If you have looked through the articles on this blog before, you will know that the business records exception to the hearsay rule is a very important hearsay exception in business disputes (or any dispute involving business records!). The business records exception requires a proper foundation to be laid by a witness before the records are admitted into evidence to ensure the accuracy and reliability of the records. The proper foundation requires the witness to show that “(1) the record was made at or near the time of the event; (2) was made by or from information transmitted by a person with knowledge; (3) was kept in the ordinary course of a regularly conducted business activity; and (4) that it was a regular practice of that business to make such a record.” Ocwen Loan Servicing, LLC v. Gunderson, 41 Fla.L.Weekly D2238a (Fla. 4th DCA 2016) quoting Yisrael v. State, 993 So.2d 952, 956 (Fla. 2008).
The business records exception to the hearsay rule comes up quite a bit in the mortgage foreclosure context. This is because the loans (notes and mortgage) get assigned or assumed by a new servicer or lender and the new servicer or lender moves to foreclosure on the mortgage. Many times the issue is laying the proper foundation with the witness being relied upon in order to admit certain documents under the business records exception to the hearsay rule.
In Ocwen Loan Servicing, LLC, the witness was trying to lay the foundation for records maintained by the original loan servicer (which was a company whose assets were purchased by the new loan servicer). He testified about the verification process of getting the original servicer’s records to the new servicer to ensure the accuracy of the records and then entering that information into the new servicer’s computer system.
The witness also tried to lay the foundation for a screenshot to show that the original promissory note was entered into the original servicer’s system / loan servicing platform. The trial judge sustained a hearsay objection and excluded this evidence because the witness did not work for the original servicer and had no personal knowledge as to its computer system / servicing platform. The trial court also excluded the loan payment history and the default letter that was entered into the original servicer’s computer system as hearsay. As a result, the loan servicer could not support a mortgage foreclosure claim and the court entered judgment in favor of the homeowners.
The appellate court reversed finding that the documents that the trial court excluded as hearsay were admissible under the business records exception even though the new loan servicer took custody of the original servicer’s records:
Where a business takes custody of another business’s records and integrates them within its own records, the acquired records are treated as having been ‘made’ by the successor business, such that both records constitute the successor business’s singular ‘business record.’ [T]he authenticating witness need not be ‘the person who actually prepared the business records.’ As such, it is not necessary to present a witness who was employed by the prior servicer or who participated in the boarding process. Rather, the records of a prior servicer are admissible where the current note holder presents testimony that it had procedures in place to check the accuracy of the information it received from the previous note holder. The testifying witness just need[s] [to] be well enough acquainted with the activity to provide testimony. Once this predicate is laid, the burden is on the party opposing the introduction to prove the untrustworthiness of the records.
Ocwen Loan Servicing, LLC, supra (internal citations and quotations omitted).
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