Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-06-01947/USCOURTS-ca8-06-01947-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 06-1947

___________

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

___________

Before RILEY, HANSEN, and SMITH, Circuit Judges.

___________

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.

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The Honorable Ortrie D. Smith, United States District Judge for the Western

District of Missouri. 

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Dunmire and Deborah had divorced in 1988. 

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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

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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 nonaffiliated 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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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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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.

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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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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

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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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