National Collegiate Student Loan Trust v. Gimple ( 2022 )

672
Argued and submitted December 1, 2020, affirmed April 6, 2022
NATIONAL COLLEGIATE
STUDENT LOAN TRUST 2006-2,
a Delaware Statutory Trust,
Plaintiff-Appellant,
v.
Courtney N. GIMPLE,
aka Courtney N. Butler,
Defendant-Respondent.
Clackamas County Circuit Court
18CV03847; A169887
508 P3d 561
Plaintiff appeals a general judgment that was entered after the trial court
granted defendant’s cross-motion for summary judgment on plaintiff’s claims
for breach of contract and quantum meruit. The court granted defendant’s cross-
motion because, after excluding two exhibits, it concluded that plaintiff had not
established a right to enforce the loan at issue. Plaintiff contends that the trial
court erred in excluding that evidence, because it was admissible under the busi-
ness records exception in OEC 803(6). Defendant responds that the trial court did
not err, because the testimony provided by plaintiff to authenticate the exhibits
was not a “person with knowledge” of the record-making practices of the business
that created the record, as required by OEC 803(6). Held: The Court of Appeals,
relying on the recent Supreme Court decision in Arrowood Indemnity Co. v.
Fasching, 369 Or 214, 224, 503 P3d 1233 (2022), concluded that the testimony
provided by plaintiff was not from a person with knowledge of the record-making
practice. Accordingly, the trial court did not err in excluding the evidence, and,
in turn, did not err in granting defendant’s cross-motion for summary judgment.
Affirmed.
Douglas V. Van Dyk, Judge.
James Schultz, Florida, argued the cause for appellant.
On the briefs were Ashley N. Wydro, Dayle M. Van Hoose,
and Sessions, Fishman, Nathan & Israel LLC, and Julie A.
Smith and Cosgrave Vergeer Kester LLP.
Nadia H. Dahab argued the cause for respondent. Also
on the brief were Innovation Law Lab and Christopher J.
Mertens and Mertens Law LLC.
Cite as 318 Or App 672 (2022) 673
Before Mooney, Presiding Judge, and Egan, Judge, and
Pagán, Judge.*
EGAN, J.
Affirmed.
______________
* Egan, J., vice DeVore, S. J.; Pagán, J., vice DeHoog, J. pro tempore.
674 National Collegiate Student Loan Trust v. Gimple
EGAN, J.
Plaintiff, the National Collegiate Student Loan
Trust 2006-2, appeals a general judgment in favor of defen-
dant after the trial court granted defendant’s cross-motion
for summary judgment on plaintiff’s claims for breach of
contract and quantum meruit. Plaintiff assigns four errors.
We affirm without discussion plaintiff’s third assignment.
We write only to address plaintiff’s second assignment, in
which plaintiff contends that the trial court erred in exclud-
ing two pieces of evidence that plaintiff asserts should have
been admitted as business records under OEC 803(6). We
conclude that the trial court did not err as to plaintiff’s sec-
ond assignment. Given that resolution, plaintiff’s first and
fourth assignments also fail. Accordingly, we affirm.
Generally, when reviewing the trial court’s ruling
on cross-motions for summary judgment, “we examine
whether there are any disputed issues of material fact and
whether either party was entitled to judgment as a matter of
law.” Providence Health Plan v. Allen, 299 Or App 128, 135,
449 P3d 504 (2019), rev den, 366 Or 257 (2020). Here, that
determination turns on the admissibility of certain hearsay
statements. “We review the court’s legal conclusions regard-
ing the admissibility of a hearsay statement under an excep-
tion to the hearsay rule for legal error.” Morgan v. Valley
Property and Casualty Ins. Co., 289 Or App 454, 455, 410
P3d 327 (2017), adh’d to on recons, 290 Or App 595 (2018).
In 2006, defendant applied for and obtained a loan
from JPMorgan Chase Bank, N.A. Bank One (Bank One).
In November 2007, defendant filed a Chapter 7 bankruptcy
petition in the United States Bankruptcy Court. Defendant’s
debt was discharged in March 2018. The parties contest
whether the loan at issue here was discharged as a part of
defendant’s bankruptcy.
Approximately 10 years after defendant filed for
bankruptcy—in February 2018—plaintiff filed a complaint
against defendant in Clackamas County Circuit Court for
breach of contract and quantum meruit. Plaintiff claimed
that, pursuant to “an assignment agreement,” it owned
defendant’s Bank One loan and that defendant had failed
to make monthly payments under the terms of the loan
Cite as 318 Or App 672 (2022) 675
agreement. Defendant responded to plaintiff’s complaint
with several affirmative defenses. As relevant here, defen-
dant claimed that plaintiff had “failed to allege facts” suffi-
cient “to show [that plaintiff was the] party in interest enti-
tled to enforce the contract.”
Subsequently, after the parties sought admissions
and both parties responded to those admissions, plaintiff
filed a motion for summary judgment arguing that there was
no genuine issue as to any material facts, because defendant
“admitted to borrowing, without timely repaying, the funds
in question.” However, in making that motion, plaintiff
acknowledged that defendant had not “admitted * * * that
Plaintiff is the correct party to whom she owes repayment
of the loan.” In support of its motion, plaintiff submitted an
affidavit of Jacqueline Jefferis, who explained in her affida-
vit that she was an employee of Transworld Systems Inc.,
the Subservicer for plaintiff regarding the educational loan
at issue. There were several exhibits attached to the affi-
davit. To establish that plaintiff was the party that owned
defendant’s loan, plaintiff attached Exhibit B—the “loan
request/credit agreement”—and Exhibit C—the “deposit
and sale agreement.”1
Exhibit B stated that the original lender was Bank
One and that defendant “promise[d] to pay to [the lend-
er’s] order, upon the terms and conditions of [the] credit
agreement.”
Exhibit C put forth the terms of the sale between
Bank One and plaintiff. As a part of that exhibit, plaintiff
attached a document titled “Pool Supplement.” That supple-
ment, which described the transaction between Bank One
and plaintiff stated:
“In consideration of the Minimum Purchase Price,
[Bank One] hereby transfers, sells, sets over and assigns
to The National Collegiate Funding, LLC * * * each stu-
dent loan set forth on the attached [transferred Bank One
loans]. * * * [The National Collegiate Funding, LLC] in turn
will sell the Transferred Bank One loans to The National
Collegiate Student Loan Trust 2006-4.”
1
For purposes of readability, and because it does not affect our analysis, we
omit unnecessary capitalization.
676 National Collegiate Student Loan Trust v. Gimple
Defendant then filed a cross-motion for summary
judgment pursuant to ORCP 47 B. Defendant maintained
that plaintiff failed to allege facts sufficient to prove that it
was the party in interest entitled to enforce the contract. In
doing so, defendant asserted that the documents that might
support that plaintiff is the party in interest, specifically
Exhibit B and Exhibit C, were “inadmissible hearsay not
qualifying as business records” because they were “without
competent foundation.” The court held a hearing on those
motions.
Plaintiff, in response to defendant’s evidentiary
argument, asserted that Exhibit B and Exhibit C were busi-
ness records, admissible as exceptions to the rule against
hearsay under OEC 803(6). To establish those exhibits as
business records, plaintiff attached a personal affidavit from
an employee—Jacqueline Jefferis—of Transworld Systems
Incorporated (TSI). In the affidavit, Jefferis stated that TSI
is the subservicer for plaintiff’s loan. As the subservicer, TSI
was the “designated custodian of records for Defendant’s
education loan. Additionally, TSI maintains the dedicated
system of record for electronic transactions pertaining to the
Defendant’s educational loan, including, but not necessarily
limited to, payments, credits, interest accrual and any other
transactions that could impact the Defendant’s educational
loan.” Jefferis’s affidavit additionally stated:
“5. I am familiar with the process by which TSI receives
prior account records, including origination records from
the time the loan was requested and/or disbursed to the
Defendant and/or the student’s school on their behalf.
“6. As custodian of records[,] it is TSI’s regularly-
conducted business practice to incorporate prior loan
records and/or documentation into TSI’s business records.
“7. I am further competent and authorized to testify
regarding this educational loan through personal knowl-
edge of the business records maintained by TSI as custo-
dian of records, including electronic data provided to TSI
related to the Defendant’s educational loan, and the busi-
ness records attached to this Affidavit.
“8. This lawsuit concerns an unpaid loan owed by
Defendant * * * to Plaintiff. Specifically, Defendant entered
Cite as 318 Or App 672 (2022) 677
into an educational loan agreement at Defendant’s special
instance and request. A loan was extended for Defendant
to use pursuant to the terms of the loan agreements.
Defendant has failed, refused, and/or neglected to pay the
balance pursuant to the agreed terms.
“9. Educational loan records are created, compiled
and recorded as part of regularly conducted business activ-
ity at or near the time of the event and from information
transmitted from a person with personal knowledge of said
event and a business duty to report it, or from information
transmitted by a person with personal knowledge of the
accounts or events described within the business record.
Such records are created, kept, maintained, and relied
upon in the course of ordinary and regularly conducted
business activity.
“10. I have reviewed the educational loan records * * *.
No payment has been received on this account. * * *. Attached
hereto and incorporated as Exhibit ‘B’ is a true copy of the
underlying Credit Agreement/Promissory Note and Note
Disclosure Statement. In the event the Defendant(s) faxed
the executed Credit Agreement/Promissory Note, per its
terms they agreed their facsimile/electronic signature is
deemed to be an original.
“11. The Defendant opened an educational loan with
[Bank One] * * *. The Defendant’s educational loan was
then transferred, sold and assigned to National Collegiate
Funding LLC, who in turn transferred, sold and assigned
the Defendant’s educational loan to Plaintiff, * * * for
valuable consideration, in the course of the securitization
process. The Defendant’s educational loan was in good
standing and not in default * * *. Attached hereto and
incorporated as Exhibit “C” is a true and correct copy of
the Agreement(s) described herein. Said Exhibit contains
a redacted copy of the Schedule of transferred loans refer-
enced within the Pool Supplement.”
After the court considered the parties’ arguments
about the affidavit and exhibits, the trial court admitted the
affidavit of Jefferis, but rejected plaintiff’s argument that
Exhibit B and Exhibit C were admissible. The court reasoned
that Jefferis was able to “attest to what she’s able to attest
to.” In essence, the court reasoned that, because Jefferis
worked for TSI “to perform the duties of subservices,” she
678 National Collegiate Student Loan Trust v. Gimple
has knowledge of how TSI “maintains the dedicated system
of record for [its] electronic transactions.” Specifically, the
court explained, she can attest to her “firsthand knowledge”
of “[p]ayments, credits, [and] interest accruals.” The court
stated that what Jefferis did not have firsthand knowledge
of was whether the “loan was extended for defendant to
use pursuant to the terms of the loan agreements.” Thus,
her affidavit could not be used to “introduce the contract,
because she has no firsthand knowledge of the contract.” In
sum, the court concluded that Jefferis could not “authenti-
cate” the exhibits, because TSI was not a “party or signor” to
the original contract, nor did TSI have firsthand knowledge
of the contract.
With those exhibits excluded, the trial court con-
cluded that plaintiff did not provide sufficient facts to sup-
port its claim that plaintiff owned the loan. Accordingly, the
court granted defendant’s cross-motion for summary judg-
ment and denied plaintiff’s motion for summary judgment.
This timely appeal followed.
On appeal, plaintiff argues that the trial court
erred in concluding that Exhibit B and Exhibit C were not
admissible as business records under OEC 803(6). Defen-
dant responds that the court properly concluded that
Exhibit B and Exhibit C were inadmissible hearsay, because
Jefferis could not authenticate the records as required by
OEC 803(6).
Hearsay is an out-of-court statement offered to
prove the truth of the matter asserted and is generally
inadmissible unless it qualifies under a hearsay exception
or is excluded from the category of hearsay. See OEC 801(3)
(defining hearsay); OEC 802 (stating that hearsay is not
admissible except as provided in OEC 801 to 806); OEC 803
and OEC 804 (setting forth exceptions to the hearsay rule);
OEC 801(4) (setting forth exclusions to category of hearsay).
The party seeking the admission of hearsay bears the bur-
den of proving that the statements satisfy the requirements
of a hearsay exception. Arrowood Indemnity Co. v. Fasching,
369 Or 214, 224, 503 P3d 1233 (2022) (Arrowood).
As relevant in this case, the “business records
exception” to the hearsay rule allows admission of:
Cite as 318 Or App 672 (2022) 679
“A memorandum, report, record, or data compilation, in
any form, of acts, events, conditions, opinions, or diagnoses,
made at or near the time by, or from information transmit-
ted 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 mem-
orandum, report, record, or data compilation, all as shown
by the testimony of the custodian or other qualified witness,
unless the source of information or the method of circum-
stances of preparation indicate lack of trustworthiness.”
OEC 803(6). Such records are admissible, despite being
hearsay, because of their “ ‘unusual reliability,’ that has been
ascribed to the ‘duty of the record keeper to make an accurate
record,’ the ‘actual reliance of the business’ on the records,
and ‘the regular entries and systematic checking which
produce habits of precision.’ ” Arrowood, 369 Or at 224-25
(quoting Legislative Commentary to OEC 803(6), reprinted
in Laird C. Kirkpatrick, Oregon Evidence § 803.06[2], 820
(7th ed 2020)).
Recently, the Supreme Court in Arrowood discussed
the requirements that must be met for a business record to
be admissible under OEC 803(6). In Arrowood, the plaintiff
relied on an affidavit by one of its employees to create the
necessary foundation to establish records of a loan made to
the defendant as business records. That affidavit averred
that
“[a]ll documents attached hereto are either produced and
maintained directly by Plaintiff or are documents from
[Discover’s] proof of claim which are adopted by the Plaintiff
and relied upon in the ordinary course of Plaintiff[’s] busi-
ness. These records were made at or near the time of the
occurrence or transaction, recorded by a person with knowl-
edge, and as the Plaintiff’s qualified custodian of records I
affirm that the attachments are true and correct copies of
documents maintained by and relied upon by Plaintiff in
the ordinary course of its regular business functions.”
369 Or at 218. The Supreme Court noted that the employee
“did not aver that she had knowledge of the record-making or
record-keeping practices” of any of the companies that pro-
vided the defendant with the loan. Id. Further, “nothing in
the affidavit addresse[d] whether the documents were made
680 National Collegiate Student Loan Trust v. Gimple
and kept in the regular course of [the loaning companies’]
business or whether it was the regular practice of either [of
the loaning companies] to make and keep such documents.”
Id.
The Supreme Court, interpreting OEC 803(6) in
compliance with the analytical framework of PGE v. Bureau
of Labor and Industries, 317 Or 606, 610, 859 P2d 1143(1993), and State v. Gaines, 346 Or 160, 171-73, 206 P3d 1042
(2009), concluded that a party seeking admission of records
as a business record under OEC 803(6) must meet the fol-
lowing requirements:
“The record must (1) describe ‘acts, events, conditions, opin-
ions, or diagnoses,’ (2) have been ‘made at or near the time’
of those acts, events, conditions, opinions, or diagnoses,
(3) have been made ‘by, or from information transmitted
by, a person with knowledge,’ (4) have been ‘kept in the
course of a regularly conducted business activity,’ and
(5) have been made because it ‘was the regular practice of
that business activity to make’ such records.”
Arrowood, 369 Or at 223-24 (quoting OEC 803(6)). To use the
exception as stated in OEC 803(6), the party seeking admis-
sion must “prove that the record it is proffering has each
of those characteristics, and the party must do so through
‘the testimony of the custodian or other qualified witness.’ ”
Id. at 224 (quoting OEC 803(6)). Additionally, “even if the
party does that, the record will not qualify for the excep-
tion if ‘the source of information or the method [or] circum-
stances of preparation indicate lack of trustworthiness.’ ” Id.
(quoting OEC 803(6)).
With the context of Arrowood in mind, we address
the parties’ arguments. Defendant argues that Jefferis’s
affidavit “does not * * * attest to any contemporaneous busi-
ness duty to record and report to TSI by any actual party”
to the transactions documented in the exhibits. Thus, defen-
dant asserts that no “person with knowledge” had attested
to whether Exhibit B and Exhibit C were “recorded and
reported to TSI in the regular course of business.” Plaintiff
does not dispute that Jefferis lacks firsthand knowledge of
Bank One’s record-making process. Rather, plaintiff’s argu-
ment focuses on the role that Jefferis played as the custodian
Cite as 318 Or App 672 (2022) 681
of records for TSI, the subservicer for plaintiff. As we under-
stand the parties’ arguments, the sole issue we must address
is whether Jefferis was “a person with knowledge” to estab-
lish a foundation to admit Exhibit B and Exhibit C under
OEC 803(6).
For a record to be admissible under OEC 803(6), a
person with knowledge “regarding the record-making prac-
tices of the business that created the record” must supply
testimony that “necessarily must include information about
the practices of the business that initially made and kept
the record.” Arrowood, 369 Or at 221, 241. As the commen-
tary to OEC 803(6) explains, the proponent of evidence is
not required
“ ‘to produce, or even identify, the specific individual upon
whose firsthand knowledge the record is based. A sufficient
foundation is laid if the proponent shows that it was the
regular practice of the activity to base such a record upon
a transmission from a person with knowledge. Thus, in the
case of contents of a shipment of goods, it is sufficient to
produce a report from the company’s computer program-
mer or a person having knowledge of the particular record
system.’ ”
Id. (quoting Legislative Commentary to OEC 803(6), reprinted
in Laird C. Kirkpatrick, Oregon Evidence § 803.06[2] at 822).
Here, as previously noted, plaintiff does not contest
the trial court’s conclusion that Jefferis had no personal
knowledge of Bank One’s record-making process. Rather,
plaintiff argues that Jefferis’s role as the custodian of
records for TSI is sufficient to establish that Exhibits B and C
are admissible as business records under OEC 803(6).
Plaintiff’s argument is foreclosed by the rule set forth
by Arrowood, which requires that the testimony “include
information about the practices of the business that initially
made and kept the record.” 369 Or at 241. Jefferis’s affida-
vit provided evidence that Jefferis had personal knowledge
of how “TSI receives prior account records, including origi-
nation records from the time the loan was requested and/
or disbursed to the Defendant and/or the student’s school
on their behalf” and that Jefferis had “personal knowledge
of the business records maintained by TSI as custodian of
682 National Collegiate Student Loan Trust v. Gimple
records, including electronic data provided to TSI related to
the Defendant’s educational loan, and the business records
attached to this Affidavit.” Nothing in those statements, or
any other statements in the record, purport that Jefferis had
knowledge of the record-making process of Bank One. As
Arrowood emphasizes, “[t]he requirement that the record be
made by, or from information transmitted by, a person with
knowledge, ensures that the record is based on first-hand
observations.” 369 Or at 224. Given the insufficient record to
show personal knowledge, plaintiff failed to demonstrate the
requirements of the business record exception. Accordingly,
the trial court did not err in excluding the evidence.
In plaintiff’s first and fourth assignments of error,
plaintiff argues, respectively, that the trial court erred in
granting defendant’s cross-motion for summary judgment
on the basis that defendant’s loan had been discharged in
bankruptcy, 11 USC § 523(a)(8)(A), and in denying plain-
tiff’s motion for summary judgment on the ground that
plaintiff failed to establish ownership and entitlement to
enforce defendant’s loan. Both of those arguments rely on
plaintiff establishing a right to enforce defendant’s loan. See
Key West Retaining Systems, Inc. v. Holm II, Inc., 185 Or App
182, 188, 59 P3d 1280 (2002), rev den, 335 Or 402 (2003)
(concluding that whether a contract exists is a question of
law); see also Enes v. Pomeroy, 104 Or 169, 176-77, 206 P 860(1922) (concluding that a party lacks standing to enforce a
contract in which it has no established interest). Given our
resolution of plaintiff’s second assignment, the trial court
did not err in determining that plaintiff had failed to prove
a loan agreement between plaintiff and defendant, so we
reject plaintiff’s first and fourth assignments. The trial
court properly granted summary judgment to defendant.
Affirmed.