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Wesley Howard Hitchcock v. American Mortg. Co. (In re Hitchcock), Ch. 12, BK22-40480-BSK, A22-4021-BSK (Sept. 20, 2023)

In a matter of first impression in this district, the bankruptcy court considered how to harmonize a federal agency’s Touhy regulations with the Federal Rules of Civil Procedure where documents are sought from an opposing litigant and not subpoenaed or requested from the federal agency.

The plaintiffs moved to compel the production of FDIC examination reports from a bank. The FDIC raised the bank examination privilege and agency regulations governing the disclosure of documents otherwise exempt from public disclosure requirements (known as Touhy regulations). The Touhy regulations are based on sovereign immunity to protect the government from being forced to comply with a subpoena.

The court examined the tension between a party’s right under Rule 34/Rule 7034 to request the production of relevant documents in the responding party’s possession, custody, or control, and the sovereign immunity of government agencies. Under the circumstances of this case, the court held that sovereign immunity is not implicated by the discovery request, because the plaintiffs were seeking the records from a bank, not from the FDIC. The court permitted the plaintiffs to request the records from the bank without making a Touhy request to the FDIC. Separately, the court would consider the claimed bank examination privilege after an in camera review of the records.

Thursday, September 28, 2023
Judge Brian S. Kruse