The Florida Fourth District Court of Appeal recently issued an opinion in Glarum v. LaSalle Bank Nat'l Ass'n—2011 Fla. App. LEXIS 14039; 2011 WL 3903161 (Fla. Dist. Ct. App. 4th Dist., Sept. 7, 2011)—that strictly applied the business records exception in a residential foreclosure case. The court held that an affidavit of indebtedness of a "specialist" at a loan servicer that relied on data from a computer system was inadmissible hearsay. This holding will affect summary judgment proceedings in all foreclosure cases currently pending in Florida.
One of the issues on appeal was whether the affidavit in support of a motion for summary judgment filed by LaSalle Bank National Association (the "Bank") was legally sufficient to allow the trial court to grant summary judgment of foreclosure against Mr. and Mrs. Glarum ("Borrowers") because it contained admissible evidence that satisfied the requirements of the business records exception to the hearsay rule under Florida law. While the Borrowers admitted that they were in default, the amount of indebtedness owed to the Bank was in dispute. Id. at *1 and *2. As a result, the Bank filed an affidavit in support of summary judgment that was executed by Ralph Orsini, a "specialist" at the Bank's loan servicer. Id. at *2. In the affidavit, Mr. Orsini stated that the Borrowers were in default of their payment obligations and certain amounts were owed pursuant to the note. Id. The Borrowers, in opposition to the Bank’s affidavit in support of summary judgment, filed the deposition of Mr. Orsini. At his deposition, Mr. Orsini explained how he derived the amount owed by the Borrowers from a computer system. Id. The problem with the deposition, as the court explained, was that "[Mr.] Orsini did not know who entered the data into the computer, and he could not verify that the entries were correct at the time they were made . . . [and] [t]o calculate [Borrowers'] payment history, [Mr.] Orsini relied in part on data retrieved from . . . a prior servicer of [Borrowers'] loan." Id.
The court ruled that the Bank's affidavit was inadmissible hearsay, as it did not satisfy the business records exception set forth in § 90.803(6)(a), Fla. Stat.1 The business records exception to the hearsay rule provides that evidence may be admitted as a business record if it meets the following elements: (i) the record was made at or near the time of the event, (ii) was made by or from information transmitted by a person with knowledge, (iii) was kept in the ordinary course of a regularly conducted business activity and (iv) that it was a regular practice of that business to make such a record. The Fourth District Court of Appeal stated:
Orsini did not know who, how, or when the data entries were made into [the] computer system. He could not state if the records were made in the regular course of business. He relied on data supplied by Litton Loan Servicing, with whose procedures he was even less familiar. Orsini could state that the data in the affidavit was accurate only insofar as it replicated the numbers derived from the company’s computer system. Despite Orsini’s intimate knowledge of how his company’s computer system works, he had no knowledge of how that data was produced, and he was not competent to authenticate that data. Accordingly, Orsini’s statements could not be admitted under section 90.803(6)(a), and the affidavit of indebtedness constituted inadmissible hearsay.
Id. at *3 and *4.
As a result, the Fourth District Court of Appeal overturned the summary judgment granted in favor of the Bank.
Lenders seeking summary judgment, and the affiants executing such affidavits, should be aware of the implications of the Glarum case. It should be considered that affidavits in support of summary judgment are tailored to the specific requirements of this case. In addition, all affiants should, among other things, have a specific understanding of how the records are kept by the lender (e.g., the lender's recordkeeping practices) and should be able to describe "how, why, when and where" the information contained in those records was obtained.