Standing to Challenge Non-Party Bank Subpoenas in Surrogate’s Court and Other Civil Litigation

Standing to Challenge Non-Party Bank Subpoenas in Surrogate’s Court and Other Civil Litigation

 

It is not atypical for a litigant in a Surrogate's Court proceeding to have to subpoena bank records whether a bank account is the subject of a dispute or the bank records are merely sought as probative evidence concerning some other issue. Whatever the case may be, as in any other litigation, a party to the proceeding may wish to object to the substance the subpoena.  

The Surrogate's Court Procedure Act ("SCPA") generally governs Surrogate's Court proceedings.  However, the Civil Practice Laws and Rules ("CPLR") are also applicable in Surrogate's Court (SCPA 102) and disclosure is most often governed by CPLR Article 31.  As such, the CPLR's rules that serve to protect against abuses of the use of disclosure devices are also applicable in Surrogate's Court.

Ordinarily, if there is a legally valid objection to the substance of a non-party subpoena, the remedy is a motion to quash or modify the subpoena. CPLR 2304. However, there is a body of case law that is not often cited by Surrogate's Court practitioners that would ostensibly preclude such a motion where the subpoena seeks the production of bank records directly from the bank subject based on a lack of standing.  

This "lack of standing" rule was first articulated in New York by the First Department in People v. Doe, 96 A.D.2d 1018, 467 N.Y.S.2d 45 (1st Dep't 1983). In that case, John Doe, a Justice of the Supreme Court brought a proceeding to quash a subpoena duces tecum issued to his bank by a Grand Jury investigating Doe for corruption. The subpoena called for production of Doe's bank's records reflecting his transactions with the bank. Among the grounds urged by Doe to quash, was the alleged lack of relevance to the investigation of Doe's affairs. The District Attorney opposed the application solely on the ground of Doe's lack of standing. The County Court affirmed Doe's right to move to quash based on relevance. On appeal, the First Department framed the issue as follows:

Critical to the determination of this appeal is the issue of standing, for if Doe lacks the power to move to quash the subpoena, all of the grounds urged by him in support of the application are of no moment. Bank records, although they may reflect transactions between the bank and its customers, belong to the bank. The customer has no proprietary or possessory interests in them. Hence, he cannot preclude their production (United States v Miller, 425 U.S. 435; Matter of Cappetta v Santucci, 42 NY2d 1066; Matter of Shapiro v Chase Manhattan Bank, 53 AD2d 542). The rule is the same with respect to telephone records (see People v Di Raffaele, 55 NY2d 234). Accordingly, if the owner of the records, in this case the Chemical Bank, is not opposed to producing them, the customer is powerless to preclude their production. Accordingly, we hold that Doe has no standing to challenge the production of the bank's records. Hence, we do not reach the other questions raised by him.

People v. Doe, 96 A.D.2d 1018, 1019, 467 N.Y.S.2d 45, 46 (1st Dep't 1983).

People v. Doe and many of the other New York cases that have followed it (see, e.g., GLIG, Inc. v. Burgher, 4 Misc. 3d 1028A, 798 N.Y.S.2d 344 (Sup. Ct. Nassau County 2004)) deal with whether bank depositors can quash subpoenas served upon the depositor's bank based on claims of ownership and/or privacy interests in the records that would protect them from disclosure on constitutional or other privacy grounds.  Said cases are among the progeny of the United States Supreme Court decision in U.S. v Miller, 425 U.S. 435, 96 S. Ct. 1619, 48 L. Ed. 2d 71 (1971) in which the Supreme Court held that a criminal Defendant did not have standing to challenge a grand jury subpoena of his bank records on Fourth Amendment grounds because he had no ownership interest in the records which belonged to the bank as business records.  Therefore, the subpoena could not be considered a government seizure.

It is submitted that the First Department was wrong to extend its holding across the board instead of limiting it to cases in which an asserted privacy right was the only ground relied upon to challenge the subpoena.  U.S. v. Miller and its progeny simply have no application in a civil action in which a court is asked to make a determination as to standing based on relevance or other applicable CPLR discovery standards. Indeed, this point was succinctly stated in the concurring opinion in People v. Doe as follows:

The authorities relied upon by the majority do not hold otherwise and are inapposite to Doe's assertion that he has standing to claim that the bank records are irrelevant to the Grand Jury investigation. The cited cases all hold that subpoenaed bank records may not be the subject of a challenge by a depositor, either on Fourth or Fifth Amendment grounds (United States v Miller, 425 U.S. 435; Matter of Cappetta v Santucci, 42 NY2d 1066; Matter of Shapiro v Chase Manhattan Bank, 53 AD2d 542). None of the cases, however, deal with the situation where an interested party, other than the subpoenaed party, seeks to challenge the subpoena on the ground of relevance.

People v. Doe, 96 A.D.2d 1018, 1019, 467 N.Y.S.2d 45, 46 (1st Dep't 1983).

Since 1983, the First Department itself seems to have recognized that its concurring in People v. Doe was logically more sound than the majority opinion and has made attempts to clarify its decision, but only in dicta because that is all the context of the cases have allowed.  See, Siskin v. 221 Sullivan St. Realty Corp., 162 A.D.2d 356, 556 N.Y.S.2d 915 (1st Dep't 1990), and Norkin v. Hoey, 181 A.D.2d 248, 586 N.Y.S.2d 926 (1st Dep't 1992).

For example, in Norkin, a subpoena duces tecum was served seeking financial information in the context of a government investigation of the issuance of a permit for a waste facility. The owner of the waste facility sought to quash the subpoena. The First Department held that inasmuch as the owner based his opposition to the subpoena on assertions of privacy rights in the information sought, he had no standing. However, in a lengthy analysis of the issue as to whether its prior decision in People v. Doe was meant to encompass standing in all situations, the Court stated:

Thus, while this Court in People v. Doe supra, 96 A.D. 2d 1018, 467 N.Y.S. 2d 45, consistent with United States v. Miller and its progeny, found that the petitioner had no standing to move to quash the Grand Jury subpoena for his bank records, Mr. Justice Kassal in his concurring memorandum (id. at 1019, 467 N.Y.S. 2d 45) took the opposite view. Cogently arguing that only the petitioner-depositor had any real interest in the records of his accounts, while "the bank had no real motivation to challenge the disclosure of financial records of its depositor since production would only affect its customer, not the bank", Justice Kassal found that the depositor had standing, even in the context of a grand jury subpoena, to challenge the production of the bank records on the ground of relevance. More recently, this Court in Siskin v. 221 Sullivan St. Realty Corp., 162 A.D.2d 356, 556 N.Y.S.2d 915, while not directly reaching the issue because it was not properly preserved for appellate review, intimated that in a wholly civil context involving private litigants the standing issue could be resolved in favor of the customer whose bank accounts are being sought by way of subpoena.  

Norkin v. Hoey, 181 A.D.2d 248, 253-254, 586 N.Y.S.2d 926, 930 (1st Dep't 1992).

In the context of Surrogate's proceeding, at least one Surrogate has addressed the issue albeit indecisively.  In  Matter of Rutherford, 26 Misc. 3d 1235A, 907 N.Y.S.2d 103 (Sur. Ct. Bronx County 2010), a subpoena duces tecum to JP Morgan Chase Bank was served seeking documents relating to all accounts held by the proponent in a will contest.  Surrogate Holzman recognized the body of cases that exist on the standing issue and stated that since the issue of standing had not been raised by the parties, he need not address the applicability of those cases directly. Specifically, Surrogate Holzman stated:

With respect to the motion to quash, as all of the parties have focused upon the relevancy of the documents subpoenaed, the court will only address this issue (see Siskin v 221 Sullivan St. Realty Corp., 162 AD2d 356, 357 [1990].  Therefore, the court will not discuss whether, in litigation involving only private parties, the court must rigidly follow the cases holding that private citizens do not have a right to privacy, or any other constitutional right, giving them standing to seek to quash a subpoena served upon a financial institution by a governmental agency in the course of investigating matters within its jurisdiction (cf. Matter of Norkin v Hoey, 181 AD2d 248, 250 [1992]; Siskin v 221 Sullivan St. Realty Corp., 162 AD2d at 356; and see Kephart v Burke, 306 AD2d 924 [2003]; Matter of Oncor Communs., Inc. v State, 218 AD2d 60 [1996]; GLIG, Inc. v Burgher, 4 Misc 3d 1028 [A] [2004]). Specifically, the court will not address the issue of whether, in litigation between private parties, in light of the fact that if the parties were not engaged in litigation one party could not obtain the financial records of the other, there are any public policy considerations or any other reason for holding that a party lacks standing to move to quash a subpoena for that party's records served upon a financial institution by the other party on the ground that the records sought are irrelevant to any issue in the proceeding (see Matter of MacLeman, 9 Misc 3d 1119 [A] [2005]).

The Surrogate clearly went to great lengths to frame an issue that was not raised by the parties and which he was not going to address.  It is reasonable to assume that the Surrogate's intent in doing so was to call attention to the standing issue, and frame it in such a way as to invite a critical look at it in the next case in which the issue becomes ripe for determination. Moreover, the Surrogate did not, in effect, feel constrained to follow a rigid approach when he applied general CPLR standards for materiality and quashed the subpoena as being too broad.

However, despite Surrogate Holzman's decision and the dicta of Siskin v. 221 Sullivan St. Realty Corp., and Norkin v. Hoey, there has not been a specific and direct ruling that would clearly rectify the Court's mistake in People v. Doe's.  Nevertheless, it would seem to be only a matter of time for the right case to come along because there is simply no common-sense approach that should result in a lasting rule that a litigant has no standing to move to quash on issues of relevancy, scope and breath of the non-party bank subpoenas in civil cases where the same rule does not apply to other non-party subpoenas.