Deutsche Bank Trust Co. Ams. v. Clifford

246 A.3d 597

DEUTSCHE BANK TRUST COMPANY AMERICAS, AS TRUSTEE FOR RESIDENTIAL ACCREDIT LOANS, INC., MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES, SERIES 2007-QS9

v.Stephen L. CLIFFORD

Docket: Pen-20-188

Supreme Judicial Court of Maine.

Submitted On Briefs: January 20, 2021

Decided: February 25, 2021

Patrick E. Hunt, Esq., Patrick E. Hunt, P.A., Island Falls, for appellant Stephen L. Clifford

Brett L. Messinger, Esq., and Elizabeth M. Lacombe, Esq., Portland, for appellee Deutsche Bank Trust Company Americas

Panel: GORMAN, JABAR, HUMPHREY, and HORTON, JJ.

JABAR, J.

[¶1] Stephen Clifford appeals from the District Court's (Bangor, Larson, J .) entry of judgment in favor of Deutsche Bank on Deutsche Bank's foreclosure complaint, contending that the court abused its discretion by admitting several documents under the business records exception to the rule against hearsay. See M.R. Evid. 803(6). Clifford also contends the court erred in finding that Deutsche Bank satisfied the elements of proof to support a judgment for foreclosure. We disagree and affirm the judgment.

I. BACKGROUND

[¶2] In September 2016, Deutsche Bank Trust Company Americas (the Bank), acting as trustee,¹ filed a complaint for foreclosure against Clifford concerning real property that Clifford owned in Brewer. A bench trial was held in the District Court (Larson, J .) on July 16, 2018, at which one witness testified—Sally Torres, a senior loan analyst for Ocwen Loan Servicing, LLC. Several exhibits offered by the Bank were admitted de bene , including the note, the mortgage, the assignments of the mortgage, the demand letter, and documents showing the amount due. At the conclusion of the trial, the court took the matter under advisement pending further briefing by the parties. The parties submitted written closing arguments.

[¶3] The Bank also filed two post-trial motions to allow the presentation of additional evidence. The one relevant to this appeal sought permission to provide evidence that the Bank had given notice of the foreclosure to the Maine Bureau of Consumer Credit Protection (the Bureau), if the court concluded that such notice was a required element of the Bank's foreclosure claim. The Bank's Exhibit I, a copy of the receipt from the Bureau, was attached to the motion. Clifford advised the court that he did not intend to respond to the motion.

[¶4] In December 2018, the court issued an order deferring a ruling on the Bank's motions, stating that "there are two foreclosure cases currently on appeal to the Law Court that could potentially provide guidance to the trial court regarding the very same notice and evidentiary issues that are [in] this case." Four months later, the court issued an order finding that the Bank's motion seeking to admit evidence of notice to the Bureau was moot.²

[¶5] On May 1, 2019, the court entered a foreclosure judgment in favor of the Bank. Although the court did not explicitly admit the exhibits that it had admitted de bene at the trial, it did so implicitly. Clifford moved for additional findings of fact and conclusions of law; the motion was denied. Clifford appealed to this Court. We issued a memorandum of decision on May 12, 2020, vacating the order denying Clifford's motion for further findings and remanding with instructions for the court to issue express factual findings regarding each of the exhibits admitted de bene . See Deutsche Bank Tr. Co. Ams. v. Clifford , Mem-20-38 (May 12, 2020).

[¶6] On June 26, 2020, following remand, the court issued an order that contained express factual findings as to why the court found each exhibit admitted de bene as ultimately admissible under M.R. Evid. 803(6).³ The court, on remand, found that Torres was a qualified witness who provided the foundational evidence to make the exhibits admissible as business records pursuant to Rule 803(6). The court then reinstated its order of foreclosure entered on May 1, 2019. Clifford timely appeals. See M.R. App. P. 2B(c)(1).

II. DISCUSSION

A. Business Records

[¶7] Clifford contends that the court erred in admitting several exhibits under the business records exception to the hearsay rule, including the mortgage deed (Exhibit B), the affidavit of debt (Exhibit E), and the assignments of the mortgage (Exhibit C). Clifford argues that the testimony of Torres did not establish a sufficient foundation for the admission of the exhibits. See M.R. Evid. 803(6).

[¶8] "[W]e review a trial court's foundational findings to support admissibility for clear error and its ultimate determination of admissibility for an abuse of discretion." State v. Abdi , 2015 ME 23, ¶ 16, 112 A.3d 360 ; see also Midland Funding LLC v. Walton , 2017 ME 24, ¶ 18, 155 A.3d 864.

Rule 803(6) provides,

A record of an act, event, condition, opinion, or diagnosis [is admissible hearsay] if:

(A) The record was made at or near the time by—or from information transmitted by—someone with knowledge;

(B) The record was kept in the course of a regularly conducted activity of a business, organization, occupation, or calling, whether or not for profit;

(C) Making the record was a regular practice of that activity;

(D) All these conditions are shown by the testimony of the custodian or another qualified witness, or by a certification that complies with Rule 902(11), Rule 902(12) or with a statute permitting certification; and

(E) The opponent does not show that the source of information or the method or circumstances of preparation indicate a lack of trustworthiness.

M.R. Evid. 803(6). In Bank of New York Mellon v. Shone , we held that

[a] record that one business has received from another is admissible under Rule 803(6) without testimony about the practices of the business that created the record, provided, first, that the proponent of the evidence establishes that the receiving business has integrated the record into its own records, has verified or otherwise established the accuracy of the contents of the record, and has relied on the record in the conduct of its operations, and, second, that the opponent of admission has not shown that the record is nonetheless not sufficiently trustworthy to be admitted.

2020 ME 122, ¶ 1, 239 A.3d 671. Because our decision represented a realignment of our precedents, we gave additional guidance concerning the proper application of the Rule:

The traditional method of admitting business records in evidence pursuant to Rule 803(6) is through the testimony of a witness with personal knowledge of the practices of the business or other entity that created the record. The integrated records method is a different method that applies when the record has, in effect, become a business record of a business other than the business that created the record. ... Thus, the integrated records approach eliminates the need for testimony about the practices of the entity that created the record and shifts the focus to the record's status within the receiving entity.

Id . ¶ 8.

[¶9] Here, the trial court specifically found that Torres's testimony supplied the foundation required to satisfy Rule 803(6).

[¶10] Ocwen has been the servicer of the Clifford loan since February 2013, having purchased the loan in bankruptcy from Homecomings, the prior owner and servicer of the loan. Torres worked for Homecomings from 2004 to 2013, and when Ocwen purchased a portfolio of loans (including Clifford's) in bankruptcy from Homecomings, Torres was involved in that purchase and started working for Ocwen immediately after. Clifford concedes that Torres was "qualified to testify to business records kept by Ocwen" under the "traditional method" described in Shone but argues that Torres lacked the necessary familiarity with how Homecomings generated its records.

[¶11] On remand, the court found that from the day the loan was extended and through trial, Torres had worked for the two companies in charge of servicing Clifford's loan. Torres testified to her familiarity—gained from nine years of employment with Homecomings in a variety of positions—with how Homecomings generated, stored, and maintained such records. Torres testified that it was a regular practice of Homecomings to keep documents such as these. Torres also testified that Clifford's loan and all records related to it came over to Ocwen when Ocwen purchased Homecomings’ entire record system.

[¶12] Torres's testimony satisfied both the traditional rule and the integrated records rule outlined in Shone .⁴ Torres worked for and understood the regular business practices of both Homecomings and Ocwen. There was sufficient testimony about Torres's personal knowledge of the practices of both businesses to establish the existence of, and admit, the mortgage deed (Exhibit B),⁵ the three assignments of the mortgage (Exhibit C),⁶ and the affidavit of debt (Exhibit E). The court did not abuse its discretion by admitting these documents under the business records exception. M.R. Evid. 803(6).

B. Required Elements

[¶13] In Bank of America, N.A. v. Greenleaf , we set out "the eight elements of proof to support a judgment of foreclosure." 2014 ME 89, ¶ 18, 96 A.3d 700. We review the trial court's factual findings underlying a judgment of foreclosure for clear error. Deutsche Bank Nat'l Tr. Co. v. Wilk , 2013 ME 79, ¶ 11, 76 A.3d 363.

1. Promissory Note

[¶14] At trial, the Bank presented the court with what it said was the original promissory note. Clifford, who did not testify, maintained through his attorney that the note was a photocopy, although he did not dispute signing the original, wherever it was. The Bank separately offered Exhibit A, a copy of the note. Clifford contends that the Bank failed to prove that it was the owner of the underlying promissory note because Clifford argues the note was a copy, not the original.

[¶15] The Bank presented the court with the physical note, and Clifford challenged it with nothing more than his attorney's personal observations. The trial court then performed its role as the fact-finder and determined...