JPMorgan Chase Bank, N.A. v. Lowell, Docket: And-16-139.

• Decision Date: 28 February 2017
• Docket Number: Docket: And-16-139.
• Citation: 156 A.3d 727
• Parties: JPMORGAN CHASE BANK, N.A. v. Terrance B. LOWELL et al.
• Court: Maine Supreme Court

156 A.3d 727

JPMORGAN CHASE BANK, N.A.

v.Terrance B. LOWELL et al.

Docket: And-16-139.

Supreme Judicial Court of Maine.

Submitted On Briefs: November 29, 2016

Decided: February 28, 2017

Joshua Klein–Golden, Esq., Clifford & Golden, PA, Lisbon Falls, for appellant Terrance B. Lowell

Adam J. Shub, Esq., Preti Flaherty Beliveau & Pachios, LLP, Portland, for appellee JPMorgan Chase Bank, N.A.

Panel: ALEXANDER, MEAD, JABAR, HJELM, and HUMPHREY, JJ.

HJELM, J.

[¶1] Terrance B. Lowell appeals from a judgment of foreclosure in favor of JPMorgan Chase Bank, N.A., entered in the District Court (Lewiston, Dow, J. ) after a bench trial. Lowell argues that the court erred or abused its discretion by admitting certain documents pursuant to the business records exception to the hearsay rule, see M.R. Evid. 803(6), and by finding that the notice of default issued by JPMorgan complied with statutory requirements. Although the court properly admitted the challenged documents in evidence, we agree that the notice of default was defective. We therefore vacate the judgment and remand for entry of judgment for Lowell.

I. BACKGROUND

[¶2] In March 2015, JPMorgan filed a complaint against Lowell seeking foreclosure on residential property located in Auburn.¹ JPMorgan alleged that Lowell had defaulted by failing to make payments due on a promissory note executed in favor of Wachovia Mortgage Corporation; that the note was secured by a mortgage in favor of Mortgage Electronic Registration Systems, Inc., (MERS), as nominee for Wachovia; and that, after several transactions, all rights created by the instruments had been assigned to JPMorgan.² Lowell filed an answer, which, as later amended, disputed many of the allegations in the complaint and asserted several affirmative defenses.

[¶3] The matter proceeded to trial in March 2016. To lay the foundation necessary for the admission of various documents as business records, see M.R. Evid. 803(6), JPMorgan presented the testimony of employee Frank Dean, who had worked for JPMorgan for five years and, at the time of trial, was a "mortgage banking research officer." Dean testified that his responsibilities in that position included reviewing "business records pertaining to residential mortgage loans," and that in preparation for trial he had "reviewed the electronic business records pertaining to [Lowell's] mortgage file," including the note, mortgage, assignments of the mortgage, and payment history. He further testified that he previously worked as a "bank branch loan officer" for JPMorgan and had been "responsible for meeting with bank customers, ... developing residential mortgage applications, ... processing mortgage loans, closing mortgage loans, and ... handling customer service issues ... such as payment applications." He stated that while assisting customers with loan payments he observed "how the system was accessed" by bank tellers at the time of payment, "where the information was entered, and how it was saved, and became a record." He explained that, based on this cumulative experience, he was familiar with how JPMorgan's business records were created, checked for accuracy, and accessed, and he confirmed that JPMorgan followed all procedures for maintaining the accuracy of the documents at issue in this case.

[¶4] Based on Dean's foundational testimony, JPMorgan introduced a number of documents in evidence, including the note and mortgage; the notice of default and right to cure issued to Lowell by JPMorgan in January 2015; and Exhibit E, which consists of "screen prints" from JPMorgan's computer databases that show the charges and payments made on Lowell's loan between June 2006—which, Dean testified, is when JPMorgan acquired the note—and late February 2016. Dean stated that according to the computer printouts, Lowell had not made any payments on his loan since September 1, 2012.

[¶5] During Dean's testimony, Lowell made a general objection to the admission of JPMorgan's records pursuant to Rule 803(6). The court overruled the objection, rejecting Lowell's argument that JPMorgan was required to establish that Dean had knowledge about the creation of the records particular to this case. Lowell later objected specifically to the admission of some portions of Exhibit E that cover activity while JPMorgan owned the note, based on his assertion that Dean lacked personal knowledge about how various charges in the printouts were calculated and entered, and the court also overruled that objection.³

[¶6] Following the trial, on March 16, 2016, the court entered a judgment of foreclosure in favor of JPMorgan, finding that Lowell owed $125,000.33 on the note and mortgage, plus attorney fees and disbursements. Lowell timely appealed. See 14 M.R.S. § 1901 (2016) ; M.R. App. P. 2.

II. DISCUSSION

[¶7] To be entitled to a judgment of foreclosure, JPMorgan was required to prove, among other things, "the amount due on the mortgage note, including any reasonable attorney fees and court costs," and service on Lowell of a notice of default and right to cure that complied with statutory requirements. Bank of Am., N.A. v. Greenleaf , 2014 ME 89, ¶ 18, 96 A.3d 700 ; see also 14 M.R.S. §§ 6111(1–A), 6322 (2014).⁴ Lowell argues that the court erred by admitting JPMorgan's business records showing the amount due pursuant to the secured obligation, and that the notice of default was statutorily defective. We address these issues in turn.

A. Evidence of Amount Due

[¶8] As evidence of the amount due, JPMorgan introduced Exhibit E, which consists of computer printouts from JPMorgan's databases showing charges and payments on Lowell's loan between June 2006 and late February 2016, a few weeks before trial, during which time JPMorgan owned the note. Although Lowell's brief does not directly cite Rule 803(6), he appears to argue that the court erred or abused its discretion by admitting Exhibit E as a business record. See Am. Express Bank FSB v. Deering , 2016 ME 117, ¶ 12, 145 A.3d 551 ("When admission of evidence under the business records exception to the hearsay rule is challenged, we review a trial court's foundational findings to support admissibility for clear error and its ultimate determination of admissibility for an abuse of discretion." (quotation marks omitted)). Lowell further asserts that the court erred by determining that Exhibit E, together with Dean's testimony, was sufficient to prove the amount due on the loan—a matter we review for clear error. See Wells Fargo Bank, N.A. v. Burek , 2013 ME 87, ¶ 17, 81 A.3d 330.

[¶9] As we have previously explained, "[b]usiness records are hearsay and therefore inadmissible pursuant to M.R. Evid. 802 unless they meet the requirements of the business records exception in M.R. Evid. 803(6)." Ocean Communities Fed. Credit Union v. Roberge , 2016 ME 118, ¶ 9, 144 A.3d 1178. Evidence qualifies for the business records exception if the necessary foundation is established by a witness who is a "custodian or another qualified witness." M.R. Evid. 803(6)(D).⁵ "A qualified witness is one who was intimately involved in the daily operation of the business and whose testimony showed the firsthand nature of his knowledge." Roberge , 2016 ME 118, ¶ 10, 144 A.3d 1178 (quotation marks omitted).

[¶10] Here, Dean testified in detail about JPMorgan's procedures for producing and retaining loan payment records, and he described his direct experience interacting with the departments that entered loan payments into the system. Based on this testimony, the court did not err by determining that Dean was qualified to establish the foundation for the admission of Exhibit E and that the testimony established the foundational requirements for the admission of that exhibit. Id. ¶11 (stating that "[o]nce the qualifications of the witness are established, the moving party must lay the necessary foundation for the admission of the documents as business records"). Further, the court did not err by determining, based in part on that exhibit, that JPMorgan had satisfied its burden to prove the amount due on the loan.⁶

[¶11] On appeal, Lowell also makes a brief reference to an argument that was developed more extensively at trial, namely, that Dean was not qualified to establish the foundation for the admission of Exhibit E because he lacked firsthand information about the specific transactions at issue here. To the extent that it is preserved, Lowell's challenge to the admission of Exhibit E based on Dean's lack of personal knowledge is not persuasive. If Dean had personal knowledge about the facts recorded in Exhibit E, JPMorgan would not have needed to invoke Rule 803(6) because Dean could have testified to the facts directly and without resort to documentation. Instead, the very purpose of Rule 803(6) is to allow the proponent to prove the contents of properly established business records through those records themselves, without the need for the foundation witness to have personal knowledge of the events or transactions described in those records. See Beneficial Maine Inc. v. Carter , 2011 ME 77, ¶ 12, 25 A.3d 96 (stating that the purpose of Rule 803(6) is "to allow the consideration of a business record, without requiring firsthand testimony regarding the recorded facts, by supplying a witness whose knowledge of [the business's recordkeeping] practices ... is sufficient to ensure the reliability and trustworthiness of the record"); see also State v. Abdi , 2015 ME 23, ¶ 17, 112 A.3d 360 ("The fact that the witness did not prepare or supervise the preparation of the record does not preclude the witness from providing the foundation for admissibility."). The court did not err in admitting Exhibit E over this objection.

B. Notice of Default and Right to Cure

[¶12] Lowell next argues that the court erred by finding that the notice of default issued by JPMorgan strictly complies with the requirements established in 14 M.R.S. § 6111. "We review a trial court's factual findings underlying a judgment of...