201 A.3d 784
Pa. Super. Ct.2018Background
- Borrower Lawrence J. Rao executed a 2006 note and mortgage (original lender SunTrust; MERS as nominee); SunTrust later reported the note missing and executed a Lost Note Affidavit.
- Mortgage was assigned to MB Financial in 2015; MB Financial filed a mortgage foreclosure in June 2015 based on a 2011 default.
- At a non-jury trial, MB Financial called Nancy Johnson (SunTrust AVP, default proceedings officer) and sought to admit the Lost Note Affidavit and other business records; the trial court excluded the Lost Note Affidavit and a limited power of attorney.
- Rao presented no evidence and moved for a nonsuit / directed verdict; the trial court granted the motion and entered a Judgment of Nonsuit for Rao.
- MB Financial filed post-trial relief; the trial court denied it. MB Financial appealed, arguing chiefly that the Lost Note Affidavit was admissible as a business record and that exclusion deprived it of proving its right to enforce the lost note under 13 Pa.C.S. § 3309.
Issues
| Issue | Plaintiff's Argument (MB Financial) | Defendant's Argument (Rao) | Held |
|---|---|---|---|
| Admissibility of Lost Note Affidavit as business record | Affidavit is a business record under Pa.R.E. 803(6) / 42 Pa.C.S. § 6108; custodian Johnson authenticated it | Objected as hearsay; challenged contents and trustworthiness | Court of Appeals: affidavit qualified as business record; exclusion was an abuse of discretion |
| Competency of SunTrust witness to authenticate records | Johnson, longtime SunTrust officer, was custodian and sufficiently testified about preparation/maintenance | Cross-examined content and identity but did not show untrustworthiness | Held witness was a qualified custodian; her testimony met Rule 803(6) requirements |
| Whether MB Financial could prove standing / right to foreclose without the affidavit | Lost Note Affidavit was necessary to show MB could enforce a lost note under 13 Pa.C.S. § 3309 | Rao argued MB had insufficient proof of possession/right to enforce the note | Because affidavit was excluded, MB could not make a prima facie case; exclusion was prejudicial — case remanded for new trial (court did not decide § 3309 sufficiency) |
| Appropriateness of nonsuit/directed verdict | MB argued nonsuit improper because, viewing evidence favorably to plaintiff, a factfinder could find MB entitled to foreclose | Rao moved for nonsuit/directed verdict after plaintiff rested | Court reversed nonsuit because exclusion of the key affidavit wrongly left no evidence; remanded for new trial |
Key Cases Cited
- Billig v. Skvarla, 853 A.2d 1042 (Pa. Super. 2004) (nonsuit standard; plaintiff entitled to all favorable inferences)
- Tong-Summerford v. Abington Mem'l Hosp., 190 A.3d 631 (Pa. Super. 2018) (credibility and weight are for the factfinder on nonsuit)
- U.S. Bank, N.A. v. Pautenis, 118 A.3d 386 (Pa. Super. 2015) (business records trustworthiness and admissibility)
- Commonwealth Fin. Sys., Inc. v. Smith, 15 A.3d 492 (Pa. Super. 2011) (Rule 803(6) requires circumstantial trustworthiness)
- Sycamore Restaurant Group, LLC v. Stampfi Hartke Assocs., LLC, 174 A.3d 651 (Pa. Super. 2017) (factors for evaluating business-record trustworthiness)
- Keystone Dedicated Logistics, LLC v. JGB Enters., Inc., 77 A.3d 1 (Pa. Super. 2013) (qualified witness need not have personal knowledge but must show preparation/maintenance)
- CitiMortgage, Inc. v. Barbezat, 131 A.3d 65 (Pa. Super. 2016) (party seeking to foreclose must own or hold the note)
- JP Morgan Chase Bank, N.A. v. Murray, 63 A.3d 1258 (Pa. Super. 2013) (UCC governs enforcement of notes)