Court Opinion

ID: 3192393
Source: CourtListenerOpinion
Date Created: 2016-04-07 20:02:40.891299+00
Date Added: 2024-06-11T13:14:30.573382
License: Public Domain

IN THE SUPERIOR COURT ()F THE STATE OF DELAWARE

MIDLAND FUNDING LLC,
Assignee of CITIBANK, N.A.
(SEARS PREM_IER CAR_D),
Plaintiff~beiow Appellant,
C.A. NlSA-OI~OOS Al\/IL

ERl\/IA GRAVES,

Defendant-beloW/Appe]lee.

\-.../\._/\..../\.._/\.J‘-._/\__/g/\_,/\__,/\__,/-.._/

Subn'iitted: February 15, 2016
Decided: April 7, 2016

()RDER

On appeal from a decision of the Court of Common Pleas: AFF]Rl\/IEI).

This is an appeal from a decision of the Court of Comrnon Pleas in a
consumer debt aetion. The assignee of the original creditor filed the action,
seeking payment of an overdue debt. On the day of trial, the trial judge granted
judgment in favor of the debtor after ruling inadmissible an affidavit the assignee
sought to offer to prove the debt’s existence and its assignment to the plaintiff

The assignee filed this appeal.

Proeedurai History

On Septeinber 8, 2014, Midland Funding, LLC ("l\/Iidland") filed an action
against Ernia Graves to collect a $3,l5().08 debt The debt was a Citibanl<, N.A.,
Sears credit card account that Citibank allegedly assigned Midland. Graves filed an
answer to the Coinplaint, admitting most of the allegations.' Specificall_y, Graves
admitted: (1) she "defauited on the Account by failing to make the payment due;""'
(2) there is "now due and owing froin defendant to plaintiff the principal balance

of $3,150.08;"3 and (3) "Defendant is indebted to Plaintiff based on Account stated

aboveYM

l\/Iidland and Graves appeared for trial on January 9, 2015. l\/Iidland argued
that because Graves admitted the allegations in her answer, there was nothing more
to prove and judgment should be entered against Graves. Midland attempted to
move into evidence certain business records purportedly establishing both the
amount of the debt and the assignment from Citibanl< to Midland. 'l`o admit the
evidence, l\/Iidland relied on an affidavit from Lori 'l`hielen-Nelson, who was an
officer of l\/lidland and a. °‘legal specialist" of Midland Credit Managelnent, Inc.

("MCM"), the entity that services l\/Iidland’s accounts (the "l\/lidland Affidavit").5

g Appellalit’s Opening Br. App. A-l6 ("App.").
Ans. to Compl. il 3.
3 1a 31114.
" rd. ar 11 6.
5 App. /\~20.

Original to Prothon<)tary
cc: Seth H. Yeag@r, Esquire
Ms. Erxna Graves,pro se, via Fist Class M`aif

I l

ln a letter dated December 8, 2014, Midland sent Graves a copy of the
l\/lidland Affidavit and attached records and indicated the affidavit would be
introduced at trial. in the letter, Midland explained the affidavit "deznonstrate[s]
the correct amount owed on [Grave’s] Citibank, N.A. account."° The letter did not
notify Graves that the records also would be introduced to establish the assignment
of the debt from Citibanl< to Midland.

"l`he records to which the Midland Affidavit refers include a bill of sale and
assignment (the "Assigninent"),? an affidavit of sale of account by original creditor
(the "Affidavit of Sale"),g and credit card statements.g 'l`he Assignlnent from
Citibank to l\/Iidland, dated February 24, 2014, offers no specific information as to
which accounts were sold, referring only to "the Accounts described in Exhibit l

1150

and the final electronic fiie. Exhibit 1, however, is redacted almost coinpletely,

leaving no account information whatsoever."

The Affidavit of Sale, dated March 3, 2()14, was executed by Patricia Hall,
who was the financial account inanagei' of Citibank, N.A., and states: "I have
access to the creditor’s books and records and am aware of the process of the sale
of accounts and electronic storage of business records. . . . As part of the [February
" Id. ar /\-19.

l let at A-23.
*"!d. ar A-zs.
9 Id. at A-ZS through A-3 l.

"’ 1a at A-zz.
" Id. at A-z¢a.

24, 20]4] sale of the Accounts, certain electronic records were transferred on
individual accounts to the debt buyer."iz Aithough the Affidavit of Sale states that
the affiant is "not aware of any errors in the information provided about the
Accounts," it provides no more information than that Citibank "sold a pool of
charged-oft` accounts . " § 3

The l\/lidland Afi'idavit refers to attached records and a "data sheet," which
allegedly "contaiii[s] account data printed by l\/l'Cl\/l, without alteration or
rnodiiicatioii, directly from electronic records provided by [Citibanl<] in connection

"ll The data sheet consists of the debtor’s account

with the sale of the account
inforination, and at the bottom it states: "Data printed by Midland Credit
l\/laiiageinent, Inc. from electronic records provided by Citibank, N.A. pursuant to
the Bill of Sale / Assigninent of Accounts transferred on or about 2/24/2()14 in
connection with the sale of accounts from Citibanl<, N.A. to l\/lidiand Funding,
LLC."“

'I` he Court of Common Pleas refused to admit the evidence because l\/lidiand

did not have a business records custodian present to testify at trial.m l\/l`idland’s

counsel argued that the affidavit was sufficient to admit the evidence under

"rd_ m /\»25.

ll Icf.

ll /d. al A-Zl;siee /~\-27.

'~‘Id. ata-21

m Mi`ca’lari'd Fztiictl, LLC v. Gi'c!ves, CPU¢l-i¢i-OUZ§'Y'/’, at 4, 5, 8 (Dcl. Com. Pl. Jan. 9, 2015)
('I`IKANSCRIP'F) ("'l`r.").

Delaware Rules of Evidence ("D.R.E.") 803(6)'7 and 902(11).'8 'l`he l\/Iidiand
A'ftidavit states that "[l\/Iidland] purchases portfolios of deiinqtlent accounts . . .
and contracts with its affiliate, l_\/ICl\/i, to service the accounts on [l\/lidland]’s
belialt";" "l\/ICM holds the cornputei' records and account information for accounts
purchased by [l\/Iidland];" the affiant has "access to" and has "reviewed the
electronic records pertaining to the account" and is "authorized to make this
affidavit on [l\/iidla.nd]’s behait`;" and the affiant is °‘fainiliai‘ with and trained on the

manner and method by which l\/ICl\/I creates and maintains its business records

pertaining to this account."lg

The court rejected that argument, reasoning that a business custodian was
required to testify and holding that: "If you’re seeking to get those documents in

through the evidence rules without a business records custodian, I find that that’s

01 20

not an acceptable matter here. The trial judge stated that Graves could not

"admit to a transfer of the debt that she knows nothing about and doesn’t

understand" and that the proffered affidavit was not an acceptable way to move the

'7 D.R.l%l. 803.6 Records ofregularly conducted activity (allowiiig the introduction of records of regularly
conducted activity if it is acco:np)aiiied by testirnony or "ceititication that coinpiies with D.R.E. 902(1 l),
l`).R.l%`,. 902(l2) . . . .").

"‘ D.R.E. 902(11) Certified doincstic records of regularly conducted activity (Rccords arc “vdniissible
under Rule 803(6) if accompanied by a written declaration of its custodian or other qualified person . . .
certifying that the record (A) was made at or near the time of the occurrence of the tnat'tcrs set forth by, or
front information transmitted by, a person with knowledge of those lnatters; (B} was kept in the course of
the reguiarly conducted activity; and {C) was made by the regularly conducted activity as a regular
practice.").

"" /»\pp. /\»20.

lt 'n-. 7.

evidence into the record.z] 'l`he court below did not reach the issue of whether the
evidence, if admitted, was sufficient to satisfy i\/lidland’s burden to prove the
assignment of the debt. l\/Iidland had nothing else to present. The Couit therefore
entered judgment for Graves.zz l\/iidland filed a timeiy appeal on january 23,
2015_23
The Parties’ Contentions

l\/iidland’s appeal is based on one argument the trial court improperly

refused evidence that should have been accepted as business records.% Graves’

response consists of two sentences:

i am requesting the courts to strike l\/lidiands’s[sic]
business records that Mr. Yeager' attempted to submit
into evidence via Affidavit at the January 9, 2015 trial,
and my Answer from October 22, 2014 frorn Yeager’s
Opening Brief, dated August 13, 2015. Based on no new
evidence, I ask the Superior Court to uphold the decision
rendered at the lower court and to please dismiss.

Analysis
This Court "rcviews evidentiary rulings by the Court of Common Pleas

under an abuse of discretion standard."z§ "An abuse of discretion occurs when ‘a

court has . . . exceeded the bounds of reason in view of the circumstances,’ [or] . . .

2' 1a at a

 Id. at l() ("|:'l`]lie state is finding a .itldgiiielit for you[_, Graves].").

23 Super. Ct. Civ. R. 72(1)) ("ifno time is prescribed by statute, the notice of appeal shall be filed within
15 days froin entry ot` the final judgment, order, or disposition front which an appeal is perniitted by
law.").

24 Appeilant’s Opeiiing Br. 9.

25 city (JW:J»»¢/iigi@ii v. F/aiii@i~, 20 r 3 wis 4829585, at *4 (o@i. sup@i-. may 22, 2013) testing pet
Acceprcnice Corp. v. Stvcrirr, 20l2 WL 6042644, at *6 (Del. Stlper. Nov. 30, 2012)).

6

so ignored recognized rules of law or practice . . . to produce injustice."z(’ "["I`]o
find reversible error in an evidentiary ruling, [the court] must find not only error in
the ruling, but that a "substantial right of the party is affected.’m lf the reviewing
court determines that the lower court abused its discretion, the court then must
consider whether the act resulted in significant prejudice.?"g

'i"he court below erred in its holding that l\/Iidland was prohibited from
admitting the business records without a business custodian’s live testiinony. To
the extent the lower court’s ruling suggests that a custodian must testify before a
court will admit business records into evidence, that ruling is at odds with D.R.E.
8()3(6), which perinits admission of records of regulariy conducted activity if
accompanied by testimony or "certification that complies with D.R.E. 902(11)."29
The record contains nothing that indicates the court below considered whether the
Midiand Afiidavit complied with D.R.E. 902(11). If the Midland Affidavit
complied with the rules, the affidavit and accompanying records should have been

admitted into evidence. Graves’ status as a self-represented litigant does not alter

the rules of evidence.

25 De/. Accepicrivce Cl'r)rj)., 2012 WL 6()42644, at *3 (quotirtg Cu/p v. Slcrie, 766 A.Zd 486, 489
(I`Jc:|.ZO(}I)).

27 Merc'edes-Berrz ofN. A)n. Inc. v. Nm'riiczn Gens'hnian's Thz`ng.s' m Wear, lnc., 596 A.Zd 1358,
1365 (Del. ¥991).

28 rrai~pa~ v_ .siai@, 970 A.zd :99, 201 (1')@1. 2009).

2" i_).ii.i=;. 303(6).

That conclusion, however, does not require reversal of the tower court if l
conciude that the error was harmless because the cotirt’s judgment may be
affirmed on independent grounds.'?o in my opinion, there are two independent
grounds on which the judgment in favor of Graves may be afflrmed. First,
l\/Iidland fa.iled strictly to comply with the notice requirement in D.R.I§l. 9()2(11).
Second, the evidence l\/lidland sought to admit was insufficient to establish the
debt’s assignment.

"I`urniiig first to the notice issue, Rule 902(11) provides that a record of
regularly conducted activity may be authenticated by a written declaration of its
custodian or other quafii'ied person certifying that the record:

(A) was made at or near the time of the occurrence of the matters set forth

by, or from information transmitted by, a person with knowledge

of those niatters;

(B) was kept in the course of the regularly conducted activity; and

(C) was made by the regularly conducted activity as a regular practice. A
party intending to offer a record into evidence under rhi.s' paragraph
n'iusr provide ivrirren notice of that intention fo all adverse parries, and
must make the record and deciaration available for inspection
sufficiently in advance of their offer into evidence to provide an adverse
party with a fair opportunity to cliallenge them,}l

Al_thougli Midfan_d notified Graves of its intent to offer the records at issue into

evidence, I\/fidland indicated the records were being offered to establish the amount

““ .st»@ iranian orr ca »». rzzrib.i, 2013 wi, 1 143630@)@1. stip@i-. iviai-. 14, 2013).

~“ i).iz.r,. 902(1 1).

of the debt Graves owed. In view of Graves’ self-represeztted status, the notice
was inisleadiiwg as to the documents’ purpose. This is particularly true since
Graves was not challenging the amount of the debt. By indicating to a self~
represented litigant that the records were being offered for one purpose, but then
attempting to admit them for a different purpose, Midland violated the spirit, if not
the letter, of D.R.E. 902(1 l).

In addition, even ifthe Midland Aftidavit and accompanying records were
admissible under the rules of evidence, the records were not sufficient to establish
the assignment front Citibank to Midland. The proffered evidence shows:

l. Citibank sold and assigned to l\/lidland a series of accounts described in

an exhibit attached to the bill of sale.'l?
2. The exhibit attached to the bill of sale refers to individual accounts
"described in the final electronic file" delivered to l\/Iid|and.'“
3. Citibanl< sold l\/Iidland a pool of "charged off’ accounts and, as part of
the sale, transferred to Midland "certain electronic records . . . on
individual accounts."“
4. Midland has in its files the electronic records for Graves’ Citibanl< Sears
credit card, which l\/[`idland represents were transferred in connection
with the sale of accounts from Citibanl< to l\/Iidland.$§

~‘2 App. A-23.
33 1a ar /-\-24.
~"‘ 1a ar /-\»25, /\~26.

5. The account statements reflect a balance of $3,150.08 on Graves’ credit

card.'l(`

The proffered evidence is missing one key piece: direct documentation that
Graves’ account was one of the accounts Citibank sold to _l\/Iidland. ln a consumer
debt action, the purported assignee of the creditor has the burden to prove the
assignment in order to establish standing.w This Court and the Court of Common
Pleas have held that a plaintiff must offer specific proof showing the assignment or
sale of the account at issue to the plaintiff.lg This, l\/Iidland has not done; there is
no evidence listing Graves’ account as one of the accounts Citibank sold Midland.
The proffered evidence would require the Court to make the inference that Graves’
account must have been included in the sale since Midland now has possession of

the electronic files for Graves’ account. This inference, although fair, does not

meet l\/Iidland’s burden of proof.
Based on the foregoing, the Court of Common Pleas‘ decision is
AFFIRMEI).

IT IS S() ORDERED.

 

35 ld. m A-z?.

~" mt ar A-zs through /~.-31.

37 M."a'fcrnd Funding, LLC v. Hanby, 2015 WL 738060, at *4 (Del. Com. Pl. Feb. 23, 20|5).
”K/zned:n.»-z v_ (JACH LLC, 2015 WL 3429941,@1*3-4(13@1. super. may 22, 2015); H¢mby, 2015 WL
738060,31*5.

10