Bank of N.Y. v. Calloway, 4D13–2224.

• Decision Date: 07 January 2015
• Docket Number: No. 4D13–2224.,4D13–2224.
• Citation: 157 So.3d 1064
• Parties: BANK OF NEW YORK, as Trustee for the Noteholders Cwabs Inc., Asset Backed Notes Series 2006–SD4006–SD4, Appellant, v. Andrew CALLOWAY, Appellee.
• Court: Florida District Court of Appeals

157 So.3d 1064

BANK OF NEW YORK, as Trustee for the Noteholders Cwabs Inc., Asset Backed Notes Series 2006–SD4006–SD4, Appellant

v.Andrew CALLOWAY, Appellee.

No. 4D13–2224.

District Court of Appeal of Florida, Fourth District.

Jan. 7, 2015.

Rehearing Denied March 3, 2015.

Erin M. Berger of Kelley Kronenberg, Tampa, for appellant.

Donna Greenspan Solomon of Solomon Appeals, Mediation & Arbitration, Fort Lauderdale and Roy D. Oppenheim, Geoffrey E. Sherman and Jacquelyn K. Trask of Oppenheim & Pilelsky, Weston, for appellee.

Opinion

GILLESPIE, KENNETH, Associate Judge.

Appellant Bank of New York, as trustee for the Noteholders CWABS Inc., Asset Backed Notes Series 2006–SD4006–SD4 (“Bank of New York”), appeals the trial court's order involuntarily dismissing its foreclosure action. Bank of New York maintains that the trial court abused its discretion in excluding the Borrower's payment history since its witness laid a proper foundation under the business record exception. We agree and reverse.

I. FACTS

In February 2008, Bank of New York filed a complaint seeking to foreclose upon a real property mortgage executed by the Borrower. The matter proceeded to a non-jury trial on May 8, 2013, during which Bank of New York centered its case around one witness—Jean Knowles—a litigation foreclosure specialist for its servicer, Resurgent Capital Services LP (“Resurgent”). The vital purpose of calling Knowles was to lay a predicate for admitting Resurgent's business records pertinent to the case.

Knowles testified that Resurgent became the fourth servicer¹ of the subject loan on November 16, 2012, more than five years after the Borrower's alleged July 1, 2007 default. To effectuate the ownership change, the prior servicer—Bank of America—transferred to Resurgent the Borrower's original loan documents along with its business records chronicling his complete payment history. Upon receipt, Resurgent reviewed the documents for accuracy before scanning them and inputting the payment information into its records system.

Alongside this backdrop, Bank of New York attempted to introduce into evidence the Borrower's “payment history”—a printed tabulation from Resurgent's records laying out the Borrower's monthly payments from the date the loan was executed. To lay a foundation to the business record, Knowles testified that: (1) the proffered document was “a true and accurate representation of the payment history for th[e] loan,” (2) it was “kept during the regular course of regularly-conducted activities by a person with knowledge of the event or activity,” (3) the “person making the record ha[d] a duty to accurately compile [the] information for th[e] record,” and (4) it is “the regular practice of the servicer to make such a record.” In addition, Bank of New York sought to introduce a document entitled “transaction dates,” which contained “the dates that the mortgage [wa]s first due, the maturity date, transaction dates,” and “what date [Resurgent] acquired it.”

As to both documents, the Borrower's counsel objected upon lack of foundation grounds and requested to voir dire the witness. During questioning, Knowles admitted that since Resurgent acquired the loan's servicing rights five years after the Borrower's alleged default, the payment history contained in its records derived from the documents transferred to it by Bank of America. Notwithstanding, Knowles conceded she never worked for Bank of America and thus did not know how Bank of America recorded its payment information, who at Bank of America input the records, whether that information was entered in the regular course of Bank of America's business activity, and whether the person who inputted that information did so with knowledge of its contents.

Relying upon this testimony, the Borrower's counsel argued the two proffered documents constituted inadmissible hearsay since Knowles lacked personal knowledge regarding Bank of America's processes for obtaining and recording loan information. Bank of New York responded that Knowles laid a sufficient predicate under the business records hearsay exception by establishing her familiarity with Resurgent's business records and testifying that Resurgent reviews the accuracy of all information transferred to it upon acquiring a loan.

The trial court sustained the Borrower's hearsay objection, barring Bank of New York from introducing any evidence. In so ruling, the trial court found that although Knowles established that the records acquired from Bank of America were “accurate insofar as they [we]re the records she got from the prior servicer,” Bank of New York failed to provide a witness with knowledge of Bank of America's record-making processes. Since Knowles lacked such knowledge, the trial court found it was incumbent upon Bank of New York to have “somebody who is knowledgeable about the prior servicers ... come and explain ... their records.”

Thereafter, Bank of New York called the Borrower to establish his payment history. The Borrower testified that he did not feel obligated to pay his outstanding indebtedness because Bank of New York's “paperwork is awful.” Furthermore, the Borrower testified that the payment history report was inaccurate, since he made several payments between June 2006—the date he executed the loan—and November 1, 2006—his first listed payment date. At the conclusion of the testimony, the Borrower moved for a motion for involuntary dismissal with prejudice due to Bank of New York's inability to prove the amounts due under the loan. The trial court granted the Borrower's motion for involuntary dismissal noting that it could not “figure out what the balance is.”

Two weeks later, on May 21, 2013, the trial court entered a written order memorializing its ruling that Knowles' “testimony concerning the subject loan prior to November 18, 2012, constituted ... inadmissible hearsay.” As justification, the trial court's order noted that Knowles “was not familiar with the prior servicer's business practices or procedures,” that she “was unable to testify as to the accuracy of the prior servicer's business records,” and that she “did not know who, how or when the data entries were made into the prior servicer's business records.” The trial court found that Knowles “could not provide the requisite evidentiary foundation for any business records of the prior servicers with respect to the subject loan.” Following the denial of Bank of New York's motion for rehearing, this appeal ensued.

II. ANALYSIS

The standard of review for evidentiary rulings is abuse of discretion, limited by the rules of evidence. See Yang v. Sebastian Lakes Condo. Ass'n, 123 So.3d 617, 620 (Fla. 4th DCA 2013). The trial court's granting of a motion for involuntary dismissal is reviewed de novo. See Deutsche Bank Nat'l Trust Co. v. Huber, 137 So.3d 562, 563 (Fla. 4th DCA 2014)

Section 90.803(6), Florida Statutes (2008), “provides a hearsay exception for records of regularly conducted business activity.” A.S. v. State, 91 So.3d 270, 271 (Fla. 4th DCA 2012). To admit business record evidence under this subsection, the proponent must demonstrate: (1) that the record was made at or near the time of the event; (2) that it was made by or from information transmitted by a person with knowledge; (3) that it was kept in the ordinary course of a regularly conducted business activity; and (4) that it was a regular practice of that business to make such a record. See Yisrael v. State, 993 So.2d 952, 956 (Fla.2008). Such foundation may be established in one of three ways:

“First, the proponent may take the traditional route, which requires that a records custodian take the stand and testify under oath to the predicate requirements.” [Yisrael, 993 So.2d at 956 ] (citing § 90.803(6)(a), Fla. Stat. (2004) ). “Second, the parties may stipulate to the admissibility of a document as a business record.” Id. “Third and finally, since July 1, 2003, the proponent has been able to establish the business-records predicate through a certification or declaration that complies with sections 90.803(6)(c) and 90.902(11), Florida Statutes (2004).” Id. at 957.

Cayea v. CitiMortgage, Inc., 138 So.3d 1214, 1217 (Fla. 4th DCA 2014). When employing this first option, “it is not necessary to call the individual who prepared the document”; however, “the witness through whom [the] document is being offered must be able to show each of the requirements for establishing a proper foundation.” Mazine v. M & I Bank, 67 So.3d 1129, 1132 (Fla. 1st DCA 2011) (citation omitted); see also Hunter v. Aurora Loan Servs., LLC, 137 So.3d 570, 573 (Fla. 1st DCA 2014).

In reaching its decision, the trial court relied heavily on Glarum v. La Salle Bank National Association, 83 So.3d 780 (Fla. 4th DCA 2011). In Glarum, this Court held that an affidavit of a loan servicing specialist was inadmissible under the business records exception because the specialist “had no knowledge of how his own company's data was produced and he was not competent to authenticate that data.” Id. at 783 (emphasis added). Notably, the specialist in Glarum attested that he did not know whether his business's records were made in the regular course of business, whether the business made the data entries into its computer system, or who made the entries when the borrowers made payments. Id. at 782–83. Furthermore, the specialist relied upon data supplied by a prior servicer, “with whose procedures he was even less familiar.” Id. at 783. While this latter fact was relevant, the takeaway was that the “specialist had a total lack of knowledge as to how his company's own data was produced.” Weisenberg v. Deutsche Bank Nat'l Trust Co., 89 So.3d 1111, 1112 (Fla. 4th DCA 2012) (distinguishing Glarum where the supervisor at the bank's servicing agent's deposition showed that she “knew how the data was produced” and “demonstrated that she was familiar with the bank's record-keeping system and had knowledge of how the data was uploaded into the system”).

In a...