Poor Box Relocations Invite Lawsuits

David P. McGuinn, Safe Deposit Specialists


After 45 years of providing worldwide safe deposit training, products and consultations, I am frequently asked, “What’s new in the safe deposit industry?” My answer is always the same, “Lawsuits”! Due to downsizing, mergers and closing existing branch facilities, there have been numerous safe deposit lawsuits filed nationwide.


Incorrect Procedures

These lawsuits have occurred because many financial institutions did not follow correct box relocation procedures. Because of this lack of concern and knowledge, many unhappy consumers are taking legal action. The following examples show why these problems and the subsequent litigations are occurring.


Three Lawsuits

After losing all of her valuable box contents, one disgruntled box renter stated that, without receiving any written box cancellation notice, two locksmiths spent an entire weekend inside the vault drilling many boxes. These men were given the security alarm code and vault door combination. They successfully drilled over 80 safe deposit boxes with no dual control or management supervision. Many of these boxes contained valuable contents. These box contents were never inventoried and on the following day, only one employee transported them from the vault to another location.


Another very unhappy family went to their financial institution to pick up their prized possessions – Fifty thousand dollars worth of antique gold and diamond jewelry that the family and their ancestors had accumulated over the past 100 years and wore only on special occasions. The vault employee informed them that their safe deposit box had been relocated and they no longer had a box at this location. When the family asked where their box and contents were now located, the employee told them, “I don’t know!” The family attempted to complain to upper management. They were ignored and no one would discuss any details about their missing possessions. A significant lawsuit was filed to recover their losses.


After investing millions in gold, a wealthy doctor stored his gold collection in a safe deposit box. Unfortunately his bank decided to close several branches and merge hundreds of boxes into another vault. Because of very poor renter notification, documentation and recordkeeping, his and many other contracts and records were lost. Hundreds of boxes were incorrectly drilled, inventoried and all box contents were moved into an unsecure record storage area. When the doctor discovered the mistake and requested the return of his gold, it could not be found. A lawsuit followed and two years later it was settled out of court for a very large undisclosed amount.


Guidelines Needed

These are only a few of the many horror stories that have been shared with me. Unfortunately, very few state and federal regulations spell out how to properly relocate or close a safe deposit facility. Because guidelines and assistance are always needed, many financial institutions are trying to establish their own internal procedures. When you attempt to create this step-by-step process you must also consider and include all nationally accepted safe deposit box relocation standards.


Whenever you close, merge or relocate your a safe deposit operation your procedures must protect your financial institution and your box renter’s contents. If a box relocation project becomes your responsibility, you must take every precaution that your security, insurance, vault design, legal notification, chain of custody log, project bidding and all other box relocation procedures are handled with utmost care.


Twelve Step Program

Take into consideration the following 12 steps. All of them must be carefully followed:


1. Proper written notification must be given to all renters.

2. Establish a specific “Chain of Custody” log.

3. Carefully select the right moving date and time.

4. Identify the safest access routes, to and from each location.

5. Establish adequate security controls and procedures.

6. Review your safe deposit liability insurance coverage.

7. Prepare a detailed vault floor plan and box layout.

8. Develop a written box move bid specification.

9. Establish a detailed box relocation bidding procedure.

10. Use only “experienced” box movers.

11. Specify your box relocation requirements.

12. Review all dimensions, procedures, specifications, etc.


Extra Precautions

In addition to these steps, one innovative financial institution came up with a great idea. They bought a dozen eggs just before their box relocation. No, they weren’t planning to serve breakfast. They placed a hard-boiled egg in twelve empty boxes that were scheduled to be moved. After completing the relocation, these uncracked eggs were removed under dual control and this entire procedure was documented. This extra precaution would serve as a valuable defense if any renter makes a claim for damaged box contents in the future.


You Can’t Be Too Careful

Any precautions you can take to minimize your unlimited liability should be seriously considered and implemented. Remember, your safe deposit operation is the only consumer service you provide in which you cannot define, anticipate or limit your potential legal exposure.

David P. McGuinn, President of Safe Deposit Specialists in Houston, is a former banker and often referred to nationwide as the safe deposit GURU. In all 50 states he has trained over 350,000 safe deposit personnel since 1969. For over 40 years, McGuinn’s seminars, manuals, forms and other resources have been considered the accepted standard for the financial industry.

Hear more from David McGuinn at the Safe Deposit Box Issues Seminar on Thursday, September 28.