Hearsay – Business Records Exception; Admissibility of Witness Testimony at Debt Collection Trial

Bayview Loan Servicing LLC v. Wicker, 163 A.3d 1039 (Pa. Super. 2017), allocatur granted Jan. 17, 2018, appeal docket 3 WAP 2018

This case involves a foreclosure action brought by Bank of America (BOA) against James and Beryl Wicker based on a mortgage assigned to Bank of America by Mortgage Electronic Registration Systems, Inc (MERS).

The trial court allowed Bayview to present the testimony of Terrence Schonleber for the purposes of authenticating business records over the Wickers’ hearsay objection that Schonleber lacked personal knowledge required to authenticate the records. Relying on U.S. Bank, N.A. v. Pautenis, 118 A.3d 386 (Pa. Super. 2015), the trial court reasoned that Schonleber “could authenticate and verify the accuracy of the relevant records such that the [trial court] did not need to find that he had personal knowledge of the underlying facts in order to testify.” Slip Op., at 15.

Pursuant to Pa. R.E. Rule 803(6), the admission of a recorded act, event or condition is admissible if:

(A) the record was made at or near the time by—or from information transmitted by—someone with knowledge;

(B) the record was kept in the course of a regularly conducted activity of a “business”, which term includes business, institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit;

(C) making the record was a regular practice of that activity;

(D) all these conditions are shown by the testimony of the custodian or another qualified witness, or by a certification that complies with Rule 902(11) or (12) or with a statute permitting certification; and

(E) neither the source of information nor other circumstances indicate a lack of trustworthiness.

In determining whether the source of information indicates a lack of trustworthiness, the Superior Court noted its finding in Pautenis that:

“As long as the authenticating witness can provide sufficient information relating to the preparation and maintenance of the records to justify a presumption of trustworthiness for the business records of a company, a sufficient basis is provided to offset the hearsay character of the evidence.” Boyle v. Steiman, 631 A.2d 1025, 1032–33 (1993) (internal citations omitted), appeal denied, 649 A.2d 666 (Pa. 1994).

Slip Op., at 15 (quoting Pautenis, 118 A.3d at 401).

Based on the holdings in Pautenis and Boyle, the Superior Court agreed with the trial court’s conclusion that Schonleber’s testimony was qualified to authenticate the business records produced at trial, and that this testimony was not hearsay, even though Schonleber’s testimony was based on records compiled by a third party.

In so ruling, the Superior Court failed to recognize any conflict with or distinguish its decision in Commonwealth Financial Systems v. Smith, 15 A.3d 492, 497 (Pa. Super. 2011), wherein the Superior Court refused to adopt the federal “rule of incorporation” that a document prepared by a third party is properly admitted as part of the business records of the acquiring business, if the business integrated the document into its records and relied upon it.

The Pennsylvania Supreme Court granted allocatur on the following issues as stated by the Wickers:

(1) Did the Superior Court err in affirming the decision of the trial court which found the [Respondent’s] witness competent to testify and received evidence under the business records exception to the hearsay rule?

(2) As to the contested evidence received by the Court, will a grant of allocatur, here, resolve the conflict between both U.S. Bank v. Pautenis; Boyle v. Steiman and Commonwealth Financial Systems v. Smith as to the admissibility of witness testimony at a debt collection trial?

For more information, contact Kevin McKeon or Dennis Whitaker.