Saturday, September 10, 2011

Don't skimp on your affidavits if you expect summary judgment

I am just back from a wonderful vacation in the Berkshires of Massachusetts, catching up on recent decisions.  On September 7, 2011 a Florida appeal out of Palm Beach was widely reported because it involved a failed foreclosure. The headlines trumpet the "further complications" for other pending foreclosure cases in Florida.  The various blogs and listserves trumpet this as yet another smack down for lenders and servicers.  *yawn*

This case is an ordinary, plain vanilla, and rudimentary decision about application of the rules of evidence. It has little to say about the validity of mortgages, standing to foreclose, or "robo-signing."  It is simply another admonition to trial lawyers (regardless of the area of concentration or specialty) to adhere to the rules of evidence for the authentication of business records and the data they contain when seeking judgment. Period.

But first, please enjoy the view I had from my relative's boat, last week, and then I'll explain a bit about the court opinion:

Gary Glarum's lender, LaSalle Bank, sued to foreclose on a defaulted mortgage loan. Florida conducts its foreclosures a bit differently than here, in Maryland, and requires a judgment of foreclosure. The lender filed a motion for summary judgment, supported by the affidavit of a "specialist" employed by the lender's loan servicer (a different entity, as is usual). Judgment in favor of the lender for the full amount of the claimed indebtedness was granted on the strength of the facts presented in the "specialist's" affidavit, and Mr. Glarum appealed.  The appellate court reversed, in a reported opinion.

The Florida appellate court held that the affidavit of the "specialist" was bad evidence.  It was hearsay, based on facts contained in a computer database.  Now, ordinarily, a witness can rely on data kept in the ordinary course of business.  But in this case, the data had been migrated from another loan servicer's system, had been entered by others, and was thus not considered the business record of this particular entity employing the witness.  I think the most troubling aspect for the court was the lack of any verification by the succeeding loan servicer.

In prior posting on this site, I've stated the opinion that a court does not sit to cure deficiencies in my evidence. This case underscores this simple point.  An affidavit that simply regurgitates data from a screen shot will not convert hearsay into an admissible business record.  The Florida decision quickly runs through the elements of its evidence rule on business records.  It is similar to Maryland's evidence rule.

The crux of the matter is trial counsel's willingness to push the lender/client to conduct a proper investigation into the calculation of the debt or element of damage, and to then draft a proper affidavit.  In the Florida case, the "specialist" was deposed, giving trial counsel another shot to prepare the witness so that the underlying data could be explained.

This is a simple point, and one that is lost on most lenders and servicers who delegate trial preparation to very low level employees, or worse, to designated corporate witnesses who fly around the country to recite whatever counsel puts in their hands a few hours before trial.  This annoys me, endlessly.  But did I mention that I am just back from a wonderful vacation in the Berkshires?  I thus refuse to be annoyed, and choose, instead, to reflect on last weeks more tranquil moments, as the ice slowly melted in my glass....see you in court!