If a judgment-creditor uses a Supplemental Proceeding to make a bank disclose a debtor's account information, does the Clerk of Superior Court have to pay the bank's record-production charge, or does the judgment-creditor?

Plain-English summary

Assistant Clerk Richard Shumacher of Buncombe County had a billing dispute to sort out. A judgment-creditor had used the Supplemental Proceedings statute, NCGS 1-360, to get an order requiring the judgment-debtor's banks to appear and answer questions about funds they held for him. The Clerk's office had also ordered the banks not to transfer those funds. At least one bank, in response, had asked to be reimbursed for the cost of gathering and producing the records, citing the Financial Privacy Act's cost-reimbursement provision in NCGS 53B-9(b). The bank wanted the Clerk to pay. Shumacher wanted to know if he had to.

Senior Deputy AG Ann Reed and Assistant AG L. McNeil Chestnut, for AG Easley, said no. The judgment-creditor pays.

The reasoning is short and clean. The NC Financial Privacy Act (Chapter 53B) generally requires that a "governmental authority" pay a financial institution's cost when the authority accesses a customer's financial records under a court order or judicial subpoena. NCGS 53B-9(b) sets the fee by reference to the federal Right to Financial Privacy Act, 12 USC § 3415, and its regulations at 12 CFR § 219. The Clerk of Superior Court is a governmental authority under NCGS 7A-101.

But the AG noted that NCGS 53B-9(b)'s allocation rule depends on who is "in reality seeking" the records, not on who signs the order. In a Supplemental Proceeding under NCGS 1-360, the judgment-creditor is the party trying to find the debtor's assets to satisfy the judgment. The Clerk's role is to issue the procedural order that makes the bank disclosure possible. The Clerk does not want the records, does not benefit from them, and is not pursuing any independent interest. The judgment-creditor is the real party in interest, and the records flow to the creditor for the creditor's benefit.

The conclusion: the Clerk has no obligation to pay the bank's record-production fee. The bank should pursue payment from the judgment-creditor directly, who should make billing arrangements with the bank as part of conducting the Supplemental Proceeding.

Currency note

This opinion was issued in 1997. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The NC Financial Privacy Act and the federal Right to Financial Privacy Act have been amended multiple times since 1997, and the supplemental proceedings statute has been revisited as well. Anyone working a current Supplemental Proceeding should check the current versions of Chapter 53B, NCGS 1-360, 12 USC § 3415, and the implementing federal regulations before relying on the 1997 allocation rule.

Background and statutory framework

The North Carolina Financial Privacy Act, codified in Chapter 53B, was modeled on the federal Right to Financial Privacy Act of 1978. Both statutes serve a privacy purpose: government cannot fish through a customer's bank records without going through a defined procedure. The standard procedures include customer consent, administrative subpoena, court order, and (more narrowly) emergency disclosure. When the government accesses records via court order or subpoena, the bank is entitled to be reimbursed for the cost of finding and producing the records, at a rate set by the federal regulation 12 CFR § 219.

The federal RFPA, and Chapter 53B in turn, are addressed at government intrusion into financial privacy. They do not directly regulate civil litigation between private parties. In a federal civil case, a litigant who wants bank records uses Rule 45 subpoenas and the costs lie where the rules of civil procedure place them; the RFPA's "governmental authority" provisions are inapt because no government is the party in interest.

The wrinkle in North Carolina is that the Clerk of Superior Court does have some hybrid character. In Supplemental Proceedings under NCGS 1-360, the Clerk plays a quasi-adjudicative role: ordering the debtor and third parties (like banks) to appear and answer questions, and issuing collateral restraining orders. The Clerk is not a passive ministerial officer in this setting; the Clerk has its own authority to act. A bank receiving an order signed by the Clerk could reasonably read NCGS 53B-9(b) to make the Clerk responsible for the fee.

The AG cut through that ambiguity by reading the statute in light of substance, not formality. The "governmental authority accessing customer financial records" in NCGS 53B-9(b) is the one whose interest the records serve. The Clerk's interest in a Supplemental Proceeding is purely procedural; the Clerk is not a litigant. The judgment-creditor is the litigant, and even though the creditor cannot personally issue the order, the creditor is the substantive requester. So the cost allocation follows the substance.

This is consistent with how civil litigants pay their own discovery costs in other contexts. A subpoena for medical records in a tort case is paid by the litigant who issues it. A bank-records subpoena under a Rule 45 discovery order is paid by the litigant. The Supplemental Proceeding statute does not change that allocation; the Clerk's role does not transform private-party discovery costs into court costs.

For Clerks, the practical takeaway in 1997 was: do not pay the bank, do not require court funds to be drawn down to pay the bank, and tell the bank to send the bill to the judgment-creditor's attorney. For judgment-creditors, the takeaway was: the cost of asset discovery sits with you, and you should build it into your collection strategy.

Common questions

Could the bank refuse to produce records until paid?

The opinion does not directly address this. Under federal RFPA practice and standard subpoena law, a third party producing records under a court order generally has to comply with the order regardless of whether payment has been arranged in advance, but can pursue the requesting party for reimbursement after the fact. A bank that wanted certainty would request payment in advance from the judgment-creditor and condition its compliance on payment. If the creditor refused, the bank would have to either comply and bill, or move to quash or modify the order. Refusing to comply outright would risk contempt.

What if the judgment-debtor refuses to pay and the creditor can't afford the bank fees?

That is a collection economics problem, not a legal allocation problem. The creditor bears the cost. If pursuing a particular debtor's bank records costs more than the recoverable judgment, the creditor will not run the Supplemental Proceeding. The Clerk is not the backstop.

Does this opinion apply to administrative subpoenas (not court orders)?

The opinion is specifically about court orders issued in Supplemental Proceedings under NCGS 1-360. The same logic should apply to other litigation-driven judicial subpoenas where the Clerk or judge is acting on behalf of a private party. Administrative subpoenas issued by state agencies pursuing their own regulatory interest are different: the agency is the requesting party in substance as well as form, and the agency would pay under NCGS 53B-9(b).

What about a search warrant or grand jury subpoena?

Those involve law enforcement, not private litigation. The State is the requesting party. The State pays the bank's fee under NCGS 53B-9(b). This 1997 opinion does not change that allocation.

Does the same allocation apply in federal court Supplemental Proceedings?

The federal Right to Financial Privacy Act applies its own framework, but the same substance-over-form logic generally controls federal practice too. A judgment-creditor in federal court enforcing a federal judgment under Rule 69 typically bears the cost of bank-records discovery. The federal allocation does not turn on this 1997 NC AG opinion, but the result is the same.

Source

• Landing page: https://ncdoj.gov/opinions/payment-of-financial-institution-charges-financial-privacy-act/

Citations

• N.C. Gen. Stat. Ch. 53B (North Carolina Financial Privacy Act)
• N.C. Gen. Stat. §§ 53-9, 53B-4(11), 53B-9(b)
• N.C. Gen. Stat. § 1-360
• N.C. Gen. Stat. § 7A-101 et seq.
• 12 U.S.C. § 3415 (Federal Right to Financial Privacy Act, § 1115)
• 12 C.F.R. § 219

Original opinion text

May 29, 1997

The Honorable Richard Shumacher
Assistant Clerk of Superior Court
Buncombe County Courthouse
Asheville, North Carolina 28801

Re: Advisory Opinion — Payment of Financial Institution Charges Financial Privacy Act, N.C.G.S. § 53-9(b)

Dear Mr. Shumacher:

This will address your recent request for an advisory opinion regarding certain issues under North Carolina's Financial Privacy Act (the "NCFPA"), Chapter 53B of the North Carolina General Statutes.

The Facts

You indicate that following a judgment in a civil action instituted in Buncombe County District Court, the judgment-creditor moved in a Supplemental Proceeding, pursuant to N.C.G.S. § 1-360, for an Order directing parties indebted to the judgment-debtor to appear and answer questions concerning property they hold for the benefit of the judgment-debtor. The parties in this case are banks which hold funds on deposit belonging to the judgment-debtor. You also indicate that the Clerk's office has ordered the banks not to transfer any funds of the judgment-debtor.

You next indicate that, in response to the Order to Appear, at least one bank has requested reimbursement for its expense in producing records in accordance with the NCFPA and has cited N.C.G.S. §§ 53B-4(11) and 53B-9(b) as authority for this request.

The Issue

The issue is whether or not the Clerk of Court must compensate a financial institution in accordance with the NCFPA.

Discussion of the Issue

In general, the NCPFA prohibits a "governmental authority" from having access to a customer's financial records held by a financial institution (i.e., a bank, savings institution or credit union) unless the records are described with reasonable specificity and they are obtained through one of several procedures prescribed by statute. One such means is a ". . . court order or administrative or judicial subpoena authorized by law. . . ." N.C.G.S. § 53B-4(11). N.C.G.S. § 53-9(b) expressly requires the governmental authority accessing customer financial records to pay the financial institution a fee for the cost directly incurred in assembling and delivering records. This cost is determined by reference to § 1115(a) of the Federal Financial Privacy Act, 12 USC § 3415 (and regulations promulgated thereunder at 12 CFR § 219).

It is clear that the Office of the Clerk of Superior Court is a governmental authority. N.C.G.S. § 7A-101, et seq. If the Clerk were seeking the financial records of a bank customer, the Clerk would, we believe, have to pay the charges prescribed by statute. However, in this instance, it is a litigant, i.e., the judgment-creditor, who is in reality seeking customer information from a financial institution and not the Clerk's office. The Court, through the Office of the Clerk of Superior Court, is the conduit by which the information is being sought. It is the judgment-creditor who is, or presumably will be, the beneficiary of the information. Under these circumstances, we conclude that the Clerk has no responsibility for the payment of bank charges obtained from a financial institution under the NCFPA. It is our opinion that these charges would be the obligation of the judgment-creditor who should make arrangements directly with the bank.

We trust that this provides you the guidance you seek in this matter. If we may be of further assistance, please let us know.

Very truly yours,

Ann Reed
Senior Deputy Attorney General

L. McNeil Chestnut
Assistant Attorney General