CT102 LLC v. NextGear Capital, Inc.

Decision Date19 March 2021
Docket NumberCourt of Appeals Case No. 20A-CC-1909
Citation167 N.E.3d 737 (Table)
Parties CT102 LLC, d/b/a JD Byrider of New Haven and Metro Motors, and Herman Jeffrey Baker, Appellants-Defendants, v. NEXTGEAR CAPITAL, INC., Appellee-Plaintiff.
CourtIndiana Appellate Court

Attorney for Appellants: Julie A. Camden, Camden & Meridew, P.C., Fishers, Indiana

Attorneys for Appellee: David J. Jurkiewicz, Nathan T. Danielson, Sarah T. Parks, Bose McKinney & Evans LLP, Indianapolis, Indiana


Kirsch, Judge.

[1] CT102 LLC, d/b/a JD Byrider of New Haven and Metro Motors ("Borrower") and Herman Jeffrey Baker ("Baker") (together, "Defendants") appeal the trial court's order on damages for breach of contract in favor of NextGear Capital, Inc. ("NextGear") after an evidentiary hearing held on remand from this court for further proceedings on the appropriate measure of damages due to NextGear. Defendants raise one issue for our review, which we restate as: whether the trial court abused its discretion when it admitted documents into evidence to prove the amount of damages under the business records exception to the rule against hearsay.

[2] We affirm.

Facts and Procedural History

[3] On January 31, 2014, Defendants entered into an agreement whereby NextGear would, in installments, advance up to $300,000.00 to Borrower for the purchase of vehicles ("the Agreement"). Appellee's App. Vol. II at 8-20. Baker executed an unconditional guaranty of repayment of the corresponding note. Id. at 28-33. According to NextGear's records, Borrower subsequently defaulted under the Agreement by failing to repay the amounts advanced by NextGear as agreed under Agreement. Id. at 40; Tr. Vol. 2 at 8, 17. Due to Borrower's default, NextGear declared the entire indebtedness due and owing under the Agreement to be immediately due and payable in full. Appellee's App. Vol. II at 40.

[4] On September 4, 2018, NextGear filed its complaint against Defendants, alleging breach of contract claims against Borrower on the promissory note and Baker on his personal guaranty. Id. at 2-7. On August 13, 2019, NextGear filed a motion for summary judgment on its breach of contract claims along with a designation of evidence. AppellantsApp. Vol. 1 at 4. On September 11, 2019, Defendants filed a brief and designation of evidence in opposition to the summary judgment motion. Id. On October 22, 2019, the trial court entered an order granting summary judgment in favor of NextGear and against Defendants on NextGear's breach of contract claims. Appellee's App. Vol. II at 34-38. The order included a money judgment against Defendants, jointly and severally, in the principal amount of $177,947.73. Id. Defendants filed a motion to reconsider, which was denied by the trial court. AppellantsApp. Vol. 2 at 5.

[5] On December 17, 2019, Defendants filed an appeal challenging the trial court's order and asserting that the trial court erred in granting summary judgment because there was a genuine issue of material fact as to the appropriate amount of damages. Baker v. NextGear Capital, Inc. , No. 19A-CC-960, 2020 WL 1542096, *1 (Ind. Ct. App. Apr. 1, 2020). On April 1, 2020, a panel of this court issued its decision, remanding to the trial court "for an evidentiary hearing on damages." Id. at * 1, * 4. This court acknowledged that Defendants had not expressly conceded the issue of liability under the loan documents, but it found that Defendants had only sought remand for a reconsideration of damages. Id. at *1 n.1. We found that Defendants did not "dispute the existence of an enforceable contract" or "dispute that there was a breach of contract on [their] part" or "claim to have timely satisfied [their] obligations" to NextGear. Id. at *2. We also found that while Defendants "initially raised defenses such as improper venue and falsification of a document," they had abandoned those contentions on appeal. Id. at *1 n.2.

[6] On remand, the trial court held an evidentiary hearing on damages on October 6, 2020. Tr. Vol. 2 at 2, 4. At the beginning of the hearing, the trial court confirmed its understanding that the hearing was solely "on the damage aspect of this case." Id. at 4. Two witnesses testified during the damages hearing; Eric Brown ("Brown"), the senior manager of risk and recovery at NextGear, was NextGear's only witness, and Baker was the only witness called by Defendants. Id. at 4, 7, 28, 43. During Brown's direct testimony, NextGear moved to admit certain of NextGear's business records into evidence. Id. at 15-16, 22. These business records included: an Affidavit of Debt; a Payment Received Report; a Disbursement Detail Report; a Payment Receipt; and a Rate, Fee and Term Schedule. Pl.’s Exs. 1-5. Defendants objected to the admission of the business records on hearsay grounds. Tr. Vol. 2 at 13, 15-16, 22. The trial court overruled all of Defendants’ objections and admitted NextGear's proffered evidence pursuant to the business records exception to Indiana's rule against hearsay. Id. at 16, 22. According to NextGear's records, the amount due and owing to NextGear under the Agreement as of September 30, 2020 totaled $205,494.11. Id. at 15-16; Appellee's App. Vol. II at 41.

[7] At the conclusion of the damages hearing, the trial court stated that, based on the evidence presented and on Baker's concession, "there is money owed" from Defendants to NextGear. Tr. Vol. 2 at 44. The trial court then asked the parties to submit proposed orders on damages owed to NextGear. Id. at 44-46. On October 15, 2020, the trial court entered its order on damages and awarded NextGear "actual damages for breach of contract" against Defendants, jointly and severally, in the principal amount of $205,494.11. AppellantsApp. Vol. 2 at 9-15. The order also stated that (1) NextGear was entitled to a further judgment for its attorneys’ fees and expenses in an amount to be determined upon further application to the trial court, and (2) judgment was entered against the Defendants on their counterclaims. Id. at 14-15. Defendants now appeal.

Discussion and Decision

[8] We review a trial court's decision on the admissibility of evidence for an abuse of discretion. Barrix v. Jackson , 973 N.E.2d 22, 24 (Ind. Ct. App. 2012), trans. denied. An abuse of discretion occurs when the decision is against the logic and effect of the facts and circumstances before the court. Id. Even where the trial court's decision is erroneous, however, we will not reverse the judgment where the decision does not prejudice the substantial rights of a party. Id. at 24-25 (citing Ind. Trial Rule 61 ).

[9] Defendants argue that the trial court abused its discretion when it admitted the busines records proffered by NextGear at the damages hearing. They contend that that the trial court erred because NextGear did not lay a proper foundation to show that the evidence qualified under the business records exception to the prohibition against hearsay. Defendants maintain that Brown was not a proper authenticating witness because he did not meet the criteria under Indiana Evidence Rule 803(6). Specifically, Defendants assert that Brown was not the business records custodian for NextGear; he could not testify whether the record was made at or near the time, by or from information transmitted by someone with knowledge; he was not in his current position at the time the documents were made; he could not testify whether the record was kept in the course of a regularly conducted activity of the business; and he could not testify that making the record was a regular practice of that activity.1

[10] Hearsay is an out-of-court statement offered in evidence to prove the truth of the matter asserted. Ind. Evidence Rule 801(c). Hearsay is not admissible unless it falls under certain exceptions. Ind. Evidence Rule 802. The business-records exception, Indiana Evidence Rule 803(6), provides that a record of an act, event, condition, opinion, or diagnosis is admissible if:

(A) the record was made at or near the time by -- or from information transmitted by -- someone with knowledge;
(B) the record was kept in the course of a regularly conducted activity of a business, organization, occupation, or calling, whether or not for profit;
(C) making the record was a regular practice of that activity;
(D) all these conditions are shown by the testimony of the custodian or another qualified witness, or by a certification that complies with Rule 902(9) or (10) or with a statute permitting certification; and
(E) neither the source of information nor the method or circumstances of preparation indicate a lack of trustworthiness.

[11] "The reliability of business records stems in part from (1) the fact that the organization depends on them to operate, (2) the sense that they are subject to review, audit, or internal checks, and (3) the precision engendered by the repetition." In re De.B. , 144 N.E.3d 763, 769 (Ind. Ct. App. 2020) (citing In re E.T. , 808 N.E.2d 639, 642-43 (Ind. 2004) ). "Under the business records exception, ‘a person who has a familiarity with the records may provide a proper business records exception foundation even if he or she is not the entrant or his or her official supervisor.’ " Hussain v. Salin Bank & Tr. Co. , 143 N.E.3d 322, 332 (Ind. Ct. App. 2020) (quoting Payne v. State , 658 N.E.2d 635, 645 (Ind. Ct. App. 1995), trans. denied ), trans. denied. To obtain admission under the business records exception, the proponent of an exhibit need only call an individual who has a functional understanding of the business's record-keeping process, who could be the entrant, the entrant's supervisor, co-workers, a records custodian, or any other such person. Id.

[12] As NextGear points out, this case is similar to Hussain , where the trial court granted a lender summary judgment on the issue of a borrower's liability under its loan documents but determined that there were material facts in dispute as to the proper measure of damages, and therefore, a damages...

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