U.S. Bank v. Williams

[Cite as U.S. Bank v. Williams, 2022-Ohio-4590.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
U.S. Bank Trust National Association as :
Trustee of the Lodge Series III Trust,
:
Plaintiff-Appellee, No. 21AP-576
: (C.P.C. No. 19CV-7085)
v.
: (REGULAR CALENDAR)
Charles Williams, Jr.,
:
Defendant-Appellant.
:
D E C I S I O N
Rendered on December 20, 2022
On brief: Sottile & Barile LLC, Ethan Hill, and Susan B.
Klineman, for appellee. Argued: Ethan Hill.
On brief: Bruce M. Broyles, for appellant. Argued:
Bruce M. Broyles.
APPEAL from the Franklin County Court of Common Pleas
KLATT, J.
{¶ 1} Defendant-appellant, Charles Williams, Jr., appeals a judgment of the
Franklin County Court of Common Pleas that granted summary judgment to plaintiff-
appellee, U.S. Bank Trust National Association as trustee of the Lodge Series III Trust. For
the following reasons, we reverse that judgment and remand this case to the trial court.
{¶ 2} On August 30, 2019, U.S. Bank filed a foreclosure complaint against
Williams. In the complaint, U.S. Bank alleged that it was the holder of a promissory note
executed by Williams and Regina Blount-Williams. U.S. Bank also alleged that it was the
holder of the mortgage that secured the note. Additionally, U.S. Bank stated that Williams
No. 21AP-576 2
and Blount-Williams had defaulted on the note and owed $377,862.90, plus interest, costs,
and expenses. U.S. sought a monetary judgment, foreclosure of the mortgage, sale of the
mortgaged property, and payment of the monetary judgment from the sale proceeds.
{¶ 3} U.S. Bank moved for summary judgment against Williams on June 2, 2021.1
To support its motion, U.S. Bank relied on the affidavit of Jordan Kahoalii, an asset
manager for SN Servicing Corporation, which acted as the servicing agent for the Williams'
mortgage loan. Kahoalii testified in her affidavit that, in her capacity as asset manager, she
had access to U.S. Bank's loan accounts, which were maintained in the ordinary course of
business. The Williams' loan account included the promissory note, loan modification
documents, the mortgage, the payment history, and servicing records. Kahoalii averred
that:
[d]ata entries in the Loan Account [were] made at or near the
time of occurrence by a person, with knowledge of the
occurrence, and [were] compiled and recorded as part of [U.S.
Bank's] regularly conducted business activity. Such records
[were] kept, maintained, and relied upon in the course of [U.S.
Bank's] ordinary and regularly conducted business activity.
The statements [she made] in [her] Affidavit [were] based upon
[her] personal review of those entries relating to the Loan
Account of Charles Williams, Jr. and Regina Blount-Williams,
and from [her] own personal knowledge of how the records
[were] kept and maintained.
(Kahoalii Aff. at ¶ 2.)
{¶ 4} Kahoalii then stated that the Williams' note was in U.S. Bank's possession,
and that U.S. Bank had acquired the note prior to the filing of the complaint. Kahoalii also
stated that the mortgage was assigned to U.S. Bank as reflected in the assignments of
mortgage attached to her affidavit. Finally, according to Kahoalii, the Williams had
defaulted under the terms of the note, and there was "due and owing [ ] the principal sum
of $377,862.90, together with interest on the unpaid principal [sum] from August 10, 2017,
at the rate of 2%, and including the additional sum of $12,941.90 of non-interest bearing
principal, as set forth in the Note and Loan Modification * * *." Id. at ¶ 11. To substantiate
1 Blount-Williams did not answer the complaint. Consequently, U.S. Bank moved for and received default
judgment against Blount-Williams.
No. 21AP-576 3
the amount due, Kahoalii attached a copy of the payment history, which Kahoalii indicated
"reflect[ed] payments and charges associated with the Loan Account." Id.
{¶ 5} In response to U.S. Bank's motion for summary judgment, Williams argued
that U.S. Bank lacked standing to enforce the mortgage. Williams pointed out gaps in the
chain of recorded assignments of the mortgage, and Williams claimed that those gaps
deprived U.S. Bank of the standing it needed to proceed with foreclosure. Additionally,
Williams argued that Kahoalii could not testify regarding the amount owed because she
based her testimony on a payment history created by a prior loan servicer, which Williams
alleged was inadmissible hearsay.
{¶ 6} In a judgment dated October 11, 2021, the trial court granted U.S. Bank
summary judgment and issued a decree of foreclosure. Williams now appeals that
judgment and assigns the following errors:
[1.] THE TRIAL COURT ERRED IN GRANTING SUMMARY
JUDGMENT WHEN A GENUINE ISSUE OF MATERIAL
FACT REMAINED AS TO APPELLEE'S RIGHT TO ENFORCE
THE MORTGAGE AS DEMONSTRATED BY THE CHAIN OF
ASSIGNMENTS OF THE MORTGAGE.
[2.] THE TRIAL COURT ERRED IN GRANTING SUMMARY
JUDGMENT WHEN A GENUINE ISSUE OF MATERIAL
FACT REMAINED AS TO THE AMOUNT OF PRINCIPAL
AND INTEREST DUE.
[3.] THE TRIAL COURT ERRED IN FAILING TO CONSIDER
THE ARGUMENTS OF APPELLANT REGARDING THE
INADMISSIBLE HEARSAY AND THE CONFUSING NATURE
OF THE PAYMENT HISTORY WHEN RENDERING
SUMMARY JUDGMENT.
{¶ 7} All Williams' assignments of error challenge the trial court's decision to grant
U.S. Bank summary judgment. A trial court must grant summary judgment under Civ.R.
56 when the moving party demonstrates that: (1) there is no genuine issue of material fact;
(2) the moving party is entitled to judgment as a matter of law; and (3) reasonable minds
can come to but one conclusion when viewing the evidence most strongly in favor of the
nonmoving party, and that conclusion is adverse to the nonmoving party. Hudson v.
Petrosurance, Inc., 127 Ohio St.3d 54, 2010-Ohio-4505, ¶ 29; Sinnott v. Aqua-Chem, Inc.,
116 Ohio St.3d 158, 2007-Ohio-5584, ¶ 29. Appellate review of a trial court's ruling on a
No. 21AP-576 4
motion for summary judgment is de novo. Hudson at ¶ 29. This means that an appellate
court conducts an independent review, without deference to the trial court's determination.
Zurz v. 770 W. Broad AGA, LLC, 192 Ohio App.3d 521, 2011-Ohio-832, ¶ 5 (10th Dist.);
White v. Westfall, 183 Ohio App.3d 807, 2009-Ohio-4490, ¶ 6 (10th Dist.).
{¶ 8} The party moving for summary judgment bears the initial burden of
informing the trial court of the basis for the motion and identifying those portions of the
record that demonstrate the absence of a genuine issue of material fact. Dresher v. Burt,
75 Ohio St.3d 280, 293 (1996). The moving party does not discharge this initial burden
under Civ.R. 56 by simply making conclusory allegations. Id. Rather, the moving party
must affirmatively demonstrate by affidavit or other evidence allowed by Civ.R. 56(C) that
there are no genuine issues of material fact and the moving party is entitled to judgment as
a matter of law. Id. If the moving party meets its burden, then the nonmoving party has a
reciprocal burden to set forth specific facts showing that there is a genuine issue for trial.
Civ.R. 56(E); Dresher at 293. If the nonmoving party does not so respond, summary
judgment, if appropriate, shall be entered against the nonmoving party. Id.{¶ 9} By his first assignment of error, Williams argues that the trial court erred in
granting U.S. Bank summary judgment because U.S. Bank failed to establish its right to
enforce the mortgage. We disagree.
{¶ 10} Initially, we must determine whether Williams challenges U.S. Bank's
standing to foreclose or, instead, Williams contends U.S. Bank cannot satisfy an element of
its foreclosure action. In the trial court, Williams argued that U.S. Bank lacked standing
because it could not establish its right to enforce the mortgage. Now, before this court,
Williams argues that U.S. Bank cannot prove an element of its foreclosure action because it
is unable to enforce the mortgage. Having lost in the trial court, a party cannot change its
theory of the case in an attempt to succeed on appeal. State ex rel. Gutierrez v. Trumbull
Cty. Bd. of Elections, 65 Ohio St.3d 175, 177 (1992). We will consequently review the
argument Williams raised in the trial court: U.S. Bank lacked standing due to its alleged
inability to enforce the mortgage.
{¶ 11} "[T]he fundamental requirement of standing is that the party bringing the
action must have a personal stake in the outcome of the controversy, i.e., that it must be the
injured party." Deutsche Bank Natl. Trust Co. v. Holden, 147 Ohio St.3d 85, 2016-Ohio-
No. 21AP-576 5
4603, ¶ 32. To establish standing generally, a claimant must show that it suffered an injury
that is fairly traceable to the defendant's allegedly unlawful conduct, and that the requested
relief is likely to redress the injury. Id. at ¶ 20. At its core, standing turns on the nature and
source of the claim asserted. Id.
{¶ 12} Typically, a foreclosure action consists of a legal action to collect on the
defaulted note together with an equitable action to force a sale of the mortgaged property.
Id. at ¶ 5. In such an action, "[t]he person entitled to enforce the note pursuant to R.C.
1303.31 has standing to seek a personal judgment against the promisor on that obligation,
while the mortgagee or its successor and assign has standing to foreclose on the mortgage."
Id. at ¶ 35. The plaintiff must possess the requisite stake in the action on the date that it
files the action. Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-
Ohio-5017, ¶ 24-25.
{¶ 13} Here, in its foreclosure action, U.S. Bank sought both a monetary judgment
on the note and the forced sale of the Williams' property for the satisfaction of the mortgage
debt. U.S. Bank had standing, therefore, if it was the person entitled to enforce the
Williams' note and the holder of the Williams' mortgage on the date it filed the complaint.
{¶ 14} On appeal, Williams does not contest that U.S. Bank is the person entitled to
enforce the note. The law and evidence supports this conclusion.
{¶ 15} A plaintiff qualifies as the "[p]erson entitled to enforce" a negotiable
instrument if the plaintiff is "[t]he holder of the instrument." R.C. 1303.31(A)(1). The
definition of "holder" varies depending on whether the negotiable instrument at issue is
made payable to a particular person. If the instrument is payable to an identified person,
the holder is the identified person when in possession of the instrument. R.C.
1301.01(T)(1)(b).2 If an instrument is payable to the bearer, the holder is the person in
possession of the instrument. R.C. 1301.01(T)(1)(a). A blank indorsement makes the
instrument payable to the bearer. R.C. 1303.25(B).
2 Effective June 29, 2011, Am.H.B. No. 9, 2011 Ohio Laws File 9, repealed R.C. 1301.01, amended the
provisions of R.C. 1301.01, and renumbered that section so that it now appears at R.C. 1301.201. R.C.
1301.201 only applies to transactions entered into after the effective date of that statute. The Williams
executed their note in 1987, well before the effective date of R.C. 1301.201. Consequently, we apply R.C.
1301.01 to this appeal.
No. 21AP-576 6
{¶ 16} Kahoalii, the asset manager for the servicing agent, authenticated the
Williams' note and the accompanying allonges in her affidavit. The Williams' note was
indorsed in blank. According to Kahoalii's affidavit testimony, U.S. Bank acquired the
Williams' note prior to filing the complaint, and U.S. Bank maintains the note in its
possession. U.S. Bank, therefore, provided evidence establishing itself as the person
entitled to enforce the Williams' note.
{¶ 17} Williams, however, disputes U.S. Bank's contention that it is the holder of the
Williams' mortgage. Williams argues that gaps in the chain of the recorded mortgage
assignments prevented U.S. Bank from acquiring any interest in the mortgage. In response,
U.S. Bank first asserts that Williams cannot question the assignments that resulted in its
status as the holder of the mortgage. According to U.S. Bank, the mortgage assignments
were contractual matters not involving Williams, and as a non-party to those transactions
Williams lacks the privity necessary to challenge their validity.
{¶ 18} U.S. Bank's argument fails for two reasons. First, U.S. Bank did not raise it
in the trial court, and thus, waived the right to raise it on appeal. West v. Bode, 162 Ohio
St.3d 293, 2020-Ohio-5473, ¶ 43. Second, we have previously found the argument
unavailing. As a defendant, a homeowner may challenge the plaintiff bank's standing to
bring a foreclosure action: " '[T]he maker of the note or mortgage has standing to challenge
their enforcement against the maker, even if not a party in privity to the particular transfer
or assignment challenged.' " Green Tree Servicing LLC v. Asterino-Starcher, 10th Dist.
No. 16AP-675, 2018-Ohio-977, ¶ 23, quoting United States Bank Natl. Assn. v. George,
10th Dist. No. 14AP-817, 2015-Ohio-4957, ¶ 27.
{¶ 19} We therefore turn to analyzing whether the chain of recorded mortgage
assignments culminates in U.S. Bank's acquisition of the mortgage. In total, eight
assignments of the mortgage were recorded with the Franklin County Recorder prior to the
filing of the complaint. The first three assignments maintain the chain. In the first,
Washington Mutual Bank FA, successor in interest of the original mortgagee, assigned the
mortgage to EMC Mortgage Corporation. In the second, EMC Mortgage Corporation
assigned the mortgage to LaSalle Bank National Association as trustee for the certificate
holders of EMC Mortgage Loan Trust 2004-A, Mortgage Loan Pass-Through Certificates,
No. 21AP-576 7
Series 2004-A ("LaSalle Bank"). In the third, LaSalle Bank assigned the mortgage to EMC
Mortgage LLC.3
{¶ 20} In the fourth assignment, which was signed June 11, 2015 and recorded
July 8, 2015, EMC Mortgage Corporation assigned the mortgage to Wilmington Trust,
National Association, as trustee for VM Trust Series 3 ("Wilmington Trust"). Because EMC
Mortgage LLC—not EMC Mortgage Corporation—owned the mortgage prior to the fourth
assignment, the fourth assignment broke the chain. However, a "gap assignment"
attempted to fix the problem. The next recorded assignment, entitled "GAP ASSIGNMENT
OF MORTGAGE," expressly stated, "THE ASSIGNMENT OF THE BELOW REFERENCED
LIEN IS FILED OUT OF SEQUENCE * * *." (Kahoalii Aff. at Ex. C.) Indeed, the gap
assignment was executed on April 27, 2015—before the fourth assignment—but recorded
on February 25, 2016—after the fourth assignment. Therefore, when placed in
chronological sequence, the gap assignment belongs before the fourth assignment.
{¶ 21} But the gap assignment did not accomplish its goal of mending the break in
the chain. In the gap assignment, LaSalle Bank assigned the mortgage to EMC Mortgage
Corporation. The entity at the end of the assignment chain was EMC Mortgage LLC, not
LaSalle Bank. LaSalle Bank had already assigned its interest to EMC Mortgage LLC in the
third assignment, and thus had no interest in the mortgage to assign in the gap assignment.
To fill the gap, EMC Mortgage LLC, the assignee in the third mortgage, would have to assign
the mortgage to EMC Mortgage Corporation, the assignor in the fourth mortgage. Because
no such gap assignment was recorded, the gap went unfilled.
{¶ 22} As an alternative argument, U.S. Bank asserts that, if the gap assignment is
disregarded as invalid, the chain of recorded mortgage assignments is not broken.
According to U.S. Bank, EMC Mortgage Corporation and EMC Mortgage LLC are the same
entity, so EMC Mortgage Corporation could legally assign to another entity a mortgage first
assigned to EMC Mortgage LLC. If correct, this would eliminate the gap between the third
and fourth assignments.
{¶ 23} We, however, cannot review U.S. Bank's argument because it rests upon
evidence that U.S. Bank did not introduce in the trial court. U.S. Bank attaches various
3 In the third assignment and the gap assignment, LaSalle's successor in interest, The Bank of America,
National Association, actually assigned the mortgage. However, to avoid excessive complication, we will
refer to the assignor in these two assignments as "LaSalle."
No. 21AP-576 8
business records to its appellate brief to support its assertion that EMC Mortgage
Corporation and EMC Mortgage LLC are the same entity. The trial court did not have these
records before it when ruling on the motion for summary judgment.
{¶ 24} An appellate court's review is limited to the same evidentiary materials that
were before the trial court when it ruled on the motion for summary judgment. Guernsey
Bank v. Milano Sports Ents., LLC, 177 Ohio App.3d 314, 2008-Ohio-2420, ¶ 30 (10th Dist.).
" 'A reviewing court cannot add matter to the record before it, which was not part of the
trial court's proceedings, and then decide the appeal on the basis of the new matter.' "
Morgan v. Eads, 104 Ohio St.3d 142, 2004-Ohio-6110, ¶ 13, quoting State v. Ishmail, 54
Ohio St.2d 402 (1978), paragraph one of the syllabus.
{¶ 25} U.S. Bank asserts that this court can consider the new evidentiary material
under Loc.R. 9.1 of the Tenth District Court of Appeals because the material pertains to U.S.
Bank's standing to defend this appeal. Pursuant to Loc.R. 9.1, this court "may admit
additional evidence pertaining to the * * * [s]tanding of a party to prosecute or defend the
appeal." However, U.S. Bank's standing to defend this appeal is not at issue. We are
reviewing a different question: whether U.S. Bank has standing to pursue a foreclosure
action. We thus find U.S. Bank's argument unpersuasive, and we strike the evidentiary
material attached to U.S. Bank's brief from the record.
{¶ 26} Returning to the chain of recorded mortgage assignments, in the fifth
assignment, Wilmington Trust assigned the mortgage to V Mortgage Reo 3, LLC. The sixth
assignment, once again, broke the chain of mortgage assignments because in it,
Wilmington Trust purported to assign the mortgage it had already assigned; this time to
U.S. Bank Trust National Association, as trustee of the Bungalow Series III Trust. Finally,
in the seventh assignment, U.S. Bank Trust National Association, as trustee of the
Bungalow Series III Trust, assigned the mortgage to U.S. Bank Trust National Association,
as trustee of the Lodge Series III Trust.
{¶ 27} As Williams points out, there are two breaks in the chain of the mortgage
assignments. Nevertheless, even with these breaks, U.S. Bank can still enforce the
mortgage pursuant to equitable assignment. Negotiation of a note secured by a mortgage
operates as an equitable assignment of the mortgage, even if the mortgage is not assigned
or delivered. Deutsche Bank Natl. Trust Co. v. Stone, 10th Dist. No. 20AP-94, 2021-Ohio-
No. 21AP-576 9
3007, ¶ 21; Asterino-Starcher, 10th Dist. No. 16AP-675, 2018-Ohio-977, at ¶ 37;
Huntington Natl. Bank v. Miller, 10th Dist. No. 14AP-586, 2016-Ohio-5860, ¶ 19; UAP-
Columbus JV326132 v. Young, 10th Dist. No. 14AP-422, 2014-Ohio-4590, ¶ 30; Wells
Fargo Bank, N.A. v. Byers, 10th Dist. No. 13AP-767, 2014-Ohio-3303, ¶ 18; United States
Bank Natl. Assn. v. Gray, 10th Dist. No. 12AP-953, 2013-Ohio-3340, ¶ 32. " 'In other
words, "[t]he physical transfer of the note endorsed in blank, which the mortgage secures,
constitutes an equitable assignment of the mortgage, regardless of whether the mortgage is
actually (or validly) assigned or delivered." ' " Stone at ¶ 21, quoting Asterino-Starcher at
¶ 37, quoting Deutsche Bank Natl. Trust Co. v. Najar, 8th Dist. No. 98502, 2013-Ohio-
1657, ¶ 65; accord Miller at ¶ 19; Chenault v. Deutsche Bank Natl. Trust Co., 10th Dist. No.
14AP-669, 2015-Ohio-1850, ¶ 16; Byers at ¶ 18; Gray at ¶ 32.
{¶ 28} Ohio's version of the Uniform Commercial Code incorporates the common-
law doctrine of equitable assignment. Gray at ¶ 33. Under R.C. 1309.203(G), "[t]he
attachment of a security interest in a right to payment or performance secured by a security
interest or other lien on personal or real property is also attachment of a security interest
in the security interest, mortgage, or other lien." This division "codifies the common-law
rule that a transfer of an obligation secured by a security interest or other lien on personal
or real property also transfers the security interest or lien." UCC Official Comment, Section
9-203, Comment 9 (2000).
{¶ 29} Here, Williams does not dispute that U.S. Bank is the person entitled to
enforce the note, or that U.S. Bank came into possession of that note prior to the filing of
the complaint. Transfer of the note into U.S. Bank's possession effectuated the equitable
assignment of the mortgage to U.S. Bank, regardless of the invalidity of certain recorded
assignments. Consequently, pursuant to the doctrine of equitable assignment, U.S. Bank
was the holder of the mortgage when it filed suit.
{¶ 30} Williams argues that the two breaks in the chain of the recorded mortgage
assignments evidence the separation of the mortgage from the note, which precludes us
from applying the doctrine of equitable assignment. But Williams' argument assumes the
inapplicability of the doctrine in the first place. Pursuant to equitable assignment, the
mortgage transfers with the note, regardless of whether the transfer is memorialized with
a valid mortgage assignment that appears in the record. Consequently, defects in the chain
No. 21AP-576 10
of recorded mortgage assignments do not affect the operation of the doctrine. When
applying the doctrine of equitable assignment, the operative question, instead, is whether
the plaintiff bank is the person entitled to enforce the note.
{¶ 31} In sum, we conclude that U.S. Bank established that, at the time it filed the
complaint, it was the person entitled to enforce the Williams' note, and it was the holder of
the Williams' mortgage. U.S. Bank, therefore, had standing to enforce both the note and
mortgage. Accordingly, we overrule Williams' first assignment of error.
{¶ 32} We next consider Williams' third assignment of error. By that assignment of
error, Williams argues that the trial court erred in not explicitly ruling on his argument that
Kahoalii impermissibly relied on hearsay to testify to the amount due on the note. We find
no error because it is clear from the grant of summary judgment that the trial court rejected
Williams' argument. In finding that "there is due the Plaintiff on the promissory note * * *
the principal balance of $377,862.90," the trial court necessarily found Kahoalii's testimony
admissible. (Jgmt. Entry & Decree of Foreclosure at 2.) Accordingly, we overrule the third
assignment of error.
{¶ 33} By Williams' second assignment of error, he argues that the trial court erred
in granting summary judgment when a genuine issue of material fact remained regarding
the amount due on the note. Williams contends that the trial court could not rely on
Kahoalii's affidavit testimony regarding the amount due because she based her testimony
on hearsay. We agree.
{¶ 34} Affidavits offered in opposition to summary judgment must be made on
personal knowledge, must set forth admissible evidence, and must show affirmatively that
the affiant is competent to testify to the matters stated in the affidavit. Civ.R. 56(E).
" 'Personal knowledge' is 'knowledge gained through firsthand observation or experience,
as distinguished from a belief based on what someone else has said.' " Bonacorsi v.
Wheeling & Lake Erie Ry. Co., 95 Ohio St.3d 314, 2002-Ohio-2220, ¶ 26, quoting Black's
Law Dictionary 875 (7th Ed.1999). " 'Information in affidavits that is not based on personal
knowledge and does not fall under any of the permissible exceptions to the hearsay rule
may be properly disregarded by the trial court when granting or denying summary
judgment.' " Ohio Receivables, LLC v. Dallariva, 10th Dist. No. 11AP-951, 2012-Ohio-3165,
No. 21AP-576 11
¶ 16, quoting Cincinnati Ins. Co. v. Thompson & Ward Leasing Co., 158 Ohio App.3d 369,
2004-Ohio-3972, ¶ 13 (10th Dist.).
{¶ 35} Here, Kahoalii based her testimony regarding the amount owed on a payment
history, which she attached to her affidavit. Williams asserts that the payment history
constitutes inadmissible hearsay because it includes a business record of a prior servicing
agent. Because Kahoalii's knowledge regarding the amount owed arises from hearsay,
Williams argues, the trial court should have rejected Kahoalii's testimony as not meeting
the Civ.R. 56(E) standard.
{¶ 36} In her affidavit, Kahoalii does not identify what entity created the payment
history; instead, she just states that the payment history "reflect[s] payments and charges
associated with the Loan Account." (Kahoalii Aff. at ¶ 11.) The payment history consists of
two spreadsheets; one untitled and one titled "SN Servicing Corporation; Loan History
General." Id. at Ex. E. The untitled spreadsheet has entries for transaction dates spanning
from April 2, 2012 to January 10, 2019. The SN Servicing spreadsheet begins with an entry
with a transaction date of January 14, 2019 and a transaction description of "New Loan."
Id.{¶ 37} Given the configuration of and information contained in the spreadsheets, we
conclude that SN Servicing became the servicing agent for the Williams' loan on January 14,
2019. Consequently, the untitled spreadsheet—detailing transactions dated prior to
January 14, 2019—is the business record of the prior servicer. This conclusion is buttressed
by U.S. Bank's admission in its appellate brief that "records from prior servicers" are
attached to Kahoalii's affidavit. (Appellee's Brief at 13.)
{¶ 38} In response to Williams' argument, U.S. Bank asserts that Kahoalii could rely
on the prior servicer's payment history for the amount owed because that payment history
is admissible evidence under the hearsay exception for business records. Pursuant to
Evid.R. 803(6), business records that meet the enumerated requirements are excepted
from the hearsay rule. Evid.R. 803(6) permits the admission of business records of an
entity even when the entity was not the maker of the records, so long as the other
requirements of Evid.R. 803(6) are met and circumstances indicate that the records are
trustworthy. Cach v. Alderman, 10th Dist. No. 15AP-980, 2017-Ohio-5597, ¶ 17; Dallariva,
10th Dist. No. 11AP-951, 2012-Ohio-3165, at ¶ 20. Consequently, records need not be
No. 21AP-576 12
prepared by the entity offering them if the entity received, maintained, and relied on the
records in the ordinary course of business, and incorporated the records into the business
records of the testifying entity. Cach at ¶ 17; Dallariva at ¶ 20.
{¶ 39} Here, because Kahoalii did not acknowledge that another entity created the
payment history, her affidavit does not address the elements necessary to establish the
foundation for admission of an adoptive business record. Without that foundation, the
payment history constitutes hearsay, which renders Kahoalii's testimony regarding the
amount owed on the note inadmissible evidence. Accordingly, we conclude the trial court
erred in granting U.S. Bank summary judgment, and we sustain Williams' second
assignment of error.
{¶ 40} For the foregoing reasons, we overrule Williams' first and third assignments
of error, and we sustain his second assignment of error. Additionally, we grant Williams'
motion to strike the evidentiary material attached to U.S. Bank's appellate brief. We reverse
the judgment of the Franklin County Court of Common Pleas, and we remand this cause to
that court for further proceedings consistent with law and this decision.
Motion to strike granted;
judgment reversed; cause remanded.
DORRIAN and McGRATH, JJ., concur.