Wilmington Tr., N.A. v. Berry

• Decision Date: 02 July 2020
• Docket Number: Docket: Aro-19-435
• Citation: 2020 ME 95
• Parties: WILMINGTON TRUST, NATIONAL ASSOCIATION, AS TRUSTEE FOR MFRA TRUST 2014-2 v. LISA BERRY
• Court: Maine Supreme Court

2020 ME 95

WILMINGTON TRUST, NATIONAL ASSOCIATION, AS TRUSTEE FOR MFRA TRUST 2014-2 v. LISA BERRY

Docket: Aro-19-435

MAINE SUPREME JUDICIAL COURT

Submitted On Briefs: May 12, 2020

July 2, 2020

Reporter of Decisions

Panel: MEAD, GORMAN, JABAR, HUMPHREY, and HORTON JJ.

HUMPHREY, J.

[¶1] Wilmington Trust, National Association, as Trustee for MFRA Trust 2014-2 (Wilmington), appeals from a judgment entered by the District Court (Fort Kent, Soucy, J.) in favor of Lisa Berry following a bench trial on Wilmington's complaint for foreclosure. Wilmington argues that the court erred by excluding evidence of business records showing Berry's payment history with various loan servicers, see M.R. Evid. 803(6), and in finding that Berry did not receive a properly served notice of default and mortgagor's right to cure, see 14 M.R.S. § 6111(3) (2018).¹ Wilmington also argues that thecourt abused its discretion in awarding attorney fees to Berry. See 14 M.R.S. § 6101 (2020). We affirm the judgment.

I. BACKGROUND

A. Foreclosure Complaint and Trial

[¶2] On February 16, 2018, Wilmington filed a complaint for foreclosure, alleging that Berry was in default for failing to make payments since May 1, 2015, and that she owed $73,508.08.²

[¶3] On March 20, 2019, the court held a one-day bench trial on Wilmington's complaint. At trial, Wilmington sought to admit in evidence business records purporting to show Berry's payment history with various loan servicers, including, in relevant part, Ditech Financial (formerly Green Tree Servicing) and Fay Servicing, LLC, the current servicer of Berry's loan. To support the admission of these records, Wilmington presented testimony from an employee who worked for these loan servicers and who was familiar with each entity's record keeping practices. However, Berry objected to the admission of the business records because the records also contained areference to a separate loan servicer, "Marix Servicing, LLC." Although the records indicated that Marix may have serviced Berry's loan in December 2016, an employee of Fay Servicing testified that he had no knowledge about Marix and did not recognize the name. The court admitted the records "de bene."

[¶4] Additionally, Wilmington attempted to prove that it had properly mailed to Berry a notice of default and right to cure. Wilmington presented testimony indicating that the notice had been mailed, and the court admitted in evidence a copy of the notice, which contained a "First-Class Mail" designation on the exhibit's cover page and a "Transaction Report" from LenderLive, LLC, indicating that a notice was mailed in January 2017. Berry testified that she had never received the notice and that there were three other individuals who also received mail at her address.

[¶5] Regarding the business records, the court sustained Berry's objection made at trial and concluded that, although the witness was "qualified . . . to lay the foundation necessary to admit the . . . loan payment history," the "unexplained reference" to Marix was "fatal to [Wilmington's] attempts to lay a proper foundation for the admission of [the records]." The court found that the reference to Marix "indicate[s] a lack of trustworthiness of the records offered." Additionally, the court found that Wilmington had "failed to prove timely receipt of notice of the right to cure" and that Berry had presented a "credible reason explaining why she may not have received it." Because it excluded the evidence of the business records and found that Wilmington did not prove that it had properly served Berry with the notice of default and right to cure, the court entered judgment in favor of Berry on May 14, 2019.

B. Post-Judgment Motions

[¶6] On May 28, 2019, Wilmington moved to amend the judgment. See M.R. Civ. P. 59(e). Wilmington argued that the reference to Marix in the records did "not indicate a lack of trustworthiness" and, in support, requested that the court take judicial notice of documents on the Securities and Exchange Commission's website.³ Wilmington asserted that these documents demonstrated that Marix and the other loan servicers at issue were owned by the same parent corporation and "were effectively the same company." Wilmington further argued that the notice of default and right to cure had complied with the notice requirements of 14 M.R.S. § 6111 and that Berry'sreceipt of the notice "may be presumed from [the] mailing." Berry opposed the motion.

[¶7] On June 13, 2019, Berry filed a motion seeking an award of attorney fees because Wilmington "d[id] not prevail." 14 M.R.S. § 6101. Wilmington objected, arguing that an award of attorney fees was unwarranted because it did not act in "bad faith" during the proceedings.

[¶8] The court held a hearing on July 17, 2019, and, on September 27, 2019, entered orders on the two pending post-judgment motions. In one order, the court denied Wilmington's motion to amend, concluding that "the unexplained appearance of M[a]rix Servicing in [the business records] raises a host of doubts about the reliability of the documents." The court also declined to take judicial notice of the documents offered by Wilmington, reasoning that such notice "would not resolve the trustworthiness issues raised by" the reference to Marix in the records or "the failure of the witness . . . to even recognize the name [Marix]." In a separate order, the court granted Berry's motion for attorney fees, concluding that "from the plain language of the statute . . . [Berry] need not prove bad faith or extraordinary circumstances."⁴ Wilmington timely appealed. See M.R. App. P. 2B(c)(2)(D).

II. DISCUSSION

A. Evidentiary Issues

[¶9] Wilmington's arguments address two of the eight elements of proof necessary to support a judgment of foreclosure: "the amount due on the mortgage note, including any reasonable attorney fees and court costs," and "evidence of [a] properly served notice of default and mortgagor's right to cure in compliance with statutory requirements." Bank of Am., N.A. v. Greenleaf, 2014 ME 89, ¶ 18, 96 A.3d 700 (quotation marks omitted). We address each in turn.

1. Business Records

[¶10] Wilmington contends that the court erred in excluding evidence of business records demonstrating the amount due on Berry's note, arguing that it offered sufficient foundational testimony to admit the evidence pursuant to the business records exception to the hearsay rule. See M.R. Evid. 803(6). Wilmington further argues that any issues regarding the reference to Marix in the records pertained only to the weight—not the admissibility—of the evidence, and that the reference to Marix was not a necessary part of proving its case.

[¶11] We review for clear error "[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," M & T Bank v. Plaisted, 2018 ME 121, ¶ 19, 192 A.3d 601 (quotation marks omitted), and review the court's "ultimate determination of admissibility for an abuse of discretion," Am. Express Bank FSB v. Deering, 2016 ME 117, ¶ 12, 145 A.3d 551 (quotation marks omitted).

[¶12] The purpose underlying the business records exception to the hearsay rule is "to allow the consideration of a business record, without requiring firsthand testimony regarding the recorded facts, by supplying a witness whose knowledge of business practices for production and retention of the record is sufficient to ensure the reliability and trustworthiness of the record." Avis Rent A Car Sys., LLC v. Burrill, 2018 ME 81, ¶ 28, 187 A.3d 583 (quotation marks omitted). Maine Rule of Evidence 803(6) "dictates both (1) what foundation must be laid to admit such evidence as an exception to the rule excluding hearsay evidence, and (2) the type of witness required to lay that foundation." Greenleaf, 2014 ME 89, ¶ 25, 96 A.3d 700. In order to lay the proper foundation, a party must provide, in relevant part, "the testimony of the custodian or another qualified witness," M.R. Evid. 803(6)(D), to establish that

(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; [and]

(C) Making the record was a regular practice of that activity[.]

M.R. Evid. 803(6)(A)-(C); see Greenleaf, 2014 ME 89, ¶ 25, 96 A.3d 700. The opponent of the record may defeat the proponent's offer by demonstrating that "the source of information or the method or circumstances of preparation indicate a lack of trustworthiness." M.R. Evid. 803(6)(E).⁵ "In evaluating trustworthiness for purposes of Rule 803(6), courts consider factors such as the existence of any motive or opportunity to create an inaccurate record, any delays in preparation of the record, the nature of the recorded information, the systematic checking, regularity and continuity in maintaining the records, and the business's reliance on them." HSBC Mortg. Servs., Inc. v. Murphy, 2011 ME 59, ¶ 11, 19 A.3d 815 (alterations omitted) (quotation marks omitted); see Plaisted, 2018 ME 121, ¶ 26 n.8, 192 A.3d 601 (stating that a court "could haveexcluded [evidence] if the sources of information or other circumstances indicated a lack of trustworthiness even if it otherwise would have been admissible").

[¶13] Here, the employee of Fay Servicing testified regarding his familiarity with the business records of the various loan servicers and was, as the court found, "qualified . . . to lay the foundation necessary to admit the screenshots of the loan payment history." After Wilmington laid this foundation, however, Berry had the opportunity, and burden, to demonstrate that "the source of information or the method or circumstances of preparation indicate a lack of trustworthiness." M.R. Evid. 803(6)(E). Berry pointed to the reference to Marix in the records, and the court then found that...