Bayview Loan Servicing LLC v. Wicker

206 A.3d 474

BAYVIEW LOAN SERVICING LLC, Appellee

v.James Bernard WICKER and Beryl G. Wicker, Appellants

No. 3 WAP 2018

Supreme Court of Pennsylvania.

Argued: October 24, 2018

Decided: March 28, 2019

Rachel Anne Labush, Esq., Community Legal Services, for Philadelphia Legal Assistance, Amicus Curiae, Community Legal Services, Amicus Curiae, Neighborhood Legal Services Association, Amicus Curiae, The Community Justice Project, Amicus Curiae, The Pennsylvania Legal Aid Network, Inc., Amicus Curiae, The National Consumer Law Center, Amicus Curiae, Community Legal Services, et al, Amicus Curiae.

Joanne Louise Werdel, Esq., Philadelphia Legal Assistance, for Philadelphia Legal Assistance, Amicus Curiae, Community Legal Services, Amicus Curiae, Neighborhood Legal Services Association, Amicus Curiae, The Community Justice Project, Amicus Curiae, The Pennsylvania Legal Aid Network, Inc., Amicus Curiae, The National Consumer Law Center, Amicus Curiae, Community Legal Services, et al, Amicus Curiae.

Daniel Andrew Pallen, Esq., Law Offices of Daniel A. Pallen, P.L.L.C., for Wicker, Beryl G., Appellant, Wicker, James Bernard, Appellant.

Edward Win-Teh Chang, Esq., BlankRome LLP, for Bayview Loan Servicing LLC, Appellee.

Harry Burnett Reese, Esq., Powers Kirn & Associates, LLC, for Bayview Loan Servicing LLC, Appellee.

Laura Elizabeth Vendzules, Esq., Blank Rome LLP, for Bayview Loan Servicing LLC, Appellee.

SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

OPINION

JUSTICE BAER

We granted review to consider the application of Pennsylvania's business records exception to the rule against hearsay, pursuant to Pennsylvania Rule of Evidence 803(6) and the Uniform Business Records as Evidence Act, 42 Pa.C.S. § 6108. The parties before the Court agree that current Pennsylvania precedent allows a records custodian to authenticate documents even if the witness did not personally record the specific information in the documents. The parties disagree, however, as to whether a records custodian can lay a foundation for documents incorporated into the files of the custodian's employer when the information in the documents was recorded by a third party, a process which has been allowed under the similar but not identical Federal Rule of Evidence 803(6), pursuant to the so-called adopted business records doctrine. For the reasons that follow, we affirm the Superior Court in concluding that the trial court did not abuse its discretion in allowing the testimony of the records custodian and admitting the documents under the facts of this case.

James and Beryl Wicker signed a mortgage agreement for their residence in Punxsutawney, Pennsylvania in favor of Countrywide Bank, FSB (Countrywide) in February 2008, which secured a promissory note executed by James Wicker in consideration for a loan with a principal amount of $ 119,000. The mortgage agreement indicated that Mortgage Electronic Registration Systems, Inc. (MERS) would act as nominee for Countrywide and its successors and assigns and was designated as the mortgagee. In an assignment of mortgage recorded in November 2011, MERS, as nominee for Countrywide, assigned the mortgage to Bank of America.

In May 2012, Bank of America filed a mortgage foreclosure action against the Wickers alleging that the Wickers defaulted on their mortgage as of September 1, 2010. It further averred that it had provided the Wickers with the statutorily required foreclosure notice pursuant to 41 P.S. § 403 on September 21, 2011. Subsequently, Bank of America filed a motion for summary judgment, which the trial court granted in part and denied in part. In so doing, the trial court narrowed the issues for trial to determining whether Bank of America had provided proof of (1) the required foreclosure notices; (2) the date of default; and (3) the amount of indebtedness.

On July 14, 2015, counsel for Bank of America filed a praecipe to substitute Bayview Loan Servicing, LLC (Bayview) as plaintiff in the mortgage foreclosure action following an assignment of the mortgage from Bank of America to Bayview recorded on June 15, 2015. A non-jury trial occurred on August 13, 2015, at which Bayview presented only one witness, Terrance Schonleber, a litigation manager for Bayview, and the Wickers did not present any witnesses. Bayview intended for Schonleber to authenticate its business records, which would provide information relating to the Wickers' mortgage and promissory note; their alleged default and indebtedness; and the foreclosure process. The Wickers' counsel objected at the beginning of Schonleber's testimony and renewed the objection in regard to the individual exhibits. He argued that the testimony would constitute hearsay because Schonleber did not have the requisite personal knowledge of the records Bayview sought to admit, given that the records originated from Bank of America, rather than his employer, Bayview.

In response to the initial objection, Bayview's counsel questioned Schonleber to provide a foundation for his testimony. Schonleber explained that he had worked for Bayview as a litigation manager for approximately two years. In this role, he had access to Bayview's "master servicing records" of delinquent borrowers and was familiar with the Wickers' file. Notes of Testimony (N.T.), August 13, 2015, at 8.

He additionally described the interaction between Bayview and Bank of America regarding the records and explained the "loan boarding process," which occurred when a loan was purchased by Bayview from another servicer. Id. at 11. He asserted that the boarding process involves "[fourteen] project coordinators, data mapping, imaging, [and] loan review," which all worked to "basically safeguard and check all figures that come from the prior servicer into ours." Id.

He stated that the Wickers' loan was "less complex" than some because of Bayview's longstanding business relationship with Bank of America and the fact that both companies used the same mortgage platform, MSP, which he asserted was an industry standard. Id. at 11. The platform, according to the testimony, is used for making records "at or near the time [of] each occurrence of each event" in order to create "an accurate depiction of every transaction and every occurrence for each loan." Id. at 13. He additionally stated that Bayview and Bank of America "work in conjunction, hand-in-hand, for each loan," in order to "make sure that all the safeguards are in place in order that there are no mistakes." Id. at 13-14. He further established that this process is part of "regularly conducted activity at Bayview." Id. at 14.

Following this proffer, the Wickers' counsel reiterated his objection, arguing that Schonleber's testimony constituted double hearsay because he did not have personal knowledge of the records as required by Pa.R.E. 602¹ given that he did not create the documents and that the records did not originate from Bayview but instead from Bank of America. Id. at 14-15. While counsel tacitly acknowledged that Schonleber could have overcome the first level of hearsay under the business records exception of Pa.R.E. 803(6) in regard to the documents originating from Bayview, id. at 17, he asserted that Schonleber could not authenticate the records to the extent they contained information derived from Bank of America because he had never worked for Bank of America.²

After a brief recess to consider Rule 602 in conjunction with Rule 803(6), as well as the Uniform Business Records as Evidence Act, 42 Pa.C.S. § 6108(b) (the Act),³ the trial court concluded that requirements of the Rules and the Act were met in this case. Initially, it found that the witness indicated that information was recorded "at the time or near the time of each occurrence or event," kept in the ordinary course of its business, and constituted a regular part of their activity. N.T. at 20-21. Finally, the trial court provided the following analysis under Rule 803(6) and the Act:

In total, I'm looking at all of the evidence, but my thought, looking at where we are here, Bayview with its servicing platform, it works in conjunction with Bank of America and regularly gets these records, they regularly rely on them, they regularly use them, and, as such, relying on their business and using that in the regular course of business, I think they are admissible through this witness because he has personal knowledge that this is how the records come in and this is how they are used. And there's also been no testimony, and there's no evidence that there's motive or opportunity to prepare an inaccurate record.

N.T. at 22-23. Accordingly, the court overruled the Wickers' objections to Schonleber's testimony and permitted the admission of the questioned records into evidence. The court observed that counsel could still dispute the weight to be accorded the documents. N.T. at 22. Schonleber then proceeded to testify in regard to the various documents regarding the foreclosure notices, the default date, and the amount of indebtedness, and was subjected to cross-examination on all relevant points by the Wickers' counsel.

On September 4, 2015, the trial court issued a brief order and opinion concluding that the documents authenticated by Schonleber established that (1) the appropriate foreclosure notice had been sent to the Wickers' last known address, which was also the mortgaged property; (2) the default date was September 1, 2010; and (3) that the amount due as of the date of trial was $ 155,413.54.⁴

On September 14, 2015, the Wickers filed a motion for reconsideration in which they reasserted their challenge to Schonleber's testimony. The trial court denied the motion. After the court entered judgment against the Wickers, the Wickers filed a notice of appeal to the Superior Court, raising what the trial court counted as thirty-two separate claims of error in a thirty-five paragraph Statement of Issues Complained of on Appeal pursuant to Pa.R.A.P. 1925(b). The trial court issued a one paragraph...