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Adoptive Business Records in Ohio’s Courtrooms

Posted By USFN, Monday, June 17, 2019

by Rick D. DeBlasis, Esq. and Charles E. Rust, Esq.
Lerner, Sampson & Rothfuss
USFN Member (KY, OH)

The “business records exception” of Ohio Evidence Rule 803(6) is an indispensable ally of the lender’s trial lawyer.  The rule against hearsay prohibits the use of records to prove a lender’s case, unless the record is offered by the testimony of the custodian or other qualified witness who has personal knowledge of the record-keeping system in which the record is maintained.  This requirement has made its way to the forefront of foreclosure litigation recently, due to the prevalence of servicing changes during the life a loan.  Now, the majority of Ohio’s appellate courts has addressed the nuances of authenticating adoptive business records, i.e., those created and maintained by a prior servicer.

In Ohio, the idea that the records of a prior servicer may be authenticated by a subsequent servicer originates from a 2006 credit card case in Ohio’s First District Court of Appeals.[1]  The court held that "exhibits can be admitted as business records of an entity, even when that entity was not the maker of those records, provided that the other requirements of [Evid.R.] 803(6) are met and the circumstances indicate that the records are trustworthy."[2]  The majority of Ohio’s Appellate Districts have directly adopted or discussed this general notion, or it has been applied by the respective common pleas courts.[3]  But this begs the question:  what circumstances indicate that the records of a prior servicer are indeed trustworthy?

Recently, some Ohio courts of appeals have held that “trustworthiness of a record is suggested by the profferer's incorporation into its own records and reliance on it.”[4]  Others have held that “[o]ne circumstance that indicates the trustworthiness of such a document proffered as a business record might be the ongoing relationship between the business creating the document and the incorporating business.”[5]  At a fundamental level, such logic is consistent with the notion that “[t]he rationale behind Evid.R. 803(6) is that if information is sufficiently trustworthy that a business is willing to rely on it in making business decisions, the courts should be willing to rely on that information as well.”[6]

It is likely not enough for an affiant to aver simply that the records of a prior servicer are incorporated into the records of the current servicer.[7]  The records of a prior servicer must be incorporated and relied upon in the ordinary course of business to meet the trustworthiness requirements of Evidence Rule 803(6).[8]  Thus, the summary judgment affidavit of a transferee servicer should explicitly indicate both incorporation of the records of the prior servicer into its own and reliance upon those records in the ordinary course of business.

Other averments can augment trustworthiness.  For example, the transferee servicer may have, or may have had, an ongoing relationship with the transferor servicer, such that the new servicer has become familiar with and relied upon, without issue, the old servicer’s record-keeping system for many years.[9]  The new servicer may have acquired the old servicer.[10]  Failure to include such language in the lender’s affidavit could be the difference between the court awarding summary judgment and the court finding a genuine issue of material fact warranting trial.

 

Copyright © 2019 USFN. All rights reserved.

June e-Update

 


[1] Great Seneca Financial v. Felty, 170 Ohio App.3d 737, 2006-Ohio-6618, 869 N.E.2d 30, ¶ 14 (1st Dist.).

[2] Id.

[3] See Ocwen Loan Servicing, LLC v. Malish, 2d Dist. Montgomery No. 27532, 2018-Ohio-1056, ¶ 23; Sec'y of Veterans Affairs v. Leonhardt, 3rd Dist. Crawford No. 3-14-04, 2015-Ohio-931, ¶¶ 57-59; Carrington Mtge. Servs., LLC v. Shepherd, 5th Dist. Tuscarawas No. 2016 AP 07 0038, 2017-Ohio-868, ¶ 34-36; U.S. Bank N.A. v. Hill, 6th Dist. Ottawa No. OT-17-029, 2018-Ohio-4532; Bank of New York Mellon v. Kohn, 7th Dist. Mahoning No. 17 MA 0164, 2018-Ohio-3728; RBS Citizens, N.A. v. Zigdon, 8th Dist. Cuyahoga No. 93945, 2010-Ohio-3511; Ohio Receivables, LLC v. Dallariva, 10th Dist. Franklin No. 11AP-951, 2012-Ohio-3165, ¶¶ 19-21; Green Tree Servicing, LLC v. Roberts, 12th Dist. Butler No. CA2013-03-039, 2013-Ohio-5362, ¶¶ 30-31.

[4] Ocwen Loan Servicing, LLC v. Malish, supra.

[5] PNC Mtge. v. Krynicki, 7th Dist. Mahoning No. 15 MA 0194, 2017-Ohio-808, ¶ 13; Sec'y of Veterans Affairs v. Leonhardt, supra, ¶ 59.

[6] U.S. Bank, N.A. v. Lawson, 5th Dist. Delaware No. 13CAE030021, 2014-Ohio-463, ¶ 20.

[7] Bank of N.Y. Mellon v. Roulston, 8th Dist. Cuyahoga No. 104908, 2017-Ohio-8400.

[8] See Deutsche Bank Trust Co. v. Jones, 2018-Ohio-587, ¶ 17.

[9] Ocwen Loan Servicing, LLC v. Malish, supra.

[10] Id.

 

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