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Midland v Van Slyke AZ CoA Ruling, Any Prior Discussion Here?

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I've been singularly engrossed in academic work since the beginning of the year.  So it was just yesterday that I read the AZ div1 CoA memorandum decision on Midland v Van Slyke (CV 14-0851).  Has there been any prior discussion of this decision on this forum since the issuance of the ruling on Feb 25th?  I couldn't turn anything up either in a forum search or by way of a site specific google search.

The decision is unpublished and creates not binding precedent but only persuasive authority (Slyke's counsel has since requested the publishing of the ruling).  I'm thinking about the decision's impact (as  persuasive authority) on RoE 803(6) and Parker, as applicable specifically to these sorts of cases.  But I don't want to drone on about it in a new thread here if others already discussed it months ago.

If there has been any prior discussion on the forum here about this decision I'd be grateful if someone would be kind enough to point me to it.

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Thank you for bringing this case to my attention.  I mean this is what I have been preaching forever on this board with regard to JDB's.  Someone who works for the JDB is in absolutely no position to testify as to the records of an original creditor.

While this case very well not be binding in Arizona - that does not mean you are unable to utilize the very same arguments and attempt to prevail.  Theoretically, these underlying arguments can be used against any JDB in the country - obviously you would not cite this case or statutes, however, fundamentally an employee of a JDB is in no way able to establish admissibility of business records their employer did not create. 

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That case basically says an affidavit or witness from the original creditor needs to be provided. Isn't that what AZ defendants have been saying @Harry Seaward all along only to get told the adoptive records rule allows this, 803 (6) standard is met. New Jersey is even worse with the reasoning that banks are honest, can't keep customers if the records weren't accurate, that's where JDB got them from, JDB wins. Lack of trustworthiness has always been there in the business records exception but it seems like the burden was on the defendant to subpoena an OC employee to prove they're untrustworthy. Even bringing up a CFPB order (Midland and Chase) has been met with, "there's no indication this applies to the account".

So, has anything changed in AZ that isn't going to require in a JDB debt lawsuit for a defendant to know the only way they win is a MTC Arb?

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2 hours ago, usctrojanalum said:

Thank you for bringing this case to my attention.  I mean this is what I have been preaching forever on this board with regard to JDB's.  Someone who works for the JDB is in absolutely no position to testify as to the records of an original creditor.

While this case very well not be binding in Arizona - that does not mean you are unable to utilize the very same arguments and attempt to prevail.  Theoretically, these underlying arguments can be used against any JDB in the country - obviously you would not cite this case or statutes, however, fundamentally an employee of a JDB is in no way able to establish admissibility of business records their employer did not create. 

 

2 hours ago, usctrojanalum said:

At minimum, a JDB would need an affidavit from an employee of the OC.  But JDB's do not get those. 

I think we've all made the same claims before. 

Unfortunately, some courts don't require anything from the OC even if the defendant objects to the business records due to the fact that the JDB cannot authenticate the records created by another business.   Here's just a few courts that allow it.

CACH, LLC v. Hoffman, SC Court of Appeals, 2014 (unpublished)

Portfolio Recovery Associates, LLC v. Staeheli, MN Court of Appeals, 2014 (unpublished)

Ohio Receivables v. Dallariva, OH Court of Appeals, 2012

Simien v. Unifund, TX Court of Appeals, 2010

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As someone just reminded me, the ARCP were amended in 2014 to (apparently) allow the citation of memorandum decisions in limited circumstances.

Ultimately, even if eventually published, this decision may serve only to draw a road map (much as Parker did) to victory by way of which affidavits to have on hand.  It seems clear that it is a higher burden for the third-party debt buyer, but not an insurmountable one.  The value in this decision may be temporary until they re-group and demand more documents when purchasing portfolios.  I think they are re-grouping anyway in AZ from the cloud of the CFPB  consent order.  The calendar/dockets are much thinner than this time last year.

I'm working on an outline and thinking it all over, with all of the other cases in context.

You can watch a clip of some of the oral arguments in this case here

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2 hours ago, CCRP626 said:

Isn't that what AZ defendants have been saying @Harry Seaward all along only to get told the adoptive records rule allows this

Not since Parker was in play.  After that, they have always argued that any records the JDB was offering, was included in the adoptive business records doctrine.  They never saw that it was distinguishable.  I'm happy Skiba pursued this, now at least there is a direct point of reference as it relates to "admissible" business records.  This is great for the people in AZ.

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8 minutes ago, Coffee_before_tea said:

Not since Parker was in play.  After that, they have always argued that any records the JDB was offering, was included in the adoptive business records doctrine.  They never saw that it was distinguishable.

Doesn't Parker show an OC custodian as a witness, not just an affidavit from one?

Maybe it never got passed but I thought AZ had an assignee/debt buyer/golfing buddy statute beyond the adoptive records practice which limited the amount of docs an assignee/buyer had to submit as proof?

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Correct, Parker had a witness from the OC, that was fully deposed.  There may have been affidavits made by the same employee, but opposing council was able to do a full deposition, and challenge/investigate the witnesses positions.

5 minutes ago, CCRP626 said:

Maybe it never got passed but I thought AZ had an assignee/debt buyer/golfing buddy statute beyond the adoptive records practice which limited the amount of docs an assignee/buyer had to submit as proof?

I can't speak to this, as I don't know.  

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11 minutes ago, CCRP626 said:

Doesn't Parker show an OC custodian as a witness, not just an affidavit from one?

Maybe it never got passed but I thought AZ had an assignee/debt buyer/golfing buddy statute beyond the adoptive records practice which limited the amount of docs an assignee/buyer had to submit as proof?

From Van Slyke:

Finally, we reject Midland's assertion that the court improperly required personal knowledge about the creation of these specific statements or testimony from Chase personnel.   On the contrary, the court stated it was "not ruling that testimony at trial by a Chase representative would be necessary to admit the account statements," concluding only that the foundation Johnson had offered "was insufficient."

 

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1 hour ago, BV80 said:

On the contrary, the court stated it was "not ruling that testimony at trial by a Chase representative would be necessary to admit the account statements," concluding only that the foundation Johnson had offered "was insufficient."

if no Chase witness, a Chase affidavit would be needed. Again, haven't defendants been saying this after Parker for these JDB cases? This Van Slyke case was for over $14,000, so Superior Court with no small claims/justice court evidence standards shall be relaxed if that's the key? Outside of catching the appeals court justices on a good day, I'm not seeing what worked here that hasn't for all these defendants who said they should have just done an MTC Arb.

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1 hour ago, CCRP626 said:

Again, haven't defendants been saying this after Parker for these JDB cases?

It depends on whom you are referring to.  The strong consensus from the AZ posters (after parker) is that any JDB can submit any business record without affidavit or testimony from the OC (or previous assignee).  It's not to say they were wrong, it just that they failed to challenge the Parker ruling as it relates to the business records exception in collection cases.

If this gets to be a published case, it will certainly, at the least, cause a Justice Court Judge to think (for a second).  Really, without testimony from the OC, I don't see how a JDB can lay foundation for business records.  With the numerous CFPB orders regarding the wildly inaccurate record keeping and accounts, the "trustworthiness" aspect goes out the window.

The Arb route is still probably the best route for the defendants in AZ; although, the defendants that don't have Arb available will be happy with this case.

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7 hours ago, Coffee_before_tea said:

 I'm happy Skiba pursued this

Skiba didn't pursue this.  It was the JDB plaintiff appealing because their records weren't admitted.  And therein lies the problem with citing this case, unpublished or not.  It's the flip side of the same coin when a defendant appeals a lower court's decision to admit a JDB's evidence.  The appellate court in Slyke is saying the same thing as every other court has said, which is  "Whether business records are sufficiently reliable to satisfy the hearsay exception in Rule 803(6) . . . is for the trial court to determine in the exercise of its sound discretion."  They are simply saying the lower court refused to admit the evidence with sound reasoning and the appellate court found no abuse of discretion in this decision.  Based on the way the appellate court has ruled on admitted JDB evidence, there is no doubt in my mind that had the lower court admitted the records under identical circumstance, the appellate court would have also found the lower court had not abused its discretion and would have not reversed the decision to admit the records.

The short version is had this been a case where a defendant appealed the admission of a JDBs records, it would have the potential to change the landscape of JDB evidence admission.  However, even if Slyke were citable, because it is a plaintiff JDB challenging the trial court's refusal to admit its records, it does practically nothing to undo how trial courts are applying Parker to JDB cases.

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All of what @Harry Seaward says is right.  The decision is brief and narrow and to the extent that it does touch on issues related to 803(6) and Parker it does so only within the larger rubric of the whether or not their was an abuse of discretion by the trial court judge.

What it does show is that there is a case of  "sound discretion" (that made it though the court of appeals and doesn't run afoul of 803(6) and Parker) where these business records were not admitted into evidence.

It gives something on point to say against arguments that hold up only Parker, the AZ Supreme Court, and testimony about reliance and the ordinary course of business.  I doubt very much that this decision will be published and many new cases now already include the affidavits that the trial court here found lacking.

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17 hours ago, CCRP626 said:

if no Chase witness, a Chase affidavit would be needed.

The court didn't rule that an OC affidavit is necessary. 

Here's an AZ ruling that took place after Van Slyke and the court ruled in favor of the JDB. 

https://scholar.google.com/scholar_case?case=13120540267480300200&q="COPPER+STATE+FINANCIAL+MANAGEMENT,+LLC+v.+ESPIRITU"&hl=en&scisbd=2&as_sdt=4,3

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@BV80 a few differences there a defendant may be able to use and one that seems a definite violation based on past CFPB orders-

-JDB affidavit in Espirito swears he's familiar with the original creditor's recordkeeping practices. CFPB has pointed that's not to be done in past orders. 807 (10) of the FDCPA The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.

-In Van Slyke, when the JDB employee was asked whether Midland received the Chase statements at the time of the account’s purchase, she responded that she did not know nor could she state how the account statements were generated—either specifically or based on industry practices. Espirito addresses that: JDB affidavit averred that it is standard in the industry for the financial institution to make the documentation available to the purchaser, and JDB relies on that documentation to be true and accurate. The defendants do not otherwise challenge the trustworthiness or reliability of the documents. Other 803 (6) points addressed as well in JDBs favor.

Both cases were similar amounts, around $14,000.

 

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5 minutes ago, CCRP626 said:

-JDB affidavit in Espirito swears he's familiar with the original creditor's recordkeeping practices. CFPB has pointed that's not to be done in past orders.

I checked the Encore consent order and didn't see that.   Where did I miss it?

 

6 minutes ago, CCRP626 said:

-In Van Slyke, when the JDB employee was asked whether Midland received the Chase statements at the time of the account’s purchase, she responded that she did not know nor could she state how the account statements were generated—either specifically or based on industry practices. Espirito addresses that: JDB affidavit averred that it is standard in the industry for the financial institution to make the documentation available to the purchaser, and JDB relies on that documentation to be true and accurate. The defendants do not otherwise challenge the trustworthiness or reliability of the documents.

You can challenge the trustworthiness and reliability of records, but a mere challenge alone without giving a judge something to sink his teeth into is not going to necessarily result in their exclusion. 

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Just now, BV80 said:

You can challenge the trustworthiness and reliability of records, but a mere challenge alone without giving a judge something to sink his teeth into is not going to necessarily result in their exclusion. 

Right. This came up in a recent FDCPA case where the only proof submitted by the consumer was a CFPB order against the bank for recordkeeping inaccuracies/trustworthiness. The Judge said there wasn't any proof the account was one of those in the CFPB order so with that as the sole basis of the claim, denied.

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4 minutes ago, CCRP626 said:

Right. This came up in a recent FDCPA case where the only proof submitted by the consumer was a CFPB order against the bank for recordkeeping inaccuracies/trustworthiness. The Judge said there wasn't any proof the account was one of those in the CFPB order so with that as the sole basis of the claim, denied.

I think I read that one.  Was that a ruling by an IL federal court?

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11 minutes ago, BV80 said:

I think I read that one.  Was that a ruling by an IL federal court?

Yes, Casso vs. LVNV Funding. Same Judge who handled the recent Portfolio class action:

http://www.creditinfocenter.com/community/topic/327878-pra-and-offers-to-settle-time-barred-debt-to-illinois-and-indiana-consumers/

 

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5 hours ago, Xerxes said:

It gives something on point to say against arguments that hold up only Parker, the AZ Supreme Court, and testimony about reliance and the ordinary course of business.

Agreed, and could very well sway a trial court judge that's sitting on the fence with a JDB's records. 

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On 7/8/2016 at 3:31 AM, Harry Seaward said:

Skiba didn't pursue this.  It was the JDB plaintiff appealing because their records weren't admitted.  And therein lies the problem with citing this case, unpublished or not.  It's the flip side of the same coin when a defendant appeals a lower court's decision to admit a JDB's evidence.  The appellate court in Slyke is saying the same thing as every other court has said, which is  "Whether business records are sufficiently reliable to satisfy the hearsay exception in Rule 803(6) . . . is for the trial court to determine in the exercise of its sound discretion."  They are simply saying the lower court refused to admit the evidence with sound reasoning and the appellate court found no abuse of discretion in this decision.  Based on the way the appellate court has ruled on admitted JDB evidence, there is no doubt in my mind that had the lower court admitted the records under identical circumstance, the appellate court would have also found the lower court had not abused its discretion and would have not reversed the decision to admit the records.

The short version is had this been a case where a defendant appealed the admission of a JDBs records, it would have the potential to change the landscape of JDB evidence admission.  However, even if Slyke were citable, because it is a plaintiff JDB challenging the trial court's refusal to admit its records, it does practically nothing to undo how trial courts are applying Parker to JDB cases.

Great points, Harry.

 While a consumer defendant could point out the differences between the testimony offered Parker and the testimony offered by a JDB affiant, it could be noted that in Parker, the appellate court did NOT rule that testimony from the creator of records or an employee from that creator is required in order for business records to be deemed admissible. 

But, as you have stated, it could serve to sway a judge who is "sitting on the fence".  

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Under Parker:

1.  Merchants were transmitting the sales slip information from use of the OC credit card, to the OC.
2.  Merchants are simply passing purchase information through to the OC. 
3.  Merchants have little custodial duty for these transactions, as all disputes & actions of fraud ultimately fall on the OC.
4.  At no time was the OC out of the loop, in terms of this data collection/transmission.
5.  The witness from the OC was fully deposed, and any foundation issues would have been addressed.

A typical JDB scenario:

1.  The JDB purchases "accounts" from another JDB or an OC, with the express language that there is no warranty of accuracy, or if the accounts are legal/collectible, etc...
2.  The JDB receives an Excel spreadsheet with account information on it.
3.  The JDB begins collections based on this spreadsheet, no account level documentation has yet to enter the JDB's "records".
4.  The JDB files suit against a debtor, typically without the account level documentation.  The account level documentation is sought & provided just prior, or after the lawsuit is filed.
5.   The JDB typically has to purchase the account level documentation from the OC,  they don't, unless they have to. (90% default judgments, courts rarely require it)
6.   The JDB often receives the account level documentation from a 3rd party (convoke systems etc...), which, either the JDB or OC has contracted to store and maintain these records.  Regardless, the OC or 3rd party maintains, stores, and transmits these records at the JDB's request and purchase. 
7.   The JDB receives a handful of account statements, and possibly a generic card agreement for the current year, not necessarily from the date of the last purchase or payment.
8.   The JDB then gets an employee and gives them a title like "litigation specialist" or "Document officer", and their job is to simply parrot the 803(6) rule & sign affidavits.
9.   The JDB employee doesn't prepare their own affidavits, and rarely has the account level documentation on hand to verify.  They simply sign the affidavit and the notary stamps it.
10. The account level documentation is incorporated into the JDB's "records"  in whole, or in part in anticipation, preparation of litigation, or already active litigation.

We (and the Courts) have to ask ourselves:  How can the JDB employee lay foundation for the OC's records, or how can the JDB employee lay foundation for the records supposedly incorporated into their own records.  The convoluted manner in which the already suspect records are kept, maintained, transferred, and the timing thereof, create untrustworthiness, and huge gaps in the custodial incorporation of said records.

Given the fact that these "records" are only incorporated into the JDB's business, under the anticipation or current litigation purposes.  Their regularly conducted activity is litigation.   Moreover, if they relied on them day-to-day, then they would not have to purchase the records, when they file suit against a debtor.

Foundational food for thought...

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Burden of proof in Parker: 'beyond a reasonable doubt'

Burden of proof in JDB lawsuit: 'most likely of all presented scenarios'

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