Portfolio Recovery Assoc v. MacDonald

IN THE SUPREME COURT OF THE STATE OF IDAHO
Docket No. 43346
PORTFOLIO RECOVERY ASSOCIATES, )
LLC., )
) Boise, January 2017 Term
Plaintiff-Respondent, )
) 2017 Opinion No. 57
v. )
) Filed: June 1, 2017
LLOYD MACDONALD, )
) Stephen W. Kenyon, Clerk
Defendant-Appellant. )
_______________________________________ )
Appeal from the District Court of the Seventh Judicial District of the State of
Idaho, Bonneville County. Hon. Jon J. Shindurling, District Judge.
The decision of the district court is reversed and remanded.
Ballard Law, PLLC, Rexburg, for appellant.
Johnson Mark, LLC, Meridian, for respondent.
ON THE BRIEFS
_____________________
BRODY, Justice.
This is a debt collection matter. Plaintiff Portfolio Recovery Associates, LLC (“PRA”)
sued Defendant Lloyd MacDonald for the amount owed on a Citibank credit card account.
MacDonald filed a motion for summary judgment, arguing that PRA did not have standing to
bring this action because it could not prove that the debt had been assigned by Citibank to PRA.
PRA filed a cross-motion for summary judgment. MacDonald objected to the evidence PRA
submitted to support its position, arguing that the evidence was inadmissible hearsay and lacked
adequate foundation. The magistrate court overruled MacDonald’s objections and granted
summary judgment in favor of PRA. MacDonald appealed to the district court. The district court
affirmed the magistrate court’s decision. We reverse.
I.
FACTUAL AND PROCEDURAL BACKGROUND
1
PRA purchases charged-off credit card accounts and then attempts to collect the debts.
PRA claims to own a Citibank credit card account for Lloyd MacDonald. PRA sued MacDonald
in magistrate court alleging he failed to pay $3,776.29 owed on the account. MacDonald filed a
motion for summary judgment, arguing that PRA did not have standing to bring the suit because
PRA could not prove that the account had been assigned to it. PRA filed an objection to
MacDonald’s motion and a cross-motion for summary judgment. PRA attached the following
exhibits to its objection and cross-motion:
Exhibit 1 Affidavit of Chad Robertson, a Citibank Document Control Officer
(“Robertson Affidavit”). No exhibits are attached to the affidavit itself.
Exhibit 2 Affidavit of Sale of Account by Original Creditor signed by Patricia Hall,
a Citibank Financial Account Manager, dated July 16, 2013 (“Hall
Affidavit”).
Exhibit 3 Bill of Sale and Assignment from Citibank to PRA
Exhibit 4 Missing (it is not part of the Clerk’s Record and is not part of the record
below).
Exhibit 5 Sears credit card statements in MacDonald’s name.
MacDonald objected to the consideration of these exhibits, arguing that they are
inadmissible hearsay and that the statements contained in the Robertson Affidavit lack
foundation. The magistrate court overruled MacDonald’s evidentiary objections and granted
summary judgment in favor of PRA. MacDonald appealed the magistrate court’s decision to the
district court. The district court, sitting as an intermediate appellate court, affirmed the magistrate
court’s decision. MacDonald appeals the district court’s decision, arguing that the Robertson
Affidavit and credit card statements are inadmissible and should not have been considered when
deciding the parties’ cross-motions for summary judgment.
II.
STANDARD OF REVIEW
When reviewing the decision of a district court sitting in its capacity as an appellate court
[t]he Supreme Court reviews the trial court (magistrate) record to
determine whether there is substantial and competent evidence to support the
magistrate’s findings of fact and whether the magistrate’s conclusions of law
follow from those findings. If those findings are so supported and the conclusions
follow therefrom and if the district court affirmed the magistrate’s decision, we
affirm the district court’s decision as a matter of procedure.
Bailey v. Bailey, 153 Idaho 526, 529, 284 P.3d 970, 973 (2012) (quoting Losser v. Bradstreet,
145 Idaho 670, 672, 183 P.3d 758, 760 (2008)). “Thus, this Court does not review the decision of
2
the magistrate court.” Pelayo v. Pelayo, 154 Idaho 855, 859, 303 P.3d 214, 218 (2013). “Rather,
we are ‘procedurally bound to affirm or reverse the decisions of the district court.’” Id. (quoting
State v. Korn, 148 Idaho 413, 415 n.1, 224 P.3d 480, 482 n.1 (2009)).
III.
ANALYSIS
A. The Robertson Affidavit does not contain adequate foundation and is not admissible
under the business records exception to the hearsay rule.
MacDonald challenged the admissibility of the Robertson Affidavit, arguing that the
statements contained in the affidavit are hearsay and lack adequate foundation. He argued that
the affidavit should not be considered when deciding the cross-motions for summary judgment
based on the 2014 version of Idaho Rule of Civil Procedure 56(e) which provided that assertions
of fact must be properly supported by admissible evidence. Rule 56(e) stated:
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 therein.
Sworn or certified copies of all papers or parts thereof referred to in an affidavit
shall be attached thereto or served therewith. The court may permit affidavits to
be supplemented or opposed by depositions, answers to interrogatories, or further
affidavits. When a motion for summary judgment is made and supported as
provided in this rule, an adverse party may not rest upon the mere allegations or
denials of the party’s pleadings, but the party’s response, by affidavits or as
otherwise provided in this rule, must set forth specific facts showing that there is a
genuine issue for trial. If the party does not so respond, summary judgment, if
appropriate, shall be entered against the party.
We have held that these requirements “are not satisfied by an affidavit that is conclusory, based
on hearsay, and not supported by personal knowledge.” State v. Shama Res. Ltd. P’ship, 127
Idaho 267, 271, 899 P.2d 977, 981 (1995).
To determine the admissibility of the Robertson Affidavit it is necessary to look at the
actual text of the document. The Robertson Affidavit stated in relevant part:
AFFIDAVIT
STATE OF MISSOURI )
) ss.
COUNTY OF PLATTE )
Account Holder: LLOYD MACDONALD Account # ending in 2766
SSN/EIN/TIN #: xxx-xx-8980
The undersigned, Chad Robertson, being duly sworn, states and deposes as
follows:
3
1. I am an employee of Citibank, N.A. (“Citibank”), a national bank
located in Sioux Falls, South Dakota, and I am authorized to make this Affidavit.
My job title is Document Control Officer. My job responsibilities include
reviewing and obtaining account information in Citibank’s records as it relates to
credit card accounts owned or previously owned by Citibank. This includes
accounts previously owned by Citibank (South Dakota), N.A., which merged into
Citibank in or about July 2011. The statements set forth in this affidavit are true
and correct to the best of my knowledge, information and belief based on either
personal knowledge or review of the business records of Citibank.
2. My duties include having knowledge of, and access to, business records
relating to the Citibank account referenced above. These records are kept by
Citibank in the regular course of business and it was in the regular course of
business of Citibank for an employee or representative with personal knowledge
of the act, event, condition, or opinion recorded to make memorandum or records
or to transmit information thereof to be included in such memorandum or records;
and that the records were made at or near the time of the act and/or event recorded
or reasonably soon thereafter.
3. Citibank’s records reflect that a credit card account ending in account
number 2766 (the “Account”) was sold to Portfolio Recovery Associates, LLC
on or about 6/27/2013. At the time the Account was sold, Citibank prepared and
forwarded to Portfolio Recovery Associates, LLC a spreadsheet reflecting
Account information as of the sale date based on Citibank’s records, including,
among other things, the Account number, Account balance, the date of the last
payment, the Account holder’s name, and Social Security number (the
“Account Information”). The Account Information reflects that the Account was
opened on 10/4/2005. The Account Information reflects that the Account holder’s
name at time of the sale was LLOYD MACDONALD, with a Social Security
number ending: xxx-xx-8980.
4. The Account Information indicates that, as of the date the Account was
sold, there was due and payable on the Account $3,776.29.
5. The Account Information reflects that, as of the date the Account was
sold, the last Account payment received by Citibank posted to the Account on
10/2/2012.
(emphasis added).
The district court examined MacDonald’s objections to the Robertson Affidavit under
Idaho Rule of Evidence 803(6)—the business records exception to the hearsay rule. Rule 803(6)
sets forth the foundational requirements for the admission of business records. It states:
The following are not excluded by the hearsay rule, even though the
declarant is available as a witness:
(6) 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 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,
4
all as shown by the testimony of the custodian or other qualified witness, or by
certification that complies with 902(11), unless the opponent shows the source of
information or the method or circumstances of preparation indicate lack of
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.
I.R.E. 803(6) (emphasis added).
This Court has made it clear that Rule 803(6) does not require the testimony of the person
who created the document in order to admit it as a business record. “The general requirement for
admission under I.R.E. 803(6) is that the document be ‘produced in the ordinary course of
business, at or near the time of occurrence and not in anticipation of trial.’” Large v. Cafferty
Realty, Inc., 123 Idaho 676, 683, 851 P.2d. 972, 979 (1993) (citing Beco Corp. v. Roberts & Sons
Const. Co., 114 Idaho 704, 711, 760 P.2d 1120, 1127 (1988)). The Court has also noted:
Because records of regularly conducted activity are not normally self
proving, as public records may be under Rule 803(8), the testimony of the
custodian or other person who can explain the record keeping of the organization
is ordinarily essential. The custodian need not have personal knowledge of the
actual creation of the document nor need [the custodian] have been an employee
of the business when the record was made. The test is whether [the custodian]
has knowledge of the system used to make the record and not whether [the
custodian] has knowledge of the contents of the record.
Id. (quoting Report of the Idaho State Bar Evidence Committee, C 803, p. 10 (4th Supp. 1985)
(emphasis added)).
MacDonald argued that the statements contained in the Robertson Affidavit are likely
based on information contained on a computer screen. We agree. The fact that Robertson’s
statements are based on electronic information, however, still implicates Rule 803(6). The Rule
makes it clear that a business record can be in any format. In other words, a paper printout is not
required to fall under the Rule. Having said that, however, we recognize that electronic
information raises heightened concerns about accuracy and authenticity. This is where the
foundation for Robertson’s statements falls apart.
Robertson stated in his affidavit that Citibank records showed that the account linked to
MacDonald was sold to PRA. He did not identify the records he examined and did not explain
when or how the information was entered into the Citibank records. Robertson also stated that
Citibank prepared and delivered a spreadsheet to PRA reflecting account information as of the
sale date. Robertson does not explain, however, how that spreadsheet was made or the
5
procedural safeguards that were used to make sure that the information taken from Citibank
records and put on the spreadsheet was accurate. His affidavit also does not contain any
statement verifying that the information on the spreadsheet was still accurate at the time of his
affidavit. The reality is that consumers do not always know or understand when accounts are sold
and may make payments to their credit card company that are not reflected on a spreadsheet
created at the time of the sale of the debt. For these reasons we find that the foundation for the
statements contained in the Robertson Affidavit was not adequate under Rule 803(6).
The magistrate court ruled on MacDonald’s objection to the Robertson Affidavit from the
bench. Unfortunately, the court did not go through a detailed analysis of the affidavit itself on the
record. Instead, the court ruled that it was persuaded to admit the affidavit based on another trial
court opinion that MacDonald submitted. We have reviewed that opinion and do not find that it
addresses the issues raised in this case. The magistrate court also stated that it would more fully
articulate the basis for its decision in two cases that were under advisement in another county.
Those decisions are not part of this record, and we cannot use them to evaluate the magistrate
court’s reasoning. There is not an adequate record to support the magistrate court’s decision to
admit the Robertson Affidavit, and as such, we find that the magistrate court abused its
discretion. The district court erred when it affirmed the magistrate court’s decision.
B. The Sears Credit Card Statements were inadmissible because they lacked
certification.
MacDonald also challenged the admissibility of the Sears credit card statements that were
submitted by PRA. He contends that the credit card statements are hearsay and do not fall under
the business records exception in Rule 803(6). The magistrate court ruled that the credit card
statements were admissible. The district court affirmed the decision, finding that the Robertson
Affidavit satisfied the certification requirements of Idaho Rule of Evidence 902(11). Rule
902(11) allows the admission of certified records of regularly conducted activity without
extrinsic evidence of authenticity. Under the rule, the custodian of the record, or another
qualified person, must certify that the record: (1) was made, at or near the time of the occurrence
of the matters in the record to be admitted, by a person who has knowledge of those events; (2) is
kept in the course of regularly conducted activity; and (3) was made as a regular practice.
Because we have ruled that the Robertson Affidavit is inadmissible, there is no certification for
the Sears credit card statements. As such, it was an abuse of discretion for the magistrate court to
consider the credit card statements, and the district court erred when it affirmed that decision.
6
C. The catch-all exception to the hearsay rule cannot be used to admit the Robertson
Affidavit or Sears Credit Card Statements.
PRA contends that the “catch-all” exception to the hearsay rule can be used to admit the
Robertson Affidavit and Sears credit card statements. Rule 803(24) of the Idaho Rules of
Evidence is the catch-all exception. The rule states in relevant part:
The following are not excluded by the hearsay rule, even though the declarant is available
as a witness.
(24) Other exceptions. A statement not specifically covered by any of the
foregoing exceptions but having equivalent circumstantial guarantees of
trustworthiness, if the court determines that (A) the statement is offered as
evidence of a material fact; (B) the statement is more probative on the point for
which it is offered than any other evidence which the proponent can procure
through reasonable efforts; and (C) the general purposes of these rules and the
interests of justice will best be served by admission of the statement into
evidence.
I.R.E. 803(24). To allow PRA to use the catch-all exception in this case would render the
foundational requirements in 803(6) and the certification requirements in 902(11) meaningless.
We addressed this type of argument in Fragnella v. Petrovich, 153 Idaho 266, 281 P.3d 103(2012). In Fragnella, the Court declined to use the catch-all exception to admit a police report
where the Idaho Rules of Evidence specifically stated that a police report is not admissible as a
public record. See id. at 275, 281 P.3d at 112 (discussing I.R.E. 803(8)). Although Rule 803(6)
and Rule 902(11) do not prohibit the introduction of the Robertson Affidavit or the Sears credit
card statements, these rules lay out basic foundation requirements that simply were not satisfied
in this case. We recognize that the magistrate court did not consider whether the “catch-all”
provision could be used to admit the evidence at issue. Because we find that the catch-all
exception does not apply, no findings by the magistrate court on remand are necessary.
D. Summary judgment could not be properly granted in MacDonald’s favor.
MacDonald argues that PRA lacks standing to bring suit because the company has not
proven that it owns the Citibank account. The district court rejected this argument, finding that
the Robertson Affidavit when accompanied by the Bill of Sale and credit card statements shows
that an assignment took place. While we generally do not review denials of motions for summary
judgment, we find that MacDonald did not adequately marshal PRA’s evidence regarding the
existence of an assignment, and therefore, summary judgment could not be granted in his favor
on this issue.
7
Standing is not a mere pleading requirement, “‘but rather an indispensable part of the
plaintiff’s case.’” Camp Easton Forever, Inc. v. Inland Nw. Council Boy Scouts of Am., 156
Idaho 893, 898, 332 P.3d 805, 810 (2014) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555,
561 (1992)).
“‘[E]ach element must be supported in the same way as any other matter on which the
plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the
successive stages of the litigation.’” Id. (quoting Lujan, 504 U.S. at 561). Thus, PRA ultimately
bears the burden of proving that MacDonald had a contractual obligation to pay money to
Citibank and that PRA is the assignee of that obligation.
Because PRA bears this burden of proof, MacDonald’s burden in support of his motion
for summary judgment could “be satisfied by showing the absence of material fact with regard
to” PRA’s claim to be the assignee of MacDonald’s obligation. Bromley v. Garey, 132 Idaho
807, 810, 979 P.2d 1165, 1168 (1999). If the materials that MacDonald submitted in support of
his motion for summary judgment satisfied this threshold burden, then the burden shifted to PRA
to demonstrate by way of admissible evidence that a genuine issue of material fact exists as to
this issue. Sherer v. Pocatello Sch. Dist. No. 25, 143 Idaho 486, 489−90, 148 P.3d 1232, 1235–
36 (2006).
MacDonald failed to meet this initial burden. Consequently, PRA was not required to
present admissible evidence to resist MacDonald’s motion for summary judgment. MacDonald
could have shown the absence of evidence of an assignment “either by an affirmative showing
with [his] own evidence or by a review of all [PRA’s] evidence and the contention that such
proof of an element is lacking.” Holdaway v. Broulim’s Supermarket, 158 Idaho 606, 611, 349
P.3d 1197, 1202 (2015) (citing Antim v. Fred Meyer Stores, Inc., 150 Idaho 774, 776, 251 P.3d
602, 604 (Ct. App. 2011)).
Apparently, because MacDonald had no personal knowledge as to whether Citibank
assigned its interest in his account to PRA, he made no effort to make an affirmative showing
that there was no assignment to PRA. Instead, under Rule of Civil Procedure 56 as it then
existed, the only basis upon which summary judgment could have been granted to MacDonald
due to PRA’s lack of standing was if MacDonald presented the trial court with a review of all of
PRA’s evidence of an assignment coupled with the contention that the assembled evidence failed
to demonstrate the existence of an assignment. This did not occur. It is important to note that
8
after the summary judgment proceedings were complete before the trial court, Rule 56 was
amended, and the amendments took effect on July 1, 2016. We address Rule 56 as it existed at
the time of the trial court’s decision.
The only affidavit that MacDonald offered in support of his motion for summary
judgment was that of his attorney. The affidavit represented that PRA had responded to the
unspecified discovery requests and produced the Bill of Sale, the Affidavit of Patricia Hall, and
thirteen account statements that were appended to counsel’s affidavits as exhibits. Counsel’s
affidavit did not assert that the appended documents were the entirety of the evidence produced
in response to the discovery request.
MacDonald’s brief in support of his motion does represent that “Plaintiff has provided all
the documents it will be able to produce to prove the validity of the debt it claims Defendant
owes, as well as its evidence it owns the alleged debt.” There are two difficulties with this
representation. The brief is silent as to whether counsel’s affidavit contained all documents PRA
provided in response to the discovery requests. The greater difficulty with this representation is
that the factual assertions in a party’s brief in support of a motion for summary judgment were
not a basis for granting a motion for summary judgment at the time of the trial court’s ruling.
Idaho Rule of Civil Produce 56(c) provided that summary judgment decisions were to be based
upon “the pleadings, depositions, and admissions on file, together with the affidavits, if any”
offered in support of the motion. A representation contained in a brief is not among the items
upon which summary judgment could have been properly granted.
Because MacDonald did not adequately marshal PRA’s evidence regarding the existence
of an assignment, PRA did not ever have a burden of responsive production to show its standing
to pursue its claim, and so summary judgment could not properly be granted in MacDonald’s
favor.
IV.
ATTORNEY’S FEES
MacDonald requests an award of attorney’s fees on appeal pursuant to Idaho Code
section 12-120(1), which allows reasonable attorney’s fees to the prevailing party. Because the
case is not yet resolved, there is no prevailing party. Where there is no present prevailing party,
this Court has refused to award attorney’s fees. Howard v. Perry, 141 Idaho 139, 143, 106 P.3d
9
465, 469 (2005). If MacDonald is ultimately the prevailing party, then the trial court may award
him attorney’s fees for this appeal.
V.
CONCLUSION
We reverse the decision of the district court. We remand with instructions to the district
court to remand this case to the magistrate court with instructions to vacate the judgment entered
in favor of PRA and conduct further proceedings. Costs to MacDonald.
Chief Justice BURDICK, and Justices EISMANN, JONES and HORTON CONCUR.
10