Keybank Nat'l Ass'n v. Estate of Quint

• Citation: 176 A.3d 717
• Decision Date: 21 December 2017
• Docket Number: Docket: Yor–17–198
• Parties: KEYBANK NATIONAL ASSOCIATION v. ESTATE OF Eula W. QUINT et al.
• Court: Supreme Judicial Court of Maine (US)

176 A.3d 717

KEYBANK NATIONAL ASSOCIATION

v.ESTATE OF Eula W. QUINT et al.

Docket: Yor–17–198

Supreme Judicial Court of Maine.

Argued: November 15, 2017

Decided: December 21, 2017

Brent L. Messinger, Esq. (orally), Andrea T. Holbrook, Esq., and David C. West, Esq., Portland, for appellant KeyBank National Association

Thomas A. Cox, Esq. (orally), Portland, for appellee Vickie L. Kilton

Frank D'Alessandro, Esq., Chet Randal, Esq., and Jonathan E. Selkowitz, Esq., Pine Tree Legal Assistance, Inc., Portland, for amicus curiae Pine Tree Legal Assistance, Inc.

John D. Clifford, IV, Clifford & Golden, P.A., Lisbon Falls, for amicus curiae Maine Attorneys Saving Homes

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

ALEXANDER, J.

[¶ 1] KeyBank National Association appeals from a judgment entered by the District Court (Springvale, Dobson, J. ) in favor of Vickie L. Kilton and the Estate of Eula W. Quint on KeyBank's complaint for a residential foreclosure.¹ KeyBank challenges the court's denial of its motion to continue the trial and the court's determination that KeyBank did not lay a proper foundation for admitting the loan servicing records pursuant to the business records exception to the hearsay rule. See M.R. Evid. 803(6). We affirm the judgment.

I. CASE HISTORY

[¶ 2] On September 30, 2015, KeyBank filed a complaint for a residential foreclosure against Quint and Kilton in the District Court. Shortly thereafter, Kilton contacted KeyBank to report that Quint had died. After the appointment of a special administrator for Quint's estate, the Estate, represented by counsel, filed an answer denying the allegations in the complaint and waiving mediation. See M.R. Civ. P. 93(m). Kilton did not file an answer or otherwise defend in the matter until the trial management conference in December 2016. At that conference, she appeared unrepresented.

[¶ 3] On April 14, 2017, the court held a nonjury trial. Neither counsel for the Estate nor the personal representative was present at trial. Kilton appeared, represented by an attorney who had filed a notice of limited appearance that day. See M.R. Civ. P. 11(b) ; M.R. Prof. Conduct 1.2(c), (d).

[¶ 4] KeyBank moved to continue the trial for at least a month, stating that, with the assistance of her attorney, Kilton could apply for a loan modification. KeyBank added that the Estate was not present and therefore was unable to protect its interest in the property. Kilton objected to the motion, arguing, inter alia, that she believed that KeyBank requested a continuance because it did not have sufficient evidence to support its claim. After confirming that Kilton understood the risk of declining the opportunity for a loan modification and noting that KeyBank's burden at trial was not dependent on the Estate's presence, the court denied KeyBank's motion.

[¶ 5] When the trial began, KeyBank first called Kilton to testify. Kilton admitted that she had executed a promissory note in favor of KeyBank, which was secured by a mortgage on property located in Parsonsfield, and that she had failed to make payments due on the note. On cross-examination, she testified that, when she first obtained the loan, she received monthly bills from "Countrywide."

[¶ 6] KeyBank's only other witness was a "complex liaison" from PHH Mortgage Services, which, he testified, is the current loan servicer for KeyBank and handles the day-to-day operations of managing and servicing loan accounts. The complex liaison testified that he has been an employee of PHH in the foreclosure department for seven years. As part of his training, he had worked with supervisors of various departments—including loss mitigation, collections, servicing, and escrow—to understand those departments' processes. He further stated that he participates in training annually and continues to meet with members of other departments on a regular basis, particularly when a question on a loan arises.

[¶ 7] The complex liaison testified that when an event occurs on an account, such as contact with the borrower or receipt of a payment, the event is documented in the account on the same day. He stated that he does not have the ability to alter a business record once it has been entered into the system. He also described PHH's physical and digital security, as well as PHH's "clean-desk policy" and sign-off procedure.

[¶ 8] The complex liaison testified that he has training on and personal knowledge of the "boarding process" for loans being transferred from prior loan servicers to PHH and of PHH's procedures for integrating those records. He explained that transferred loans are put through a series of tests to check the accuracy of any amounts due on the loan, such as the principal balance, interest, escrow advances, property tax, hazard insurance, and mortgage insurance premiums. He further explained that if an error appears on the test report for a loan, that loan will receive "special attention" to identify the issue, and, "[i]f it ultimately is something that is not working properly, then that loan will not ... transfer." Loans that survive the testing process are transferred to PHH's system and are used in PHH's daily operations.

[¶ 9] The complex liaison testified that he has access to and is familiar with PHH's records and that his responsibilities include reviewing those records on a daily basis. He is also responsible for attending trials, depositions, settlement conferences, and mediations. He stated that before attending a judicial proceeding in a foreclosure action, he reviews everything related to that foreclosure. Specific to this case, he testified that the records related to the loan from KeyBank to Kilton and Quint were kept in the regular course of PHH's business. He stated that the loan is past due since March 2009 and that PHH took over servicing of the loan "well after that point."²

[¶ 10] The court admitted in evidence, without objection, KeyBank's exhibits one through six, which included a copy of the original promissory note dated April 29, 2002;³ a copy of the recorded mortgage; the purported assignment of the mortgage by Mortgage Electronic Registration Systems, Inc., from KeyBank to Bank of America recorded on January 9, 2012; the ratification of the January 2012 assignment recorded on March 6, 2015; the recorded assignment of the mortgage from Bank of America to KeyBank dated October 10, 2012; and the notice of default and right to cure issued to Kilton and Quint by KeyBank in August 2015. The complex liaison testified that an allonge affixed to the promissory note transferred the note to "Bank of America, N.A. as Successor by Merger to BAC Home Loans Servicing, LP fka Countrywide Home Loans Servicing, LP," but was later voided.

[¶ 11] Pursuant to the business records exception to the hearsay rule, M.R. Evid. 803(6), KeyBank moved to admit exhibit seven, which consisted of screenshots from PHH's computer system purporting to show the amounts owed, the costs incurred, and the outstanding principal balance on Kilton and Quint's loan. Kilton objected, arguing that PHH's records were based on the records of prior servicers and that KeyBank had not established that the witness had knowledge of the record-keeping practices of either Bank of America or Countrywide. The court determined that the complex liaison's testimony was insufficient to admit exhibit seven pursuant to the business records exception. KeyBank conceded that, without exhibit seven, it would not be able to prove the amount owed on the loan, which KeyBank correctly acknowledged was an essential element of its foreclosure action. Kilton moved for a judgment as a matter of law, see M.R. Civ. P. 50(d), and the court entered a judgment in favor of Kilton and the Estate. KeyBank timely filed this appeal. See 14 M.R.S. § 1901 (2016) ; M.R. App. P. 2 (Tower 2016).⁴

II. LEGAL ANALYSIS

A. Business Records Exception

[¶ 12] KeyBank's primary contention on appeal is that the trial court erred by finding that it had not laid a proper foundation for admitting PHH's loan servicing records pursuant to the business records exception when the complex liaison offered detailed testimony about his training and experience in—and PHH's procedures for—receiving and integrating records of prior loan servicers.

[¶ 13] A trial court's determination regarding whether the necessary factual foundation to admit evidence pursuant to the business records exception has, or has not, been established is reviewed for clear error. Beneficial Me. Inc. v. Carter , 2011 ME 77, ¶ 9, 25 A.3d 96 ; Maine Appellate Practice § 419 at 278 (4th ed. 2013). A "clear error" standard on evidentiary foundation issues requires us to determine if the trial court's ruling is supported by and consistent with the facts that appear in the record. See State v. Dilley, 2008 ME 5, ¶ 25, 938 A.2d 804 ; State v. Buchanan, 2007 ME 58, ¶ 8, 921 A.2d 159. When the appealing party was the proponent of the evidence that was not admitted at trial, that party "must demonstrate that a contrary finding was compelled by the evidence." Handrahan v. Malenko , 2011 ME 15, ¶ 13, 12 A.3d 79.

[¶ 14] "Business 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. M.R. Evid. 803(6) provides that a business record 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(11), Rule 902(12) or with a statute permitting certification; and

(E)

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