Kevin T. Williams v. Unifund CCR, LLC

FILED
Jan 20 2017, 8:09 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANT
Judith Fox
Alan Grigorian, Certified Legal Intern
Notre Dame Clinical Law Center
South Bend, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Kevin T. Williams, January 20, 2017
Appellant-Defendant, Court of Appeals Case No.
71A04-1604-CC-901
v. Appeal from the St. Joseph Circuit
Court
Unifund CCR, LLC, The Honorable John E. Broden,
Appellee-Plaintiff. Judge
The Honorable Larry L. Ambler,
Magistrate
Trial Court Cause No.
71C01-1401-CC-78
Riley, Judge.
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STATEMENT OF THE CASE
[1] Appellant-Defendant, Kevin T. Williams (Williams), appeals the trial court’s
judgment in favor of Appellee-Plaintiff, Unifund CCR, LLC (Unifund), on
Unifund’s Complaint against Williams for nonpayment of credit card debt.
[2] We reverse.
ISSUE
[3] Williams raises four issues on appeal, one of which we find dispositive and
which we restate as: Whether the evidence admitted at trial supports Unifund’s
claim.
FACTS AND PROCEDURAL HISTORY
[4] Unifund is a debt-buying company that purchases charged-off accounts from
credit card companies by way of large portfolios of debt. When acquiring credit
card accounts through assignment agreements, the accounts are handled by
several assignees before being ultimately assigned to Unifund. Here, the
account at issue was purchased by Pilot Receivables Management (Pilot), who
assigned it to its affiliated entity Unifund CCR Partners (Unifund Partners),
after which Unifund Partners assigned the account to Unifund. The account
was transferred to Unifund in a very large Excel file, which “can contain
anywhere from one to several thousand credit card accounts all displayed as a
single line in that Excel spreadsheet.” (Transcript p. 29). Unifund altered this
spreadsheet in anticipation of trial.
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[5] On April 29, 2002, Williams opened a credit card account with Citibank. By
2009, Williams had accumulated monthly credit card debt in the aggregate
amount of $10,402.90. On or about March 25, 2013, Citibank sold a block of
charged-off accounts, including Williams’ account, to Pilot who, in turn,
assigned the account to Unifund Partners. The information listed on the
spreadsheet that Citibank provided to Pilot included the account number, the
account balance, the date of the last payment, the account holder’s name and
social security number. On July 1, 2013, Pilot assigned “Receivables” to
Unifund Partners “for collection purposes only,” with Pilot retaining “title and
ownership of such Receivable.” (Appellant’s App. Vol. III, p. 107). That same
day, Unifund Partners assigned these “Receivables” to Unifund. (Appellant’s
App. Vol. III, p. 108).
[6] On January 21, 2014, Unifund filed a Complaint, alleging breach of contract,
account stated, promissory estoppel, and unjust enrichment. On February 13,
2014, Williams filed his answer and motion to dismiss Unifund’s Complaint, as
well as a motion to strike Unifund’s exhibits, arguing that the affidavit of debt,
account statement, and bill of sale and assignment were based on hearsay and
therefore inadmissible under Indiana Evidence Rule 802. On January 12, 2015,
Unifund filed its motion for summary judgment to which Williams filed a brief
in opposition. On April 1, 2015, following a hearing, the trial court denied
Unifund’s motion for summary judgment. On July 27, 2015, the trial court
ordered Unifund to provide proof of the last payment date in Williams’
account, as well as proof of ownership of the account. The trial court
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additionally directed that any additional exhibits offered at trial should be
exchanged by the parties by August 17, 2015.
[7] On August 31, 2015, the trial court conducted a bench trial. During trial,
Unifund offered two Exhibits into evidence, both of which contained
documents which had not previously been provided to Williams pursuant to the
trial court’s order. After a timely objection by Williams, the trial court took the
admission of the Exhibits under advisement. On October 22, 2015, the trial
court issued its judgment, admitting the Exhibits and awarding Unifund
$10,402.90 plus costs. On November 23, 2015, Williams filed a motion to
correct error, which was denied by the trial court on March 28, 2016.
[8] Williams now appeals. Additional facts will be provided as necessary.
DISCUSSION AND DECISION
[9] Williams appeals from the trial court’s denial of his motion to correct error.
Our standard of review in such cases is well established. We review a trial
court’s ruling on a motion to correct error for an abuse of discretion. McEntee v.
Wells Fargo Bank, N.A., 970 N.E.2d 178, 182 (Ind. Ct. App. 2012). An abuse of
discretion occurs when the trial court’s decision is contrary to the logic and
effect of the facts and circumstances before it or the reasonable inferences
therefrom. Id. It should be noted that Unifund did not file an appellee’s brief.
When the appellee does not submit a brief, we need not undertake the burden
of developing an argument on his behalf. Howard v. Daugherty, 915 N.E.2d 998,
999 (Ind. Ct. App. 2009). We will, however, apply a less stringent standard of
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review with respect to the showing necessary to establish reversible error.
Wolverine Mut. Ins. Co. v. Oliver, 933 N.E.2d 568, 570 (Ind. Ct. App. 2010), trans.
denied. It is within our discretion to reverse the trial court’s decision if the
appellant can establish prima facie error. Howard, 915 N.E.2d at 999.
[10] Williams contends that the trial court abused its discretion when it admitted
Unifund’s Exhibits into evidence over his objection. In order to be successful at
trial, Unifund needed to establish that (1) Williams owed Citibank $10,402.90
and (2) Unifund was the assignee or owner of that debt. See Seth v. Midland
Funding, LLC, 997 N.E.2d 1139, 1140 (Ind. Ct. App. 2013). Unifund’s evidence
presented at trial consisted of two Exhibits. Exhibit 1 contained seventeen
credit card statements produced by Citibank. Exhibit 2 included five separate
documents: (1) a Bill of Sale and Assignment, signed by Patricia Hall,
Financial Account Manager at Citibank; (2) an affidavit, signed by Aimee
Dykes, a document control officer at Citibank; (3) a redacted thirty-page
spreadsheet; (4) an Assignment dated July 1, 2013, between Pilot and Unifund
Partners; and (5) an Assignment, dated July 1, 2013, between Unifund Partners
and Unifund. Unifund offered both Exhibits into evidence through the
testimony of Nathan Duvelius (Duvelius), an authorized representative and
custodian of records for Unifund. Both Exhibits were admitted over Williams’
objections. We will discuss the admissibility of each document in turn.
I. Exhibit 1
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[11] Exhibit 1 consists of seventeen credit card statements produced by Citibank for
the account at issue, bearing the credit card account number, Williams’ name,
and the balance due. However, hearsay statements are generally not admissible
unless they fall within one of the hearsay exceptions. See Ind. Evidence Rule
802. Under Indiana Evidence Rule 803(6), otherwise inadmissible hearsay may
be admitted if it consists of records of regularly conducted business activity,
provided certain requirements are met. Specifically, in order to admit these
unsworn and unverified statements as business records pursuant to Indiana
Evidence Rule 803(6), Unifund was required to establish that these statements
(A) [] [were] made at or near the time by—or from
information transmitted by—someone with knowledge;
(B) The record was kept in the course of a regularly conducted
activity of a business, organization, occupation, or calling,
whether or not for profit;
(C) Making the record was a regular practice of that activity;
(D) All these conditions are shown by the testimony of the
custodian or another qualified witness []; and
(E) Neither the source of information nor the method or
circumstances of preparation indicate a lack of
trustworthiness.
[12] The Exhibit was admitted at trial through the testimony of Duvelius, who
testified to be “Unifund’s authorized representative and custodian of the
records.” (Tr. p. 14). He affirmed to be “familiar with the standard business
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practices of Unifund.” (Tr. p. 14). However, Duvelius conceded that he was
“not familiar with Citibank’s records or operations” and did “not know
Citibank’s records or bookkeeping methods.” (Tr. p. 48). Additionally, he was
unfamiliar with Citibank’s accounting procedures and was unaware as to
Citibank’s accounting practices or regular business practices. Accordingly, as
Duvelius did not have personal knowledge of Citibank’s regularly conducted
business activities and record keeping, the trial court abused its discretion by
admitting Exhibit 1. See Speybroeck v. State, 875 N.E.2d 813, 821 (Ind. Ct. App.
2007) (“[A] business could not lay the proper foundation to admit the records of
another business because the requesting business lacked the personal knowledge
required to ensure reliability”), reh’g denied.
II. Exhibit 2
[13] Again, through Duvelius’ testimony, Unifund introduced Exhibit 2, which was
admitted by the trial court over Williams’ objection. This Exhibit included five
separate documents: (1) a Bill of Sale and Assignment, signed by Patricia Hall,
Financial Account Manager at Citibank; (2) an affidavit, signed by Aimee
Dykes, a document control officer at Citibank; (3) a redacted thirty-page
spreadsheet; (4) an Assignment dated July 1, 2013, between Pilot and Unifund
Partners; and (5) an Assignment, dated July 1, 2013, between Unifund Partners
and Unifund.
[14] The Bill of Sale and Assignment, signed by Citibank’s financial account
manager, states that Citibank “does hereby transfer, sell, assign, convey, grant,
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bargain, set over, and deliver to [Pilot], and to [Pilot’s] successors and assigns,
the Accounts described in Exhibit 1 and the final electronic file.” (Plaintiff’s
Exh. 2). However, as noted before, because Duvelius is unfamiliar with
Citibank’s regularly conducted business practices, he could not testify as to the
document’s reliability and authenticity. Therefore, lacking the proper
foundation, the trial court abused its discretion by admitting the Bill of Sale and
Assignment into evidence.
[15] The thirty-page spreadsheet was initially generated in full by Citibank and was
later redacted by Unifund for trial purposes. At trial, the spreadsheet was
offered into evidence through Duvelius’ testimony. Because Duvelius conceded
that he did not know whether Citibank kept these records in accordance with its
regular business practices, the reliability of the document cannot be attested to
and should not have been admitted by the trial court. See Ind. Evid. R. 803(6).
[16] Next, Exhibit 2 contains two Assignments. The first Assignment is between
Pilot and Unifund Partners, and the second Assignment between Unifund
Partners and Unifund. Both Assignments state that
Assignor, for value received and in connection with the
Agreement, transfers and assigns to Assignee all of Assignor’s
rights in the Receivables, for collection purposes only, including
conducting litigation in Assignee’s name, for those Receivables
which Assignor owns or may acquire from time to time.
Assignor shall retain title and ownership of such Receivables.
(Plaintiff’s Exh. 2). Both Assignments were offered through Duvelius’
testimony. Although Duvelius stated that he was Unifund’s authorized
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representative and custodian of the records, without further evidence he also
stated that he was “authorized to testify on Pilot’s behalf by an officer of the
company.” (Tr. p. 18). As such, in those capacities, Duvelius could
presumably affirm that the Assignments were kept in the regular course of
business. See Ind. Evid. R. 803(6).
[17] Nonetheless, although the Assignments indicate certain rights were assigned
from one company to another, the Assignments fail to specify the transfer of
rights in Williams’ account. While the Assignments refer to “rights in the
Receivables,” these “Receivables” are purportedly more closely defined in the
Servicing Agreement entered into between the Assignor and Assignee, which
was not presented to the trial court or admitted into evidence at trial.
Accordingly, we agree with Williams that the Assignments fail to adequately
establish that Unifund has been assigned or owns Williams’ account.
[18] Finally, we address the admissibility of the affidavit, signed by Aimee Dykes
(Dykes), a document control officer at Citibank. Dykes affirmed that she has
knowledge of the business records relating to Williams’ account, which are kept
by Citibank in the regular course of business. In her affidavit, she attested that
Williams’ account was sold to Pilot and that Citibank had prepared and
forwarded to Pilot a spreadsheet reflecting the relevant account information.
She also confirmed the account’s balance due. Although the affidavit is
admissible as a business record pursuant to Indiana Evidence Rule 803(6), it
falls short of satisfying Unifund’s burden of proof. While the affidavit
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establishes that Williams’ account was sold to Pilot, Unifund failed to present
any admissible evidence indicating that it now owns the account.
[19] Based on the totality of the evidence before us, Unifund failed to satisfactorily
establish that it owns Williams’ account and is entitled to collect the debt
associated with it.
CONCLUSION
[20] Based on the foregoing, we hold that the trial court abused its discretion by
entering judgment in favor of Unifund.
[21] Reversed.
[22] Baker, J. and Mathias, J. concur
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