143 N.E.3d 322
Ind. Ct. App.2020Background
- In 2008 Ashfaq and Azra Hussain executed a promissory note and mortgage with Salin Bank for $221,937.26; payments were monthly through 2023 and the note allowed collection costs (e.g., NSF fees).
- An initial $565 check bounced at closing; Salin charged a $20 NSF fee and applied it to principal; Hussains later made partial payments and incurred further fees.
- Salin filed to foreclose in 2012; the Hussains entered Chapter 13 (with an arrearage plan) but their bankruptcy was dismissed in 2016 and foreclosure litigation resumed.
- Salin moved for summary judgment relying on the note, mortgage, title records, attorney-fee affidavit, and an affidavit from custodian John Frieburg; the Hussains responded with an affidavit from forensic analyst Marie McDonnell alleging Salin’s initial breach (the $20 NSF principal increase) and payment-history exhibits.
- The trial court granted summary judgment to Salin on liability (finding no initial material breach by Salin) but reserved damages; at the damages hearing Horizon Bank (Salin’s successor) produced loan-history exhibits authenticated by loan officer Ken Blough and the court admitted them and awarded $242,718.47.
- On appeal the Hussains argued (1) Frieburg’s affidavit was inadmissible hearsay under T.R. 56(E), (2) McDonnell’s affidavit raised a triable issue of first material breach, and (3) the damages exhibits were inadmissible hearsay because Blough lacked foundation.
Issues
| Issue | Plaintiff's Argument (Hussains) | Defendant's Argument (Salin/Horizon) | Held |
|---|---|---|---|
| Admissibility of Frieburg affidavit for summary-judgment foundation | Frieburg’s affidavit is hearsay/not based on personal knowledge, so Salin failed to prove default | Frieburg was Salin/Horizon records custodian who identified the note and mortgage already in the record; T.R.56(E) satisfied | Court admitted affidavit; summary judgment on liability proper—Hussains admitted note and default were established |
| Whether Salin committed the first material breach by adding $20 NSF to principal | McDonnell’s affidavit shows Salin unilaterally altered terms (adding $20 to principal) creating a triable breach | Note expressly allows application of payments and assessment of collection costs; NSF is a collection cost and did not deprive Hussains of loan benefit | Court held the $20 fee was not a material breach as a matter of law; Hussains breached first by missing initial payment |
| Admissibility of damages exhibits (41-page loan history and itemization) | Blough (Horizon) lacks knowledge of original Salin records and cannot authenticate Salin’s documents under Evid. R. 803(6) | Horizon is Salin’s successor; loan records were merged into Horizon systems; Blough had custody, reviewed records, and ran amortization calculations | Court found Blough laid a proper business-records foundation; exhibits admissible and damages award sustained |
| Whether McDonnell’s payment-history exhibits create a genuine factual dispute on damages or liability | McDonnell’s analysis and attached payment history contradict bank’s calculations and raise material facts | Hussains themselves submitted some of the same records; bank’s records corroborated amounts and the plaintiffs cannot object to evidence they designated | Court held the plaintiffs’ own designated records undercut their objections; damages award stands |
Key Cases Cited
- Poiry v. City of New Haven, 113 N.E.3d 1236 (Ind. Ct. App. 2018) (summary-judgment standard and de novo review)
- Seth v. Midland Funding, LLC, 997 N.E.2d 1139 (Ind. Ct. App. 2013) (affidavit based on unspecified third‑party records insufficient under T.R.56(E) and Evid. R.803(6))
- Zelman v. Capital One Bank (USA) N.A., 133 N.E.3d 244 (Ind. Ct. App. 2019) (litigation‑support affidavit failed to authenticate unsworn bank records under business‑records exception)
- Holmes v. Nat’l Collegiate Student Loan Trust, 94 N.E.3d 722 (Ind. Ct. App. 2018) (successor/servicer affidavit could not authenticate originator’s records absent foundation)
- Williams v. Unifund CCR, LLC, 70 N.E.3d 375 (Ind. Ct. App. 2017) (witness unfamiliar with originator’s recordkeeping cannot lay foundation for those business records)
- McEntee v. Wells Fargo Bank, N.A., 970 N.E.2d 178 (Ind. Ct. App. 2012) (elements required to establish a prima facie foreclosure case)