Opinion ID: 1634087
Heading Depth: 1
Heading Rank: 4

Heading: Breach of Duty of Confidentiality

Text: The Chancellor held that Trustmark owed a duty of confidentiality to the Hammons. In so far, the trial court relied upon, Mitchell, supra, and Rubenstein v. South Denver National Bank, 762 P.2d 755 (Colo. App. 1988). Essentially, the Chancellor believed Trustmark could not disclose information found regarding the Hammon's loan to a third party (Stribling) simply because that information was a matter of public record. We hold that Mitchell does not impose a duty of confidentiality in a debtor-creditor relationship. At most, a duty of trust may arise in some circumstances. Mitchell, supra . Here, such circumstances are not present and therefore no duty of confidentiality existed. While Rubenstein imposes a duty of confidentiality upon banks, it only does within the bank-depositor relationship. Moreover, Rubenstein does not impose an absolute duty of confidentiality. Thus, Rubenstein stands only for the proposition that information regarding deposits made by a bank customer are to remain confidential. Because the case sub judice involves a bank-borrower relationship no duty of confidentiality exists. Trustmark asserts that either there is an absolute duty of confidentiality, or there is none. Essentially, the bank argues that all mortgagors know and that mortgages are a matter of public record and thus, there is no expectation of confidentiality regarding the amount of the debt, the amount of the payments, or the term of the loan payout. Again, this situation is clearly distinguishable from one involving customer deposits in a bank where the amounts deposited are expected to remain confidential. We agree with Trustmark. We note that holding a bank liable for divulging information that is a matter of public record places a bank in a precarious situation when giving credit information to credit reporting agencies. We also note that disclosures by Trustmark were made only to Stripling, an individual who had previously been identified to the bank by Billy Hammons as a party with whom the Hammons were engaged in business negotiations, which included the assumption of the bank's debt. Furthermore, the Hammons were in default, and suit had been filed by the bank, therefore the note itself was a matter of public record. Moreover, the Hammons' own suit against King and Allain stated the amount of the debt to Trustmark. Both lawsuits and the information contained therein were on file with the Chancery Clerk and were matters of public record. The record establishes, that Bounds' motivation for disclosing the loan information to Stripling was the desire to collect the debt via the consummation of a contract for the sale of water. Therefore, Trustmark has presented a strong argument against the Chancellor's holding. Because of the lack of case law in Mississippi regarding the issue involved, this Court is compelled to examine case law from other jurisdictions which are on point and thus persuasive. These decisions establish that confidentiality is owed to a depositor, but the same duty is not extended to a borrower. Graney Development Corp. v. Taksen, 92 Misc.2d 764, 400 N.Y.S.2d 717 (Supp. 1978); Young v. United States Department of Justice, 882 F.2d 633 (2d Cir.1989); Schoneweis v. Dando, 231 Neb. 180, 435 N.W.2d 666 (1989). In distinguishing a case of a bank-depositor relationship from a bank-borrower relationship, the New York court held: In this case, however, the information revealed by the bank did not concern the plaintiff's deposit with the bank; it concerned a loan made by the bank. As to that loan, the relation between the bank and the plaintiff was solely that of creditor and debtor. The information the bank imparted about the state of the plaintiff's loan was not information it received in its capacity as agent for a depositor; it was information it obtained as a party to the loan agreement. It was not information that the borrower would normally expect would be kept confidential. One who defaults on his debts owed to a merchant cannot expect that his default will be kept a secret. While a creditor, who publishes his debtors defaults to the public at large may be liable for breach of privacy, he will not be liable (in the absence of malice) if he divulges the default not to the public at large, but privately to selected individuals. The bank in its capacity as lender is in no different position than that of any other lender or creditor. I see no basis, therefore, for implying an agreement of confidentiality to the relations of a bank with its borrowers. The cause of action based upon a breach of implied contract of confidentiality is, therefore, dismissed. Graney Development Corp. v. Taksen, 92 Misc.2d 764, 400 N.Y.S.2d 717, 720 (Supp. 1978). In the case sub judice, Trustmark, is a party to the loan agreement, not an agent for a depositor. We find that the information relayed to Stripling was not that which would ordinarily be kept confidential. Moreover, the same information was a matter of public record. The bank never published this information, but rather, selectively gave it to a potential buyer, Stripling, whom the bank first learned about from the Hammons. We find nothing out of the ordinary in attempting to locate potential bidders at foreclosure, for it is much better than the situation where the bank is the only bidder present on the courthouse steps. The Chancellor erred in holding that a duty was breached, and that the duty of confidentiality exists between a bank-borrower. In the absence of such a duty, there can be no breach.