Phillips v. Mortg. Elec. Registration Sys., Inc.

• Decision Date: 05 April 2013
• Docket Number: Case No. 5:09-cv-2507-TMP
• Parties: REX A. PHILLIPS and, MARY M. PHILLIPS, Plaintiffs, v. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; MERSCORP, INC; ONEWEST BANK, FSB, Defendants
• Court: U.S. District Court — Northern District of Alabama

REX A. PHILLIPS and, MARY M. PHILLIPS, Plaintiffs,

v.MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.;

MERSCORP, INC; ONEWEST BANK, FSB, Defendants

Case No. 5:09-cv-2507-TMP

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA NORTHEASTERN DIVISION

DONE: April 5, 2013

MEMORANDUM OPINION

This cause comes before the court on the motions for summary judgment by both the plaintiffs and the defendants. Defendants, Mortgage Electronic Registration System, Inc., and MERSCORP, Inc., (collectively referred to as "MERS") and OneWest Bank, FSB ("OneWest"), filed their motion for summary judgment on May 1, 2012 (Docs. 54 and 55), as did the plaintiffs, Rex and Mary Phillips (Docs. 56 and 57). Both motions have been fully briefed. These parties have consented to the exercise of dispositive jurisdiction by the undersigned magistrate judge. (Doc. 44).¹

I. Summary Judgment Standards

Under Federal Rule of Civil Procedure 56(a), summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgmentas a matter of law." Fed. R. Civ. P. 56(a). The party asking for summary judgment "always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting former Fed. R. Civ. P. 56(c)). The movant can meet this burden by presenting evidence showing there is no dispute of material fact, or by showing that the nonmoving party has failed to present evidence in support of some element of its case on which it bears the ultimate burden of proof. Celotex, 477 U.S. at 322-23. There is no requirement, however, "that the moving party support its motion with affidavits or other similar materials negating the opponent's claim." Id. at 323.

Once the moving party has met his burden, Rule 56 "requires the nonmoving party to go beyond the pleadings and by her own affidavits, or by the 'depositions, answers to interrogatories, and admissions of file,' designate 'specific facts showing that there is a genuine issue for trial.'" Id. at 324 (quoting former Fed. R. Civ. P. 56(e)). The nonmoving party need not present evidence in a form necessary for admission at trial; however, he may not merely rest on his pleadings. Celotex, 477 U.S. at 324. "[T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322.

After the plaintiff has properly responded to a proper motion for summary judgment, the court "shall" grant the motion if there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The substantive law will identifywhich facts are material and which are irrelevant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248. "[T]he judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Id. at 249. His guide is the same standard necessary to direct a verdict: "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52; see also Bill Johnson's Restaurants, Inc. v. N.L.R.B., 461 U.S. 731, 745 n.11 (1983). However, the nonmoving party "must do more than show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The evidence supporting a claim must be "substantial," Marcus v. St. Paul Fire and Marine Ins. Co., 651 F.2d 379 (5th Cir., Unit B, 1981); a mere scintilla of evidence is not enough to create a genuine issue of fact. Young v. City of Palm Bay, 358 F.3d 859, 860 (11th Cir. 2004); Kesinger ex rel. Estate of Kesinger v. Herrington, 381 F.3d 1243, 1249-1250 (11th Cir. 2004). If the non-movant's evidence is so thoroughly discredited by the rest of the record evidence that no reasonable jury could accept it, the evidence fails to establish the existence of a genuine issue of fact requiring a jury determination. See Scott v. Harris, 550 U.S. 372, 127 S. Ct. 1769, 1776, 167 L. Ed. 2d 686 (2007) ("Respondent's version of events is so utterly discredited by the record that no reasonable jury could have believed him. The Court of Appeals should not have relied on such visible fiction; it should have reviewed the facts in the light depicted by the videotape."); Lewis v. City of West Palm Beach, Fla., 561 F.3d 1288, 1290 n. 3 (11th Cir. 2009). If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted. Anderson, 477 U.S. at 249 (citations omitted); accord Spence v. Zimmerman, 873 F.2d256 (11th Cir. 1989). Furthermore, the court must "view the evidence presented through the prism of the substantive evidentiary burden," so there must be sufficient evidence on which the jury could reasonably find for the plaintiff. Anderson, 477 U.S. at 254; Cottle v. Storer Communication, Inc., 849 F.2d 570, 575 (11th Cir. 1988). Nevertheless, credibility determinations, the weighing of evidence, and the drawing of inferences from the facts are the function of the jury, and therefore the evidence of the non-movant is to be believed and all justifiable inferences are to be drawn in his favor. Anderson, 477 U.S. at 255. The non-movant need not be given the benefit of every inference but only of every reasonable inference. Brown v. City of Clewiston, 848 F.2d 1534, 1540 n.12 (11th Cir. 1988).

II. Admissibility of Marks Affidavit

A preliminary evidentiary issue raised by plaintiffs is whether the affidavit of Rebecca Marks, attached to the defendants' motion for summary judgment as Exhibit A, is admissible, or whether it must be stricken, as plaintiffs argue. Plaintiffs assert that the Marks Affidavit fails to comply with the Rule 56 requirements for affidavits in that parts of it are not based on the affiant's personal knowledge, it offers inadmissible evidence, and it fails to show how the affiant is competent to testify to the matters in the affidavit. See Fed. R. Civ. P. 56(c)(4).²

At the outset, the Marks Affidavit identifies Rebecca Marks as "the Default Litigation Manager for OneWest Bank, FSB" and that she was "fully authorized to make this Affidavit onbehalf of OneWest Bank." (Doc. 55-1, p. 2 of 10).³ As part of her "job functions, [she is] familiar with business records maintained by OneWest Bank for the purpose of servicing mortgage loans." Further, "[t]hese records (which include data compilations, electronically imaged documents, and others) are made at or near the time by, or from information provided by, persons with knowledge of the activity and transactions reflected in such records, and are kept in the course of business activity conducted regularly by OneWest Bank." (Id. at pp. 2-3 of 10). Also, she testified that, "It is the regular practice of OneWest Bank's mortgage servicing business to make these records. In connection with making this affidavit, I have personally examined these business records." (Id. at p. 3 of 10). Nevertheless, based on her review of the records, throughout the affidavit Marks testified to events occurring at and involving other entities, such as Quicken Loans, Inc., and IndyMac Bank, with whom she has no apparent employment or agency relationship. Plaintiffs argue that Marks's affidavit, thus, contains testimony about which she has no personal knowledge and is based only on the records maintained by OneWest Bank, and that such evidence fails to comply with the Rule 56(c)(4) requirements.

This particular evidentiary issue has been addressed by a number of courts, all of whom have concluded that when business records pass from a predecessor entity to a successor entity under a merger or receivership, the successor entity is able to authenticate the business records of its predecessor. For example, the district court for the Northern District of Illinois, in a case in which one bank took over the assets of a failed bank through an FDIC receivership, has explained:

The record reflects that although Maxwell [the affiant] did not work for Midwest and was not a custodian of Midwest's records, Maxwell would constitute a qualified witness since the records of Midwest became FirstMerit's records as the successor bank. See United States v. Jakobetz, 955 F.2d 786, 801 (2nd Cir.1992) (stating that "[e]ven if the document is originally created by another entity, its creator need not testify when the document has been incorporated into the business records of the testifying entity"). In addition, other courts have held that a successor bank that has acquired a failed bank through the FDIC can satisfy Rule 803(6) with the declaration of an employee of the successor bank. See, e.g., U.S. Bank Nat. Ass'n v. American Screw & Rivet Corp., 2010 WL 3172772, at *3 (N.D.Ill.2010) (holding that witness from successor bank could authenticate records of bank that went into receivership); Krawczyk v. Centurion Capital Corp., 2009 WL 395458, at *5 (N.D.Ill.2009) (indicating that a bank can rely on its predecessor's business records and that "[u]ltimately, the primary emphasis of Rule 803(6) is on the reliability or trustworthiness of the records sought to be introduced").

FirstMerit Bank, N.A. v. Balin, 2012 WL 4017948, *3 (N.D. Ill. Sept. 11, 2012). As a...