Foreclosure Defense Florida

Foreclosure REVERSED! Improper business records!

foreclosure reversedCharles H. Channell, Jr., challenges the final judgment of foreclosure
entered by the trial court following a bench trial. He asserts numerous issues, including the sufficiency of Deutsche Bank National Trust Company’s evidentiary foundation for the admissibility of its purported business records. We conclude that the evidentiary issue is meritorious as to the documents admitted to establish the amount due, and we reverse for further proceedings.

Deutsche Bank commenced a mortgage foreclosure action against Mr.
Channell in September 2010, based on an adjustable rate mortgage executed on
September 27, 2007. Trial commenced on Deutsche Bank’s second amended
complaint on April 22, 2014. The only witness called by Deutsche Bank was a loan
analyst employed by Ocwen, the loan servicer at the time of trial. No questions were
asked, and no testimony was offered, as to whether the business records Ocwen
obtained from a prior servicer, HomeEq Corporation, had in any manner been reviewed,
checked, or verified for accuracy, nor was any testimony provided as to how the
information was integrated with Ocwen’s records. Mr. Channell’s counsel objected to
the admission of the loan transaction history based on hearsay and lack of foundation.
The objections were overruled and the records were received in evidence.1
We review a trial court’s ruling on admissibility of evidence for an abuse of
discretion. Sas v. Fed. Nat’l Mortg. Ass’n, 112 So. 3d 778, 779 (Fla. 2d DCA 2013).
Florida’s evidence code permits the admission of “records of regularly conducted
business activity” as an exception to the bar on hearsay admissibility. § 90.803(6), Fla.
1While we find the issue to be preserved through contemporaneous
objection by counsel, we note that, pursuant to Florida Rule of Civil Procedure 1.530(e),
[w]hen an action has been tried by the court without a jury,
the sufficiency of the evidence to support a judgment may be
raised on appeal whether or not the party raising the
question has made any objection thereto in the trial court or
made a motion for rehearing, for new trial, or to alter or
amend the judgment.

In laying the foundational predicate to admissibility of business records,
the proponent shall provide evidentiary proof
(1) that the record was made at or near the time of the event,
(2) that it was made by or from information transmitted by a
person with knowledge, (3) that it 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

Bank of N.Y. v. Calloway, 157 So. 3d 1064, 1073 (Fla. 4th DCA 2015) (citing Yisrael v.
State, 993 So. 2d 952, 956 (Fla. 2008)). Where the record is in the form of computer or
electronic records, such as a computerized loan transaction history, the foundational
witness ought to possess knowledge of the record-keeping system. See Bank of Am.,
N.A. v. Delgado, 40 Fla. L. Weekly D1080, D1082 (Fla. 3d DCA May 6, 2015). Further,
where the witness called to testify is not the person who prepared the purported
business record, the witness must demonstrate knowledge of each of these
requirements for admissibility. Calloway, 157 So. 3d at 1069; Hunter v. Aurora Loan
Servs., LLC, 137 So. 3d 570, 573 (Fla. 1st DCA 2014).
We conclude that the foundation laid in this instance was woefully
inadequate. In reaching that conclusion, we find two cases to be particularly instructive:
Calloway, 157 So. 3d 1064, and WAMCO XXVIII, Ltd. v. Integrated Electronic
Environments, Inc., 903 So. 2d 230 (Fla. 2d DCA 2005). “The rationale behind the
business records exception is that such documents have a high degree of reliability
because businesses have incentives to keep accurate records.” Calloway, 157 So. 3d
at 1071 (internal quotation marks omitted). Where, as here, 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.’ ” Id.
Mere reliance on these records by a successor business, however, is
insufficient to establish admissibility. Id. at 1071-72. More is required. For purposes of
the instant appeal, the evidentiary burden could have been established, as in WAMCO,
by testimony that the successor servicer had independently confirmed the accuracy of
the predecessor’s records. See WAMCO, 903 So. 2d at 233. Or, as in Calloway, the
burden could have been met by offering evidence that the records were reviewed for
accuracy prior to being integrated into the successor servicer’s records system. See
Calloway, 157 So. 3d at 1072.

In this case, no testimony was offered as to whether the loan transaction
records sought to be introduced as business records had been checked or verified in
any manner or whether the witness had any knowledge of the prior servicer’s recordkeeping
system. The record fails to demonstrate that an adequate foundational
predicate was established, and the loan transaction records relied on to establish the
outstanding debt constituted inadmissible hearsay. See §§ 90.802, .803(6); Kelsey v.
SunTrust Mortg., Inc., 131 So. 3d 825, 826 (Fla. 3d DCA 2014). Because these
documents were admitted in error, there is insufficient evidence to support the amount
due and owing under the loan. Accordingly, while we affirm the judgment of
foreclosure, we must reverse and remand for further proceedings to properly establish
the amount due and owing. See Sas, 112 So. 3d at 780.
Affirmed in part; reversed in part; remanded.


Leave a Reply