Miss Jones LLC v. Stiles

MISS JONES LLC, Plaintiff, v. KEITH STILES, MOY RLTY, LLC,VAN HASSELT AUTO SERVICE, Defendants.

No. 17-cv-1450 (NSR)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

August 13, 2020

OPINION & ORDER

NELSON S. ROMÁN, United States District Judge

Plaintiff Miss Jones LLC ("Plaintiff" or "Miss Jones") brings this action against Defendant Keith Stiles ("Defendant" or "Stiles"), as well as Defendants Moy Rlty, LLC and Van Hasselt Auto Service (the "Non-Appearing Defendants"), to foreclose on a mortgage. Presently before the Court is (1) Plaintiff's (a) motion for summary judgment against Defendant Stiles pursuant to Rule 56 of the Federal Rules of Civil Procedure, (b) motion for a default judgment against the Non-Appearing Defendants pursuant to Rule 55(b) of the Federal Rules of Civil Procedure, and (c) motion to appoint a referee pursuant to New York Real Property and Proceedings Law ("NYRPAPL") § 1321 or, in the alternative, to appoint a special master pursuant to Rule 53 of the Federal Rules of Civil Procedure (ECF No. 124); and (2) Defendant Stiles's cross motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure (ECF No. 116).

For the following reasons, the parties' motions are DENIED.

BACKGROUND

I. Admissibility of the Acceleration Letters Offered by Defendant

Defendant has submitted, in connection with his cross motion, copies of three letters that he avers were sent to him in 2009. (See Aff. of Keith J. Stiles ("Stiles Aff."), ECF No. 121, Ex. C.) To establish the letters' admissibility under the business records exception to the hearsay rule, Defendant proffers a "Certification" from Pamela Glass ("Glass"), the Records Custodian for PNC Bank, N.A. (the "Glass Certification"). (Id. Ex. D.) Plaintiff challenges the admissibility of these letters on the basis that they constitute inadmissible hearsay. (Pl. Mem. of Law in Supp. of Mot. for Summ. J. ("Pl. Mot."), ECF No. 130, at 6; Pl.'s Mem. of Law in Opp. to Def.'s Cross Mot. for Summ. J. ("Pl. Opp."), ECF No. 106, at 5.) Plaintiff specifically maintains that Glass is not a "qualified witness" who can authenticate the documents as business records because, inter alia, (1) she does not state she was employed by the bank in 2009 when the letters were allegedly created; (2) she does not state that she has personal knowledge of the creation of the letters in 2009, or if the bank's business procedures were followed in the creation of the letters; (3) she does not allege that the letters were mailed to Defendant; and (4) she does not allege that the bank had a procedure in place to record whether letters were sent to mortgage borrowers. (Pl. Opp. 6-7.) The Court concludes that Defendant has established the admissibility of the letters.¹

Hearsay is an out of court statement offered as evidence to prove the truth of the matter asserted and is typically inadmissible. Fed. R. Evid. 801(c), 802. However, this rule is subject to certain exceptions. Fed. R. Evid. 803, 804. One such exception is the business-records exception under Federal Rule of Evidence 803(6). Under the business-records exception, "a record of an act, event, condition, opinion, or diagnosis" will be admitted as hearsay if all of the following criteria are established: (1) "the record was made at or near the time by . . . someone with knowledge"; (2) "the record was kept in the course of a regularly conducted activity of a business"; (3) "making the record was a regular practice of that activity"; and (4) "all these conditions are shown by thetestimony of the custodian or another qualified witness." Fed. R. Evid. 803(6)(A)-(D). "The Second Circuit takes 'a generous view' of the business-records exception, construing it to favor admission over exclusion of evidence with 'any probative value at all,' and viewing the 'principal precondition' to admission of documents under Rule 803(6) to be that the records have 'sufficient indicia of trustworthiness to be considered reliable.'" Mason Tenders Dist. Council v. Aurash Const. Corp., No. 04 Civ. 2427(RCC), 05 Civ. 1891(RCC), 2005 WL 2875333, at *2 (S.D.N.Y. Oct. 31, 2005) (quoting United States v. Freidin, 849 F.2d 716, 722 (2d Cir. 1988)).

A person who testifies to the admissibility of business records "need only show that he [or she] is 'familiar with the record-keeping system of the business in question and [knows] how the records were created.'" Kasper Glob. Collection & Brokers, Inc. v. Global Cabinets & Furniture Mfrs., Inc., 952 F. Supp. 2d 542, 572-73 (S.D.N.Y. 2013) (internal citation omitted). "'The custodian need not have personal knowledge of the actual creation of the document. . . . Nor is there any requirement under Rule 803(6) that the records be prepared by the party who has custody of the documents and seeks to introduce them into evidence.'" Phoenix Assocs. III v. Stone, 60 F.3d 95, 101 (2d Cir. 1995) (internal citation omitted). Rather, all that is required is that the custodian testify "that the document was 'kept in the course of regularly conducted business activity and also that it was the regular practice of that business activity to make the [record].'" Ion Audio, LLC v. Bed, Bath & Beyond, Inc., No. 15-CV-8292 (KMW), 2019 WL 1494398, at *5 (S.D.N.Y. Apr. 2, 2019) (quoting United States v. Komasa, 767 F.3d 151, 156 (2d Cir. 2014)); see also Parker v. Reda, 327 F.3d 211, 214-15 (2d Cir. 2003) ("[B]usiness records may be admitted notwithstanding the unavailability of the record's author, so long as a 'custodian or other qualified witness' testifies that the document was 'kept in the course of a regularly conducted businessactivity and also that it was the regular practice of that business activity to make the [record].'" (quoting United States v. Williams, 205 F.3d 23, 34 (2d Cir. 2000)). When offering business records on a motion for summary judgment, "the offering party should present an affidavit 'from a document custodian' that 'explain[s] whether [the records] were kept in the ordinary course of business[.]'"² Koon Chun Hing Kee Soy & Sauce Factory, Ltd. v. Star Mark Mgmt., Inc., No. 04-CV-2293 (JFB)(SMG), 2007 WL 74304, at *3 (E.D.N.Y. Jan. 8, 2007) (quoting Tradax Energy, Inc. v. Cedar Petrochem., Inc., 317 F. Supp. 2d 373, 378-79 (S.D.N.Y. 2004)).

Here, in the Glass Certification, Glass declares, "under penalties of perjury,"³ that she is the "Records Custodian" for PNC Bank, that her responsibilities as "Records Custodian" include "identifying and authenticating the records of PNC Bank" and National City Bank, which had been "incorporated into the records of PNC Bank," and that she is "familiar with the manner in which these records are kept." (Stiles Aff. Ex. D ¶¶ 1-2.) Glass goes on to affirm that (1) the letters offered by Defendant are "true copies of documents kept and maintained by PNC Bank," (2) these letters were "made at or near the date which appear[] on [them][] by the individual who sent the letter," (3) these letters were "made and kept in the course of the regularly conducted activity of PNC Bank, NA and its predecessor, National City Bank," and (4) it was "the regular practice of PNC Bank, NA and National City Bank to make such records and to place copies of letters in thefile when they were sent." (Id. ¶¶ 3-6.) The Glass Certification therefore establishes all the requisite elements under Rule 803(6), thereby supporting the three acceleration letters' admissibility under the business-records exception.

To be sure, Plaintiff is correct that Glass does not state she was employed by National City Bank in 2009 or that she has personal knowledge of the letters' creation. But, as articulated in the previously cited legal authorities, no such attestation is necessary to lay the foundation for admitting business records into evidence. Nor is it relevant, for purposes of establishing the letters' admissibility as business records, whether or not Glass alleged that the letters were mailed to Defendant or that National City Bank had a procedure in place to record when items were returned undeliverable, and Plaintiff cites to no authority to the contrary.⁴ At bottom, Defendant has met the "perfunctory" requirement of establishing the admissibility of the acceleration letters. The Court will consider them in adjudicating the parties' respective motions.

II. Factual Background

The following facts are drawn from the parties' Rule 56.1 submissions and the record. (Pl.'s 56.1 Statement ("Pl. 56.1"), ECF No. 125; Def.'s 56.1 Statement ("Def. 56.1"), ECF No. 131.) They are undisputed unless otherwise noted.

A. Defendant's Mortgage and Subsequent Default

i. Execution of the Mortgage and Subsequent Assignments

Stiles was the owner of the property located at 136 Elmwood Road, South Salem, New York (the "Mortgage Premises"). (Def. 56.1 ¶ 2; Pl. 56.1 ¶ 4; Decl. of Michael Zimmerman inSupp. of Pl. Mot. for Summ. J. ("Zimmerman Decl."), ECF No. 127, Ex. B at 1.) On July 7, 2007, Stiles executed an Equity Reserve Agreement (the "Note") and a Credit Line Mortgage secured by the Mortgage Premises (the "Mortgage") to obtain a line of credit up to the amount of $350,000 from National City Bank ("NCB"). (Pl. 56.1 ¶¶ 3-4; Def. 56.1 ¶ 3; Zimmerman Decl. Exs. A & B.) On October 25, 2007, the Note and Mortgage were duly recorded in the office of the Westchester County Clerk. (Def. 56.1 ¶ 6, Zimmerman Decl. Ex. A at 7; id. Ex. B at 7.)

Eventually, on September 3, 2010, the Note and Mortgage were duly assigned and transferred from PNC Bank, N.A. ("PNC"), successor by merger to NCB, to DBI/ASG Mortgage Holdings LLC. (Aff. Brandon Ramos in Supp. of Mot. for Summ. J. ("Ramos Aff."), ECF No. 129, ¶ 10; Zimmerman Decl. Ex. B at 6-7.) DBI/ASG, in turn, assigned and transferred the Note and Mortgage by written assignment to Miss Jones on September 16, 2016. (Ramos Aff. ¶ 11; Zimmerman Decl. Ex. B at 8-9.) Six days later, on September 22, 2016, the Note was physically transferred to Miss Jones, and, to date, Miss...