                                                                                    FILED
                                                                               Feb 27 2018, 10:08 am

                                                                                    CLERK
                                                                                Indiana Supreme Court
                                                                                   Court of Appeals
                                                                                     and Tax Court




ATTORNEY FOR APPELLANT                                     ATTORNEYS FOR APPELLEE
Thomas G. Bradburn                                         Seth Row
Bradburn Law Firm                                          Daniel Bogatz
Noblesville, Indiana                                       Javitch Block LLC
                                                           Cleveland, Ohio



                                            IN THE
    COURT OF APPEALS OF INDIANA

Alexander Holmes,                                          February 27, 2018
Appellant-Defendant,                                       Court of Appeals Case No.
                                                           87A05-1711-CC-2517
        v.                                                 Appeal from the Warrick Superior
                                                           Court
National Collegiate Student                                The Honorable Robert R.
Loan Trust,                                                Aylsworth, Judge
Appellee-Plaintiff                                         Trial Court Cause No.
                                                           87D02-1608-CC-987



Crone, Judge.




Court of Appeals of Indiana | Opinion 87A05-1711-CC-2517 | February 27, 2018                            Page 1 of 7
                                              Case Summary
[1]   Alexander Holmes appeals the trial court’s entry of summary judgment in favor

      of National Collegiate Student Loan Trust (“NCSLT”). Concluding that

      Holmes has met his burden to persuade us that the grant of summary judgment

      was erroneous, we reverse 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 Southern 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]   On 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 standing 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 was inadmissible pursuant to Indiana Trial Rule 56(E). Following a

      hearing, the trial court entered summary judgment in favor of NCSLT. The

      Court of Appeals of Indiana | Opinion 87A05-1711-CC-2517 | February 27, 2018   Page 2 of 7
      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 made, the burden shifts to

      the nonmovant to come forward with contrary evidence showing the existence

      of an issue for the trier 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 factual 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 presented is


      Court of Appeals of Indiana | Opinion 87A05-1711-CC-2517 | February 27, 2018   Page 3 of 7
      insufficient to make a prima facie showing that NCSLT is entitled to summary

      judgment on its claim against Holmes. We agree.


[7]   To make its prima 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, Charter One Bank, the amount

      alleged. See Seth 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 credit

      card contract). 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. Appellant’s App. Vol. 2 at 14. 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 and

      authorized to testify regarding Holmes’s specific loan and “the business records

      attached” to the affidavit. Id. 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




      Court of Appeals of Indiana | Opinion 87A05-1711-CC-2517 | February 27, 2018   Page 4 of 7
      from Charter One Bank to National Collegiate Funding LLC, before then being

      sold and assigned to NCSLT.1


[8]   Indiana Trial Rule 56(E) provides that supporting and opposing affidavits on

      summary judgment “shall be made on personal knowledge, shall set forth such

      facts as would be admissible in evidence, and shall show affirmatively that the

      affiant is competent to testify to the matters stated therein.” The requirements

      of Trial Rule 56(E) are mandatory, and a court considering a motion for

      summary judgment should disregard inadmissible 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 Jefferis affidavit and supporting documents are

      hearsay.2 However, NCSLT argues that the material offered is admissible

      because it falls within the business records exception to the 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 was made at or near the time by—or from information transmitted by—




      1
       The additional attached documents included computer printouts of the loan financial activity, a
      deferment/forbearance summary, the loan repayment schedule, and the loan payment history report.
      2
       Hearsay is an out of court assertion offered in court to prove the 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 Rule 802.

      Court of Appeals of Indiana | Opinion 87A05-1711-CC-2517 | February 27, 2018                        Page 5 of 7
       someone with knowledge; the record was kept in the course of a regularly

       conducted 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 the source of information nor the method

       or circumstances of preparation indicate a lack of trustworthiness. To ensure

       reliability, the proponent of a business record must authenticate it, and

       Evidence Rule 803(6) permits authentication by affidavit. Speybroeck 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, the 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, this Court stated that, pursuant to Trial Rule 803(6),


       Court of Appeals of Indiana | Opinion 87A05-1711-CC-2517 | February 27, 2018   Page 6 of 7
       one business “could not lay the proper 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).3 Because the

       Jefferis 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 has 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 not 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 hearsay evidence. VanPatten v.
       State, 986 N.E.2d 255, 269 (Ind. 2013) (Massa, J., concurring in result).

       Court of Appeals of Indiana | Opinion 87A05-1711-CC-2517 | February 27, 2018                      Page 7 of 7
