Bank of NY Mellon v. Kohn , 2018 Ohio 3728 ( 2018 )

[Cite as Bank of NY Mellon v. Kohn, 2018-Ohio-3728.]
IN THE COURT OF APPEALS OF OHIO
SEVENTH APPELLATE DISTRICT
MAHONING COUNTY
THE BANK OF NEW YORK MELLON
FKA THE BANK OF NEW YORK, as Trustee For the Certificate Holders Of CWABS,
INC., Asset-Backed Certificates Series 2006-25,
Plaintiff-Appellee,
v.
WILLIAM D. KOHN AKA WILLIAM KOHN ET AL.,
Defendants-Appellants.
OPINION AND JUDGMENT ENTRY
Case No. 17 MA 0164.
Civil Appeal from the
Court of Common Pleas of Mahoning County, Ohio
Case No. 2011 CV 2931.
BEFORE:
Gene Donofrio, Cheryl L. Waite, Kathleen Bartlett, Judges.
JUDGMENT:
Affirmed.
Atty. Laura Infante and Ashley Mueller, Clunk, Hoose Co., LPA, 4500 Courthouse Blvd.,
Suite 400, Stow, Ohio 44424, for Plaintiff-Appellee, and
Atty. Bruce Broyles, 2670 North Columbus Street, Suite L, Lancaster, Ohio 43130, for
Defendants-Appellants.
Dated:
September 10, 2018
–2–
Donofrio, J.
{¶1} Defendants-appellants, William and Joan Kohn, appeal from a Mahoning
County Common Pleas Court judgment granting summary judgment in favor of plaintiff-
appellee, Bank of America New York Mellon.
{¶2} Appellee filed a complaint in foreclosure against appellants on September
1, 2011, asserting appellants were in default of their mortgage and that appellee was
the assignee of the note and mortgage. The trial court stayed the matter for
approximately five years pending the resolution of bankruptcy proceedings.
{¶3} Appellee filed a motion for summary judgment on February 6, 2017. To its
motion, appellee attached the affidavit of Nicholas Raab. Raab is an employee of
Specialized Loan Servicing, LLC (SLS), which is appellee’s loan servicing agent. Raab
averred that SLS maintains the records for appellants’ loan in its capacity as appellee’s
agent. Raab averred that as part of his job with SLS, he was familiar with SLS’s
business records including the records dealing with appellants’ loan. Raab then
detailed the terms of appellants’ loan and default.
{¶4} Appellants filed a memo in opposition and a motion to strike Raab’s
affidavit. They asserted that Raab’s affidavit constituted inadmissible hearsay.
{¶5} The trial court denied appellants’ motion to strike Raab’s affidavit and
granted appellee’s motion for summary judgment.
{¶6} Appellants filed a timely notice of appeal on November 16, 2017. They
now raise a single assignment of error.
{¶7} Appellants’ sole assignment of error states:
THE TRIAL COURT ERRED IN RELYING UPON THE AFFIDAVIT
OF NICHOLAS RAAB WHEN HE WAS TESTIFYING FROM THE
RECORDS OF PRIOR SERVICERS AND THOSE RECORDS OF PRIOR
SERVICERS WERE CREATED IN CIRCUMSTANCES INDICATING
THAT THE RECORDS WERE UNTRUSTWORTHY.
Case No. 17 MA 0164
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{¶8} In reviewing a trial court's decision on a summary judgment motion,
appellate courts apply a de novo standard of review. Cole v. Am. Industries &
Resources Corp., 128 Ohio App.3d 546, 552, 715 N.E.2d 1179 (7th Dist.1998). Thus,
we shall apply the same test as the trial court in determining whether summary
judgment was proper. Civ.R. 56(C) provides that the trial court shall render summary
judgment if no genuine issue of material fact exists and when construing the evidence
most strongly in favor of the nonmoving party, reasonable minds can only conclude that
the moving party is entitled to judgment as a matter of law. State ex rel. Parsons v.
Fleming, 68 Ohio St.3d 509, 511, 628 N.E.2d 1377 (1994). A “material fact” depends
on the substantive law of the claim being litigated. Hoyt, Inc. v. Gordon & Assoc., Inc.,
104 Ohio App.3d 598, 603, 662 N.E.2d 1088 (8th Dist.1995), citing Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 247-248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
{¶9} Civ.R. 56(E) provides in relevant part: “Supporting and opposing affidavits
shall be made on personal knowledge, shall set forth such facts as would be admissible
in evidence, and shall show affirmatively that the affiant is competent to testify to the
matters stated in the affidavit.”
{¶10} Appellants contend that Raab’s affidavit constitutes hearsay and does not
meet the Evid.R. 803(6) business records exception to hearsay.
{¶11} Hearsay is an out-of-court statement offered in evidence to prove the truth
of the matter asserted. Evid.R. 801(C). Hearsay is generally inadmissible, except
under certain circumstances. Evid.R. 802. One of those circumstances is the business
records exception. It provides that certain business records are not excluded by the
hearsay rule if they meet certain conditions:
A memorandum, report, record, or data compilation, in any form, of acts,
events, or conditions, made at or near the time by, or from information
transmitted by, a person with knowledge, if kept in the course of a
regularly conducted business activity, and if it was the regular practice of
that business activity to make the memorandum, report, record, or data
compilation, all as shown by the testimony of the custodian or other
qualified witness or as provided by Rule 901(B)(10), unless the source of
information or the method or circumstances of preparation indicate lack of
Case No. 17 MA 0164
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trustworthiness. The term “business” as used in this paragraph includes
business, institution, association, profession, occupation, and calling of
every kind, whether or not conducted for profit.
Evid.R. 803(6).
{¶12} Whether a loan servicer can testify as to documents created by prior
servicers is the subject of a large amount of litigation in Ohio. Both appellants and
appellee cite numerous cases to support their positions. Appellants rely on an Eighth
District case that dealt with the same plaintiff and same loan servicer as in this case.
The Eighth District held in Bank of New York Mellon v. Roulston, 8th Dist. No. 104908,
2017-Ohio-8400, ¶ 18 that:
Wallace works for SLS, which is the company that services BONY's
loans, and Wallace's affidavit demonstrates that she is qualified to
authenticate documents that SLS and BONY created and maintained,
even if she was not the person who prepared these documents. Nothing in
the record, nor in Wallace's affidavit, shows that she is qualified to
authenticate records created by Bank of America, or any company other
than SLS and BONY, for that matter.
{¶13} The court determined that saying the knowledge was “based upon my
review of those records relating to loan and from my own personal knowledge of how
they are kept and maintained” was insufficient to show a working knowledge as to the
creation and maintenance of the records of prior servicers. Id. at ¶¶ 14, 17, 18.
{¶14} But the Eighth District narrowed its holding in a later case. In Deutsche
Bank Trust Co. of Americas v. Jones, 8th Dist. No. 105778, 2018-Ohio-587, the court
noted that:
Loan servicing officer Rosenthal averred that he has personal knowledge
of the facts and matters set forth in the affidavit offered in support of
Deutsche Bank's motion for summary judgment. He averred that in the
regular performance of his job functions, he reviews business records
related to the servicing of the mortgage loan at issue, and that these
Case No. 17 MA 0164
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records are maintained in the regular course of business. Rosenthal
authenticated the note, mortgage, and assignments, attesting that they are
true and accurate. He also authenticated attached payment records
detailing all payments and demonstrating that the Joneses' last payment
was applied to the May 2012 installment of the mortgage. Rosenthal
averred that the Joneses were advised in August 2012 that the loan was
in default, accelerating the unpaid balance of $142,475. This sufficiently
demonstrated his personal knowledge of the relevant business records,
including the note, mortgage, mortgage assignments, and the payment
history for the loan.
Id. at ¶ 20. This holding is in accordance with this court’s decisions in similar cases.
{¶15} For instance, this court addressed a similar situation in Bank of New York
Mellon for Certificate Holders CWABS, Inc. Asset-Backed Certificates, Series 2005-12
v. Broyles, 7th Dist. No. 16-MA-0093, 2018-Ohio-357. As to the loan servicer’s
testimony, we observed:
Visser also testified that he is familiar with all of the documents contained
in appellants' loan and mortgage. (Tr. 17–18). Visser also testified that the
information contained in appellants' loan and mortgage documents went
through a verification process once Green Tree/Ditech received it and any
errors detected in the documents are sent back to be rectified. (Tr. 45–46).
Visser also indicated that this process happens any time Ditech “receive[s]
a loan from a prior servicer * * *.” (Tr. 45).
{¶16} Id. at ¶ 13. We determined that these documents, accompanied by
Visser's testimony, were sufficient to satisfy Evid.R. 803(6).
{¶17} And in U.S. Bank, Natl. Assn. v. Wigle, 7th Dist. No. 13-MA-32, 2015-
Ohio-2324, we found the affidavit in question to be admissible:
The Drakeford affidavit states that the attached documents were business
records maintained by Bank of America as servicer for U.S. Bank.
Drakeford stated he was familiar and had personal knowledge of the
Case No. 17 MA 0164
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documents attached and they were made at or near the time of the
occurrence of the matters. Further, he authenticated the records as true
and correct copies. Again Jennifer makes several unsubstantiated
arguments implicating the legality of the affidavit, but she provided no
caselaw or Civ.R. 56(C) evidence to support her contentions.
Id. at ¶ 32.
{¶18} According to the Raab affidavit, there was an almost identical process to
what this court found to be acceptable in Broyles and Wigle. Raab’s affidavit stated that
he was familiar with the documents in the file and that they had gone through a
verification procedure. Raab also attached to the affidavit the payment records, the
notice of acceleration, and a modification agreement. The documents and the amount
of detail in Raab’s affidavit are sufficient to establish personal knowledge.
{¶19} Next, appellants attempt to challenge the trustworthiness of the
documents Raab introduced because Evid.R. 803(6) states that when “the source of the
information or the method or circumstances of preparation indicate a lack of
trustworthiness” the business records exception does not apply. In order to show
untrustworthiness, appellants point towards a consent decree which was entered
against appellee in another case. United States of America vs. Bank of America Corp.,
U.S. District Court for the District of Columbia, case No.: 1:12-cv-00361-RMC. The
consent decree, among other things, states that appellee was not sufficient in their
record keeping.
{¶20} This court addressed this very question and held that a consent decree
does not establish untrustworthiness, and that there has to be a showing of
untrustworthiness with the specific exhibits. Broyles, 7th Dist. No. 16-MA-0093 at ¶ 16.
Appellants offer no evidence that their specific documents are deficient in any way or
contrary to the truth. Therefore, the consent decree holds no weight.
{¶21} Appellants argue next that SLS does not rely upon the documents in the
course of their business. Raab’s affidavit shows otherwise:
It is the regular business practice of SLS to integrate prior servicers’
records into SLS’s business records, and to rely upon the accuracy of
Case No. 17 MA 0164
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those boarded records in providing its loan servicing functions. These prior
servicer records are integrated and relied upon by SLS as part of SLS’s
business records.
{¶22} (Aff. ¶ 3). Appellants argue that this is not sufficient. But there is even
more information as to their reliance on the documents in SLS’s welcoming letter to
appellants. In the welcoming letter, SLS specifically stated that they collect financial
information “for our everyday business purposes – Such as to process your
transactions, maintain your account(s), respond to court orders and legal investigations,
or report to credit bureaus.” (Aff. Ex. G).
{¶23} Case law supports allowing Raab’s affidavit and testimony. The consent
decree does not indicate untrustworthiness and SLS uses the documents in the course
of its everyday business. Thus, the trial court did not err in relying on Raab’s affidavit in
granting summary judgment.
{¶24} Accordingly, appellants’ sole assignment of error is without merit and is
overruled.
{¶25} For the reasons stated above, the trial court’s judgment is hereby affirmed.
Waite, J., concurs
Bartlett, J., concurs
Case No. 17 MA 0164
[Cite as Bank of NY Mellon v. Kohn, 2018-Ohio-3728.]
For the reasons stated in the Opinion rendered herein, the sole assignment of
error is overruled and it is the final judgment and order of this Court that the judgment of
the Court of Common Pleas of Mahoning County, Ohio, is affirmed. Costs to be taxed
against the Appellant.
A certified copy of this opinion and judgment entry shall constitute the mandate in
this case pursuant to Rule 27 of the Rules of Appellate Procedure. It is ordered that a
certified copy be sent by the clerk to the trial court to carry this judgment into execution.
NOTICE TO COUNSEL
This document constitutes a final judgment entry.