Court of Appeals of Indiana | Opinion 87A05

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A TTORNEY FOR A PPELLANT Thomas G. Bradburn Bradburn Law Firm Noblesville, Indiana A TTORNEY S FOR A PPELLEE Seth Row Daniel Bogatz Javitch Block LLC Cleveland, Ohio



### I N T H E 

# COURT OF APPEALS OF INDIA NA

Alexander Holmes , Appellant

- Defendant,

v. 

### National Collegiate Student Loan Trust , Appellee

- Plaintiff February 27, 2018 Court of Appeals Ca se No. 87A05

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- 2517 Appeal from the Warrick Superior Court The Honorable Robert R. Aylsworth, Judge Trial Co urt Cause No. 87D02

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- 987

Crone , Judge .Court of Appeals of Indiana | Opinion 87A05

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### Ca se Summary
[1] Alexander Holmes appeals the trial court’s entry of summary judgment in favor of National Collegiate Student Loan Trust (“NCSLT”) . Conclud ing that Holmes has met his burden to persuade us that the grant of summary judgment
was erroneous , we rev erse and remand

.



### Facts and Procedural History
[2] On November 30, 2006, Holmes cosigned a Loan Request/Credit Agreement with Charter One Bank on behalf of his son, Nicholas Holmes. The loan was an education loan for Nicholas to attend the University of Southe rn Indiana from August 2006 through May 2007. In March 2007, Charter One Bank sold a pool of student loans to National Collegiate Funding LLC, which in turn sold the loans to NCSLT. This pool of loans allegedly contained Holmes’ s specific loan account.

[3] O n August 15, 2016, NCSLT filed a complaint against Holmes alleging that it was the owner of Holmes’ s account and that Holmes owed $16,578.60 plus accrued interest

. Holmes filed his answer and affirmative defenses, including the defense that NCSLT lacked s tanding to bring its claim.

[4] On March 22, 2017, NCSLT filed a motion for summary judgment and designation of evidence. In response, Holmes asserted that NCSLT failed to prove that it owned his account and further that much of NCSLT’s designated evidence w as inadmissible pursuant to Indiana Trial Rule 56(E). Following a hearing , the trial court entered summary judgm ent in favor of NCSLT. TheCourt of Appeals of Indiana | Opinion 87A05

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court ordered Holmes to pay NCSLT $18, 183.26 plus interest and costs. Holmes filed a motion to correct error , which the trial court denied. This appeal ensued. 

### Discussion and Decision
[5] Holmes appeals the trial court’s entry of summary judgment in favor of NCSLT. Summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Wagner v. Yates , 912 N.E.2d 805, 808 (Ind. 2009) . “The party moving for summary judgment has the burden of making a prima facie showing that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law.” Goodwin v. Yeakle’s Sports Bar & Grill, Inc. , 62 N.E.3d 384, 386 (Ind. 2016). Once that showing is mad e, the burden shifts to the non movant to come forward with contrary evidence showing the existence of an issu e for the t rier of fact. Hughley v. State , 15 N.E.3d 1000, 1003 (Ind. 2014). In determining whether the moving party is entitled to summary judgment, “[w]e consider only those materials properly designated pursuant to Trial Rule 56 and construe all fact ual inferences and resolve all doubts ... in favor of the non

- moving party.” Young v. Hood’s Gardens, Inc. , 24 N.E.3d 421, 424 (Ind. 2015).

[6] Holmes contends that NCSLT has failed to establish the absence of a genuine issue of material fact. Particularly, Holmes argues that much of NCSLT’s designated evidence is inadmissible hearsay , and thus the evidence prese nted isCourt of Appeals of Indiana | Opinion 87A05

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insufficient to make a prima facie showing that NCSLT is entitled to summary judgment on its claim against Holmes . We agree

.
[7] T o make its pr ima facie case in support of summary judgment, NCSLT was required to show that Holmes executed a contract for the student loan with Charter One Bank, that NCSLT was the assignee and is now the owner of that debt , and that Holmes owed the original lender, C harter One Bank , the amount all eged

. Se e Se th v. Midland Funding, LLC , 997 N.E.2d 1139, 1140 (Ind. Ct. App. 2013) (discussing designated evidence necessary to make prima facie case in support of summary judgment in favor of creditor claiming breach of cre dit card contract)

. In support of summary judgment, NCSLT designated the affidavit of Jacqueline Jeffer i s, an employee of Transworld Sy stems, Inc. (“TSI”), the loan subservicer for U.S. Bank , National Association , the “Special Servicer” of NCSLT. Appella nt’s App. Vol. 2 at 14 . Jeff eri s stated that she was the “designated custodian of records” for TSI . She stated that she was “familiar with the process by which TSI received prior account records,” that it was “TSI’s regularly

- conducted business practice to incorporate prior loan records

... into TSI’s business records,” and therefore she was competent and authorized to testify regarding Holmes’s specific loan and “the business records attached” to the affidavit. Id . The purpose o f the Jefferi s affidavit wa s to authenticate and lay the foundation for the admissibility of several attached documents, the most relevant for our review being the loan contract between Holmes and Charter One Bank, and the schedule of pooled loans transferredCourt of Appeals of Indiana | Opinion 87A05

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from Charter One Bank t o National Collegiate Funding LLC, before then b eing sold and assigned to NCSLT

. 1

[8] Indiana Trial Rule 56(E) provides that s upporting and opposing affidavits on summary judgment “ shall be made on personal knowledge, shall set forth such facts as would be a dmissible in evidence , and shall show affirmatively that the affiant is competent to testify to the matters stated therein

. ” T he requirements of Trial Rule 56(E) are mandatory , and a court considering a motion for summary judgment should disregard inadmis sible information contained in supporting or opposing affidavits. Seth , 997 N.E.2d at 1143. Inadmissible hearsay contained in an affidavit may not be considered in ruling on a motion for summary judgment. Breining v. Harkness , 872 N.E.2d 155, 158 (Ind. Ct. App. 2007), trans. denied (2008).

[9] NCSLT admits that the Jefferi s affidavi t and supporting documents are hearsay. 2 However, NCSLT argues that the material offered is admissible because it falls within the business records exception to th e hearsay rule. Specifically, Indiana Evidence Rule 803(6) provides that records of a regularly conducted business activity are not excluded by the rule against hearsay if: the record w as made at or near the time by

— or from information tra nsmitted by

—

1 The additional attached documents included computer print outs of the loan financial activity, a deferment /forbearance summary, the loan repayment schedule, and the loan payment history report. 2 He arsay is an out of court assertion offered in court to prove t he truth of the matter asserted. Ind. Evidence Rule 801(c). Absent an exception to the rule, hearsay is inadmissible as evidence. In re E.T. , 808 N.E.2d 639, 641 (Ind. 2004); Ind. Evidence Rul e 802.Court of Appeals of Indiana | Opinion 87A05

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someone with knowle dge; the record was kept in the course of a regularly conduc ted activity of a business; making the record was a regular practice of that activity; all these conditions are shown by the testimony of the custodian or another qualified witness; and neither th e source of information nor the method or circumstances of preparation indicate a lack of trustworthiness. To ensure reliability, t he proponent of a business record must authenticate it, and Evidence Rule 803(6) permits authentication by affidavit

. Speyb roeck v. State , 875 N.E.2d 813, 819 (Ind. Ct. App. 2007)

. As an exception to the hearsay rule, the business record exception must be strictly construed. Id

.
[10] Here, t he Jeff

eri s affidavit provided no testimony to support the admission of the contract betwe en Holmes and Charter One Bank or the schedule of pooled loans sold and assigned to National Collegiate Funding, LLC, and then to NCSLT, as business records pursuant to Evidence Rule 803(6)

. T here was no testimony to indicate that Jeff eri s was familiar wi th or had personal knowledge of the regular business practices or record keeping of Charter One Bank , the loan originator, or that of NCSLT regardi ng the transfer of pooled loans, such that she co uld testify as to the reliability and authenticity of those documents

. Indeed, Jeff

eri s offered no evidence to indicate that those records were made at or near the time of the business activities in question by someone with knowledge, that the rec ord s were kept in the course of the regularly conducted activities o f either Charter One or NCSLT, and that making the record s was part of the regularly conducted business activities of those third

- party businesses

. In Speybroeck , this Cour t stat ed that, pursuant to Trial Rule 803(6),Court of Appeals of Indiana | Opinion 87A05

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one business “could not lay the prope r foundation to admit the records of another business because the requesting business lacked the personal knowledge
re quired to ensure reliability.” Id . at 821 ; accord W illiams v. Unifund CCR, LLC , 70 N.E.3d 375, 379 (Ind. Ct. App. 2017) (affiant from one business who did not have personal knowledge of another business’s regularly conducted business activities could not lay foundation for admission of exhibit)

. 3 Because the Jeff eri s affidavit is insufficient to support the admission of two of the business records necessary for NCSLT to establish its prima facie case , summary judgment is inappropriate

.
[11] Under the circumstances, we conclude that NCSLT h as failed to make a prima facie case in support of summary judgment. Accordingly, we reverse and remand for further proceedings.

[12] Reversed and remanded.
Robb, J., and Bradford, J., concur.

3 NCSLT argues that some federal circuit courts have allowed authentication of third

- party business records pursuant to Federal Rule of Evidence 803(6), but Indiana courts have not applied Indiana Evidence Rule 803(6) in the same way. This would n ot be the only point regarding hearsay evidence upon which we diverge from our federal counterparts. Indiana has also never adopted a residual exception like Federal Rule of Evidence 807 , which allows trial judges to exercise discretion to admit certain h earsay evidence. VanPatten v. State , 986 N.E.2d 255, 269 (Ind. 2013) (Massa, J., concurring in result).