Summary Judgment motion filed

[Kittyring]

I need some advice regarding a summary judgment motion just filed by the JDB Main Street. I had sent my discovery request, along with admissions, and Interogs, and was waiting for a response. I got the admissions, and now a notice of the hearing for their motion for Summary Judgment.

Their brief argues that defendant has failed to allege a valid defense recognized in law for which relief can be granted to Plaintiff. They claim no genuine issue of material fact concerning the indebtedness.

They argue a breach of contract, but have not provided me with one. Secondly they argue an account stated and actionable. They have provided only copies of billings, not an accounting or audit to show interest that they claim.

My questions are how do I answer this. I know they have the advantage of the legal arguments on their side, and I don't have much that I can argue to refute their motion.

Any advice?

[BV80]

I had sent my discovery request, along with admissions, and Interogs, and was waiting for a response. I got the admissions, and now a notice of the hearing for their motion for Summary Judgment.

Did you also send Interrogatories and Request for Production of Documents? Did they answer those?

They claim no genuine issue of material fact concerning the indebtedness.

You should write up an Opposition of Plaintiff's Motion for Summary Judgment. You have to show there is a genuine issue of material fact. You also need to include case law from Michigan, the Circuit Court of Appeals (I believe it's the Sixth Circuit Court of Appeals), or the Supreme Court of the U.S. to strenthen your arguments. If their bill of sale does not show your name and account number, they have not proven ownership...issue. If they did not include an affidavit from someone with personal knowledge...issue. If they have not proven the amount claimed in the complaint...issue.

They argue a breach of contract, but have not provided me with one.

If this is a credit card debt, there is, more than likely, not going to be a signed contract. You probably just signed an application. They should, however, provide a copy of the cardmember agreement that was in effect at the time the account went into default.

What did they say regarding a contract?

Secondly they argue an account stated and actionable. They have provided only copies of billings, not an accounting or audit to show interest that they claim.

This is from the Michigan Rules of Evidence:

Rule 803 - Hearsay Exceptions

(6) Records of regularly conducted activity. A memorandum, report, record, or data compilation, in any form, of acts, transactions, occurrences, events, conditions, opinions, or diagnoses, 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 by certification that complies with a rule promulgated by the supreme court or a statute permitting certification, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness.

Along with the statements, did they include an affidavit from the OC authenticating the statements? Did they include any affidavit at all?

If you let us know what they said and included, it might enable us to offer more specific advice.

Edited March 17, 2011 by BV80

[Kittyring]

Thanks for your reply BV80. The JDB did provide an affidavit from one of their employees who stated that she saw the records from the OC and verified the amount in their complaint. She also stated the date when the account was established. They provided me a copy of an agreement but it isn't from the time that the account was established. In their complaint, they alleged that I in fact had this document.

I did send Interogs and request for production of documents at the same time I sent admissions. They did not respond to the Interog's. I sent Interog for both the Plaintiff, and for their affiant. No response.

One of my defenses is that they failed to provide proper notice of this indebtedness. I received two notices from JDB attorneys demanding payment and both indicated that the OC was HSBC Finance. I did not have an account there. The actual account is with First National Bank of Omaha. I sent responses to both of these letters demanding verification. They did not send anything. Then the complaint did not identified the original account holder, but only the account number. The affidavit did identify FNBO. In my answer I provided an affidavit that I did not recognize the account and disputed the account and the amount.

[BV80]

They provided me a copy of an agreement but it isn't from the time that the account was established. In their complaint, they alleged that I in fact had this document.

I assume this is a credit card debt. The agreement that was in effect when the account was opened has more than likely been amended since then, so

The agreement that should be provided is the one that was in effect when the account went into default.

The JDB did provide an affidavit from one of their employees who stated that she saw the records from the OC and verified the amount in their complaint. She also stated the date when the account was established.

What records did she see? Just the statements they sent you? The judge will see those. Does that mean he can authenticate them? Does that mean he has personal knowledge of the records?

Look at rule 803(6). It states that records must be transmitted from someone 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 record all as shown by the testimony of the custodian or other qualified witness, or by certification that complies with a rule promulgated by the supreme court or a statute permitting certification.

The OC made those statements and kept them as a regular course of business. The JDB didn't make them, because JDBs don't make cc statements. JDBs don't keep or maintain them the regular course of business. Therefore, the JDB's affiant does not have personal knowledge of those records. They've obviously provided nothing from the custodian who works for OC stating the records are valid and accurate.

Therefore, their statements are hearsay because they do not comply with Rule 803(6).

I received two notices from JDB attorneys demanding payment and both indicated that the OC was HSBC Finance.

Is either one of those attorneys representing the Plaintiff? Were the notices your first communication with the Plaintiff?

[Kittyring]

BV80 can you elaborate on the issue of the first notices of this credit card debt being sent from the attorneys for the JDB? I am working on the response and brief in support. I would appreciate it if I could get some reaction to these before I send them. Is that possible? I am trying to put together a response that will at least get the JDB to negotiate a settlement. So far they have not be interested.

[BV80]

BV80 can you elaborate on the issue of the first notices of this credit card debt being sent from the attorneys for the JDB?

Have you received any communication from the Plaintiff before the attorneys sent you a notice?

[Kittyring]

No. The first notice was from the Plaintiff's attorney who identify as a debt collector. I sent a VD and they did not respond. When I got a second notice, I sent a more succient VD and got nothing. Shortly afterward they filed the suit.

[fightemdontfold]

Any valid issue that is brought forward by you at the hearing, and in the opposition to the motion you should write up and file with the court, should be able to get the motion denied.

I am a bit worried that you might not have done something correctly during the process that might have provoked them to think they can get a judgement without a trial. Did you file affirmative defenses as well as your anwser, or just an anwser??

They may just be going for broke and you may not have done anything wrong, but I know in my case I was very encouraged that I had done my anwser, affirmative defenses, and anwsered their discovery correctly by the fact that they did not respond to it by filing for a MSJ.

[Kittyring]

I answered the complaint and included affimative defenses. I file my request for Admissions, Production of Documents, and Interrogs. The fact that I was raising issues regarding the account to support their claim for damages, and Intergo directed at the person who signed the affadavid who is an employee of the JDB and not likely to have the OC documents acceptable for proof of the debt. I think that I pushed them and they are trying to intimidate me with the Summary Judgment motion.

[BV80]

No. The first notice was from the Plaintiff's attorney who identify as a debt collector. I sent a VD and they did not respond. When I got a second notice, I sent a more succient VD and got nothing. Shortly afterward they filed the suit.

Ok...let's forget the attorney for now. Had you ever heard from the Plaintiff (the JDB) before?

[Kittyring]

No the only contact has been through their attorney in Michigan. I should add that in the validation letters I notified them that I elected arbitration. I sent this to both the attorney, and to the JDB. I had to spend a great deal of time researching Main Street Acquisition to find them and their address.

[BV80]

No the only contact has been through their attorney in Michigan. I should add that in the validation letters I notified them that I elected arbitration. I sent this to both the attorney, and to the JDB. I had to spend a great deal of time researching Main Street Acquisition to find them and their address.

Debt collection attorneys are bound by the FDCPA. If this attorney collects debts on a regular basis, he's a debt collector. If the attorneys 1st letter was the very first time you ever heard from or about Main Street, that letter should have included the 30 day notice of your right to dispute. Did it include that?

[Kittyring]

In the brief filed by this JDB they use my responses to their Admissions as a reason for Summary Judgment. They state Defendants must specifically deny or state in detail the reasons why an answer a party cannot admit or deny.

Most of the answers were "Lacked documents to answer, denies demands strict proof of question", or "Can neither admit or deny lack of sufficent information to answer"

They claim the Summary Judgment should be allowed because answers are incomplete and evasive, and defendants by law are chargeable to know the facts upon which he would assert his defenses to Plaintiffs claims.

They claim prima facie unrebutted to prove their case. Are they right?

[Kittyring]

Debt collection attorneys are bound by the FDCPA. If this attorney collects debts on a regular basis, he's a debt collector. If the attorneys 1st letter was the very first time you ever heard from or about Main Street, that letter should have included the 30 day notice of your right to dispute. Did it include that?

Yes it did. The letter identified it as from a Debt Collector. It had the 30 da and I did reply in the 30 da with my validation letter. The second letter was essentially the same and I sent my second validation demand within the 30 days.

[BV80]

It's possible that by not validating and then filing suit, the attorney violated the FDCPA by continued collection activity. I'm not sure if you can include that in your Opposition to Motion for Summary Judgment or not.

Hopefully, someone can fill you in on how to handle this. It might be a matter of filing a counterclaim or, because the attorney violated, filing a separate Complaint against the attorney.

[BV80]

In the brief filed by this JDB they use my responses to their Admissions as a reason for Summary Judgment. They state Defendants must specifically deny or state in detail the reasons why an answer a party cannot admit or deny.

Most of the answers were "Lacked documents to answer, denies demands strict proof of question", or "Can neither admit or deny lack of sufficent information to answer"

They claim the Summary Judgment should be allowed because answers are incomplete and evasive, and defendants by law are chargeable to know the facts upon which he would assert his defenses to Plaintiffs claims.

They claim prima facie unrebutted to prove their case. Are they right?

I'm not sure if they're right or not. I would read my rules of civil procedure to see about the possibility of amending my answers to discovery. Since they never answered your Interrogatories, you could file a Motion to Compel. Also include the fact that they didn't respond to the Interrogatories in your Opposition to Plaintiff's Motion for Summary Judgment.

[HoppinMad]

Have you considered filing a motion to strike the Affidavit on the grounds of hearsay? Here is a very ROUGH draft of my brief in support of MTS I have been working on here in Indiana. You would need to find applicable Michigan case law to replace what I have for Indiana, but the jist would be the same. Be sure and check your local rules of procedure to see if you can still file one. (SORRY IT'S LOOOONG)

ARGUMENTS AND CITATIONS OF AUTHORITY

Defendant stated that the Plaintiff's affidavit pertains to acts and events that allegedly occurred between Defendant and a third party, HSBC Bank US. At no time was the affiant nor any of the Plaintiffs employees present to witness any purported acts or creation of the records of transactions occurring between defendant and HSBC Bank US; As such said affidavit falls under the hearsay rule, In. R.E. 802 and is inadmissible as evidence.

Defendant further states that the affidavit is not subject to the hearsay business records exemption In. R.E. 803(6) because it was not made at or near the time of the purported acts or events, and; the information contained in the document is merely an accumulation of hearsay, and; upon information and belief, the creator of the document in Plaintiff's Affidavit is not currently and has never been employed with HSBC Bank US and therefore cannot have personal knowledge of how HSBC Bank's records were prepared and maintained and; is unqualified to testify as to the truth of the information contained in Plaintiff's Affidavit.

Speybroeck v. State, 875 NE 2d 813 - Ind: Court of Appeals 2007 further explains Indiana Evidence Rule 803(6) provides such an exception for records of regularly conducted business activity provided that certain requirements are met. Specifically, Rule 803(6) provides, in pertinent part:

A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, 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 or affidavit of the custodian or other qualified witness, unless the source of information or the method or circumstances of preparation indicate a lack of trustworthiness.

As the Indiana Supreme Court has explained: The reliability of business records stems from the fact that the organization depends on them to operate, from the sense that they are subject to review, audit, or internal checks, from the precision engendered by the repetition, and from the fact that the person furnishing the information has a duty to do it correctly.

Stahl v. State, 686 N.E.2d 89, 92 (Ind. 1997). And more recently, the court stated:

[T]he business records exception to the hearsay rule is "based on the fact that the circumstances of preparation assure the accuracy and reliability of the entries." . . .

In essence, the basis for the business records exception is that reliability is assured because the maker of the record relies on the record in the ordinary course of business activities. The "regular course" of business "must find its meaning in the inherent nature of the business in question and in the methods systematically employed for the conduct of the business as a business." Thus where a company does not rely upon certain records for the performance of its functions those records are not business records within the meaning of the exception to the hearsay rule. It is not enough to qualify under the business records exception to show that the records are made regularly; rather, the court must also look to "the character of the records and their earmarks of reliability acquired from their source and origin and the nature of their compilation."

The Defendant contends that the Affidavit is not subject to the hearsay business records exclusion and is inadmissible as evidence. In R. E. 803(6) excludes records of regularly conducted business activity. Asset Acceptance states “We have been purchasing and collecting defaulted or charged-off accounts receivable portfolios from consumer credit originators since the formation of our predecessor company in 1962.” A "charge-off" is defined generally as "[t]o treat (an account receivable) as a loss or expense because payment is unlikely; to treat as a bad debt." Black's Law Dictionary p. 227 (7th ed 1999). This clearly indicates that within their regular course of business, Asset Acceptance has never engaged in the business of extending consumer credit or extending loans to consumers, or maintaining the records associated with consumer credit or loan accounts. Therefore the Affiant, as an employee of Asset Acceptance did not regularly, in the course of conducting business, maintain the records for extending credit or loaning funds, making his statement of knowledge hearsay.

Asset Acceptance explains their purchasing method in their SEC filings referenced above. "Typically we purchase our portfolios in response to a request to bid received via e-mail or telephone from a prospective seller." Their report goes on to explain that they "review data on the portfolio's accounts. This data typically includes the account number, the consumer's name, address, social security number, phone numbers, outstanding balance, date of charge-off, last payment and account origination to the extent the seller provides this data." It is abundantly clear that Asset Acceptance does not, in due diligence, review any actual documents or statements in relation to these accounts to actually validate the trustworthiness of the data. But, relies solely on the media files compiled in whole by the seller, in this case HSBC Bank. The defendant once again contends these summary files are not admissible and if used in the determination of the authenticity of the Affidavit, must be deemed as hearsay.

In Speybroeck v. State, 875 NE 2d 813 - Ind: Court of Appeals 2007 the court also held, under Rule 803(6), that the Affidavit cannot cure the unreliability inherent in HSBC's submission of the Kawasaki documents and the letters. In order for business records to be found reliable under Rule 803(6), the person recording the information must do so in the regular course of business and must have personal knowledge of the information recorded. This court reached the same result in Wilson v. Jenga Corp., 490 N.E.2d 375, 377 (Ind.Ct.App.1986), in which we held that a business could not lay the proper foundation to admit the records of another business because the requesting business lacked the personal knowledge required to ensure reliability.

[Likewise, here neither the Kawasaki documents nor the letters satisfy Rule 803(6)'s requirements of reliability. Specifically, notwithstanding the Affidavit's recitation that "these documents are made in the regular course of business activity as a regular practice of HSBC," none of those documents were created by an HSBC employee with personal knowledge of the matters set forth in the documents. See Appellant's App. at 15. Nor were Maple City, Kawasaki, Robert, or William acting in the course of HSBC's regularly conducted business activity when they created those documents. The State does not refute William's contention that HSBC lacked personal knowledge of the alleged transactions between William, Maple City, and Kawasaki. The State also does not dispute William's argument that none of those entities acted in the course of HSBC's regularly conducted business activity. Instead, the State responds that it was only required to show that the documents at issue were "kept in the routine course of business and placed in the record by one authorized to do so, not one who had personal knowledge of the transaction represented at the time of the entry." Appellee's Brief at 10.]

In support of its position, the State cites Darnell v. State, 435 N.E.2d 250, 253 (Ind.1982), in which our Supreme Court held:

The business records' exception to the hearsay rule does not require that a sponsor of an exhibit must have personally made it, filed it, or have had firsthand knowledge of the transaction represented by it. The record keeper must only show that it is part of the records kept in the routine course of business and placed in the record by one authorized to do so, who had personal knowledge of the transaction represented at the time of the entry.

But the State misapplies Darnell to William's argument. William does not allege that the affiant to Exhibit 11 was required to have personal knowledge. Rather, he argues, correctly, that someone at HSBC was required to have personal knowledge of the information contained in the Kawasaki documents and the letters. See Stahl, 686 N.E.2d at 92; Wilson, 490 N.E.2d at 377. Again, "where a company does not rely upon certain records for the performance of its functions those records are not business records within the meaning of the exception to the hearsay rule." E.T., 808 N.E.2d at 643. William has met his burden in showing that no one at HSBC had the personal knowledge required for the business records exception to apply. Hence, those documents cannot satisfy Rule 803(6)'s requirements of reliability.

[HoppinMad]

(cont...

Indiana courts applying Indiana Rule 803(6) have held that the person who records the information in the regular course of business must also have personal knowledge of the information recorded in order to make it reliable. D.W.S. v. L.D.S., 654 N.E.2d 1170, 1173 (Ind.Ct.App.1995) (the event recorded must have been within the personal knowledge of someone acting in the course of regularly conducted business activity). Federal courts reach the same result.

Defendant further claims that the underlying data used for the summary compilation of Plaintiff's Affidavit of account stated were not records kept in the course of regular business by Asset Acceptance, but were records kept by HSBC Bank, who is not a party to this suit. There is no record of who compiled the underlying data specifically, therefore no way to challenge and cross-exam the accuracy of this data in the course of a trial.

King v. State, 908 NE 2d 673 - Ind: Court of Appeals 2009 cited that in United States v. Loney, U959 F.2d 1332 (5th Cir.1992), the appellant challenged the admissibility of a compilation of computer records of approximately seventy airline customer accounts on the basis that it "was not `kept in the course of a regularly conducted business activity' because it was made `in anticipation of litigation.'" Id. at 1340. The Fifth Circuit Court of Appeals stated,

[Federal Evidence] Rule 803(6) does not require that the summary of the data be kept in the regular course of business. Rather, it is the underlying data that must be so kept. And Loney does not challenge the government's foundation for admitting the underlying data. Once the underlying data is admissible under the business records exception, a summary of that data can be admitted under Fed.R.Evid. 1006, which permits the parties to present a "chart, summary, or calculation" where "[t]he contents of voluminous writings ... cannot conveniently be examined in court." Thus, the district court properly admitted [the exhibit] under rules 803(6) and 1006. Id. at 1340-41 (footnote omitted).

While Mr. X may very well be Asset Acceptance's Custodian of Records, the mere acceptance or incorporation of electronically transferred data from HSBC Bank into Asset Acceptance’s business records is not enough to satisfy the trustworthiness requirements of In. R.E. 803(6); hence the need for In. R.E. 902(9). The source of information or the method or circumstances of preparation indicate a lack of trustworthiness.

Speybroeck v. State, 875 NE 2d 813 - Ind: Court of Appeals 2007 further states that to admit business records pursuant to Rule 803(6), the proponent of the exhibit must authenticate it. See Evid. R. 803(6), 901. Rule 803(6) permits authentication by affidavit unless "the source of information or the method or circumstances of preparation indicate a lack of trustworthiness." Evid. R. 803(6). Similarly, Evidence Rule 902(9) permits self-authentication:

Unless the source of information or the circumstances of preparation indicate a lack of trustworthiness, [extrinsic evidence of authenticity is not required when] the original or a duplicate of a domestic record of regularly conducted activity [is] within the scope of Rule 803(6), which the custodian thereof or another qualified person certifies under oath (i) was made at or near the time of the occurrence of the matters set forth, by or from information transmitted by[] a person with knowledge of those matters; (ii) is kept in the course of the regularly conducted activity[;] and (iii) was made by the regularly conducted activity as a regular practice.

"If it comports with the requirements of Rule 902(9), it is self-authenticating." Smith v. State, 839 N.E.2d 780, 786 (Ind. Ct.App.2005). However, self-authentication does not guarantee admissibility; rather, it "merely relieves the proponent from providing foundational testimony." Reemer v. State, 835 N.E.2d 1005, 1007 n. 4 (Ind.2005).

The Defendant restates that the business, Asset Acceptance, cannot lay the proper foundation to admit the records of HSBC Bank, another business, because the requesting business, Asset Acceptance, lacked the personal knowledge required to ensure reliability. Asset Acceptance as a third-party to the records cannot self-authenticate the Affidavit without producing all summary records as strictest proof. The summary records of HSBC Bank used in compiling the account stated by Asset Acceptance in the Affidavit should be ruled as hearsay and not admissible as they have never been produced to the court or defendant.

CONDITIONAL ARGUMENTS AND RECENT RULINGS

There have also been recent court rulings in neighboring states that also support the facts of this motion. In Midland Funding LLC v Brent, et al, N.D. Ohio Case 3:08-cv-01434-DAK, Sept. 23, 2009; Judge Katz found that clerks at Midland Credit had, as a practice, signed affidavits stating that the individual clerk had “personal knowledge” of the debt being collected when they did not possess such knowledge, and that who signed the affidavit, upon which the company's collection lawsuits are based, was “an entirely random act” based solely on when the affidavit came off the company's printer. Because the affidavits were false, the judge ruled that the company's collection process was not legal. “It is unclear to this court why such a patently false affidavit would be the standard form used at a business that specialized in the legal ramifications of debt collection,” Judge Katz wrote as he issued an injunction against the debt collection agency's practices in August. He reaffirmed the decision Sept. 23, 2009.

Most closely related court opinion to the current case before this court is Asset Acceptance v. Lodge, No. ED 93264 (Mo.App.E.D.2010). The appeals case determined that the only testimony regarding the documents came through Beach, an employee of Asset. Beach could not specifically testify to the mode of the documents preparation or the time of their preparation given the documents were prepared by HSBC. Although personal knowledge of the sponsoring witness as to the mode of preparation of the documents sought to be admitted as business records is not required for the admission of those documents, C & W Asset Acquisition, LLC v. Somogyi, 136 S.W.3d at 137, these documents were not even prepared by Asset in its ordinary course of business. The documents prepared by HSBC were merely transferred to Asset by HSBC as part of the transaction between Asset and HSBC. In the present case, Asset did not prepare the documents in question, but rather only received the documents from HSBC and held them in their files. Beach was not qualified to testify regarding documents not prepared by Asset. Thus, the documents do not fall under the business records exception. The trial court erred and abused its discretion in admitting Exhibits 1 and 2 into evidence under the business records exception. Point granted.

In the most recent case, the Pennsylvania Superior Court upheld on February 14, 2011 the Trial Court's ruling regarding the trustworthiness of transferred computerized business records. Trial Court Opinion, 1/26/10, at 10. The trial court’s decision was “based, inter alia, upon the inadequate authentication of computerized business records as required by Pennsylvania Rule of Evidence 803(6).” Id. Consequently, the trial court ruled that CFS failed to establish the trustworthiness and reliability of the records sufficiently to permit their admission into evidence. Id. at 1." Mr. Venditti could not say for certain whether [industry] requirements had actually been followed in the preparation and maintenance of those records because, simply put, he was never in a position to know." The chain of evidence presented did not adequately authenticate the computerized business records necessary to establish their trustworthiness and reliability sufficient to permit their admission into evidence. Commonwealth Financial Systems, Inc. v. Larry Smith, J.A26038/10 2011 PA Super 30.

CONCLUSION

The Defendant respectfully requests the Honorable Court to strike Plaintiff's Affidavit of Debt based on the grounds of hearsay and the untrustworthiness of purported Affidavit. The Defendant recognizes that the admission or exclusion of evidence is a matter within the sound discretion of the trial court. Rolland v. State, 851 N.E.2d 1042 (Ind. Ct. App. 2006).

[Kittyring]

Thank you for sharing your work. I will use some of your arquements in my response as they did not reply to my discovery for production of documents that should contain the proofs that they lack to support their claim for damages, like how they calculated the debt, interest, fees etc. All they have is the Affidant statements that are heresay.