Fla 4th DCA Provides Short Lesson on Business Records Exception to Hearsay Rule

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It is interesting that the ruling comes from a condo lien case rather than the hot topic of securitized mortgages. But the rules are the same and in this opinion the Court gives the reader a lesson on hearsay, objections, preservation of issues for appeal, and exceptions to hearsay. As a prelude, evidence is properly admitted into the record if it is unopposed. So you must object if you don’t want it in. If you don’t object, you are cooked.

When an objection is properly AND TIMELY raised it specifies what exactly you are challenging and why. Trustworthiness, Credibility and authenticity are at the heart of all evidence questions. The court will tend to allow the evidence if it determines that it has some “probative value” which is to say it might be concluded that a fact is true based on this evidence. But since courts are composed of human beings there are some boundaries to issues of hearsay and exceptions that have been set by both common law and statutes so that the litigator knows what he is entitled to expect from the court as to rulings on his own evidence or that of his opponent.

Business records are hearsay and therefore excluded from evidence if an objection is made. If an objection is made and properly framed, then the burden shifts to the other side (the proponent of the “information” being tendered as evidence) to explain why the records are not hearsay (that is impossible with business records) or why there is an applicable exception.

The guiding principle behind the rules are that evidence should be admitted if it is trustworthy. If the records come from an independent third party who could care less who wins the lawsuit, the chances are that the judge will be liberal in applying the rules. If the the records come from one of the parties in litigation then the possibility or probability of it being self serving and potentially prepared for litigation rise and the judge is supposed to apply the rules very strictly.

In this case the judge did what judges are doing across the country. The Judge erred. He applied a lenient standard to records that were clearly coming from a party with a stake in the outcome and which could have been fabricated for the purposes of litigation and which relied on the work of other parties without any knowledge of the timing of the entries that were made, the knowledge of the person making the entries, and the documents or events upon which the the outside person relied. Therefore it was unlikely that the business records could be admitted without a very tight foundation from a credible witness.

The Judge admitted the records after extremely dubious testimony and obvious evidence that there was a personal fight going on as well as a bribery or theft claim between a group of unit owners and the association’s board. The appellate court reversed. That means the unit owners win the case even though judgment was entered for the association against the unit owners by the trial court. By the way, the defense, as I have suggested in foreclosure defense cases, was payment.

The unit owners had made a large prepayment that had not been carried forward. The receipt was acknowledged but somehow, like the foreclosure cases go, the judge felt it was OK to foreclose the association’s lien even though there was unrefuted evidence that the association had indeed received a huge amount of money for no other purpose than to offset the amount of monthly dues and special assessments.

Note on page 4 the Court says “Because the condo owners’ attorney did not object to the ledgers on the ground that they were untrustworthy, this issue is not preserved. The lack of foundation, however, was argued and preserved.” In my seminars and books I have always stressed that objections must be timely, precise and well-focused preferably with back up in case law. And I generally refer people to Trial Objections by Dombroff, a small book that is worth its weight in gold.

Note that in this condo case the association’s attorney was at least smart enough to put the records custodian on the witness stand. Getting business records into evidence without the records custodian ought to be very difficult. In the lone arena of foreclosure litigation, the courts have veered out of bounds because they think they know how the case should end.

“Magic words” do not suffice. The witness must know that the records are trustworthy and how and why they are trustworthy.

Now in foreclosure litigation it gets even crazier. The party on the stand has some title that more or less clearly shows that the title was invented to have him or her testify in court. Strike one. Like the case reported here, the party lacked personal knowledge that is a prerequisite for any witness to testify about anything — it is called competence of the witness. Strike two.

And after the witness has committed to saying she saw all of the records, ask her about he payments that went out, not the payments that were received. After all, she represents the servicer who collects and then forwards the money, right? Who did the servicer forward the money to? Where are the records of that? Has she seen them? Why not? So she has not seen all the records of the servicer, has she? And what did she do to corroborate that the creditors’ books show the same figures in the account receivable or if extraneous third party transactions have resulted in a reduction or increase of the account receivable as it relates to the subject loan? So she doesn’t know if the balance due on the servicer’s books is actually the same balance due shown on the creditor’s books?

That is the part the opposing side doesn’t want to see. By opening the door to payments out to the creditor, you are now tracing the money trail. By showing that there was deception on the part of the servicer, the records are untrustworthy.  Strike 3.

http://www.4dca.org/opinions/August%202013/08-28-13/4D12-3363.12-3364.op.pdf

Tags: business records exception, condominium manager, DOMBROFF, evidence, hearsay, mortgage servicers, preservation of objection, records custodian, timely objections, Yang and Romero v Sebastion Lakes
Posted in Corruption, Eviction |