Cach, LLC v. Askew

Decision Date06 March 2012
Docket NumberNo. SC 91780.,SC 91780.
Citation358 S.W.3d 58
PartiesCACH, LLC, Respondent, v. Jon ASKEW, Appellant.
CourtMissouri Supreme Court

358 S.W.3d 58

CACH, LLC, Respondent,
v.
Jon ASKEW, Appellant.

No. SC 91780.

Supreme Court of Missouri, En Banc.

Jan. 17, 2012.Rehearing Denied March 6, 2012.


[358 S.W.3d 59]

Dennis M. Devereaux, James J. Daher, James J. Daher LLC, St. Louis, for Askew.

Karen L. Jones, Evans & Dixon LLC, St. Louis, for CACH.

Gina Chiala, Slough Connealy Irwin & Madden LLC, Kansas City, for amicus curiae National Consumer Law Center.

[358 S.W.3d 60]

Clinton P. Woerth, Eric B. Wetzel, Kozeny & McCubbin LC, St. Louis, for amicus curiae National Association of Retail Collection.Joshua C. Dickinson, Spencer Fane Britt & Browne LLP, Kansas City, for amicus curiae DBA International.M. Courtney Koger, Michelle A. Fox, Anna M. Wenzel, Kutak Rock LLC, Kansas City, for amicus curiae Commercial Law League of America.David J. Weimer, Kramer & Frank PC, Kansas City, for amicus curiae Missouri Creditors Bar Inc.ZEL M. FISCHER, Judge.

Jon Askew appeals a judgment of the circuit court entered in an action brought by CACH, LLC, a debt collector that allegedly had been assigned an outstanding debt owed by Askew. Askew claims that the circuit court erred in entering the judgment because CACH did not properly demonstrate that it had been assigned the debt in question and that the circuit court improperly admitted exhibits based on the business records exception to the hearsay rule. This Court has jurisdiction over this appeal under article V, section 10, of the Missouri Constitution, because it granted transfer after opinion by the court of appeals. Judgment reversed.

Facts

CACH filed a petition in St. Louis County circuit court seeking to recover $5,936.10 plus interest, the amount it claimed was still owed on a credit card account that Jon Askew opened in 1998 with Providian Bank. Prior to filing its petition, CACH attempted to contact both Askew and his wife to collect the money allegedly owed on the credit card account. After discussing the account with Askew's wife, CACH received two checks drawn on a joint checking account owned by Askew and his wife. The first payment of $500 was made in February 2008. The second payment of $1000 was sent in March 2008. However, Askew successfully stopped payment on the second check shortly after it was sent. In April 2008, Askew sent CACH a letter that disputed the validity of the credit card debt and requested “evidence of this debt ... as well as proof of [CACH's] authority in this matter.”

In its petition, CACH claimed it owned the account that had originally been owned by Providian. It averred that Providian was acquired by Washington Mutual, which subsequently assigned Askew's account to Worldwide Asset Purchasing II, LLC. CACH further claimed Worldwide, thereafter, assigned the account to CACH. Askew filed an answer to CACH's petition alleging, among other defenses, that CACH lacked standing to sue.

At trial, CACH offered several exhibits purported to be documents regarding the credit card account. It sought to have those exhibits admitted into evidence by laying a foundation for these documents as business records pursuant to § 490.680, RSMo 2000. CACH's sole witness at trial was Diana Eakins,1 who is the records custodian for Square Two Financial, which owns CACH.2 Eakins testified that she had been employed by Square Two Financial since 2009. Eakins admitted that she was not the custodian of records for Washington

[358 S.W.3d 61]

Mutual, which had acquired Providian, and that she never had worked for Worldwide. When asked whether she had “any personal knowledge about the business practices of Providian in 1998,” Eakins responded that she did not but that she had “bank training with most of the major banks” with which CACH dealt.

Exhibit 7 purported to be a bill of sale transferring several unnamed accounts from Washington Mutual to Worldwide. Exhibit 8 purported to be a bill of sale transferring several unnamed accounts from Worldwide to CACH. Exhibit 9 purported to be a redacted spreadsheet referencing Askew's credit card account. Askew objected to these exhibits on the basis of lack of foundation and hearsay. Askew argued that the exhibits were inadmissible hearsay because Eakins was not qualified to lay a proper foundation for the exhibits as business records. The circuit court overruled Askew's objections and admitted all of these exhibits.

CACH attempted to demonstrate that Washington Mutual assigned Askew's account to Worldwide with Exhibit 7, the bill of sale from Washington Mutual to Worldwide. CACH attempted to demonstrate that Worldwide assigned the account to CACH with Exhibit 8, the bill of sale from Worldwide to CACH. Neither Exhibit 7 nor Exhibit 8 reference Askew's account by either name or number. Instead, both refer to an attached Account Schedule. Eakins testified that Exhibit 9 was the Account Schedule attached to Exhibit 8.3

The circuit court entered judgment in favor of CACH and against Askew in the amount of $6,691.91. In a combined findings of fact and conclusions of law, the court determined that “[CACH] purchased and was assigned all rights to collect on Askew's debt” based on Exhibits 7 and 8 (the bills of sale), Exhibit 9 (the attachment showing the bill of sale applied to Askew), and the payments made by Askew to CACH, which the court concluded admitted assignment of the account to CACH.

CACH's Standing

Askew claims that he was prejudiced by the admission of Exhibit 7 4 because without this exhibit, CACH could not show that it had standing to pursue collection of the credit card debt owed to Providian.

Standard of Review

“Because standing is a question of law, review of the issue on appeal is de novo. Missouri State Medical Ass'n v. State, 256 S.W.3d 85, 87 (Mo. banc 2008).

Analysis

A party has standing to sue when it has “a justiciable interest in the subject matter of the action.” Garrison v. Schmicke, 354 Mo. 1185, 193 S.W.2d 614, 615 (1946); see also Midwestern Health Mgmt., Inc. v. Walker, 208 S.W.3d 295, 298 (Mo.App.2006) (stating that standing to sue “exists when a party has an interest in the subject matter of the suit that gives it a right to recovery, if validated.”) Courts have a duty to determine if a party has standing prior to addressing the substantive issues of the case. Farmer v. Kinder, 89 S.W.3d 447, 451 (Mo. banc 2002). For this reason, standing cannot be waived. Id.

In cases that involve a party attempting to recover on an account owed to

[358 S.W.3d 62]

some other party, “proof of an assignment of the account is essential to a recovery.” Walker, 208 S.W.3d at 298. The party must show clearly through a valid assignment it is the rightful owner of the account at issue. C. & W. Asset Acquisition, LLC v. Somogyi, 136 S.W.3d 134, 140 (Mo.App.2004). In cases that involve multiple assignments, there must be proof of the validity of assignment every time the rights to collect the debt are transferred. See Mitchell v. St. Louis Argus Pub. Co., 459 S.W.2d 1, 5–6 (Mo.App.1970). In other words, every link in the chain between the party to which the debt was originally owed and the party trying to collect the debt must be proven by competent evidence in order to demonstrate standing. Walker, 208 S.W.3d at 298.

In the current case, CACH alleges that the credit card account originated at Providian Bank, which was purchased by Washington Mutual, and that the account was assigned to Worldwide and then assigned to CACH. Therefore, to have standing to collect on Askew's credit card account, CACH must have presented competent evidence of both the assignment of the account between Washington Mutual and Worldwide and the assignment of the account between Worldwide and CACH. At trial, CACH attempted to establish the assignment between Washington Mutual and Worldwide by admitting Exhibit 7 into evidence.

On appeal, Askew challenges the court's admission of Exhibit 7. Askew argues that without the admission of this exhibit, CACH did not demonstrate it had standing to sue. CACH, however, claims Askew...

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