Bank’s Business Records and Supporting Affidavit Satisfy Evidence Rules – IL 2nd Dist.

Because they’re so integral to commercial litigation, business records and the myriad evidentiary concerns intertwined with them, are a perennial favorite topic of this blog.

In earlier posts (here and here, I’ve featured US Bank, NA v. Avdic, 2014 IL App (1st) 121759 and Bank of America v. Land, 2013 IL App (5th) 120283, two cases that examine the foundation and authenticity requirements for admitting business records in evidence and probe the interplay between Illinois Supreme Court Rule 236 and Illinois Evidence Rule 803(6).

We now can add Bayview Loan Servicing, LLC v. Szpara, 2015 IL App (2d) 140331 to the Illinois business records cannon.  Harmonized, Avdic, Land and Bayview form a trilogy of key business records cases that are useful (if not required) reading for any commercial litigator.

Bayview’s facts parallel those of so many other business records cases: a mortgage foreclosing plaintiff tries to offer business records into evidence at trial or as support for a summary judgment motion and the defendant opposes the records’ admission.

Bayview’s bank plaintiff tried to get damages in evidence via a prove-up affidavit signed by a bank Vice President who didn’t actually create the records in the first place.  The defendant moved to strike the affidavit as lacking foundation.

Affirming summary judgment for the bank, the First District provides a cogent summary of the governing standards for summary judgment affidavits that are employed to get business records into evidence.

First, the court affirmed dismissal of the defendant’s fraud in the inducement affirmative defense – premised on the claim that a mortgage broker allied with the plaintiff made false statements concerning the defendant’s creditworthiness and value of the underlying property.

Fraud in the inducement is a species of common law fraud.  A fraud plaintiff in Illinois must show (1) a false statement of material fact, (2) knowledge or belief that the statement is false, (3) intent to induce the plaintiff to act or refrain from acting on the statement, (4) the plaintiff reasonably relied on the false statement, and (5) damage to the plaintiff resulting from the reliance.  A colorable fraud claim must be specific with the plaintiff establishing the who, what, and when of the challenged statement.

The Court agreed with the trial court that the defendant’s fraud in the inducement defense was too vague and lacked the heightened specificity required under the law.  The defendant failed to sufficiently plead the misrepresentation and didn’t allege facts showing when the misstatement was made.  As a result, the defense was properly stricken on the bank’s motion. (¶¶ 34-35)

The court then found that the plaintiff’s business records – appended to a bank employee’s affidavit in support of the bank’s summary judgment motion –  were properly admitted into evidence and affirmed summary judgment for the bank.

Illinois Supreme Court Rule 236 and Illinois Evidence Rule 803(6)(“Records of Regularly Conducted Activity”) provide that a business record can be admitted into evidence as an exception to the hearsay rule if (1) the record was made in the regular course of business and (2) was made at or near the time of the events documented in the records.

In  the context of a prove-up affidavit based on business records, the affiant doesn’t have to be the one who personally prepared the record; it’s enough that the affiant has basic familiarity with the records and the business processes used by the party relying on them.

Under Evidence Rule 803(6), the lack of personal knowledge of someone signing an affidavit does not affect the admissibility of a given document, although it could affect the (evidentiary) weight given to that document.   (¶42).

The bank’s Vice President in Bayview testified in her prove-up affidavit that she had access to the business records relating to defendant’s loan, that she reviewed the records, had personal knowledge of how the plaintiff kept and prepared them and that the plaintiff’s regular practice was to keep loan records like the ones attached to the affidavit.

The court rejected the defendant’s argument that the affidavit was deficient since the bank agent wasn’t who created the attached loan records.  Citing to Avdic and Land, the Court found that, in the aggregate, the bank agent affidavit testimony sufficiently met the foundation and authenticity requirements to get the business records in evidence. (¶¶ 41-46)

Afterwords:

This case contains salutary discussion and rulings for plaintiff creditors as it streamlines the process of getting business records into evidence at the summary judgment stage and later, at trial.

Bayview reaffirms the key holdings from Avdic, Land and business records cases like them that an agent who had nothing to do with preparing underlying business records can still attest to the records’ validity and authenticity provided she can vouch for their validity and is familiar with the mode of the records’ creation.

Process Server’s Return of Service Qualifies As Public Records and ‘Regularly Conducted Business Activity’ Hearsay Exceptions – Florida Appeals Court

My experience with the hearsay evidence rules usually involves trying to get a business record like an invoice or spreadsheet into evidence at trial or on summary judgment.  The business records hearsay exception is found at Illinois Evidence Rule 803(6) and mirrors the Federal counterpart.  “Exception” in the context of hearsay evidence means a document is hearsay (an out-of-court statement used to prove the truth of the matter asserted) and would normally be excluded but still gets in evidence because the document (or other piece of evidence) has an element of reliability that satisfies the court that the document is what it appears to be.

Occasionally though, I’ve found that a working knowledge of some of the more obscure (to me at least) hearsay exceptions can in some cases lead to a victory or at least resurrect a rapidly flagging case.

Davidian v. JP Morgan Chase Bank, NA, 2015 WL 5827124 (Fla. 4th DCA 2015) (http://www.4dca.org/opinions/Oct.%202015/10-7-15/4D14-2431.op.pdf) a recent Florida appeals court decision, examines some hearsay exceptions as they apply to a process server’s sworn return of service and the persons served are challenging service.

Chase Bank filed a foreclosure suit against defendants/appellants (a husband and wife) and filed returns of service signed by Chase’s process server who certified that he served both appellants at the same time on the same date. The appellants moved to quash service of process on the grounds they were never served. The trial court denied the motion leading to this appeal.

The appeals court affirmed.  It held the appellants failed to show by clear and convincing proof that the returns of service were deficient.

In Florida, the burden of proving proper service of process is on the suing party and the return of service is evidence of whether service was validly made.  A return of service is presumed to be valid and the party contesting service must overcome the presumption by clear and convincing evidence.  A return of service is technically hearsay since it’s an out-of-court statement used to show its truth – that service of summons was in fact made on a party.

Two hearsay rule exceptions recognized not only by Florida courts but various state and Federal courts include the public records and the “regularly conducted business activity” exceptions.  Fla. Stat. s. 90.801, 803(6), (8).

Here, the court found the service return admissible under both exceptions.  The return was a public record – presumably because it was filed as part of the case record.  The return also qualified as evidence of regularly conducted business activity since the process server stated in his affidavit that was his regular practice to prepare such an affidavit detailing the date, time and manner of service.

The appeals court also rejected appellants’ argument that the service returns were defeated by their counter-affidavits in which they denied receiving the summons and complaint.  When faced with a service return and a defendant claiming he/she wasn’t served, the court makes a credibility determination after an evidentiary hearing.   Factual determinations are typically not disturbed on appeal.  The court found that the trial court was in a better position to judge the credibility of the witnesses and upheld the motion to quash’s denial.

Take-aways:

This case presents application of hearsay exceptions in an unorthodox factual setting.  The court expanded the scope of the public records and regularly-conducted-business-activity exceptions to encompass a process server’s return of service.  This case and others  like it validate process servers’ sworn returns and make it easier for plaintiffs to clear service of process hurdles where a defendant claims to have never been served.

 

 

 

Facebook Posts Not Hearsay Where Offered To Show How Ex-Wife Presented Relationship To Others – Illinois Case Note

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Reversing a family law judge’s decision to terminate ex-spousal maintenance, the Second District appeals court in In re Marriage of Miller, 2015 IL App(2d) 140530 delves into the foundation requirements for getting Facebook pages into evidence and again highlights the crucial role social media plays in litigation in this digitally saturated culture.

The trial court granted the ex-husband (“Husband”) motion to terminate maintenance payments to his ex-wife (“Wife”) based on her multiple Facebook posts that she was in a relationship and (presumably) living with another man.  Illinois divorce law posits that maintenance payments must cease when the recipient remarries or cohabitates with another on a continuing basis.

Since the Facebook posts revealed the Wife frequently trumpeting her new relationship, the court found that the policies behind maintenance payments would be compromised by allowing the Wife to continue receiving payments from Husband.

The Wife appealed, arguing that the trial court shouldn’t have allowed her Facebook posts into evidence.

Held: Reversed (but on other grounds).  Wife’s social media posts were properly authenticated, not hearsay and any prejudice to her didn’t substantially outweigh the posts’ probative value.

Rules/reasoning:

– To enter a document into evidence at trial or on summary judgment, the offering party must lay a foundation for it;

– The party offering the document into evidence – including a document to impeach (contradict) a witness on the stand – must authenticate the document through the testimony of a witness who has personal knowledge sufficient to satisfy the court that the document is what the proponent claim it is;

– To lay a foundation for an out-of-court statement (including a document), the party attempting to get the statement into evidence must direct the witness to the time, place, circumstances and substance of the statement;

– Hearsay is a statement, other than made by the declarant while testifying at trial or hearing, offered in evidence to prove the truth of the matter asserted;

– When the making of statement is the significant fact, hearsay isn’t involved (ex: the mere fact that a conversation took place isn’t hearsay);

Here, the court found that the Facebook posts weren’t offered for their truth.  Instead, they were offered to illustrate the way the Wife was portraying her current relationship to others.  The court deemed the posts relevant to the issue of how “public” or “out in the open” the Wife was about the relationship. 

And since the Husband didn’t offer the posts for the truth of their contents (that Wife was in fact living with someone and so disqualified from further maintenance payments) but instead to show the court the manner in which the Wife presented the relationship to others, the court properly allowed the posts into evidence.

The Second District also agreed with the trial court that the posts didn’t unfairly prejudice the Wife.  Indeed, the court characterized the posts as “bland”, “cumulative” and less effective than the parties’ live testimony.

(¶¶ 33-38)

The Wife still won though as the appeals court reversed the trial court’s decision to terminate Husband’s maintenance obligations.  The court found that more evidence was needed on the specifics of the Wife’s existing relationship including whether it was continuing and conjugal enough to constitute a “de facto marriage” (as opposed to a “dating” relationship only) and thus exclude the Wife from further maintenance payments from Husband.

Take-aways:

Hearsay doesn’t apply where out-of-court statement has independent legal significance;

Facebook posts authored by a party to lawsuit will likely get into evidence unless their prejudice outweighs their probative value;

Where social media posts are authored by third parties, it injects another layer of hearsay into the evidence equation and makes it harder to get the posts admitted at trial.