One Bank Witness Cannot Lay the Foundation for Records of Another Business

We won another foreclosure trial recently based on an unqualified witness.  This was not the first win from this type of issue and hopefully not the last. In a recent case, the business records which the Plaintiff sought to admit through their witness, were primarily business records of other separate entities who were neither parties to the action nor called as witnesses at trial; to wit: EMS, Chase & Aegis. The witness did not even qualify to admit the records of her own employer, SPS.

“A witness may not testify to a matter unless evidence is introduced which is sufficient to support a finding that the witness has personal knowledge of the matter.” FLA. STAT. §90.604 (emphasis added).  “Testimony must be based on matters perceived by the senses of the witness.”  C. Ehrhardt, Florida Evidence §604.1 (2014  Edition). Additionally, when introducing the business records of a company, which are hearsay, Plaintiff must meet the requirements of the business records exception in Florida Statute §90.803(6). Business records may be admitted, by a records custodian or other qualified witness, if the proponent of the evidence demonstrates the following: (1) the record was made at or near the time of the event; (2) was made by or from information transmitted by a person with knowledge; (3) 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 record. Yisrael v. State, 993 So. 2d 952, 956 (Fla. 2008). A business record may not be admitted into evidence by someone who is not a records custodian or other qualified witness. See Specialty Linings, Inc. v. B.F. Goodrich Co., 532 So. 2d 1121, 1122 (Fla. 2d DCA 1988); Pickrell v. State, 301 So. 2d 473, 474 (Fla. 2d DCA 1974).

Because the business records exception requires personal knowledge, it is widely accepted that “[n]ormally, a record custodian of one business cannot lay a foundation for business records of a second business, even in possession of the first business because the witness would not have personal knowledge of how the second business kept it[s] records and could not testify to the foundation requirements.” C. Ehrhardt, Florida Evidence §803.6 (2014 Edition).

This principle has been affirmed numerous times, but most recently by the First District Court of Appeal. Hunter v. Aurora Loan Services, LLC, 137 So. 3d 570 (Fla. 1st DCA 2014). In Hunter, a mortgage foreclosure action, the plaintiff attempted to lay the business records exception for admitting a loan history through an employee of its current loan servicer, Rushmore. Id. The loan history included transactions from a prior loan servicer, MortgageIT, who was not in court to testify as to their records. Id. The employee for Rushmore admitted he did not and had never worked for MortgageIT but that he had approximately 15 years of experience performing various duties in the residential mortgage industry. Id. He testified that based on his dealings, he knew that:

“MortgageIT’s business practice, upon the sale of a loan and mortgage, was to send electronic versions of the pertinent documents to the new owner, determine a post-sale “transfer date” on which loan servicing would transfer from its servicer to the new owner’s servicer, and retain possession of the original note and mortgage documents until the transaction was fully completed. According to Mr. Martin, this procedure is standard across the mortgage industry.”

 Id. at 1. The First District Court stated that “[w]hile it is not necessary to call the individual who prepared the document, the witness through whom a document is being offered must be able to show each of the requirements for establishing a proper foundation.” Id. at 2. Based on the testimony, the Court held that the witness failed to establish the necessary foundation for admitting the loan history under the business records exception because the witness was neither a current nor former employee of the prior servicer and otherwise lacked personal knowledge of the prior servicer’s record keeping procedure. Id. at 3. The Court went on to say that:

“Absent such personal knowledge, he was unable to substantiate when the records were made, whether the information they contain derived from a person with knowledge, whether MortgageIT regularly made such records, or, indeed, whether the records belonged to MortgageIT in the first place. His testimony about standard mortgage industry practice only arguably established that such records are generated and kept in the ordinary course of mortgage loan servicing.” Id.

In this recent case, the witness could not have personal knowledge of the procedure for how records are created and kept by the three prior servicers in order to satisfy the business records exception. We have a very detailed and ever evolving lengthy cross examination on how we highlight this issue.  For the benefit of our clients, we’d rather not post the exchange from this case on this point.

Ultimately, in accordance with the requirements of Florida Statutes §90.803(6) and §90.604, and the interpretation of said statutes by the appellate courts of Florida, we argued it would be reversible error to allow Plaintiff’s witness to bypass the hearsay rules and admit business records which quite obviously were created by businesses other than SPS, and for which the Plaintiff’s sole witness had no suitable involvement to speak to how those records are made and kept. Furthermore, this SPS witness was not a record custodian nor was she well enough acquainted with the process of making and keeping loan histories to be considered an “other qualified witness” for the limited SPS records before the Court. The same was true for the acceleration letter. Once these documents are excluded from evidence, the Plaintiff fails to meet its prima facie burden. Therefore, the only proper remedy is to grant a timely motion for involuntary dismissal.

Court: CASE DISMISSED!

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