OHIO RECEIVABLES, LLC v. HEROLD WILLIAMS
C.A. CASE NO. 25427
IN THE COURT OF APPEALS FOR MONTGOMERY COUNTY, OHIO
March 15, 2013
2013-Ohio-960
T.C. NO. 11CV7371. (Civil appeal from Common Pleas Court)
Rendered on the 15th day of March, 2013.
RONALD J. KOZAR, Atty. Reg. No. 0010275, Kettering Tower, Suite 2830, 40 N. Main Street, Dayton, Ohio 45423
Attorney for Plaintiff-Appellee
JACKSON T. MOYER, Atty. Reg. No. 0081119, 471 East Broad Street, 12th Floor, Columbus, Ohio 43215 and NICHOLAS J. CHEEK, Atty. Reg. No. 0086738, 471 E. Broad Street, 12th Floor, Columbus, Ohio 43215
Attorneys for Defendant-Appellant
FROELICH, J.
{¶ 1} Herold Williams appeals from a judgment of the Montgomery County
{¶ 2} In 2005, Williams was issued credit card number XXXXXXXXXXXX2114 by Chase Bank USA, N.A. Williams purportedly used the card for purchases totaling $13,037.98, accrued $3,457.92 in interest and fees, and, by 2009, he had an outstanding balance of $16,495.90 on the card. According to records presented in the trial court, his last payment was made in September 2009. Chase “charged off” the debt in December 2009.
{¶ 3} In August 2011, Chase sold the debt on Williams‘s account (as part of a 50-page, single-spaced electronic summary spreadsheet listing each account on a separate line) to Global Acceptance Credit Company, LP (“Global Credit“). Two days later, Global Credit sold 429 of the accounts that it had acquired from Chase, including Williams‘s account, to Ohio Receivables.
{¶ 4} In October 2011, Ohio Receivables filed a complaint against Williams in an attempt to collect on the debt. It subsequently filed a motion for summary judgment and a supplemental memorandum in support of that motion, which included affidavits from Ohio Receivables‘s agents regarding the assignments of Williams‘s debt and the amount owed. Williams opposed the motion on the basis that (1) the affidavits offered in support of the motion were not based on personal knowledge, as required by
{¶ 5} After reviewing the materials offered in support of and in opposition to summary judgment, the trial court disagreed with Williams‘s argument that much of Ohio Receivables‘s evidence was not properly before the court. The trial court also disagreed with Williams‘s assertion that Ohio Receivables could not rely on records created by other business entities in support of its motion for summary judgment, because Ohio Receivables‘s employees lacked personal knowledge of the creation of the documents. The trial court acknowledged that Ohio Receivables was “extremely sloppy” with respect to one of the affidavits it submitted, but the court nonetheless appears to have credited that affidavit. The trial court did not rely on or mention the affidavits from Chase and Global Credit that were attached to Ohio Receivables‘s reply. It granted Ohio Receivables‘s motion for summary judgment.
{¶ 6} Williams raises one assignment of error on appeal, which challenges the trial court‘s decision to grant summary judgment.
{¶ 7} Pursuant to
{¶ 8} The moving party carries the initial burden of affirmatively demonstrating that no genuine issue of material fact remains to be litigated. Mitseff v. Wheeler, 38 Ohio St.3d 112, 115, 526 N.E.2d 798 (1988). To this end, the movant must be able to point to evidentiary materials of the type listed in
{¶ 9} Once the moving party satisfies its burden, the nonmoving party may not rest upon the mere allegations or denials of the party‘s pleadings. Id.;
{¶ 10}
{¶ 11} Appellate review of the trial court‘s rulings on summary judgment motions is de novo. Helton v. Scioto Cty. Bd. of Commrs., 123 Ohio App.3d 158, 162, 703 N.E.2d 841 (4th Dist.1997).
{¶ 12}
{¶ 13} The hearsay exception relevant to this case is the business records exception.
Records of regularly conducted activity. A memorandum, report, record, or data compilation, in any form, of acts, events, or conditions, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness or as provided by Rule 901(B)(10), unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness. * * *
{¶ 14} The business records exception has an authentication requirement which must be met before the rule applies. HSBC Mtge. Servs., Inc. v. Edmon, 6th Dist. Erie No. E-11-046, 2012-Ohio-4990, ¶ 22; State v. Hirtzinger, 124 Ohio App.3d 40, 49, 705 N.E.2d 395 (2d Dist.1997). “[T]he testifying witness must possess a working knowledge of the specific record-keeping system that produced the document * * * [and] ‘be able to vouch from personal knowledge of the record-keeping system that such records were kept in the regular course of business.‘” State v. Davis, 62 Ohio St.3d 326, 343, 581 N.E.2d 1362 (1991), quoting Dell Publishing Co., Inc. v. Whedon, 577 F.Supp. 1459, 1464 (S.D.N.Y.1984), fn. 5. Generally, the business record exception requires that some person
{¶ 15} With these standards in mind, we now turn to the affidavits upon which Ohio Receivables relied in support of its motion for summary judgment. The first affidavit was created by “a custodian of records” of Ohio Receivables, who was not identified by name or title in the affidavit and whose signature was illegible. The affiant stated that “he/she is competent to testify to the matters” contained in the affidavit, which were “true based on his/her personal knowledge gained from a review of business records kept under his/her care, custody and control, and reflect business transactions kept in the ordinary and regular course of business of [Ohio Receivables] or its predecessor(s) in interest.” The affidavit further states that, based on a review of “those books and records,” Williams was issued credit card number XXXXXXXXXXXX2114 by Chase or its predecessor in interest, that Williams used that card, and that he thereby became bound by its terms and conditions. Finally, the affidavit states that “affiant has reviewed the books and records of Plaintiff and the Terms and Conditions provided by Plaintiff‘s predecessor(s) in interest” and concluded from those “books and records” that Williams had an unpaid outstanding balance of $16,495.90.1 Attached to this affidavit were a Bill of Sale from Chase to Global Credit, a redacted portion of a spreadsheet indicating that Williams‘s account was part of that sale, a Bill of Sale from Global Credit to Ohio Receivables, and a redacted portion of a spreadsheet indicating that Williams‘s account was part of that sale.
{¶ 17} The trial court relied on both of the affidavits provided by Ohio Receivables and their supporting documents in granting summary judgment on the existence of an assignment to Ohio Receivables and on the amount of the debt. Although the court observed that Ohio Receivables was “extremely sloppy with respect to the first affidavit which is signed illegibly” and did not list the name of the affiant, it found “sufficient documentation,” between the two affidavits, “to establish a sale of [Williams‘s] account by Chase to” Ohio Receivables.
{¶ 18} In our view, the documents attached to Ohio Receivables‘s affidavits were
{¶ 19} It was not necessary that an employee or agent of Ohio Receivables possess personal knowledge of these facts, but it was necessary for Ohio Receivables to prove, by some means, that the documents on which Ohio Receivables sought to rely as its business records were first business records created and maintained by Chase in the course of its (Chase‘s) regularly conducted business.
{¶ 20} Ohio Receivables‘s affidavits stating that the documents were received by Chase as part of the series of purchases of the accounts were insufficient to prove this fact. It is beyond dispute that, if Chase had sought to collect against Williams directly, it would have been required to establish the admissibility of records like the ones offered into evidence by demonstrating that they were business records. We see no reason why its assignee should be held to a lesser standard. A contrary rule “would inappropriately provide litigants with a means of avoiding rules governing the admission of evidence such as hearsay.” United States v. Irvin, 682 F.3d 1254, 1262 (10th Cir. 2012), citing United States v. Samaniego, 187 F.3d 1222, 1224 (10th Cir. 1999).
{¶ 21} We recognize that some courts have established a different rule for “adoptive business records,” where records created by a third party, such as a predecessor in interest, have been incorporated into the business records of the assignee. See, e.g., Ohio Receivables, L.L.C. v. Dallari, 10th Dist. Franklin No. 11AP-951, 2012-Ohio-3165, ¶ 21 (admitting records prepared by the creditor‘s predecessors-in-interest and attached to the affidavit of creditor‘s record custodian under “adoptive business records hearsay exception doctrine“). These cases conclude that
{¶ 22} Anders’ reference to an “anachronistic rule” cites United States v. Irvin, 656 F.3d 1151 (10th Cir. 2011), which was superseded on rehearing by United States v. Irvin, 682 F.3d 1254 (10th Cir. 2012). This case dealt with boxes of “loan files” which pertained to allegedly fraudulent home sales. Although the government in Irvin sought to admit a
{¶ 23} Although the trial court did not expressly utilize the adoptive business record exception, its rationale suggests such an approach, because it allowed Ohio Receivables to rely on Chase‘s records without evidence surrounding the circumstances of their creation by Chase, noting only that personal knowledge of the transaction by Ohio Receivables‘s employees was “obviously” impossible due to the assignment. The trial court did not address, however, the affidavits’ failure to establish the hallmark characteristics of a business record: that the documents were kept in the course of a regularly conducted business activity, that a person with knowledge of the transaction(s) created the documents, and that the documents were made at or near the time of the transaction.
{¶ 24} We do not disagree with the trial court‘s narrow conclusion that employees or agents of Ohio Receivables were not required to have first-hand knowledge of the transaction at issue (i.e., no Ohio Receivables employee or agent was required to have first-hand knowledge of the creation of Williams‘s credit card account and the charges and payments thereon). We simply conclude that, in the absence of such knowledge, Ohio Receivables had to prove by some other means that the documents upon which it relied were business records of Chase and Global Credit, and that they were thereby entitled to fall within the exception to the hearsay rule for such
{¶ 25} In its brief, Ohio Receivables contends that any shortcomings in the affidavits of Ohio Receivables were rectified when it submitted affidavits from agents of Chase and Global Credit, which were attached to its reply to Williams‘s memorandum in opposition to summary judgment. Williams objected to this filing on the basis that it was submitted “long after the briefing deadline” and suffered from the “same deficiencies” as the other affidavits. The trial court did not specifically address Williams‘s objection to this filing, and it did not refer to the attached affidavits in its decision granting summary judgment. We infer that the trial court did not consider these materials.3
{¶ 26} Moreover, we agree with Williams that the affidavit provided by Chase was insufficient to satisfy the business record exception. The affidavit, signed by Kimberlee Smith, stated that Smith was “authorized by Chase Bank USA, N.A. to make this affidavit,” but it did not include any description of Smith‘s role within Chase. She does not claim to be a custodian of records or to have personal knowledge of transactions or of the record-keeping related to the transactions; her knowledge, like the Ohio Receivables‘s affiant‘s knowledge, was based on a “review of Chase‘s records.”
{¶ 27} Underneath her signature, Smith is identified as “Attorney-in-Fact.” Ohio Receivables asserts that this designation makes an “inference of personal knowledge of the facts
{¶ 28} Finally, Ohio Receivables argues that the Chase records were admissible as business records because Ohio Receivables incorporated and relied on them in its own business dealings. It cites Air Land Forwarders, Inc. v. United States, 172 F.3d 1338 (C.A.Fed. 1999) in support of this proposition, but we note that Air Land Forwarders’ reliance on documents from a third party was coupled with other “circumstances indicating the trustworthiness of the document.”
{¶ 29} Air Land Forwarders held that repair estimates produced by third parties, which were submitted by military service members in support of their claims for loss and damage to property, were “business records” of the military within the exception to the hearsay rule. The court required proof that the business incorporating the third-party records relied on the accuracy of the documents and that there were other circumstances indicating the trustworthiness of the
{¶ 30} For the foregoing reasons, we conclude that the trial court erred in concluding that Chase‘s and Global Credit‘s alleged business records were properly considered under
{¶ 31} The assignment of error is sustained.
{¶ 32} The judgment of the trial court will be reversed, and the case will be remanded to the trial court for further proceedings consistent with this opinion.
HALL, J., concurring:
{¶ 33} I would adopt the reasoning of the 10th District, reflected in State Farm Mut. Auto. Ins. Co. v. Anders, 197 Ohio App.3d 22, 2012-Ohio-824, 965 N.E.2d 1056, that documents that have been incorporated into a business‘s records, although prepared by a third party, can be qualified as business records provided they don‘t contain inadmissible opinion, or secondary hearsay, or are otherwise untrustworthy. Nevertheless, I agree with the lead opinion that the records here were not adopted by the plaintiff as their records except to the extent that they used them as a basis to pursue this litigation. Accordingly, I concur.
Copies mailed to:
Ronald J. Kozar
Jackson T. Moyer
Nicholas J. Cheek
Hon. Barbara P. Gorman