Alva State Bank and Trust Co. v. Dayton

MEMORANDUM OPINION

PER CURIAM:

Alva State Bank seeks to prohibit the trial judge from enforcing his discovery order compelling Bank to produce and disclose loan records of customers who are not parties to the underlying lawsuit. We *636assume original jurisdiction and, for reasons set forth below, issue writ of prohibition preventing any further proceeding under this discovery order.

This action arose out of a suit on promissory notes and mortgage by petitioner against Beulah Sperry and others to foreclose the mortgage and set aside an allegedly fraudulent conveyance. The defendants argued that Sperry was only an acco-modation maker and that the notes and mortgage were obtained by fraud and misrepresentation. Defendants filed a counterclaim against the bank sounding in fraud.

To obtain proof of a common scheme or design in support of their claim of fraud, defendants sought to compel Bank to produce records of other customers who had been required to secure additional capital for existing loans. These customers are not parties to this action. The disclosure of their personal financial records would be without notice to them and without their consent.

The order challenged here provided that the bank should produce for in camera inspection by the court, loan files of non-party borrowers covering real property where the bank required additional collateral after January 1, 1985. At the time of inspection, the trial court will determine the relevancy of any inFormation therein and then release the relevant documents to the attorneys for their use and information.

These records are clearly confidential and Bank’s customers have a reasonable expectation of privacy in them.

Our Financial Privacy Act, 6 O.S.1981, §§ 2201, et seq., sets out the exclusive lawful means of obtaining records such as these. The legislatively announced public policy of that Act, found in the short title, § 2201, is to “maintain the privacy and confidentiality of the records of customers of financial institutions.”

A financial institution, such as this petitioner, is restricted as to the circumstances under which it may release records. Section 2203 provides:

“A financial institution is prohibited from giving, releasing or disclosing any financial record to any government authority unless:
(a) it has written consent from the customer for the specific record requested; or
(b) it has been served with a subpoena issued pursuant to [Section 2204] for the specific record requested.”

Defendants contend that because the underlying litigation involves private parties, the Financial Privacy Act is inapplicable as there is no “government authority” attempting to obtain the records. For this same reason, respondents argue that no expectations of privacy exist here or are protected by the constitution.

In so arguing, defendants misconstrue the reality of these circumstances, for it is precisely a government authority — a trial judge — whose order places these records in jeopardy. As elsewhere, “government authority” in this act, § 2202(c), means:

“... any agency, board, commission or department of the State of Oklahoma, or any officer, employee, representative, or agent thereof.” (Emphasis added)

See, Art. 4, Okla. Const. § 1. See also, Lugar v. Edmondson Oil Co., 457 U.S. 922, 102 S.Ct. 2744, 73 L.Ed.2d 482 (1982); Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969).

Section 2204 sets forth the proper, lawful and exclusive procedure for obtaining a customer’s bank records. Compliance with that procedure requires properly issuing subpoenas, giving notice to customers and affording them an opportunity to be heard to protest the disclosure of their records.

In ordering the production of records in a manner other than that provided by statute, the trial court acted in a manner not authorized by, and contrary to, law. Respondent is attempting to exercise judicial power not granted by law and lacks the authority to enter the challenged order.

ORIGINAL JURISDICTION ASSUMED. WRIT ISSUE.

HARGRAVE, V.C.J., and LAVENDER, SIMMS, OPALA, ALMA WILSON and SUMMERS, JJ., concur. *637KAUGER, J., specially concurring. HODGES, J., dissents. DOOLIN, C.J., disqualified.