Court Opinion

ID: 4543588
Source: CourtListenerOpinion
Date Created: 2020-06-24 15:04:11.817444+00
Date Added: 2024-06-11T08:01:14.702887
License: Public Domain

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be                                     FILED
regarded as precedent or cited before any                             Jun 24 2020, 7:31 am
court except for the purpose of establishing
the defense of res judicata, collateral                                   CLERK
                                                                      Indiana Supreme Court
                                                                         Court of Appeals
estoppel, or the law of the case.                                          and Tax Court

ATTORNEY FOR APPELLANT                                   ATTORNEY FOR APPELLEE
Thomas G. Bradburn                                       Kyle D. Michael
Noblesville, Indiana                                     Cincinnati, Ohio

                                           IN THE
    COURT OF APPEALS OF INDIANA

Kyli D. Smith,                                           June 24, 2020
Appellant-Defendant,                                     Court of Appeals Case No.
                                                         19A-CC-3041
        v.                                               Appeal from the DeKalb Superior
                                                         Court
National Collegiate Student                              The Honorable Monte L. Brown,
Loan Trust,                                              Judge
Appellee-Plaintiff.                                      Trial Court Cause No.
                                                         17D02-1901-CC-43

Tavitas, Judge.

Court of Appeals of Indiana | Memorandum Decision 19A-CC-3041 | June 24, 2020                 Page 1 of 12
                                                Case Summary
[1]   Kyli Smith (“Smith”) appeals the grant of summary judgment in favor of

      National Collegiate Student Loan Trust 2005-1 (“NCSLT”). We affirm.

                                                       Issues
[2]   Smith raises two issues on appeal, which we restate as follows:

                 I.      Whether NCSLT designated inadmissible hearsay
                         evidence in support of its motion for summary judgment.

                 II.     Whether a genuine issue of material fact exists regarding
                         NCSLT’s ownership of and right to collect on Smith’s
                         educational loan account.

                                                        Facts
[3]   On October 9, 2004, Smith executed a Bank One “Education One” loan

      agreement (“Contract”) with Bank One, N.A. (“Bank One”). 1 Appellant’s

      App. Vol. II p. 56. Bank One disbursed the loan funds to Smith on October 22,

      2004.

[4]   On February 23, 2005, Bank One executed a Pool Supplement Agreement,

      wherein Bank One “transfer[red], s[old], set[ ] over and assign[ed]” a bundle of

      educational loans to The National Collegiate Funding, LLC. See id. at 18. The

      bundle of educational loans was itemized in an attachment to the Pool

      1
          Smith’s mother, Charmaine Smith, co-signed the educational loan.

      Court of Appeals of Indiana | Memorandum Decision 19A-CC-3041 | June 24, 2020   Page 2 of 12
      Supplement Agreement and was referred to in the Pool Supplement Agreement

      as “the TRANSFERRED BANK ONE LOANS[.]” Id. Smith’s educational

      loan was among the transferred Bank One Loans. Id. at 76 (“Each of the

      following Pool Supplements was entered into [ ]: . . . Bank One, N.A., [ ] for

      loans that were originated under Bank One’s [ ] EDUCATION ONE Loan

      Program . . . .”) (emphasis in original). That same day, pursuant to a Deposit

      and Sale Agreement, The National Collegiate Funding, LLC, sold the same

      bundle of educational loans to NCSLT.

[5]   It is undisputed that Smith: (1) borrowed the educational funds; (2) has not

      made a payment on the loan since November 21, 2017; and (3) owes an

      outstanding balance. On January 24, 2019, NCSLT filed a complaint alleging

      that Smith breached the Contract and owed $6,854.75, as well as accrued and

      ongoing statutory interest. On March 29, 2019, Smith filed her answer and

      asserted various affirmative defenses, including that NCSLT lacked standing to

      pursue its claim.

[6]   NCSLT filed a motion for summary judgment, a memorandum in support, and

      supporting designated materials on July 15, 2019. NCSLT’s designated

      materials included the affidavit of Jacqueline Jefferis, in her capacity as the

      business records custodian for Transworld Systems Inc. (“TSI”). 2 On August

      15, 2019, Smith filed her response in opposition to NCSLT’s motion for

      2
          Loan subservicer TSI is the custodian of NCSLT’s loan documents.

      Court of Appeals of Indiana | Memorandum Decision 19A-CC-3041 | June 24, 2020   Page 3 of 12
      summary judgment, as well as her supporting designated materials. On

      September 12, 2019, the trial court conducted a hearing 3 on the motion for

      summary judgment; and on October 10, 2019, the trial court entered its order

      granting NCSLT’s motion for summary judgment. Smith filed a motion to

      correct error, which the trial court denied. Smith now appeals.

                                                  Analysis
[7]   Smith challenges the trial court’s entry of summary judgment in favor of

      NCSLT. Summary judgment is appropriate only when the moving party shows

      there are no genuine issues of material fact for trial and the moving party is

      entitled to judgment as a matter of law. Erie Indem. Co. for Subscribers at Erie Ins.

      Exch. v. Estate of Harris by Harris, 99 N.E.3d 625, 629 (Ind. 2018), reh’g denied; see

      also Ind. Trial Rule 56(C). Once that showing is made, the burden shifts to the

      nonmoving party to designate appropriate evidence to demonstrate the actual

      existence of a genuine issue of material fact. Schoettmer v. Wright, 992 N.E.2d

      702, 705-06 (Ind. 2013). When ruling on the motion, the trial court construes

      all evidence and resolves all doubts in favor of the non-moving party. Id. at

      706. We review the trial court’s ruling on a motion for summary judgment de

      novo, and we take “care to ensure that no party is denied his day in court.” Id.

      3
        The hearing on the motion for summary judgment appears to have been conducted telephonically. The
      record does not include a transcript.

      Court of Appeals of Indiana | Memorandum Decision 19A-CC-3041 | June 24, 2020              Page 4 of 12
      “We limit our review to the materials designated at the trial level.” Gunderson v.

      State, Indiana Dep’t of Nat. Res., 90 N.E.3d 1171, 1175 (Ind. 2018).

                                                  I.      Hearsay

[8]   Smith argues that affiant Jefferis “[lacks] personal knowledge of Bank One’s

      regularly conducted business activities and recordkeeping”; and “the documents

      and evidence offered by NCSLT in support of its motion for summary

      judgment are inadmissible hearsay.” Smith’s Br. pp. 11, 13. In ruling on a

      motion for summary judgment, the trial court must consider only the properly

      designated evidence which would be admissible at trial. Zelman v. Capital One

      Bank (USA) N.A., 133 N.E.3d 244, 248 (Ind. Ct. App. 2019); see Ind. T.R. 56(E).

      Such evidence does not include inadmissible hearsay contained in an affidavit.

      Id. Nor does it include documents that are unsworn statements or unverified

      exhibits. Id.

[9]   Although hearsay evidence is generally inadmissible, Indiana Evidence Rule

      803(6) provides for a business records exception to the hearsay rule. To

      establish admissibility under Rule 803(6), the proponent of the hearsay evidence

      must show:

              (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, organization, occupation, or calling,
              whether or not for profit;

      Court of Appeals of Indiana | Memorandum Decision 19A-CC-3041 | June 24, 2020   Page 5 of 12
               (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 the method or
               circumstances of preparation indicate a lack of trustworthiness.

       Ind. R. Evid. 803(6).

[10]   In support of her argument, Smith relies heavily on Holmes v. National Collegiate

       Student Loan Trust, 94 N.E.3d 722 (Ind. Ct. App. 2017); however, Holmes is

       readily distinguishable from the instant facts. In Holmes, NCSLT sued Holmes

       for failure to pay a student loan debt. Holmes argued that NCSLT lacked

       standing for its claim and challenged NCSLT’s designated affidavits as

       inadmissible hearsay. NCSLT successfully moved for summary judgment;

       however, a panel of this Court reversed on appeal.

[11]   The Holmes panel found:

               In support of summary judgment, NCSLT designated the
               affidavit of Jacqueline Jefferis, an employee of Transworld
               Systems, Inc. (“TSI”), the loan subservicer for U.S. Bank,
               National Association, the “Special Servicer” of NCSLT. Jefferis
               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

       Court of Appeals of Indiana | Memorandum Decision 19A-CC-3041 | June 24, 2020   Page 6 of 12
        and authorized to testify regarding Holmes’s specific loan and
        “the business records attached” to the affidavit. The purpose of
        the Jefferis affidavit was 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
        transferred from Charter One Bank to National Collegiate
        Funding LLC, before then being sold and assigned to NCSLT.

Holmes, 94 N.E.3d at 724 (citations and footnote omitted). Although Jefferis’

affidavit and supporting documents were hearsay, NCSLT argued that the

affidavit and documents fell within the business records exception to the rule

against hearsay. See Evid. R. 803(6). In rejecting this argument, the panel

reasoned:

        . . .[T]he Jefferis affidavit provided no testimony to support the
        admission of the contract between 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). There was
        no testimony to indicate that Jefferis was familiar with or had
        personal knowledge of the regular business practices or record
        keeping of Charter One Bank, the loan originator, or that of
        NCSLT regarding the transfer of pooled loans, such that she
        could testify as to the reliability and authenticity of those
        documents. Indeed, Jefferis 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
        records were kept in the course of the regularly conducted
        activities of either Charter One or NCSLT, and that making the
        records was part of the regularly conducted business activities of
        those third-party businesses. In Speybroeck [v. State, 875 N.E.2d
        813, 821 (Ind. Ct. App. 2007)], this Court stated that, pursuant to
        Trial Rule 803(6), one business “could not lay the proper

Court of Appeals of Indiana | Memorandum Decision 19A-CC-3041 | June 24, 2020   Page 7 of 12
               foundation to admit the records of another business because the
               requesting business lacked the personal knowledge required to
               ensure reliability.” Id. at 821; accord Williams 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).

       Id. at 725-26 (footnote and citations omitted). The panel, thus, deemed “the

       Jefferis affidavit insufficient to support the admission of two [ ] business records

       necessary for NCSLT to establish its prima facie case” and found it was

       inappropriate for the trial court to enter summary judgment in favor of NCSLT.

       Id. at 726.

[12]   Here, in support of its motion for summary judgment, NCSLT again tendered

       an affidavit from Jefferis. The instant Jefferis affidavit provides, in part:

               1. I am employed by Transworld Systems Inc. (hereinafter
               “TSI”), the Subservicer for [NCSLT] regarding [ ] the
               educational loan that is the subject matter of this Affidavit . . . . I
               am over the age of 18 and am competent and authorized to
               testify regarding this educational loan through my review of the
               business records maintained by TSI as custodian of records.
               These records include electronic data provided to TSI related to
               the educational loan, and the business records attached to this
               Affidavit.

               2. My statements [ ] are based on personal knowledge of the
               educational loan which I obtained through my training,
               experience, investigation and review of the business records that
               are kept and maintained by TSI as dedicated record custodian of
               this educational loan, and also my understanding of the
               structured loan program by which this educational loan was
       Court of Appeals of Indiana | Memorandum Decision 19A-CC-3041 | June 24, 2020   Page 8 of 12
        originated, funded, documented and sold ultimately to [NCSLT]
        . . . . The records I reviewed and relied upon in giving this
        Affidavit, including the business records attached [ ] (the “loan
        records”), consist of electronically stored documents and
        electronic data that are within TSI’s care, custody or control.

        3. TSI is currently [ ] the Subservicer for [NCSLT] . . . . [ ] TSI is
        custodian of the loan records, which records include loan
        origiation [sic] documents [NCSLT] obtained at acquision [sic].
        The loan records also includ [sic] electronic transactions
        pertaining to the educational loan . . . including [ ] transactions
        that occurred before TSI became the Subservicer . . . .

        4. I have access to, training and experience using the system of
        record utilized by American Education Services (“AES”) to
        enter, maintain and access the loan records during its role as
        servicer, and I am familiar with the transaction codes reflected in
        those records.

        5. It is TSI’s regularly-conducted business practice to incorporate
        prior servicers’ loan records into the system of record it maintains
        on [NCSLT’s] behalf . . . . I am familiar with the process by
        which TSI receives access to loan records from [NCSLT’s] prior
        servicers and incorporates those records into TSI’s system of
        record.

        6. AES[,] as the prior servicer of the educational loan, began
        servicing the educational loan upon the first disbursement and
        continued to service the educational loan until it was charged-off.
        Upon charge-off, the loan records were transmitted to and
        incorporated within the records of TSI (or its predecessor), as
        part of its regularly-conducted business practice. . . .

        7. I am familiar with the process by which TSI and AES, on
        behalf of [NCSLT], each receives loan records from the prior

Court of Appeals of Indiana | Memorandum Decision 19A-CC-3041 | June 24, 2020   Page 9 of 12
        servicer or loan originator, including loan origination documents
        and data recording the electronic transactions pertaining to the
        loans. . . . It is TSI’s regularly-conducted business practice to
        incorporate these loan records into the system of record it
        maintains on [NCSLT]’s behalf.

        8. Educational loan records that are within TSI’s care, custody
        and control as Subservicer for [NCSLT], including records
        entered and maintained by AES . . .were created, compiled or
        recorded, and kept as part of regularly conducted business
        activity at or near the time of the event recorded. The loan
        records were created, compiled or recorded from information
        transmitted by a person with personal knowledge of such event
        who had a business duty to report it, from information
        transmitted by a person with personal knowledge of such event.
        Such records are created, kept, maintained, accessed and relied
        upon in the course of ordinary and regularly conducted business
        activity.

                                              *****

        10. . . . [Smith] obtained an educational loan with [Bank One]
        and funds were disbursed on 10/22/2004. [Smith’s] educational
        loan was transferred, sold and assigned to National Collegiate
        Funding, LLC, on 2/23/2005 for valuable consideration, along
        with other educational loans (“Loan Pool . . . . Attached [ ] as
        Exhibit “C” is a true and correct copy of the Pool Supplement
        and a redacted excerpt of the Schedule of the Loan Pool . . .
        showing that [Smith’s] loan was part of the Loan Pool.

        11. On 2/23/2005, National Collegiate Funding, LLC
        transferred, sold and assigned the Loan Pool, including [Smith’s]
        educational loan [ ] to [NCSLT] for valuable consideration . . . .

Appellant’s App. Vol. II pp. 47-50 (citations omitted).

Court of Appeals of Indiana | Memorandum Decision 19A-CC-3041 | June 24, 2020   Page 10 of 12
[13]   Unlike the deficient affidavit that NCSLT tendered in Holmes, the instant

       affidavit demonstrated, from a source and circumstances that did not indicate a

       lack of trustworthiness, that: (1) the business records were made at, near the

       time, or from information transmitted by a person with knowledge; (2) the

       business records were kept in the course of regularly conducted activities of

       Bank One and/or NCSLT; and (3) the making of the business records was a

       regular practice of the business activities of Bank One, NCSLT, and their loan

       servicers and subservicers. See Ind. R. Evid. 803(6). NCSLT’s designated

       materials also established the manner in which Smith’s Bank One educational

       loan was transferred to NCSLT; and that Jefferis was familiar with the regular

       business practices or recordkeeping of NCSLT’s subservicer, TSI, as well as

       Bank One’s servicer, AES, regarding the transfer of pooled loans and, therefore,

       could testify as to the reliability and authenticity of those documents.

[14]   For the foregoing reasons, the instant affidavit and attached documentation

       satisfied the requirements of Evidence Rule 803(6) and were properly admitted

       as business records.

                                    II.     Ownership and Right to Collect

[15]   Smith also argues that the existence of a genuine issue of material fact

       precluded entry of summary judgment in NCSLT’s favor because “NCSLT

       failed to prove that it is the owner of Smith’s old Bank One account[.]” Smith’s

       Br. p. 13. We cannot agree. NCSLT designated materials that demonstrate

       that: (1) Bank One transferred, assigned, or sold a bundle of educational loans

       to The National Collegiate Funding, LLC, pursuant to the Pool Supplement
       Court of Appeals of Indiana | Memorandum Decision 19A-CC-3041 | June 24, 2020   Page 11 of 12
       agreement; (2) the bundle of educational loans incorporated loans that

       originated under Bank One’s Education One program, which included Smith’s

       Bank One educational loan; and (3) The National Collegiate Funding, LLC

       sold the same bundle of educational loans to NCSLT, pursuant to the Deposit

       and Sale Agreement. Accordingly, the trial court properly found that no

       genuine issue of material fact existed regarding NCSLT’s ownership of and

       right to collect regarding Smith’s defaulted educational loan; and that NCSLT

       was entitled to judgment as a matter of law.

                                                 Conclusion
[16]   The trial court properly admitted NCSLT’s designated materials. No genuine

       issue of material fact existed regarding NCSLT’s ownership of and right to

       collect regarding Smith’s defaulted educational loan; thus, the trial court

       properly entered summary judgment in NCSLT’s favor, and NCSLT is entitled

       to judgment as a matter of law.

[17]   Affirmed.

       Riley, J., and Mathias, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 19A-CC-3041 | June 24, 2020   Page 12 of 12