by Santo Longo, Esq. and Robert Wichowski, Esq.
Bendett & McHugh, PC
USFN Member (CT, ME, VT)
Editor’s note: Bendett & McHugh, PC represented the plaintiff in the case mentioned in this article.
On October 22, 2020, in The Bank of New York Mellon v. Danielle Shone, et al., 2020 ME 122, the Maine Supreme Judicial Court sitting as the Law Court (“Law Court”), the highest court in Maine, significantly clarified its prior rulings regarding the witness testimony needed to have the business records of a prior mortgage loan servicer admitted into evidence in a Maine foreclosure action.
As previously reported, in December 2017 the Law Court ruled that in order to authenticate the loan records of a prior servicer for admission into evidence, the testimony of a witness with significant knowledge of the prior servicer’s business practices was required. See KeyBank National Association v. Estate of Eula W. Quint, 2017 ME 237. As a result of that decision, foreclosure plaintiffs in Maine were frequently required to bring multiple witnesses to a single trial to ensure that at least one witness with personal knowledge about each prior servicer’s practices was present. This not only caused logistical problems for the plaintiffs, it also presented proof problems in cases where a witness with significant firsthand knowledge of a prior servicer’s practices was not available.
Fortunately for foreclosing parties, the Law Court has now clarified its prior ruling in the Quint case and established a less onerous evidentiary standard that is more in line with the approach taken in most other states as well as the federal courts.
In Shone, the trial court entered a judgment for the defendants, holding that the testimony of the current mortgage servicer’s witness was not sufficient to lay the foundation for admission of a record that was created by a prior servicer. Because the witness never personally observed how the records were created, the record was not able to be authenticated and was not entered into evidence. The trial court’s holding came even though the record being presented for admission had been checked for accuracy and integrated into the current servicer’s business records. As the record was required to prove plaintiff’s prima facie foreclosure case, the exclusion of the document resulted in the judgment for defendants. As previously written, Maine is a “one and done” state where a judgment in favor of the defendant results in a loss of the collateral.
On appeal, the Law Court In Shone held it is not required that a witness have personal knowledge of the business practices of other entities whose records have been integrated into the current servicer’s records for the integrated records to be admitted into evidence. The Law Court publically rebuked its own decisions in Quint and other recent foreclosure cases, noting that they diverged from, without specifically overruling, precedent in several earlier cases dating back to 1984. See Northeast Bank & Trust Co. v. Soley, 481 A.2d 1123 (Me. 1984).
Notably, after Quint, the Supreme Judicial Court amended Maine’s Rules of Evidence concerning the admission of business records to align with the Federal Rules of Evidence. This change became effective on August 1, 2018. Thereafter, on May 30, 2019, the First Circuit Court of Appeals released its decision in U.S. Bank Trust, N.A. v Jones, 925 F.3rd 534 (First Cir. 2019). The Jones decision, authored by former United States Supreme Court Justice David Souter, upheld a federal district court decision entering judgment for the foreclosing plaintiff in a Maine case, holding that the witness need not have personal knowledge of the record-keeping practices of a prior servicer whose records had been integrated into the current servicer’s records.
The Law Court’s decision in Shone still requires the witness to have personal knowledge of the current servicer’s record-keeping practices, as well as how the current servicer integrated the records of other businesses into its records, including how those integrated records were verified and relied upon by the current servicer to show that they are trustworthy. The Court also noted that a record may still be rejected if the opponent is able to demonstrate “that the source of the information or the method or circumstances of preparation indicate a lack of trustworthiness.”
This is a significant victory for foreclosing parties, who will ordinarily no longer be required to present a string of witnesses in order to have a chain of business records from prior servicers admitted into evidence in Maine foreclosure actions.
Copyright © 2020 USFN. All rights reserved.
December 2020 e-Update
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