NOTICE: This opinion is subject to motions for reargument under V.R.A.P. 40 as well as formal
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                                          2016 VT 33

                                         No. 2015-086

Unifund CCR Partners                                          Supreme Court

                                                              On Appeal from
   v.                                                         Superior Court, Windham Unit,
                                                              Civil Division

Daniel Zimmer                                                 October Term, 2015


John P. Wesley, J.

Nicole A. Killoran of Bauer Gravel Farnham, Colchester, and Alan H. Abes and Elizabeth M.
 Shaffer of Dinsmore & Shohl LLP, Cincinnati, Ohio, for Plaintiff-Appellant.

C. Creek Kelsey of Law in the Public Interest, L3C, Thetford Center, for Defendant-Appellee.


PRESENT: Reiber, C.J., Dooley, Skoglund, Robinson and Eaton, JJ.


        ¶ 1.   EATON, J.        In this appeal, Unifund CCR Partners (Unifund), the alleged

assignee of charged-off debt owed by defendant under a credit card account opened with AT&T

Universal/Citibank (Citibank), challenges the trial court’s decision entering judgment in favor of

defendant in an action for collection. For the reasons stated herein, we affirm.

        ¶ 2.   Unifund, a debt buyer, is in the business of purchasing large portfolios of

charged-off debts from original debt holders in the hope of eventually collecting from the
original debtors.1   On October 25, 2013, Unifund asserted the right to judgment against

defendant for charged-off debt in the amount of $2453.22, plus costs and statutory pre-judgment

interest of 12% under 12 V.S.A. § 2903, for a credit card account opened in defendant’s name

with Citibank. Unifund also alleged that defendant was unjustly enriched in that amount “by

virtue of non-payment on an account.”

       ¶ 3.    At trial, Unifund asserted that it was authorized to collect the debt by a series of

limited assignments, from Citibank to Pilot Receivables Management, LLC (Pilot) on June 18,

2012, and from Pilot to Unifund CCR LLC (UCL) and UCL to Unifund, both on June 1, 2013.

To establish standing to enforce the underlying debt, Unifund offered testimony of Brian

Billings, who spoke in support of the assignment from Citibank to Pilot, and Elizabeth Andres,

who spoke in support of the assignments from Pilot to UCL and UCL to Unifund.

       ¶ 4.    The trial court found these documents to be inadmissible as hearsay because

Unifund had failed to establish the necessary foundation for their admission. Specifically, the

trial court found that although Mr. Billings and Ms. Andres testified to having been designated as

custodians of records within their respective business organizations, neither knew anything about

the assignments outside their review in preparation for litigation.       Because “[n]either had

sufficient association with the transaction to offer a credible opinion that the information

contained in the electronic data was ‘made at or near the time [of its creation] by, or from

information transmitted by, a person with knowledge,’ ” the trial court was unable to conclude

that either Mr. Billings or Ms. Andres was qualified to authenticate the documents as business

records under Vermont Rule of Evidence 803(6).


       1
           For a more thorough discussion of the debt buying industry, see Fed. Trade Comm’n,
The Structure and Practices of the Debt Buying Industry (2013), https://www.ftc.gov/
reports/structure-practices-debt-buying-industry [https://perma.cc/A4P6-G2XX].

                                                2
       ¶ 5.    Furthermore, the trial court found Ms. Andres’ testimony as to the assignments

from Pilot to UCL and UCL to Unifund to be particularly difficult to credit. Specifically, the

trial court found it troubling that, although she claimed to have the custodial qualifications on

behalf of both assignor and assignee, Ms. Andres was unable to reconcile significant

inconsistencies between the copy of the assignment from UCL to Unifund that was attached to

the complaint and the copy produced at trial. Although the documents were dated the same day,

they had different signatories—the document included with the complaint was signed by Morgan

Smith and Autumn Hopkins, whereas the document produced at trial was signed by Jessica

Stevens and Autumn Bloom. Despite testimony from Ms. Andres that Autumn Hopkins and

Autumn Bloom were the same person who had recently been married, the trial court found that

this did not explain why Ms. Hopkins/Bloom used different last names in signatures made on the

same day, nor did it explain why Morgan Smith’s signature appears on one version while Jessica

Steven’s signature appears on another.         The trial court found that these unexplained

inconsistencies threw into question the chain of ownership of the account subject to the

complaint for collection.

       ¶ 6.    The trial court also found that, even if the assignments were admissible as a

business record under Rule 803(6), Unifund had failed to establish standing. The trial court

reasoned that the documents proffered as assignments, each of which contained the same

language, transferred the right in receivables for collection purposes only, and not title.2 Without

an ownership interest, the trial court found that Unifund had no cognizable interest in the

account, and thus, no standing to raise claims regarding the account.


       2
          As provided by the assignments themselves, the assignor “ ‘transfer[red] and assign[ed]
to assignee all of assignor’s rights in the receivables, for collection purposes only,’ ” and the
“ ‘[a]ssignor shall retain title and ownership of such receivables.’ ”

                                                 3
       ¶ 7.      The trial court further noted that, regardless of whether the assignments were

admissible or Unifund had standing, Unifund had failed to demonstrate that there ever was a

contract between Citibank and defendant, or the terms of any such contract. The trial court was

satisfied by testimony from both defendant and his father that it was father, and not defendant,

who applied for the credit card in defendant’s name, without defendant’s knowledge or authority,

and father who was responsible for nearly all of the charges attributed to the account. The trial

court considered evidence that account statements were sent to father’s home address in New

Jersey and that father paid those statements until financial difficulties prevented him from doing

so. Although the trial court acknowledged that defendant, who lived in Vermont, used the credit

card “for a few purchases,” it did not find those purchases, together with defendant’s

acknowledgement that he noticed that the card was in his name, to be sufficient to support the

inference of a contractual relationship between Citibank and defendant for every charge

attributed to the credit card. Further, the trial court found the Citibank Card Agreement to be

general and incomplete as to the nature of the interest rate, and the inclusion of some, but not all,

of Citibank’s billing statements, raised questions as to the reliability of the debt owed at the time

of charge off.

       ¶ 8.      Finally, the trial court found that Unifund failed to support its theory of recovery

under quasi contract or unjust enrichment because its proofs were all related to its contract claim.

The trial court concluded by finding that any claim that defendant was unjustly enriched in the

amount of the outstanding balance was “wholly at odds with the evidence that most of the

purchases charged to the card were made by his father.” For these reasons, the trial court entered

judgment for defendant on Unifund’s complaint.




                                                  4
       ¶ 9.    Unifund raises four arguments on appeal: (1) that documents proffered to

establish the assignment of defendant’s debt were not inadmissible as business records; (2) that

the assignment of the right to collect is itself sufficient for standing; (3) that Unifund sufficiently

established the terms of the contract between defendant and Citibank, including the contractual

interest rate; and (4) that Unifund demonstrated a basis to recover for unjust enrichment.

       ¶ 10.   Our standard of review is two-tiered. We are deferential to a trial court’s findings

of fact, and will uphold them unless clearly erroneous. Clayton v. Clayton Invs., Inc., 2007 VT

38A, ¶ 9, 182 Vt. 541, 929 A.2d 713 (mem.); see also V.R.C.P. 52(a)(2); Mann v. Levin, 2004

VT 100, ¶ 17, 177 Vt. 261, 861 A.2d 1138 (“[W]e will uphold the court's factual findings unless,

taking the evidence in the light most favorable to the prevailing party, and excluding the effect of

modifying evidence, there is no reasonable or credible evidence to support them.”). We review

the trial court’s legal conclusions de novo, and will uphold them if reasonably supported by the

findings. Id. (citing Luneau v. Peerless Ins. Co., 170 Vt. 442, 444-45, 750 A.2d 1031, 1033

(2000)).

                                        I. Contractual Claim

       ¶ 11.   Unifund challenges the trial court’s finding that the evidence was insufficient to

establish a valid and enforceable agreement between Citibank and defendant as a matter of law.

To prevail on the contractual claim requires sufficient evidence to support a finding that

defendant was party to a contract with Citibank, that he defaulted on a contractual debt by failing

to make payments, that there was an established amount due and owing, and that there was a

complete chain of assignment from the original creditor (Citibank) to the current debt holder

(Unifund), conferring standing upon the debt holder to seek collection.




                                                  5
       ¶ 12.   We begin with Unifund’s challenge to the trial court’s evidentiary ruling.

Unifund argues that the trial court should have admitted the documents purporting to assign

defendant’s account from Citibank to Unifund as business records under V.R.E. 803(6).

Specifically, Unifund contends that the trial court applied the incorrect legal standard for

business records by requiring Unifund’s witnesses to have an “association with the transaction,”

resulting in the wrongful exclusion of the alleged assignments and account documents.

       ¶ 13.   Under Rule 803(6), admission of a document as a business record requires

testimony of the custodian or other qualified witness (1) that the record is “kept in the course of

regularly conducted business activity,” (2) that it was “made at or near the time by, or from

information transmitted by, a person with knowledge,” and (3) that it “was the regular practice of

that business activity to make” the record. As a caveat, Rule 803(6) precludes admission where

“the source of information or the method or circumstances of preparation indicate lack of

trustworthiness.” Id.

       ¶ 14.   The purpose of the business record exception is to permit the admission of

reliable and accurate records, not to facilitate the introduction of otherwise incompetent evidence

merely because it appeared in a record made in the regular course of business. See Gray v. L.J.

Navy Trucking Co., Inc., 475 F.2d 545, 548 (6th Cir. 1978).           For this reason, Rule 803

recognizes an exception for business records that have been deemed by the trial court to be

trustworthy. See Reporter’s Notes, V.R.E. 803. This trustworthiness is guaranteed by the

regularity with which the records are made, the actual reliance placed on them in human affairs,

and the duty of the recorder to make an accurate record. Id. Thus, the foundation to the hearsay

exception in Rule 803(6) is the trustworthiness of the records, and where the source of the

information or the method or circumstances of preparation indicate a lack of trustworthiness, it is



                                                6
within the trial court’s discretion to exclude those business records. See Dufresne-Henry Eng’g

Corp. v. Gilcris Enters., Inc., 136 Vt. 274, 276-77, 388 A.2d 416, 418 (1978) (upholding decision

not to admit business record where testimony did not establish reliability); Colonial Plumbing

Corp. v. Solar Heating Inc., 133 Vt. 82, 83, 329 A.2d 638, 640 (1974) (characterizing language

in Rule 803(6) as requiring admission “unless the trial court, after examining the records and the

manner of their preparation, entertains serious doubt as to their dependability and being worthy

of confidence”).

       ¶ 15.   A trial court’s discretionary rulings are examined under an abuse of discretion

standard of review, which “requires a showing that the trial court has withheld its discretion

entirely or that it was exercised for clearly untenable reasons or to a clearly untenable extent.”

Vt. Nat’l Bank v. Clark, 156 Vt. 143, 145, 588 A.2d 621, 622 (1991). At trial, Unifund sought to

admit, as its own business records, documents purporting to assign defendant’s account with

Citibank to Unifund, including the alleged assignments from Citibank to Pilot, Pilot to UCL, and

UCL to Unifund. The trial court found Mr. Billings’ and Ms. Andres’ testimony about these

documents to be untrustworthy, explaining that neither had “sufficient association with the

[assignments] to offer a credible opinion that the information contained in the electronic data was

‘made at or near the time [of its creation] by, or from information transmitted by, a person with

knowledge.’ ” See V.R.E. 803(6). In particular, the trial court found Ms. Andres’ testimony

regarding the assignments from Pilot to UCL, and UCL to Unifund, difficult to credit, noting that

when confronted with inconsistencies between the version of the assignment from UCL to

Unifund attached to the initial complaint and the version produced at trial, Ms. Andres was

unable to reconcile the discrepancies between the two.




                                                7
       ¶ 16.   The trial court found it prudent to exercise caution and to demand sufficiently

documented proof of defendant’s indebtedness to Unifund. Other courts have noted that “the

possibility of a debt collector attempting to collect a debt that it does not actually own, either

through assignment or otherwise, is very real.” Webb v. Midland Credit Mgmt. Inc., No.

11C5111, 2012 WL 2022013, at *5 n.8 (N.D. Ill. May 31, 2012) (citing P. Holland, The One

Hundred Billion Dollar Problem in Small Claims Court: Robo-Signing and Lack of Proof in

Debt Buyer Cases, 6 J. Bus. & Tech. L. 259, 279 (2011). We need not decide whether the trial

court abused its discretion in concluding that the evidence was insufficient to support the

admission of the Citibank to Pilot assignment. Given the significant inconsistencies between the

copy of the assignment from UCL to Unifund attached to the complaint and the one produced at

trial, and Unifund’s witnesses’ inability to reconcile the discrepancy, the trial court was clearly

within its discretion in concluding that the documents purporting to assign the account from Pilot

to UCL, and UCL to Unifund, were sufficiently unreliable to be admitted under the business

records exception. Because the trial court was within its discretion in finding the proffered

documents unreliable due to their questionable chain of title, as a result of the uncertainties

expressed by the witnesses, Unifund has not established the existence of any valid assignment

empowering them to bring this collection action. See, e.g., Owens-Illinois, Inc. v. Armstrong,

604 A.2d 47, 50-51 (Md. 1992) (despite meeting general requirements of business record,

asbestos exposure report properly excluded based on combination of factors indicating lack of

trustworthiness).

       ¶ 17.   Unifund also challenges the trial court’s finding regarding standing, as established

by the alleged assignments. The trial court found Unifund’s effort to establish standing to be

insufficient because the assignments from Citibank, Pilot, and UCL were for collection purposes



                                                8
only, reserving title and ownership over the receivables to the assignor, Citibank. The question

is thus presented whether the documents, if admissible, are sufficient to confer standing upon

Unifund to bring the claim, despite the express reservation of title and ownership in Citibank.

Because we affirm the trial court’s finding that the documents concerning the alleged

assignments, whatever their scope, are unreliable and therefore inadmissible hearsay, we decline

to address whether, had they been admitted, the documents were sufficient to convey standing to

Unifund. Further, because we affirm the trial court’s finding that Unifund has failed to establish

a complete chain of assignment from the original creditor (Citibank) to the current debt holder

(Unifund), we also find no need to reach Unifund’s challenge to the trial court’s finding that the

evidence was insufficient to establish a valid and enforceable agreement between Citibank and

defendant as a matter of law.3 If the basis for a claim concerning collection of the debt against

defendant existed, Unifund has not established it was the entity entitled to bring it.

                                       II. Unjust Enrichment

       ¶ 18.   Unifund also argues that the trial court erred in finding that Unifund failed to

demonstrate a basis for recovery for unjust enrichment. Specifically, Unifund contends that it is

entitled to payment from defendant for the purchases he personally made on the credit card

account because defendant was unjustly enriched at Unifund’s expense. The trial court disagreed

with Unifund, finding that Unifund based its quasi-contractual claim on the same proofs as its

contractual claim and that the failure of the contractual claim therefore resulted in the failure of

the quasi-contractual claim. We agree.



       3
           We note, however, that there was evidence supporting the trial court’s findings that
defendant did not authorize his father to apply for or use a credit card issued in his name, that it
was father who engaged in all but two of the purchases made on the account, and that Unifund
failed to establish the applicable interest rate or the accuracy of the final balance owed.

                                                  9
         ¶ 19.   We first note that Vermont courts have “subject matter jurisdiction only over

actual cases or controversies involving litigants with adverse interests.” Brod v. Agency of

Natural Res., 2007 VT 87, ¶ 8, 182 Vt. 234, 936 A.2d 1286. One “element of the case or

controversy requirement is that plaintiffs must have standing, that is, they must have suffered a

particular injury that is attributable to the defendant and that can be redressed by a court of law.”

Parker v. Town of Milton, 169 Vt. 74, 77, 726 A.2d 477, 480 (1998). Because standing is a

necessary component of the court’s subject-matter jurisdiction, it cannot be waived, and its

absence can be raised at any time. Town of Charlotte v. Richmond, 158 Vt. 354, 358, 609 A.2d

638, 640 (1992) (noting subject-matter jurisdiction cannot be waived and can be raised at any

time).

         ¶ 20.   Here, Unifund has failed to establish standing to pursue a claim of unjust

enrichment against defendant because it cannot show that it suffered any injury fairly traceable to

defendant. See Parker, 169 Vt. at 77-78, 726 A.2d at 480 (setting forth elements of standing).

Because Unifund provided no proof that it was connected to these transactions other than

through the purported assignments, and because the assignments were not substantiated, there is

nothing connecting Unifund to the charged-off account. It is Unifund, not Citibank, seeking to

assert the equitable claim of unjust enrichment, and Unifund is thus without the right to make a

claim of unjust enrichment against defendant.

         ¶ 21.   A claim for unjust enrichment requires that (1) a benefit was conferred on

defendant; (2) defendant accepted that benefit; and (3) it would be inequitable for defendant not

to compensate Unifund for its value. See DJ Painting, Inc. v. Baraw Enters., Inc., 172 Vt. 239,

242, 776 A.2d 413, 417 (2001) (setting forth elements); see also Kellogg v. Shushereba, 2013

VT 76, ¶ 22, 194 Vt. 446, 82 A.3d 1121 (explaining that unjust enrichment applies if under



                                                 10
totality of circumstances it would be inequitable for benefitted party to retain benefit). Because

Unifund has failed to establish a right to the charged-off account and has failed to prove it was

otherwise connected with any of the credit card transactions on the account, defendant’s failure

to compensate Unifund for any benefit would not be inequitable. Whether Citibank would have

been entitled to a recovery of some of the benefit it allegedly conferred upon defendant, based

upon the evidence of credit card transactions adduced at trial, is not before us. On this evidence,

Unifund was a stranger to those credit card transactions and therefore equity does not demand it

be paid for benefits, if any, conferred by Citibank upon the defendant. For these reasons, we

affirm the trial court’s decision.

        Affirmed.

                                               FOR THE COURT:



                                               Associate Justice




                                                11
