Bob Lawless over at Credit Slips recently wrote about a
recent ruling from the Tennessee Court of Appeals. The case hinges on two rules of evidence:
the prohibition against hearsay evidence and the business records exception
to the hearsay rule.
When one side in a lawsuit introduces evidence to the court, the evidence
must have what is called a proper foundation. This means that the evidence
must have a discernable source. In the case of oral or other testimentary
evidence, that evidence must come directly from the source.
For instance, Bob can testify about statements that Bob made, actions that
Bob took, and other things about which Bob has personal knowledge. Bob
cannot, however, testify about things that Alice said if that testimony
is offered to establish what Alice said as fact in the case. In lawyer's
parlance, this is known as the "truth of the matter asserted."
Bob can testify that Alice spoke, but if his repetition of Alice's
statement is designed to prove that Alice made the statement, the hearsay
rule would bar that testimony.
Hearsay can also apply to documents. If Jim keeps an account ledger that
tracks Steve's payments and debits to Steve's account, Jim can
testify about the contents of his ledger because Jim kept the ledger and
has personal knowledge of its contents. Can Jim's assistant, Mary,
testify about the contents of the ledger? It depends. In general, Mary's
testimony would be hearsay. Mary did not prepare the ledger and has no
personal knowledge of the ledger.
However, there is an exception to this rule. If the ledger is kept in the
normal course of Jim's business practices, and Mary has personal knowledge
of those practices, Mary can testify as to the contents of Jim's ledger
under the business records exception to the hearsay rule. This exception
exists because some businesses are so large that no one person maintains
the business's records. In order for the business to properly introduce
those records into evidence, there must be an exception to the rule against
The Tennessee case (LVNV Funding, LLC v. Mastaw) involves a third-party debt purchaser attempting to sue a consumer for
the balance due on a Sears Gold Mastercard. In order to prove its case,
LVNV Funding introduced the affidavit of one of its employees. The afffidavit
stated that the employee had personal knowledge of LVNV's business
practices and that the employee had reviewed LVNV's records to determine
the amount due by Mr. Mastaw.
The Tennessee Court of Appeals rejected this testimony (affidavits count
as testimony) based on the rule against hearsay evidence. It also denied
LVNV's attempt to apply the business records exception to the rule
against hearsay. The court reasoned that because LVNV was a third-party
debt purchaser, it and its employees could not have personal knowledge
of the business practices of the company that had kept the records of
Mr. Mastaw's credit card account.
While this may seem like a minor technicality to some, this case highlights
the importance of critically analyzing the affidavits submitted by Plaintiff's
counsel in both credit card collection lawsuits and foreclosure lawsuits.
Many credit card and foreclosure lawsuits are won by the Plaintiff at the
summary judgment stage. When submitting a motion for summary judgment,
a Plaintiff needs to also submit affidavits in support of its motion.
Illinois Supreme Court Rule 191(a) sets forth the requirements for such an affidavit.
Among other things, Rule 191(a) requires that all documents referred to
by the affiant be attached to the affidavit. Often, this is not done,
which is a clear violation of the Rule and grounds to strike the affidavit.
In other cases, a short "balance due" worksheet may be attached.
Depending on the content of the documents, they may not qualify for the
business records exception to the rule against hearsay.
In a credit card context, this may be because the company attempting to
collect the credit card debt is not the card issuer. In those cases, the
logic of the
Mastaw case generally carries the day.
foreclosure context, a different exception that is also mentioned in Mastaw may defeat
the purported business record. The business records exception allows the
admission of documents, records, etc. prepared in the normal course of
business. However, the exception (like many legal exceptions) has an exception.
If the records were prepared
specifically for litigation or in anticipation of litigation, then the business records exception does not apply.
Illinois consumer defense attorneys would do well to pay close attention
to the contents of affidavits and their supporting documents. If a specific
exhibit to an affidavit cannot meet the requirements of the business records
exception to the rule against hearsay, then it must be stricken. If striking
the affidavit then causes the affidavit to violate Rule 191(a), the affidavit
must also be stricken.
This argument must be made at the trial court level. Although there is
conflicting authority on this point, it is best to raise it at the trial
court level and play it safe. When responding to a motion for summary
judgment, file your response brief in conjunction with a motion to strike
a bad affidavit and its exhibits. By knocking out the support for an opponent's
motion for summary judgment, you can defeat the motion itself.