In Bank of America, N.A., v. Delgado, et al., 3D13-910 (Fla. 3d DCA May 6, 2015) the Third District Court of Appeal offered some relief to banks and loan servicers still reeling from the effects of Hunter v. Aurora Loan Servs., LLC, 137 So. 3d 570 (Fla. 1st DCA 2014.) review denied, 157 So. 3d 1040 (Fla. 2014). In Hunter, the First District Court of Appeal cast doubt on whether the employees of a successor servicer can authenticate the business records of a prior servicer under the business records exception to the hearsay rule. The opinion has made waves at the trial court level as servicers have increasingly struggled with evidentiary issues where the loan file contains documents from numerous prior servicers which are required evidence to secure a judgment.
In response to the holding in Hunter, many servicers now seek to utilize witnesses with work experience at both the current and the prior servicer to ensure the witness has requisite knowledge to authenticate both business’s records. However, in Delgado, the defendant responded to this tactic by arguing that because the witness no longer worked for the prior servicer, the witness lacked the requisite competence to authenticate the prior servicer’s business records, and succeeded in persuading the trial court to exclude a payment history. On appeal however, the Third District Court of Appeal reversed.
The Third District Court of Appeal held that the business records exception “does not contain a requirement that the foundational witness be ‘in the employ of the business to which it relates at the time of its making, so long as he understands the system.’” (citing 34 Am. Jur. Proof of Facts 2d 509 (1983)). Therefore, since the lender’s witness had the knowledge necessary to testify as to all four elements of the business records exception, despite the fact that the witness no longer worked at the prior servicer, the Third DCA held that the witness established the necessary foundation for admitting a prior servicer payment history into evidence.
The Delgado opinion, when taken together with the opinion of the Fourth District Court of Appeal in Bank of New York v. Calloway, 157 So. 3d 1064 (Fla. Dist. Ct. App. 2015), reh’g denied (Mar. 3, 2015), create something of a playbook for loan servicers attempting to deal with evidentiary issues relating to prior servicer records. First, the lender can attempt to authenticate the prior servicer’s documents, which were incorporated into the new servicers business records in the ordinary course of business, as the new servicer’s “singular record” in the manner described in greater detail in the Callaway opinion. Second, and alternatively, the Delgado opinion demonstrates that the new servicer can search its roles for former employees of the old servicer, and if those employees have the requisite knowledge to testify that the prior servicer’s record meets all four elements of the business records exception, the new servicer can authenticate the old servicer’s records through former employee testimony. Third and finally, wherever possible, prior servicers may be able to secure the assistance of the prior servicer who can supply a certification or a live witness to authenticate the prior servicer’s records. The use of multiple witnesses of course taxes the resources of lenders and loan servicers which are already stretched thin to supply personnel for the many calendar calls statewide in which they have pending matters. The combination of Calloway and Delgado offer two possible solutions to limit the need for multiple witnesses and should be used to assist the trial preparation of counsel for lenders and loan servicers in the future.
