Joe Kenny v. Portfolio Recovery Associates, LLC
464 S.W.3d 29
| Tex. App. | 2015Background
- Portfolio Recovery Associates sued Joe Kenny in county civil court for unpaid credit-card debt originally owed to HSBC Bank Nevada.
- Portfolio Recovery filed a notice of filing business records and offered four exhibits at trial; a custodian-affidavit by Meryl Dreano accompanied the records.
- Dreano’s affidavit authenticated business records but also stated Portfolio Recovery was the assignee and owner of Kenny’s account (account ending 9702).
- The Assignment and Bill of Sale admitted at trial referenced a separate document identifying which accounts were transferred but did not itself identify Kenny’s account; that separate document was not in evidence.
- The trial court, after requesting post-trial briefing, said it reviewed the clerk’s file and concluded an assignment existed despite the document proving assignment not being admitted at trial.
- The court of appeals held Portfolio Recovery failed to prove the account had been assigned to it and reversed and rendered a take-nothing judgment for Kenny.
Issues
| Issue | Portfolio Recovery's Argument | Kenny's Argument | Held |
|---|---|---|---|
| Whether evidence established assignment of Kenny’s account to Portfolio Recovery | Dreano’s affidavit and the Assignment & Bill of Sale (plus clerk-file document) show assignment | No admissible evidence ties Kenny’s specific account to Portfolio Recovery; affidavit’s assignment statement is hearsay and assignment doc lacks account detail | Reversed: evidence insufficient to prove assignment; judgment for Portfolio Recovery cannot stand |
| Admissibility of custodian affidavit statements beyond authentication | Affidavit properly authenticates business records and supports assignment | Extraneous assertions (assignment ownership) exceed authentication and are inadmissible hearsay | Court treats extraneous portions as inadmissible and disregards them for sufficiency review |
| Whether the Assignment & Bill of Sale (without account list) is sufficient proof | Assignment transferring ‘‘certain accounts’’ suffices; referenced schedule exists in file | Assignment doesn’t identify which accounts; referenced schedule not in evidence | Assignment alone insufficient; referenced schedule not in record cannot supply missing proof |
| Trial court’s consideration of documents not admitted at trial | Court found assignment in clerk’s file and relied on it | Trial court may not consider truth of facts in unadmitted filings; judicial notice doesn’t extend to their factual statements | Court may not consider unadmitted extrinsic file documents for truth; such consideration is improper and cannot support judgment |
Key Cases Cited
- Catalina v. Blasdel, 881 S.W.2d 295 (Tex. 1994) (bench trial findings have same weight as jury verdict)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (legal-sufficiency standards and reviewing favorable vs. contrary evidence)
- Sw. Bell Media, Inc. v. Lyles, 825 S.W.2d 488 (Tex. App.—Houston [1st Dist.] 1992) (presumption that trial court disregards improperly admitted evidence in bench trial)
- Ortega v. Cach, LLC, 396 S.W.3d 622 (Tex. App.—Houston [14th Dist.] 2013) (custodian affidavits that exceed authentication requirements contain inadmissible hearsay)
- Guyton v. Monteau, 332 S.W.3d 687 (Tex. App.—Houston [14th Dist.] 2011) (court may not take judicial notice of truth of factual statements in pleadings or other documents in the file)
- Winchek v. Am. Express Travel Related Servs., 232 S.W.3d 197 (Tex. App.—Houston [1st Dist.] 2007) (elements required for breach of contract include proof of obligation between the parties)