Glig, Inc. v Burgher

[*1] GLIG, Inc. v Burgher 2004 NY Slip Op 51089(U) Decided on September 29, 2004 Supreme Court, Nassau County Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on September 29, 2004
Supreme Court, Nassau County

GLIG, INC. d/b/a LONG ISLAND GUTTERS, Petitioner, -against- SEQ. NO 001 COMPENSATION BOARD FRAUD INSPECTOR GENERAL

against

JOHN H. BURGHER JR., J.P. MORGAN a/k/a CHASE MANHATTAN BANK, AND LINDA PLATONE, Respondents.



008610/04



Goldstein & Avrutine

Attorneys for Petitioner

575 Underhill Boulevard Ste. 140

Syosset, NY 11791

Linda Platone

J.P. Morgan Chase Bank

One Chase Manhattan Plaza, 26th Floor

New York, NY 10081

J.P. Morgan Chase Bank

Legal Department

One Chase Manhattan Plaza, 26th Floor

New York, NY 10081

John H. Burgher, Jr.

Inspector General

NYS Workers' Compensation Board

20 Park Street

Albany, NY 12207

Attn: Joe Gardner, Esq.

Valerie Singleton, Esq.

Office of Attorney General

State of New York

200 Old Country Road, Suite 460

Mineola, NY 11501

Daniel Palmieri, J.

Petitioner's motion seeking to quash the subpoena duces tecum served by Respondent, State of New York Workers' Compensation Board Fraud Inspector General (hereinafter the "WCB"), upon co-Respondent J.P. Morgan a/k/a Chase Manhanttan Bank (hereinafter "Chase") to produce various bank account information and financial statements of Petitioner is hereby denied. Petitioner's further request that all records already given to the WCB Inspector General by Chase be returned to Petitioner is also denied. Respondents J.P. Morgan Chase Bank and Linda Platone have taken no position with regard to the outcome of this motion.

Petitioner, GLIG, Inc. d/b/a Long Island Gutters (hereinafter "GLIG") is a corporation doing business in Deer Park, New York. Sometime in late 2003 or early 2004, an individual named Noe Arguenta claimed to have sustained an injury on the job while employed at GLIG. [*2]Following an alleged Workers' Compensation claim made by Ms. Arguenta, on May 24, 2004, Fraud Inspector General John H. Burgher, Jr., of the WCB issued a subpoena duces tecum upon Chase, specifically addressed to the Legal and Subpoena Records Department. Pursuant to the subpoena, the Inspector General requested: (1) "All the account application and bank statements for Chase Manhattan Account No.(Redacted); and #(Redacted) titled in the names of Long Island Gutters and GLIG, Inc. of 1016 Grand Blvd. Deer Park, New York for the period from January 2000 to present;" and (2) "A list of any other accounts held in those two names, or by any of the following entities: George Dimou Seamless Gutters, Hi Long Island, Home Improvements of Long Island. Long Island Gutter Supply, Evia One Enterprise, Inc.." (See petitioner's moving papers Exhibit B)

On or about June 16, 2004, Chase advised GLIG that its bank records had been subpoenaed by the Inspector General of the WCB. Following notification from Chase, GLIG moved by order to show cause dated June 25, 2004, for an order quashing the subpoena duces tecum and directing the Inspector General to return all originals and copies of all records produced by Chase. On June 25, 2004, the Court granted Petitioner a temporary restraining order enjoining Respondents from taking any further action with regard to the subpoena, pending the hearing of Petitioner's application.

Petitioner argues that the WCB Inspector General failed to provide any notice of their subpoena, and that not until a letter sent by Linda Platone, legal assistant at respondent Chase, dated June 15, 2004 and received by GLIG on June 21, 2004, was Petitioner aware of the subpoena and the WCB proceeding. Petitioner retained counsel on June 23, 2004. On June 22, 2004, Chase had released the records demanded in the subpoena duces tecum to the WCB.

Petitioner claims it was deprived of its constitutional right of due process, that Chase had no right to provide the subject documentation without proper notice to and authorization from Petitioner, that the WCB has engaged in abuse of process and Respondents Chase and Platone breached their fiduciary duty to Petitioner.

In opposition, the WCB through their attorneys, the Attorney General of the State of New York, argues that Petitioner has no standing whatsoever to challenge the Inspector General's subpoena, citing and standing firm on the decision in United States v Miller, 425 US 435.

In United States v Miller, supra, in connection with an investigation, a federal agency issued grand jury subpoenas to presidents of banks where Miller kept accounts, requiring the production of all records of accounts in the name of Miller. This was done so without notice to Miller. The bank presidents complied with the demands and made the documents available to the agents. At trial, Miller challenged the subpoena and moved to suppress the evidence arguing the bank documents were illegally seized. The Supreme Court held that documents subpoenaed from a bank, consisting of records of depositor's account, were business records of the bank, and not "private papers" of the bank depositor, who could thus assert neither ownership nor possession on a claim of illegal seizure. The Court went on to say "This Court has held repeatedly that the Fourth Amendment does not prohibit the obtaining of information revealed to a third party and conveyed by him to Government authorities... Since no Fourth Amendment interests of the depositor are implicated here, this case is governed by the general rule that the issuance of a subpoena to a third party to obtain the records of that party does not violate the rights of a defendant, even if a criminal prosecution is contemplated at the time of the subpoena [*3]is issued." (United States v Miller, supra, 443-444; see also, California Bankers Assn. v Shultz, 416 US 21). The Court found the respondent lacked the requisite Fourth Amendment interest to challenge the validity of the subpoenas.

Bank customers have no proprietary interest in the records kept by the bank with which they do business, the records being the property of the bank. Bank customers do not have a sufficient expectation of privacy in such records to confer upon them the standing necessary to challenge a subpoena seeking those records on the grounds that it violates their constitutional privileges against unreasonable searches and seizures. (See Matter of Norkin v State of New York, 181 AD2d 248).

Petitioner argues that in the wake of the Supreme Court's holding in Miller, supra, a number of states, as well as the federal government, enacted statutes providing for a limited right to financial privacy (see, e.g., 12 USC § 3401 et seq.; Conn.Gen.Statutes § 36-9j et seq.; Md.Fin.Inst.Code Ann. § 1-302 et seq.). The legislature of this state, however, has not acted to provide for any privacy rights in such records, and our courts have, in the main, followed United States v Miller, supra, in holding that bank customers have no proprietary interest in the records kept by the banks with which they do business, the records being the property of the bank, and that bank customers do not have a sufficient expectation of privacy in such records to confer upon them the standing necessary to challenge a subpoena seeking those records on the grounds that it violates their constitutional privileges against unreasonable searches and seizures (Matter of Norkin v Hoey, supra, citing Cappetta v Santucci, 42 NY2d 1066; Congregation B'Nai Jonah v Kuriansky, 172 AD2d 35; People v Doe, 96 AD2d 1018; Matter of Shapiro v Chase Manhattan Bank, N.A., 53 AD2d 542, Matter of Democratic County Comm. of Bronx County v Nadjari, 52 AD2d 70).

The overwhelming weight of authority holds that a bank customer has no legitimate cognizable interest nor proprietary or possessory interests in the records of a third-party bank, and therefore cannot preclude their production. Similarly, this Court finds Petitioner lacks standing to challenge the subpoena duces tecum served upon the third-party bank Chase. Hence, this Court need not reach the other questions raised by Petitioner, however will address some of his issues below.

GLIG raises the Right to Financial Privacy Act (RFPA) of 1978 claiming it was enacted in direct response to the Supreme Court's decision in Miller, supra. The RFPA grants bank customers the right to challenge subpoenas served by the government upon financial institutions. However, Petitioner fails to note that the RFPA by its terms applies only to agencies and departments of the Federal government and does not apply to state authorities. (12 USC § 3401(3); see, Matter of Grand Jury Applications for Court-Ordered Subpoenas and Nondisclosure Orders-December 1988 Term, 142 Misc.2d 241(N.Y.Sup). The agency involved in this action is a state agency, not the US government. In that respect, the protections afforded by the above act are not applicable.

Moreover, Petitioner argues that intertwined with the issue of standing, courts must address factors which include, inter alia, relevance and notice, however, neither the Civil Practice Law and Rules which deals generally with the nature of subpoenas, the authority to issue them, and action to be taken with respect to them, nor the section of the Workers' Compensation Law which specifically confers subpoena power upon the Chairman of the WCB, mandate that [*4]relevancy be shown on the face of the subpoena. (See Goldberg v Kroeger, 85 AD2d 519, affd 56 NY2d 610). Nor does it state anywhere in the statute that the Inspector General must provide notice to the parties that documents relating to them have been subpoenaed by the WCB during the course of an investigation.

The Court finds Petitioner lacks standing to challenge the subpoena duces tecum issued by the WCB Inspector General, or the production of the records provided by Chase to WCB. Accordingly, Petitioner's motion to quash is hereby denied.

This constitutes the Decision and Order of this Court.

E N T E R

DATED: September 29, 2004

_________________________________

HON. DANIEL PALMIERI

Acting J.S.C.