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Maine: Supreme Court Requires Witness Testimony of Prior Servicer Practices for Integrated Business Records

Posted By USFN, Thursday, January 18, 2018
Updated: Thursday, January 18, 2018

January 18, 2018

by Eva M. Massimino
Bendett & McHugh, P.C. – USFN Member (Connecticut, Maine, Vermont)

In KeyBank National Association v. Estate of Eula W. Quint, 2017 ME 237 (Dec. 21, 2017), the Maine Supreme Court held that the District Court did not err in finding that plaintiff-bank failed to lay adequate foundation to admit the records of a prior servicer pursuant to the business records exception to the hearsay rule.

In Quint, the plaintiff brought a foreclosure action against the Estate of Eula Quint (Estate) as well as Vickie L. Kilton (Kilton). Despite having failed to defend against the foreclosure action, Kilton, through counsel, appeared on the day of trial. Counsel for plaintiff called a witness from the current servicer for plaintiff-bank to testify as to the business records kept in the regular course of that servicer’s business with regard to the loan subject to foreclosure. However, the outstanding principal balance on the loan could not be established without relying on records of a prior servicer, which had been incorporated into the business records of the current servicer. The witness from the current servicer was able to authenticate records created and maintained by the current servicer, but could not establish that he had any knowledge of the record-keeping practices of the prior servicer. Judgment was entered for Kilton and the Estate. The plaintiff appealed, resulting in the opinion discussed herein.

The Maine Supreme Court affirmed the decision of the lower court, holding that the plaintiff did not adequately establish the business records exception for integrated business records of the prior servicer. In doing so, the Quint Court relied on its decision in Beneficial Maine Inc. v. Carter, 2011 ME 77, which established that a “witness must demonstrate knowledge that

• the producer of the record at issue employed regular business practices for creating and maintaining the records that were sufficiently accepted by the receiving business to allow reliance on the records by the receiving business;
• the producer of the record at issue employed regular business practices for transmitting them to the receiving business;
• by manual or electronic processes, the receiving business integrated the records into its own records and maintained them through regular business processes;
• the record at issue was, in fact, among the receiving business’s own records; and
• the receiving business relied on these records in its day-to-day operations.”

In applying Carter to this case, the Maine Supreme Court held that “a witness may lay a proper foundation to admit integrated business records if the witness’s testimony satisfies the requirements of both [the business record exception] and Carter.” Since the current servicer witness was not able to present testimony to establish that the prior servicer’s business practices satisfied those requirements, a proper foundation was not laid for admitting the prior servicer’s loan records, and they were consequently inadmissible.

The Quint decision is significant for all Maine foreclosure actions that are reliant, in part, on records created by a prior servicer. In order to ensure that integrated business records are admissible, testimony should be presented of one or more witnesses with knowledge of the business practices of each prior servicer whose records are necessary to establish the essential elements of foreclosure. Other recent Maine case law has established that failing to prove any allegation in a foreclosure may result in the underlying note and mortgage being entirely unenforceable. See Pushard v. Bank of America, N.A., 2017 ME 230. Accordingly, it is of utmost importance that the proper witnesses appear and be ready to testify at trial.

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