Indiana Court of Appeals Mortgage Foreclosure Opinion, II of III: Liability – Evidence Teachings
Indiana Supreme Court Suspends All Jury Trials Until 3/1/21

Indiana Court of Appeals Mortgage Foreclosure Opinion, III of III: Damages Evidence After Lenders Merge

Lesson.  Even if the original lender no longer exists due to a merger, as long as the proper foundation is laid, the necessary liability and damages evidence should be admissible based upon the business records exception to the hearsay rule.

Case cite.  Hussain v. Salin Bank, 143 N.E.3d 322 (Ind. Ct. App. 2020)

Legal issue.  Whether a 41-page damages exhibit offered into evidence by the plaintiff lender was inadmissible hearsay.  More specifically, the question was whether the lender’s witness “lacked the knowledge to lay an adequate foundation for the admissibility of the documents under the business records exception to the hearsay rule.”  The borrowers challenged the testimony of the operative based upon the fact that their original lender had merged into the plaintiff lender.

Vital facts.  Please click here for my first post and here for my second post about Hussain, which was a straightforward mortgage foreclosure action. 

Procedural history.  Following an evidentiary hearing on damages, the trial court granted judgment for the lender for about 243k.  The borrowers appealed.   

Key rules.

Similar to last week, today’s piece addresses Indiana Evidence Rule 803(6)’s business records exception to the hearsay rule.  Last week dealt with a summary judgment affidavit and attached exhibits.  Today’s post concerns the testimony of a live witness and the so-called evidentiary “foundation” to get certain exhibits into evidence.  In Indiana:

[u]nder the business records exception, “a person who has a familiarity with the records may provide a proper business records exception foundation even if he or she is not the entrant or his or her official supervisor.”  To obtain admission under the business records exception, the proponent of an exhibit need only call an individual who has a functional understanding of the business's record-keeping process.  This could be the entrant, the entrant's supervisor, co-workers, a records custodian or any other such person.

Holding.  The Indiana Court of Appeals affirmed the trial court’s damages judgment.

Policy/rationale.  The borrowers contended that the lender’s damages witness was not qualified to lay the foundation for admission of the damages exhibits because he worked for the plaintiff lender’s predecessor and not directly for the plaintiff.  Among other points, the borrowers relied upon the Holmes decision related to credit card debt, about which I wrote on 1/13/19.  The Court distinguished Hussain from Holmes, however: 

Unlike the circumstances in [Holmes] where the [witness was] attempting to lay a foundation for the records of another business that had sold its accounts, [the witness here] was testifying on behalf of a company for whom he worked that had merged with another.  As [the original lender] no longer exists, [the successor lender] is vested with all the rights, duties and records that previously were [the merged lender’s] under Indiana corporate law. 

Just as importantly, the evidence in Hussain established that the subject loan had been integrated into the plaintiff lender’s software system, about which the witness had personal knowledge.  Among other things, the witness testified that, with respect to the debt, “he personally [ran] the numbers based upon the payments that were made on [the borrowers’] loan and determined that the amount due was consistent with what was reflected in the bank's documents.”  The Court ultimately agreed with the trial court that the witness laid the proper foundation for the damages exhibits under the business records exception to the hearsay rule.

Related posts. 


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