                      MISSOURI COURT OF APPEALS
                          WESTERN DISTRICT


    NORTHSTAR EDUCATION                           )
    FINANCE, INC D/B/A TOTAL                      )   WD81582
    HIGHER EDUCATION (T.H.E.),                    )
                                                  )   OPINION FILED:
                      Respondent,                 )
      v.                                          )   April 30, 2019
                                                  )
    SAMUEL L. SCROGGIE,                           )
                                                  )
                       Appellant.                 )



              Appeal from the Circuit Court of Nodaway County, Missouri
                          Honorable Rebecca Spencer, Judge

              Before Division Three: Thomas H. Newton, Presiding Judge,
                 Anthony Rex Gabbert, and Edward R. Ardini, Judges


           Mr. Samuel L. Scroggie appeals a Nodaway County Circuit Court judgment

awarding damages to NorthStar Education Finance, Inc. (NEF) on its petition to

recover the balance of defaulted 1998-2001 student loans. He challenges court rulings

admitting certain evidence, NEF’s standing to bring the petition, and the court’s award

of attorney fees to NEF. We affirm. 1




1
 We have taken with the case NEF’s motion for attorney fees incurred in connection with this appeal.
Because we grant the motion, we also remand for the company to submit its final costs and fees to the
circuit court.
       Mr. Scroggie took out student loans under a “T.H.E. Loan Program” while

attending Thomas M. Cooley Law School from 1998 through 2001. 2 The total amount

he borrowed under this program was $20,800. He made payments on the promissory

notes to NEF’s loan servicer Great Lakes Educational Loan Servicing Corp. (Great

Lakes) until 2014, at times under a hardship payment plan, and then defaulted. NEF

d/b/a Total Higher Education (T.H.E.) Loan Program sought to collect the balance and

ultimately filed a petition against Mr. Scroggie seeking $11,425.64, interest, and

attorney fees. Mr. Scroggie filed a pro se answer, counter-petition, and affirmative

defenses, including lack of standing, characterizing NEF as a debt collector and

challenging the validity of the assignments among various entities for the rights to

collect on the debt transferred. NEF filed a motion to dismiss the counter -claim, and

the circuit court sustained the motion.

       The case was tried in January 2018, and Mr. Scroggie made numerous objections

on hearsay and foundation grounds to exhibits, challenged here, that established the

debt, traced the history of the loan assignments, and accounted f or his payments. The

witness through whom NEF introduced the exhibits was its current CFO Mr. Charles

Osborne, who was part of the T.H.E. Loan Program’s creation and served on the board

of directors of each of the NEF-related entities to which Mr. Scroggie’s loans were




2
  Additional detail about the loan program and its relation to NEF appears in the legal analysis below.
“We view the evidence and its reasonable inferences in the light most favorable to the trial court’s
judgment and we disregard contrary evidence and inferences.” Fed. Nat'l Mortg. Ass'n v. Bostwick,
414 S.W.3d 521, 524 (Mo. App. W.D. 2013).


                                                  2
assigned. 3   The court found Mr. “Osborne’s testimony credible and competent to

authenticate the exhibits as business records.”                According to the court, NEF

demonstrated its standing to bring the petition as each transfer was proved by clear and

convincing evidence; it also found that Mr. Scroggie owed the balance of the loans, as

well as interest and attorney fees. It awarded NEF a total of $15,089.36. Mr. Scroggie

timely filed this appeal pro se.

                                         Legal Analysis

       Four of the five points relied on challenge the trial court’s evidentiary rulings.

We review a trial court’s decisions admitting or excluding evidence for an abuse of

discretion. Fed. Nat’l Mortg. Ass’n v. Bostwick, 414 S.W.3d 521, 524 (Mo. App. W.D.

2013). “[A]bsent clear abuse of discretion, its action will not be grounds for reversal.”

Cox v. Kansas City Chiefs Football Club, Inc., 473 S.W.3d 107, 114 (Mo. banc 2015)

(citation omitted). “A ruling constitutes an abuse of discretion when it is clearly against

the logic of the circumstances then before the court and is so unreasonable and arbitrary

that it shocks the sense of justice and indicates a lack of careful, deliberate

consideration.” Id. (citation omitted). While one of the points challenges the trial

court’s ruling on NEF’s standing, which should be addressed at the outset, we consider

the first two points in order as predicates for establishing the admissibility of the

documents that Mr. Scroggie contends in point three lacked the requisites to establish

standing.


3
  Mr. Scroggie also objected to Mr. Charles Osborne testifying about the documents because his name
had not been disclosed as a potential witness in discovery. No depositions were taken before trial, so
the court indicated that it would entertain a motion for continuance for Mr. Scroggie to depose Mr.
Osborne. Neither party sought a continuance as they were ready to proceed to trial, and Mr. Scroggie
stated that he was asking instead that the witness not be allowed to testify. The court overruled his
objection to Mr. Osborne’s testimony. Although Mr. Scroggie mentions this objection in his brief, he
does not base any of his points on this issue.

                                                  3
       In the first point, Mr. Scroggie argues that the trial court erred in admitting his

loan applications/promissory notes—Exhibits 1A, 2A, and 3A—into evidence because

they were hearsay and inadmissible as business records in that Mr. Osborne was not

competent to testify about documents prepared by other business entities. Relying

primarily on CACH, LLC v. Askew, 358 S.W.3d 58 (Mo. banc 2012), Mr. Scroggie

argues that NEF could not demonstrate evidence of the debt because the “lenders” on

the loans were University National Bank or PNC Bank, and Mr. Osborne lacked

competence to authenticate the documents because he had neither been an officer of

these banks nor had he been employed by them.

       CACH involved litigation instituted by a debt collector allegedly assigned an

outstanding credit card debt owed by Mr. Jon Askew. Id. at 60. The company offered

exhibits during trial purporting to be evidence of Mr. Askew’s credit card account and

sought to have them admitted as business records under section

490.680. 4 Id. Over objection, the court allowed a records custodian employed by

CACH’s owner to testify as to documents allegedly transferring or selling the accounts

in a series of transactions leading to CACH through several unrelated entities. Id. at

60-61. Finding that CACH had purchased and been assigned all rights to collect Mr.



4
  Section 490.680, RSMo. (2016), addresses the competency of records as evidence, by stating the
following:

       A record of an act, condition or event, shall, insofar as relevant, be competent evidence
       if the custodian or other qualified witness testifies to its identity and the mode of its
       preparation, and if it was made in the regular course of business, at or near the time of
       the act, condition or event, and if, in the opinion of the court, the sources of
       information, method and time of preparation were such as to justify its admission.

“Business records with adequate foundation are excepted from hearsay exclusion because we can
presume the veracity of a business record when it is made in the regular course of business and
contemporaneously to the event it records.” See Fed. Nat’l Mortg. Ass’n, 414 S.W.3d at 528 (also
noting that documents prepared for litigation a re not business records).

                                                  4
Askew’s debt, the trial court awarded CACH more than $6,000. Id. at 61. The Missouri

Supreme Court reversed, concluding “that CACH failed to demonstrate that it had

standing to pursue the collection of the money allegedly owed on [Mr.] Askew’s credit

card account.” Id. at 65. The court made this determination by finding that CACH

failed to produce any competent evidence of an assignment in the chain of title between

two specific companies, neither of which employed the records custodian whose

testimony was used to lay the foundation for admitting the documents making those

assignments. Id. at 64. According to the court, section 490.680 requires that a records

custodian or qualified witness lay the foundation for a business record. Id. That

witness “must have sufficient knowledge of the business operation and methods of

keeping records of the business to give the records probity.” Id. (citation omitted).

That knowledge is insufficient, according to our supreme court, where a records

custodian of one business testifies that a document prepared by another business merely

appears in the files of the business that did not create the record, or where the witness

is familiar generally with how records are prepared in an industry. Id. at 63-64. This

case is distinguishable given Mr. Osborne’s particularized and exhaustive knowledge

about the process involved in making and documenting student loans under the T.H.E.

Loan Program, which made the loans extended to Mr. Scroggie.

      Mr. Osborne testified that he was on the board of directors of an NEF

predecessor when it created the T.H.E. Loan Program in coordination with educational

leaders in Minnesota who had been asked by the U.S. Department of Education to start

a new loan-guarantee corporation following the Higher Education Assistance

Foundation’s bankruptcy. The company, then known as NorthStar Guarantee, was “in



                                           5
the business of accepting documents from various schools and – and processing them

for the federally[ ]guaranteed portion of student loans.” The company “would provide

both documentation and . . . would be reviewing documentation that was to substantiate

the federally[ ]guaranteed loans and actually processing that guarantee.” According to

Mr. Osborne, NorthStar Guarantee then began in 1997 to go into the business of

originating loans, both federally guaranteed and private, and securitizing them by

issuing bonds to fund the loans. NorthStar Guarantee divided into a Division A and a

Division B, which was an independent entity that NEF succeeded in 2001. Mr. Osborne

was a director of Division B and of NEF, a nonprofit organization. He testified that,

after a student would apply for a loan on a form with the designation “T.H.E. Loan

Program” at the top, the loan would be processed by NEF’s predecessor or NEF which

would direct the funding bank—University National Bank, PNC, or First Union

National Bank—to release the funds that NEF’s predecessor or NEF would immediately

reimburse. This process was used so loans could be made by federally chartered banks

across state lines. While documents in the chain of title among NEF entities included

a bill of sale from the funding bank, the bill of sale was a document that NEF’s

predecessors had created, according to Mr. Osborne. At no time did the original loan

application/promissory note leave the possession of NEF entities or NEF.

      As to Exhibits 1A, 2A, and 3A, Mr. Osborne testified that he was familiar with

the documents and how they were maintained in the ordinary course of business for

nonlitigation purposes. He explained how a student would obtain the application form

in a student loan aid office, complete it, and give it to a school official who would

certify attendance and the amount of tuition. The form would be mailed to the Post



                                          6
Office box designated at the top of the form for the T.H.E. Loan Program, the address

in Minnesota for NEF, and then NEF’s predecessor or NEF would approve

disbursement of the loan request or would underwrite the loan. Mr. Osborne testified

that NEF was not in the business of purchasing defaulted loans to collect on them. Mr.

Osborne was qualified to lay a foundation for Exhibits 1A, 2A, and 3A. The evidence

clearly showed that NEF or its predecessor created the loan program and the loan

applications/promissory notes, processed the loans, and maintained possession of the

notes when Mr. Osborne served as a director of NEF’s predecessor or NEF and Mr.

Scroggie applied for his loans. He had sufficient knowledge of the business operation

and methods of keeping records of the business to authenticate the documents. The

trial court did not abuse its discretion in admitting the promissory notes. This point is

denied.

      In the second point, Mr. Scroggie claims that the trial court erred in admitting

Exhibits 1B, 2B, and 3B into evidence because they were hearsay and inadmissible as

business records in that Mr. Osborne was not competent to testify about documents

prepared by other business entities. The B series of documents included the wire

reports documenting the amounts disbursed to Mr. Scroggie, bills of sale and blanket

endorsements, and other transfers and assignments between NEF financing entities

through 2003, which Mr. Osborne testified were business records created and

maintained in the ordinary course of NEF’s business organization.             On cross -

examination, he testified that these records are maintained in an NEF storeroom.




                                           7
      Starting with Exhibit 1B, which related to the loan for which Mr. Scroggie

applied in 1999, Mr. Osborne testified about the process by which the documents were

created as follows:

      This is the – After the disbursing of the – The process that occurred using
      this exhibit is that the underwriting would be completed by NorthStar,
      NorthStar would authorize the disbursement. Typically schools would
      receive tuition at two different dates, so although the plaintiff or the
      individual would apply for one loan, there would be two different
      disbursements under the loan. The instructions for that disbursement
      would go from NorthStar to, in this case, University National Bank, and
      University National Bank would send the money to the school. Then on
      that very same day, the – NorthStar, through its own financing, would
      effectively reimburse University National Bank the monies for that loan.

       And you’re going to go through the – the following pages, which have
      the actual disbursement instructions, in this case, to the detailed activity
      report for 12/30 – well, this is – the 12/30/1999 for $3,000. You can see
      Mr. Scroggie’s name there on the activity report. This is one of the
      disbursements made under this original promissory note.

      Q. And going – turning to the fourth page, which is a transfer agreement,
      purports to be a transfer agreement between NorthStar THE Funding, LLC
      and NorthStar THE Funding II, LLC, is that correct?

      A. Correct. Two of our subsidiaries using the financing of thes e loans.
      In 2001, these were used as collateral in a financing, and they had to be
      transferred through these organizations effectively to ensure the trustees
      that there were no other prior claims or liens on the loans. And you can
      see that’s signed by Mr. Thornton, who is an officer of THE Funding, LLC
      and of both organizations, both I and II.

       Behind that is an actual – Mr. Scroggie’s loan is identified specifically
      with a token number, and we – with a redacted page, we have provided
      the identification – specific identification of this loan within the group of
      loans that were transferred for collateral.

      Q. What was the rest of the chain of assignment, as it’s been termed?

      A. This was a – The bill of –

          ***




                                           8
      Q. All right, Mr. Osborne, turning further, you see a bill of sale,
      assignment and assumption of liabilities. It is a – purports to be between
      NorthStar Guarantee, Division B, and [NEF], which is the entity which
      you are the CFO for, correct?

      A. And all of these other entities too.

      Q. Yes. So can you walk us through this transfer as well?

      A. Yes. This is the final transfer. Division B, which was the origination
      branch of the – of NorthStar Guarantee, upon [NEF] receiving its tax-
      exampt status, all the assets. All the liabilities of NorthSta r Guarantee
      were transferred into [NEF], and that’s – this is the document that does
      that.

       But I want – If I may, I need to correct one thing I just said, because I
      pointed to this pile. I am not an officer of PNC, First Union National
      Bank, or University National Bank.

      Q. But you were an officer of the entity with which – from which those
      loans were transferred?

      A. Correct.

      As to Exhibit 2B, which related to the loan for which Mr. Scroggie applied in

2000, Mr. Osborne testified about the process by which the documents were created as

follows:

      This is the disbursement record for the first part of the loan. It was an
      $8,000 loan. The first half was $4,000 and the $160 was the origination
      fee that was reimbursed at that time as well, and that 160 is retained, and
      the net amount to the school is 4,000. Did you – Just the first page, or
      the remaining pages as well?

      Q. Just the first page.

      A. Okay.

      Q. Are you familiar with the process by which this record is created?

      A. I am.

      Q. Are you familiar with the process by which this record is kept and
      maintained?

                                           9
      A. I am.

      Q. Is it the business practice of NorthStar to create and make use of
      business records for nonlitigation purposes?

      A. Yes.

           ***

      Q. Mr. Osborne, can you walk us through this as well?

      A. Similarly, this loan took a very similar path. There is a bill of sale
      from University National Bank to THE Funding, LLC. There is another
      wire report for the second installment of this loan you’ll see down – go
      down to the middle of the page, Samuel Scroggie, and a bill of sale for
      that disbursement. And – And the transfer agreement from LLC to
      Funding II as part of a bond issue that was made in ’01. And the token –
      redacted page, again this is a loan with a token last three digits -905.

       These pages are redacted because the practice of the servicer is to use
      the social secuity number followed by three digits – portions of the social
      security number. So this page was at one point filled with a host of other
      loans that were with it, and we redacted that out.

       Bill of sale from – then from Division B and blanket endorsement and
      assumption of liabilities to transfer this to [NEF].

      Q. And just for the record, were you an officer of the first entity to which
      the loan was transferred?

      A. Yes.

      As to Exhibit 3B, which related to the loan for which Mr. Scroggie applied in

1998, Mr. Osborne testified about the process by which the documents were created as

follows:

      This is, again, a disbursement report for the amount of – the first half of
      the 6,800, you’ll see at the bottom the $3,400 disbursed on November 6,
      1998, and on the next page, the disbursement on 12/22/1998, for the next
      $3,400 second half of the loan.

      Q. And what – Are you familiar with how these records are created?

      A. Yes.

                                          10
      Q. Are they created at or near the time of the events in question?

      A. Yes.

      Q. By a person with knowledge of the facts?

      A. Yes.

      Q. Are they created for – pursuant to policies for nonlitigation purposes?

      A. Yes.

      Q. Are you familiar with how they are kept and maintained?

      A. Yes.

          ***

      Q. All right. Mr. Osborne, this loan is different than the other two loans
      in its chain of title. Can you walk us through that?

      A. Yes. This loan was – The disbursing bank was PNC Bank, and PNC
      Bank was actually providing a credit line to – what we call the Warehouse
      Credit Line to – to the loan program. They also had, just for capacity
      reasons, asked First Union National Bank to participate with them – with
      them in this warehouse line, hence you see a transfer – a bill of sale from
      PNC Bank to First Union Bank as the next bill of sale and blanket
      endorsement with the form of bill of sale and the blanket endorsement,
      and then ultimately over to THE Funding, LLC, and then from Funding,
      LLC to Funding II, and it took the same path as the other loans to that
      case in a blanket endorsement, the redacted token page, and finally
      Division B transfers to NEF.
       In the course of – this was – note was dated in 1998, and the initial
      arrangement we had for funding loans by NorthStar was using PNC and
      First Union. We move – then went – The other two loans you have, we
      were using University National Bank later on.

      Mr. Osborne was not affiliated with the banks represented in these sale, transfer,

and assignment chains, but he testified that NorthStar had created the documents that

the banks used and maintained them in the regular course of business for non -litigation

purposes. He was affiliated, either as a director or CFO, with every other entity in the

chain of title which, as noted above, transferred loans made under a program that NEF’s

                                          11
predecessor created. 5 He explained the business operation for which these documents

were created and testified that he was familiar with how they were kept and maintained.

The CACH requirement that the qualified witness laying a foundation for business

records under section 490.680 “must have sufficient knowledge of the business

operation and methods of keeping records of the business to give the records probity”

is met here. The trial court did not abuse its discretion in admitting these exhibits.

This point is denied.

        In the third point, Mr. Scroggie argues that the trial court erred in finding that

NEF had standing based on Exhibits 1B, 2B, and 3B because the assignments lacked

the required information to prove a valid assignment as to each predecessor in that they

contain blanket endorsements and assignments that did not identify the underlying

loans or Mr. Scroggie. Standing presents a question of law, so we review the issue on

appeal de novo. CACH, 358 S.W.3d at 61.

         A party has standing to sue when it has “a justiciable interest in the
        subject matter of the action.” Garrison v. Schmicke, 354 Mo. 1185, 193
        S.W.2d 614, 615 (1946); see also Midwestern Health Mgmt., Inc. v.
        Walker, 208 S.W.3d 295, 298 (Mo. App. [W.D.] 2006) (stating that
        standing to sue “exists when a party has an interest in the subject matter
        of the suit that gives it a right to recovery, if validated.”).

5
  Mr. Scroggie contends that NEF’s evidence on the relationship between NEF and the NEF entities in
the chain of title was contradictory and inconsistent, pointing to the company’s sworn response to an
interrogatory indicating that NEF is not the parent company of any other companies and Mr. Osborne’s
testimony that the NEF entities in the chain of title were subsidiaries. He cites case law indicating
that, where “the testimony of a witness contains antagonistic and irreconcilable statements of fact in
which one class tends to sustain the allegations of the petition and the other to disprove them,” the case
is not “for the determination of a jury.” Mo. Interstate Paper Co. v. Gresham, 116 S.W.2d 228, 230
(Mo. App. 1938) (emphasis added) (“Until a witness can determine for himself what he saw or did not
see, a jury is not warranted in making the determination for him.”). Here, NEF’s witness did not make
antagonistic and irreconcilable statements of fact. Nor do we find the testimo ny and interrogatory
response inconsistent. The interrogatory queried whether NEF is the parent company of any other
company, to which NEF responded “No.” Mr. Osborne testified that he was a director of NEF’s
predecessor, NEF, and all the subsidiaries in the chain of title, which were “financing subsidiaries.”
Because Mr. Osborne also testified that NEF ceased originating loans in 2008, it is unclear whether the
entities in the chain of title, which the evidence showed had by then transferred their asset s to NEF,
are currently in operation.

                                                   12
Id.

      First, we do not believe that the trial court based its conclusion about standing

solely on the B series of exhibits. As to the assignment of the notes, reflected in

Exhibits 1B, 2B, and 3B, the trial court distinguished them from the assignments in

CACH by observing that they “were effectuated as [NEF’s] business struc ture changed

from originating student loans to administering them, and that the assignments were to

new entities in [NEF’s] business activity.” According to the court, this case “does not

‘involve a party attempting to recover on an account owed to some ot her party.’” The

court further concluded that NEF had an interest in the subject matter of the action by

addressing other evidence relating to Mr. Scroggie’s interactions with NEF’s servicer

and agent, Great Lakes. Mr. Scroggie sought forbearance and har dship payment plans

from Great Lakes, which, in the trial court’s view, amounted to an admission that he

owed the debt, and NEF gave Great Lakes the authority to enter into such payment

plans. “The hardship payment plans were both requested after the 2003 transfer of the

notes from Northstar Guarantee, Inc. to [NEF] so both requests and all subsequent

payments went to [NEF]. Under well-established principles of agency law, payment to

an agent is the same as payment to the principal.” The court also concl uded that NEF

proved chain of title under CACH by addressing Mr. Osborne’s competence to testify

about the business practices and authenticity of the business records of each

transferring entity. The final evidentiary matters the court relied on to conclu de that

NEF had standing involved Mr. Scroggie’s admission through his questioning of Mr.

Osborne and his own testimony that “he had requested the loans, signed the promissory

notes, and used the proceeds to fund his legal education.” Mr. Scroggie did not show



                                          13
in any way that the loans had been paid in full, and he testified that he had made

payments to NEF’s servicer Great Lakes. As discussed in more detail below regarding

evidence of Mr. Scroggie’s payments, we have no reason to disagree with the trial

court’s findings and conclusions as to NEF’s standing.

      Second, we do not believe that the cases on which Mr. Scroggie relies support

his argument that the blanket endorsements failed to identify the underlying loans or

Mr. Scroggie thus implicating NEF’s standing to sue. In Student Loan Marketing

Association v. Holloway, 25 S.W.3d 699 (Mo. App. W.D. 2000), this Court did not rule

that the plaintiff lacked standing to collect a student-loan debt for alleged deficiencies

in the chain of title; rather, we stated that, without documents connecting the blanket

endorsements to the promissory notes, the plaintiff failed to lay an adequate foundation

showing the assignments of the notes to the plaintiff. Id. at 704. We remanded for the

plaintiff to do so. Id. Here, by contrast, Mr. Osborne clearly linked the promissory

notes to the bills of sale with blanket endorsements and the other documents that

identified Mr. Scroggie’s loans as among those transferred. As indicated above, the

documents in the chain of title were also attached to the promissory notes and submitted

as exhibits. In Holloway, a number of the supporting documents apparently could not

be found and had not been submitted during trial. Id. at 703-04.

      C & W Asset Acquisition, LLC v. Somogyi, 136 S.W.3d 134 (Mo. App. S.D.

2004), is similarly unhelpful to Mr. Scroggie. There, the exhibit consisting of the

documents purporting to show the chain of title contained an affidavit by the plaintiff

loan-company servicer’s employee. Id. at 136 n.2. The trial court refused to admit the

exhibit, finding that it lacked the basic elements for the admission of a business record



                                           14
under section 490.680, and dismissed the case for insufficient evidence. Id. at 137.

While the appeals court determined that the affidavit substantially complied with

section 490.692, it found that the trial court did not abuse its discretion in excluding

the evidence because, lacking a live witness to testify as to where the records came

from or who authored them, the plaintiff could not prove the mode of their preparation.

Id. at 139-40. In dicta, the court also indicated that the documents on their face failed

to establish “the credit agreement, default and balance due as argued by [the plaintiff].”

Id. at 140. Some of the shortcomings the court mentioned may be applicable to the

documents submitted here, but given Mr. Osborne’s testimony explaining how the

records were created and related to each other, Somogyi is distinguishable.

      Based on all the evidence introduced at trial, we conclude that NEF had standing

to bring this action.   Its predecessor created the loan program through which Mr.

Scroggie obtained some of the student loans he used for law school, and its predecessor

supplied the funding for those loans. The payments that he made were made to NEF’s

loan servicer which sent the payments to NEF. Mr. Scroggie defaulted on the loans and

owes NEF the balance. This point is denied.

      In the fourth point, Mr. Scroggie challenges the trial court’s admission into

evidence of Exhibits 4, 5, and 6 because they were hearsay and inadmissible business

records in that Mr. Osborne was not competent to testify about documents prepared by

other business entities. He contends that the documents were generated by Great Lakes

or maintained on its computer system. Because Mr. Osborne did not work for Great

Lakes, Mr. Scroggie aruges that he was not competent to testify as to its business

records.



                                           15
      During trial, Mr. Osborne discussed the relationship between Great Lakes and

NEF, testifying that Great Lakes “was under contract to NorthStar, they did not take

ownership of the loans; they simply provided custodial and records keeping services

on our behalf at our – on our audit.” He also testified that Great Lakes “would – And

we would retrieve documents as we need – as necessary, when needed for – for debtors

or actions such as this.” According to Mr. Osborne, “The recordkeeping by Great Lakes

was essentially receiving cash payments from debtors, applying them to the loans, and

providing various accounting reports and records, reporting to credit bureaus, the IRS,

and the like.” Exhibit 4 consisted of “various documents used for the request for

hardship.” Mr. Osborne testified that “NorthStar, through Great Lakes, would allow

the loan to be placed in either suspension, forbearance, or the payment to be revised to

reflect the capacity and the ability of the individual to make the loan payment.” While

he acknowledged that Great Lakes created the documents, Mr. Osborne testified that

Great Lakes did so at NEF’s direction, and that he was familiar with how they were

kept and maintained and that they were created for nonlitigation purposes in the regular

course of business.   Mr. Osborne then discussed the separate parts of the exhibit,

testifying that they involved Mr. Scroggie’s 2002 request for a forbearance and his

2004 and 2005 requests for a hardship payment plan.

      Exhibit 5 consisted, according to Mr. Osborne, of “photocopies, screenshots

essentially, from the accounting system of Great Lakes Loan Servicer maintained for

NorthStar’s loans. We actually have online access to this system in our offices in

Eagen.” He further testified, “This is a printout of the loan activity on the combined

balances for Mr. Scroggie’s indebtedness to the loan program.” Mr. Osborne testified



                                          16
that he was familiar with how the records were created and maintained and that they

were created for nonlitigation purposes in the ordinary course of business. In response

to Mr. Scroggie’s questions on voir dire, Mr. Osborne testified that “[NEF] keeps all of

these records under contract using a contract provider of – of custodial lockbox

services, which is the service that Great Lakes provides to all of the loan companies

that they serve as the servicer for.” He further testified, “In some cases, particularly in

the context of these records are maintained directly by NorthStar in its offices in

Eagen.” The first page showed Mr. Scroggie’s three loans. The second page, which

Mr. Osborne characterized as a ledger, showed the payments disbursed to Mr. Scroggie

and then reduced by reimbursements from the school for loan amounts not needed. Mr.

Osborne explained the codes used for the “payment type” column in the sixteen pages

following the first page of Exhibit 5, observing that some of the payments were actually

T.H.E. rebates of interest to the debtor. According to Mr. Osborne, “As a business,

NorthStar – 90 percent of our excess of revenue or expenses is rebated to the student

borrowers in the form of a rebate of interest. We do it every month. Ten percent of it

is reserved by NorthStar and is used to make grants to institutions of higher education

for scholarships.” He further explained that each of the pages showed the progression

of all payments on Mr. Scroggie’s loans over the years to the date of default, “which

was May 29, 2014.” He had no concerns over the accuracy of the records, testifying

that Great Lakes and NEF are audited by the same company, and indicated that the

documents are used “for monthly reporting purposes to the three credit bureaus for

purposes of credit rating and then annually for purposes of creating 1099s for interest




                                            17
payments made by debtors reporting that to the IRS.”          Mr. Osborne reported the

principal and interest due on the default date, as reflected in Exhibit 5.

      Exhibit 6 was described by Mr. Osborne as follows:

       This is a computer maintained on – A computer system-maintained
      record of every interaction of the staff of Great Lakes and NorthStar with
      the borrower with notations to the file as to date and time and – and the
      action taken, very shorthand. This is the – When – When either NorthStar,
      typically it’s our default diversion group, or staff for Great Lakes has a
      [sic] interaction with the borrower, they’re required to document their
      conversations for use in later conversations.

      Q. So this is a printout of information that is on your system?

      A. Correct.

      Q. Are you familiar with how this data is kept and retrieved?

      A. Yes.

      Q. With how it’s reported?

      A. Yes.

      Q. Is it the business practice of [NEF] to create and maintain such records
      for nonlitigation purposes?

      A. Yes.

Mr. Osborne testified in more detail about the exhibit, noting that it showed emails,

phone calls, and letters sent to Mr. Scroggie about his loans. When asked how a

particular entry would get into the file, Mr. Osborne testified as follo ws:

       That is actually someone contacted, reached out, and talked to the
      borrower. They used an auto-dialer to do that. As you can imagine, the
      way this works is there’s actually preloaded phone numbers of debtors to
      call, and when they finally hit – an auto-dialer hits and someone picks up,
      you’ll actually get it coming up on the screen of the – of the NorthStar –
      in this case, Great Lakes person – let’s see the date – yes, Great Lakes
      person, and then you’ll see a notation as to what happened.




                                           18
         So for instance, dialer called, borrower no answer. Letter sent. The one
        that you’re contacting, talked to borrower, will make payment next week.

        Q. So is it correct to say that once – when there’s an interaction with the
        servicer, that’s reported and reported to you, and that is maintained on
        your database?

        A. We have actually –

        Q. Yeah. Access.

        A. – access to this through our own – we are – we are in the Great Lake
        – We can go into the Great Lakes system.

        Q. Perfect. Do you have any reason to doubt the accuracy of this?

        A. No.

        Under CACH, a witness who cannot testify about the identity or mode of

preparation of a business record or about how that record has been kept and maintained

is not competent to authenticate it. Great Lakes was the servicer of NEF’s loans and

thus its agent; Mr. Osborne established his familiarity with the records’ creation,

preparation, use, and maintenance. 6 The trial court did not clearly abuse its discretion

in admitting Exhibits 4, 5, and 6. This point is denied.

        In the fifth and final point, Mr. Scroggie challenges the trial court’s award of

attorney fees to NEF, claiming that the court had no competent evidence on which to

base that award. The promissory notes, Exhibits 1A, 2A, and 3A, each contain a

provision under which the borrower agrees to pay the costs of suit, the costs of

collection, and “if permitted by law, reasonable attorneys’ fees.”                   Reiterating his

argument that the trial court erred in admitting these exhibits, Mr. Scroggie contends


6
 Even if the Court were to decide that Mr. Osborne was not competent to testify about Great Lakes’
documents, these documents are, according to NEF, not dispositive of the court’s judgment. They
essentially establish what Mr. Scroggie owes on the defaulted student loans, and he did not dispute that
amount. He has disputed to whom he owes the balance only.

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that NEF had no contracts on which to base its claim for attorney fees. Because we

have already determined that the trial court did not abuse its discretion in admitting the

exhibits and because attorney fees may be recovered under a contractual provision, we

deny this point.

                                      Conclusion

      Finding that NEF had standing to recover the balance of the student -loan debt

Mr. Scroggie incurred under the T.H.E. Loan Program and that the trial court did not

abuse its discretion in admitting exhibits establishing his liabili ty for the debt and

allowing NEF to recover attorney fees, we affirm. We grant NEF’s motion for attorney

fees and remand to the circuit court for a determination of the amount of attorney fees

and costs to be awarded.



                                                /s/Thomas H. Newton
                                                Thomas H. Newton, Presiding Judge


Gabbert, and Ardini, Judges concur.




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