Florida Supreme Court Sets the Standard for Loan Servicer Business Record Authentication

On July 2, 2020, the Florida Supreme Court issued its ruling Jackson v. Household Finance Corporation III, et al., SC18-357, 2020 WL 3580036, and provided new guidance for record authentication under the business records exception to the hearsay rule. At issue in the case was whether or not a testifying employee properly authenticated business records maintained by HSBC with respect to a mortgage loan account. The Florida Supreme Court’s ruling in favor of the lender resolves a split of authority in Florida on the quantum of proof necessary to access the business records exception to the hearsay rule in Florida.

Section 90.803(6) sets forth Florida’s requirements to establish a hearsay exception for business records. The Florida Supreme Court reiterated the four elements of the business records exception: (1) that the record was made at or near the time of the event, (2) that it was made by or from information transmitted by a person with knowledge, (3) that it was kept in the ordinary course of a regularly conducted business activity, and (4) that it was a regular practice of that business to make such a record.

In Jackson, the defendant challenged whether or not the  necessary predicate testimony had been adduced as to the elements, and whether the witness had the requisite personal knowledge to establish these elements.  In holding that the witness’s testimony laid an adequate foundation for the records in question, the Florida Supreme Court held:

“Here, the proponent presented the testimony of a twenty-five year employee and executive vice president who testified that he was ‘familiar with the business practices of the company’ and that it was the company’s ‘regular business practice’ to ‘record acts, transactions, payments, communications, escrow account activity, disbursements, events and analysis with respect to the mortgage loan account.’ He further testified that the documents met each of the other foundational requirements set forth in section 90.803(6), using the language of the statute or a close approximation of it, as detailed above. No additional foundation is required by the statute or by any case from this Court, and we reject the notion that the witness must also detail the basis for his or her familiarity with the relevant business practices of the company or give additional details about those practices as part of the initial foundation because this would be inconsistent with the plain language of the statute.

Rather, once the proponent lays the predicate for admission of documents set forth in the statute and reflected in our case law, ‘the burden shifts to the opposing party to prove that the records are untrustworthy,’ or that they should not be admitted for some other reason.”

Id. (internal citations omitted). The Florida Supreme Court reiterated that the person authenticating business records for use in court proceedings need not be the person who created the document, and need not have been present when the document was created. Instead, “a qualified witness, therefore, is anyone with personal knowledge of the organization’s regular business practices relating to creating and retaining the record(s) at issue. This knowledge will necessarily come from the witness’s training or experience, or, most likely, a combination of both.” Id. (internal citations omitted).

Furthermore, as to the witness’ competence, the Florida Supreme Court found that the witness’ testimony on cross examination revealed no “disqualifying deficiency in his relevant knowledge.” Id.  Specifically, the Court observed:

“[The witness] explained that during his twenty-five years with the company he had ‘been in the various departments’ and ‘managed various departments’ such that he had ‘basically become really familiar with a lot of the different questions.’ He also mentioned ‘cross-training and what have you.’ Additionally, on cross-examination, [the witness] testified that he first became familiar with the Jackson file and documents ‘a couple of months ago.’ [The witness] explained that ‘upon [his] review of the documents,’ he personally ‘went into [HSBC’s] imaging system and reviewed those documents and compared them to the ones that were printed today.’ [The witness] stated that ‘they have not been changed,’ and that ‘[t]hey are the same that have been imaged in our system from the beginning.’ These responses demonstrate a working knowledge of HSBC’s relevant record-keeping practices and system.”

The Florida Supreme Court expressly rejected the opinions of lower courts, such as Florida’s Fourth District Court of Appeal, that had treated as a necessary prerequisite to the admission of business records testimony above and beyond the elements of the exception, such as requiring testimony showing detailed knowledge of the “procedures for inputting payment information into their systems and how the payment history was produced[.]” See e.g. Maslack v. Wells Fargo Bank, N.A., 190 So. 3d 656 (Fla. 4th DCA 2016).  The Florida Supreme Court also rejected the idea that a witness who testifies to the elements of the business records exception in terms verbatim to the language of the statute somehow offers lesser evidence than a witness whose testimony uses more colloquial phraseology when testifying. Id.

The Florida Supreme Court’s rationale for not requiring more testimony to authenticate business records is twofold: first the Court recognized that the statutory elements of the business records exception are just that, the elements, and requiring more would be both unfaithful to the statute and unnecessarily time consuming and expensive given that “documents are what they purport to be in 99 out of 100 cases”,  including mortgage foreclosure actions. Id. In other words, the Florida Supreme Court recognized that the business records authentication process should be simple and the burden of proof to authenticate a document is slight.  Id.  Finally, the Court recognized that in those rare cases where fraud is being perpetrated, nothing prevents the opposing party from bringing forth the evidence to make that apparent to the Court.  For example, in Jackson, despite appealing all the way to the Florida Supreme Court, the defendant did not even dispute the accuracy of the records in question – only whether more foundational evidence should have been required to admit the document into evidence.

The Florida Supreme Court’s common sense approach should cut against what has become a favored tactic to delay mortgage foreclosure and other financial services litigation matters - unnecessary hearsay objections to properly authenticated business records. The Florida Supreme Court’s ruling also provides a useful rubric for lenders, loan servicers, and any other business involved in litigation, on how to properly authenticate business records into evidence and the nature of the knowledge witnesses must possess to survive cross examination if the foundation for business records authentication testimony is challenged.

The Florida Supreme Court’s opinion can be found here.

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