Ohio Receivables, L.L.C. v. Williams , 2013 Ohio 960 ( 2013 )

[Cite as Ohio Receivables, L.L.C. v. Williams, 2013-Ohio-960.]
IN THE COURT OF APPEALS FOR MONTGOMERY COUNTY, OHIO
OHIO RECEIVABLES, LLC :
Plaintiff-Appellee : C.A. CASE NO. 25427
v. : T.C. NO. 11CV7371
HEROLD WILLIAMS : (Civil appeal from
Common Pleas Court)
Defendant-Appellant :
:
..........
OPINION
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
Court of Common Pleas, which entered summary judgment in favor of Ohio Receivables,
LLC, in its action to collect on a credit card debt.
{¶ 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 Civ.R. 56, (2) personal
knowledge gained from a review of business records, without the presentation of evidence
about the creation of those records, was insufficient, and (3) Ohio Receivables’s “mere
acquisition” of documents from other companies did not make those documents business
3
records of Ohio Receivables within the meaning of the business records exception to the
hearsay rule. Williams also presented his own affidavit and an affidavit from his attorney;
both individuals stated that they had been unable to follow or reproduce the calculations that
apparently resulted in the amount requested by Ohio Receivables, and that it “[did] not
accurately represent the amount due on the credit card.” The attorney also stated that he had
been unable to open electronic files produced by Ohio Receivables associated with the
alleged assignments of Williams’s account. Ohio Receivables filed a reply to Williams’s
memorandum in opposition to the motion for summary judgment, to which it attached
affidavits from employees of Chase and Global Credit.
{¶ 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.
[Cite as Ohio Receivables, L.L.C. v. Williams, 2013-Ohio-960.]
{¶ 7} Pursuant to Civ.R. 56(C), summary judgment is proper when (1) there is no
genuine issue as to any material fact, (2) the moving party is entitled to judgment as a matter
of law, and (3) reasonable minds, after construing the evidence most strongly in favor of the
nonmoving party, can only conclude adversely to that party. Zivich v. Mentor Soccer Club,
Inc., 82 Ohio St.3d 367, 369-370, 696 N.E.2d 201 (1998).
{¶ 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 Civ.R. 56(C) that a court is to consider in rendering
summary judgment. Dresher v. Burt, 75 Ohio St.3d 280, 292-293, 662 N.E.2d 264 (1996).
A party moving for summary judgment meets its initial burden by presenting or identifying
appropriate evidentiary materials in support of the essential elements of its own claim. See
Todd Dev. Co., Inc. v. Morgan, 116 Ohio St.3d 461, 2008-Ohio-87, 880 N.E.2d 88, ¶ 13, 18;
Raymond Builders Supply, Inc. v. Slapnicker, 11th Dist. Ashtabula No. 2003-A-0040,
2004-Ohio-1437, ¶ 5; Day, Ketterer, Raley, Wright & Rybolt, Ltd. v. Burns, 5th Dist. Stark
No. 1996CA00132, 1996 WL 490694, *1 (Aug. 26, 1996).
{¶ 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.; Civ.R. 56(E). Rather,
the burden then shifts to the nonmoving party to respond, with affidavits or as otherwise
permitted by Civ.R. 56, setting forth specific facts that show that there is a genuine issue of
material fact for trial. Id. Throughout, the evidence must be construed in favor of the
nonmoving party. Id.{¶ 10} Civ.R. 56(C) lists the types of evidentiary materials that a court may
5
consider in rendering summary judgment; these include “the pleadings, depositions, answers
to interrogatories, written admissions, affidavits, transcripts of evidence, and written
stipulations of fact, if any, filed in the action.” Absent an exception, hearsay may not be
considered in a motion for summary judgment. Johnson v. Southview Hosp., 2d Dist.
Montgomery No, 25049, 2012-Ohio-4974, ¶ 20, citing Knoth v. Prime Time Marketing
Mgmt., Inc., 2d Dist Montgomery No. 20021, 2004-Ohio-2426, ¶ 13 (“It is fundamental that
the evidence offered by affidavit in support of or in opposition to a motion for summary
judgment must also be admissible at trial, albeit in different form, in order for the court to
rely on it.”)
{¶ 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} Evid.R. 801(C) defines hearsay as a “statement, other than one made by the
declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the
matter asserted.” A “statement,” as included in the definition of hearsay, is an oral or
written assertion or nonverbal conduct of a person if that conduct is intended by him as an
assertion. Evid.R. 801(A). “Proving the contents of a writing presents problems with
hearsay, authentication, and the best evidence rule.” U.S. Bank Natl. Assn. v. Higgins, 2d
Dist Montgomery No. 24963, 2012-Ohio-4086, ¶ 15 (internal citations omitted). The
records of Chase, Global, and/or Ohio Receivables constitute statements other than those
made by a declarant while testifying in trial and are offered to prove the truth of the matters
contained in them. The records, therefore, may not be considered in a summary judgment
6
unless they qualify under an exception to the hearsay rule. Evid.R. 802.
{¶ 13} The hearsay exception relevant to this case is the business records
exception. Evid.R. 803(6) provides that the following evidence is not excluded by the rule
against hearsay:
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
7
testify as to the regularity and reliability of the business activity involved in the creation of
the record. Hirtzinger at 49.
{¶ 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.
1
This amount ostensibly represents the amount owed on the account at the time of the assignment, but, with the
accumulation of interest, does not represent the total amount that Ohio Receivables sought to collect.
[Cite as Ohio Receivables, L.L.C. v. Williams, 2013-Ohio-960.]
{¶ 16} A second affidavit was attached to Ohio Receivables’s supplemental
memorandum in support of its motion for summary judgment and was signed by Gabriel S.
Cheek, who identified himself as a custodian of records at Ohio Receivables.2 This affidavit
provides more specific information about how documents were obtained from Chase and
relied upon by Ohio Receivables. It stated that, after the sale of the credit card account, “it is
in the regular practice of [Ohio Receivables] to * * * send subpoenas to original creditors
requesting documentation in addition to that acquired” at the time of the purchase of the
account and that, once these records are received, “they are incorporated into the business
records of [Ohio Receivables] and relied upon by [Ohio Receivables] in conducting its
day-to-day business.” The following additional documents were attached to that affidavit:
account statements from April 2005 through July 2008, a copy of the “cardmember
agreement” for the account (a form document containing no identifying information specific
to Williams), and copies of checks that were written in payment on the account.
{¶ 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
2
The signatures on the two affidavits are very similar, but we will not speculate about whether they are signed by the
same person.
9
not properly authenticated and, as business records of a separate entity, were not properly
considered in support of Ohio Receivables’s motion for summary judgment. Although
employees of Ohio Receivables were permitted to state, via affidavit or otherwise, that they
had obtained these records in the course of the purchase, they could not attest to the facts that
the contract documents between Williams and Chase reflected the terms of the credit card
agreement, that the documents were made at or near the time that the account was opened by
someone with knowledge of that transaction, or that the billing statements and spreadsheets
were generated in the regular practice of Chase’s business activity.
{¶ 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).
[Cite as Ohio Receivables, L.L.C. v. Williams, 2013-Ohio-960.]
{¶ 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. Dallariva, 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 Evid.R. 806(3) “permits exhibits to be admitted as
business records of an entity even when the entity was not the maker of the records, so long
as the other requirements of [Evid.R. 803(6)] are met and circumstances indicate the records
are trustworthy,” Id. at ¶ 20, citing Shawnee Assocs., L.P. v. Shawnee Hills, 5th Dist. No.
09–CAE–05 0051, 2010-Ohio-1183, ¶ 50, and that “[r]ecords need not be actually prepared
by the business offering them if they are received, maintained, and relied upon in the ordinary
course of business” and “incorporated into the business records of the testifying entity.” Id.(Some internal citations omitted.) See, also, State Farm Mut. Auto. Ins. Co. v. Anders, 197
Ohio App.3d 22, 2012-Ohio-824, 965 N.E.2d 1056, ¶ 17-19 (10th Dist.) (“Numerous federal
courts have addressed whether documents may be admitted as business records of an entity
other than the maker” and “have permitted admission of documents incorporated into a
business's records, although prepared by third parties,” rejecting “the ‘anachronistic rule’ that
once required foundational testimony to be given by the preparer of a business record.”).
{¶ 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
11
summary of the loan files under Evid.R. 1006, we see no meaningful evidentiary distinction
between an Evid.R. 1006 summary and the 50-page spreadsheet reflecting the accounts sold
by Chase to Global and then to Ohio Receivables and from which Ohio Receivables sought
to parse out Williams’s account. The documents summarized must themselves be
admissible. Id. at 1261-1262. The admission of the summary in Irvin was found to be
error.
{¶ 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
12
documents. Chase could have done this very simply by attaching an appropriate affidavit
containing the information required by Evid.R. 803(6) to the list of accounts it sold to Global
Credit.
{¶ 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 *
3
Civ.R. 56 does not permit a party to obtain summary judgment “by ambush,” i.e., by introducing new arguments and
evidence for the first time in a reply brief. HSBC Bank USA v. Beirne, 9th Dist. Medina No. 10CA0113-M, 2012-Ohio-1386, ¶
18.
13
* * eminently reasonable.” We disagree. Without more specific information, the authority or
knowledge of a person designated as an “attorney-in-fact” is not readily apparent. We find this
designation analogous to the affidavit presented by a “Team Leader” in TPI Asset Mgt., L.L.C. v.
Conrad-Eiford, 193 Ohio App.3d 38, 2011-Ohio-1405, 950 N.E.2d 1018 (2d Dist.). In that case,
the “team leader” stated that he was authorized to make an affidavit on behalf of Chase Bank and
detailed facts related to an account. We held that the affiant’s assertion that he was authorized to
make the affidavit was “insufficient to demonstrate any personal knowledge of the facts that the
affidavit contain[ed]” and that the title of “team leader,” standing alone, ”fail[ed] to portray a
basis to find that through that position he gained the required personal knowledge.” Smith’s
affidavit, signed as an attorney-in-fact “authorized by Chase * * * to make th[e] affidavit,” was
likewise inadequate.
{¶ 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
14
documents, i.e., the fact that military service members could be fined or imprisoned for submitting
false claims, among other factors. We have no such circumstances in this case. Furthermore,
although Ohio Receivables argues that it has incorporated and relied on Chase’s and Global
Credit’s documents in its business endeavors, its business endeavor is merely to collect on the
debt, not to receive or process payments, send bills, record charges, and the like. In other words,
it does not appear that Ohio Receivables does, in fact, rely on these records in its business, except
to the extent that it uses them as a basis for this and other lawsuits.
{¶ 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 Civ.R. 56 as
Ohio Receivables’s business records and in granting summary judgment in favor of Ohio
Receivables.
{¶ 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.
..........
FAIN, P.J., concurs.
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
15
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