ("the First
Demand") and addressed it to Dunmire at the Pearl Address. Malley, however, sent
the First Demand to Davidson with a separate letter asking Davidson to deliver the
First Demand to Dunmire. Davidson returned the First Demand, explaining that he did
not represent Dunmire in the matter and was not authorized to accept the
correspondence.
Malley then attempted to deliver the First Demand by other methods, including
certified mail. Malley's attempts failed because Dunmire either was unavailable or
unwilling to sign for receipt of the correspondence. All attempts to deliver the First
Demand were made at Dunmire's Pearl Address—his last known mailing address.
Neither Morgan Stanley nor Malley were aware that Dunmire no longer resided at the
Pearl Address.
Malley then prepared a second letter ("the Second Demand") on August 26,
2004, which again demanded payment, detailed Morgan Stanley's efforts to deliver
the First Demand, and included a copy of the First Demand. Because Malley was
unaware that Dunmire no longer resided at the Pearl Address, he also addressed the
Second Demand to the Pearl Address. Considering that previous attempts to confirm
Dunmire's receipt of the documents had failed, Malley retained Hatfield Process
Service ("Hatfield") to personally deliver the Second Demand. Hatfield is an
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independent contractor, and the individual process servers it hires are independent
contractors for Hatfield.
In the letter of instruction to Hatfield, Malley directed that the letter be "served"
on Dunmire; it did not direct that the letter be delivered to Deborah. Hatfield assigned
process server Julie Whyte the task of delivering the Second Demand. On August 28,
2004, Whyte went to the Pearl Address, but Dunmire was not there. Through her
efforts, Whyte eventually reached Deborah by telephone. Deborah informed Whyte
that "we're at an address on Orient Cemetery Road ("the Orient Address")" and invited
Whyte to meet her there. Upon Whyte's arrival at the Orient Address, she told
Deborah that she had "a delivery for Delbert." Deborah agreed to take the package.
Whyte then notified Malley that she had served Deborah, but Malley instructed Whyte
that he wanted her to personally serve Dunmire with the Second Demand. After
Whyte's continued efforts to personally serve Dunmire failed, Hatfield assigned the
task to Patricia Prewitt. Prewitt successfully served the Second Demand to Dunmire.
Following settlement of his divorce, Dunmire filed suit against Morgan Stanley,
asserting state law claims for negligence per se, breach of contract, fraudulent
misrepresentation, negligent misrepresentation, breach of fiduciary duty, and
negligence. All six claims arise first from Dunmire's allegation that the Second
Demand contained confidential financial information that was disclosed in violation
of the GLBA3 to Deborah, who was not a co-owner of the accounts in question.
3
Specifically, under "Count I: Negligence Per Se," Dunmire's Amended
Complaint states that "[t]he above and foregoing conduct of Morgan Stanley
constitutes a violation of Morgan Stanley's federal statutory and regulatory duties
owed to Mr. Dunmire, as more specifically set forth below:
a. Violations of the Gramm-Leach Bliley Act, 15 U.S.C. § 6801(a),
which specifically states: "It is the policy of the Congress that each
financial institution has an affirmative and continuing obligation to
respect the privacy of its customers and to protect the security and
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Dunmire also alleged that the disclosure to Deborah caused the divorce proceeding to
be longer and more expensive, thereby damaging Dunmire financially and
emotionally.
II. Discussion
On appeal, Dunmire argues that the district court erred in granting summary
judgment to Morgan Stanley because there is no dispute that Morgan Stanley
disclosed "nonpublic personal information" to Deborah, which is protected by the
GLBA and Morgan Stanley's own privacy policy. According to Dunmire, because this
fact is undisputed, Morgan Stanley's justifications for disclosing his personal
information raise material fact issues not suitable for summary judgment.
No private right of action exists for an alleged violation of the GLBA. See, e.g.,
Farley v. Williams, No. 02-CV-0667C(SR), 2005 WL 3579060 (W.D. N.Y. Dec. 30,
2005) (unpublished); Briggs v. Emporia State Bank & Trust Co., No. 05-2125-JWL,
2005 WL 2035038, at *3 (D. Kan. Aug. 23, 2005) (unpublished); Am. Family Mut.
Ins. Co. v. Roth, No. 05 C 3839, 2005 WL 3700232 (N.D. Ill. Aug. 5, 2005)
(unpublished); Borninski v. Williamson, No. Civ.A. 3:02-CV-1014, 2004 WL 433746
(N.D. Tex. Mar. 1, 2004) (unpublished); Menton v. Experian Corp., No. 02 Civ.
4687(NRB), 2003 WL 21692820 (S.D. N.Y. July 21, 2003) (unpublished).
Nonetheless, Dunmire, in his amended complaint, based his state law claims on the
allegation that Morgan Stanley's conduct violated the GLBA. Accordingly, we must
address whether the district court properly concluded that no violation of the GLBA
confidentiality of those customers' nonpublic personal information."
b. Violations of SEC Regulations, 17 C.F.R. § 248.10; and
c. Violations of CFTC Regulations, 17 C.F.R. § 160.10.
In each subsequent count, Dunmire "incorporates each and every preceding paragraph
of his Complaint, as if fully set forth herein."
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occurred when Morgan Stanley, through the process server, delivered the Second
Demand to Deborah Dunmire.
The GLBA provides that "[i]t is the policy of the Congress that each financial
institution has an affirmative and continuing obligation to respect the privacy of its
customers and to protect the security and confidentiality of those customers' nonpublic
personal information." 15 U.S.C. § 6801(a). The GLBA defines "nonpublic personal
information" as information "(i) provided by the consumer to a financial institution;
(ii) resulting from any transaction with the consumer or any service performed for the
consumer; or (iii) otherwise obtained by the financial institution." Id. § 6809(4)(A).
The GLBA, however, lists exceptions to the rule against disclosing nonpublic
personal information. It permits financial institutions to disclose nonpublic personal
information "as necessary to effect, administer, or enforce a transaction requested or
authorized by the consumer . . . ." Id. § 6802(e)(1). "Necessary to effect, administer,
or enforce the transaction" means that, inter alia, "the disclosure is required, or is one
of the lawful or appropriate methods, to enforce the rights of the financial
institution. . . ." Id. § 6809(7)(B). In turn, the CFTC's regulations provide that
"necessary to effect, administer or enforce the transaction" means that the disclosure
is "required or is a usual, appropriate or acceptable method" that is used "in
connection with . . . [t]he authorization, settlement, billing, processing, clearing,
transferring, reconciling or collection of amounts charged. . . ." 17 C.F.R. §
160.14(b)(2)(v)(A); see also 17 C.F.R. § 248.14(b)(2)(vi)(A).
We conclude that Dunmire's state law claims based on a violation of the GLBA
fail for two reasons. First, Dunmire's financial information, i.e., his dispute with
Morgan Stanley, lost its "nonpublic" character under the GLBA when Dunmire filed
the reparations complaint against Morgan Stanley with the CFTC. This filing took
place in April 2004—approximately four months before Whyte served Deborah with
the Second Demand from Morgan Stanley. The filing disclosed that Dunmire was
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claiming damages against Morgan Stanley in the amount of $2,075,000. Thus,
Dunmire's financial information lost its nonpublic character when he filed his
reparations complaint disclosing his financial information to the CFTC—a third party.
Second, even assuming that the Second Demand letter contained "nonpublic
personal information," Dunmire's state law claims still fail because delivery of the
Second Demand to Deborah was an appropriate and acceptable method of settling or
collecting a debt it believed Dunmire owed—a valid exception under the GLBA. The
Second Demand advised Dunmire of the amount that Morgan Stanley alleged was
due. Before retaining Hatfield Process Service to effect personal delivery of the
Second Demand, Morgan Stanley made several attempts to notify Dunmire about the
alleged debt, including phoning him, sending the First Demand to Davidson, and
sending the First Demand by certified mail. Additionally, Whyte, the process server,
only served Deborah Dunmire after Whyte's unsuccessful attempt to locate Dunmire
at the Pearl Address. We cannot say that Morgan Stanley's efforts to effectuate service
were unreasonable, especially considering that Dunmire failed to notify Morgan
Stanley that he no longer lived at the Pearl Address. Dunmire has offered no evidence
that, if Morgan Stanley had mailed the Second Demand to the Pearl Address, Deborah
could not have retrieved the Second Demand from the Pearl Address.
Therefore, because we hold that Morgan Stanley did not violate the GLBA, all
of Dunmire's state law claims fail, as they were all predicated on the allegation that
Morgan Stanley violated the GLBA.
III. Conclusion
Accordingly, we affirm the district court's grant of summary judgment to
Morgan Stanley.
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