Keybank National Association v. Estate of Eula W. Quint

Citations: 2017 ME 237; 176 A.3d 717

Court: Supreme Judicial Court of Maine; December 20, 2017; Maine; State Supreme Court

Original Court Document: View Document

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KeyBank National Association appeals a District Court judgment favoring Vickie L. Kilton and the Estate of Eula W. Quint in a residential foreclosure case. KeyBank contests the court's denial of its motion to continue the trial and the ruling regarding the admissibility of loan servicing records under the business records exception to hearsay. The judgment is affirmed. Although the Estate did not participate in the appeal, it remains involved in the litigation related to the promissory note and mortgage.

KeyBank initiated foreclosure proceedings on September 30, 2015. After Quint's death, Kilton informed KeyBank, leading to the appointment of a special administrator for the Estate, which filed an answer to the complaint and waived mediation. Kilton did not respond until a trial management conference in December 2016, where she appeared unrepresented. 

During the nonjury trial on April 14, 2017, neither the Estate's counsel nor its personal representative attended. Kilton, represented by an attorney who had just filed a limited appearance, opposed KeyBank's request for a continuance, suggesting KeyBank lacked sufficient evidence. The court denied the continuance, noting that it was not contingent on the Estate's presence.

KeyBank presented Kilton as its first witness, who acknowledged executing a promissory note secured by a mortgage and admitted to defaulting on payments. The only other witness was a complex liaison from PHH Mortgage Services, the current loan servicer for KeyBank. He provided testimony regarding the documentation and processing of loan accounts, PHH's security measures, and the procedures for integrating transferred loans, emphasizing the thorough checks for accuracy before loans are added to PHH's system.

A complex liaison testified to having access to and familiarity with PHH’s records, which he reviews daily. His responsibilities include attending judicial proceedings related to foreclosure actions, for which he reviews all relevant records beforehand. In this case, he confirmed that the loan from KeyBank to Kilton and Quint has been overdue since March 2009, with PHH assuming servicing responsibilities after that date. The court admitted KeyBank's exhibits one through six into evidence, which included key documents such as the original promissory note, recorded mortgage, assignments of the mortgage, and a notice of default issued in August 2015. The liaison also noted that an allonge transferring the note to Bank of America was later voided.

KeyBank sought to admit exhibit seven, which consisted of screenshots from PHH’s system detailing the loan's amounts owed and outstanding balance, under the business records exception to the hearsay rule. Kilton objected, questioning the foundation of the records since they were based on prior servicers' records, arguing that the witness lacked knowledge of their record-keeping practices. The court found the testimony insufficient to admit exhibit seven, leading to KeyBank’s inability to prove the loan amount—a crucial element of its foreclosure action. Consequently, Kilton moved for a judgment as a matter of law, resulting in a judgment favoring Kilton and the Estate. KeyBank subsequently appealed, claiming the trial court erred in not admitting the PHH loan servicing records. The appeal asserts that the complex liaison's testimony established a proper foundation for the business records exception, with the appellate review standard being "clear error." The appealing party must show that the trial court's ruling contradicts the evidence in the record.

Business records are generally considered hearsay and inadmissible under M.R. Evid. 802 unless they satisfy the business records exception outlined in M.R. Evid. 803(6). To be admissible, a business record must meet several criteria: it should be created at or near the time of the event by someone with knowledge; maintained in the regular course of business; made as a standard practice; supported by testimony from a custodian or qualified witness; and must not indicate untrustworthiness through its source or preparation method. A qualified witness may not necessarily be an employee of the original record creator but must have intimate knowledge of the business's operations.

In the specific case reviewed, a complex liaison provided testimony regarding PHH's daily operations but was deemed unqualified to authenticate screenshots from PHH’s computer system due to gaps in the loan servicing history. The witness failed to address the regular business practices of prior servicers, which were crucial for establishing the admissibility of records integrated into PHH’s system. The history of the loan indicated that after Kilton and Quint signed a promissory note for $65,000 with KeyBank, they received bills from Countrywide, and ownership of the note transferred between KeyBank and Bank of America. However, there was no evidence about who serviced the loan before PHH took over after March 2009. Although the witness provided insight into PHH's loan boarding procedures, this did not establish the regular practices of earlier servicers, leading the trial court to correctly determine that KeyBank did not lay a proper foundation for the admission of PHH’s servicing records.

KeyBank contended that the court erred in denying its motion for a continuance on the grounds of unfair surprise due to Kilton's representation by counsel at trial. KeyBank asserted that it would have prepared differently had it known about opposing counsel's presence. The court's decision to deny a continuance is reviewed for abuse of discretion, focusing first on the reasons presented at the time of the request and then evaluating any prejudicial effects on KeyBank's rights. KeyBank provided two reasons for the continuance: Kilton's ability to seek a loan modification with legal assistance and the absence of the Estate. However, Kilton rejected the loan modification, which did not impact KeyBank’s strategy. KeyBank also acknowledged that the Estate’s absence would not influence the case outcome. Consequently, KeyBank failed to demonstrate substantial justification for the continuance, leading the court to conclude that denying it did not constitute an abuse of discretion. On appeal, KeyBank introduced new reasons, which cannot be considered as appellate review is limited to the theories presented at trial. Furthermore, the court found that Kilton's attorney's presence did not unfairly surprise KeyBank, nor did it alter the burden of proof, as no witnesses or evidence were presented by Kilton. Therefore, the trial held was effectively the same as the one for which KeyBank was prepared. The judgment was affirmed.