Midland Funding LLC v. Michael Bassett

STATE OF MICHIGAN

COURT OF APPEALS

MIDLAND FUNDING, LLC, UNPUBLISHED

December 13, 2016

Plaintiff-Appellee,

v No. 328720

Washtenaw Circuit Court

MICHAEL BASSETT, LC No. 14-000438-CZ

Defendant-Appellant.

Before: M. J. KELLY, P.J., and O’CONNELL and BECKERING, JJ.

PER CURIAM.

In this debt collection case, defendant Michael Bassett appeals as of right from the trial

court’s grant of a directed verdict to plaintiff Midland Funding, LLC following a bench trial. For

the reasons stated in this opinion, we reverse and remand for further proceedings.

I. BASIC FACTS

According to the evidence presented by Midland Funding, Bassett obtained a credit card

financed by FIA Card Services, N.A. in August 2004. He incurred charges on the card and made

payments on it until February 2009. It appears that when he stopped making payments, he still

owed a significant sum of money. In December 2012, FIA Card Services assigned a pool of

unpaid accounts to Asset Acceptance. In August 2013, Asset Acceptance sold “purchased

accounts” to Midland Funding. Shortly thereafter, Midland Credit Management, Inc, a debt

collection company, informed Bassett that Midland Funding had acquired his FIA Card Services

account and that Midland Credit Management would be collecting on and servicing his account.

In November 2013, Midland Credit Management sent another letter offering Bassett three

payment options. It does not appear that Bassett responded to those correspondences.

-1-

Midland Funding brought suit against Bassett in May 2014. In an affidavit attached to

the complaint, a Midland Funding employee averred that Midland Funding had been assigned all

rights, title, and interest in Bassett’s FIA Card Services account. Basset initially contended that

he was unaware of the account1 and that in any event Midland Funding had failed to show that

the account was properly assigned to it. Midland Funding filed a motion for summary

disposition, but failed to provide satisfactory proof that Bassett’s FIA Card Services account had

been assigned to it. As a result, the trial court stated that it would only grant summary

disposition if evidence of the assignment was produced. Midland Funding did not produce the

evidence and the trial court never issued an order granting or denying the motion. Thereafter,

Bassett filed a motion to dismiss the suit because the affiant supporting the complaint had died

before the complaint was filed. Bassett believed the affiant’s death was a fatal flaw in the

proceedings because the affiant would not be able to testify at trial. In response to Bassett’s

motion, the trial court ordered Midland Funding to submit an amended affidavit within 21 days.

After Midland Funding failed to meet that deadline, the case was set for trial.

On July 15, 2015, the day before trial, Midland Funding submitted notice of its intention

to submit certified records under MRE 902(11). With the exception of an “account specific

affidavit” from Ashley Lashinski, a Midland Certified Management legal specialist, all of the

proposed records had been previously submitted with Midland Funding’s motion for summary

disposition. Lashinski averred in her April 2015 affidavit that she was familiar with the records

pertaining to Bassett’s account and that the account was included in the assignments from FIA

Card Services to Asset Accounting and from Asset Accounting to Midland Funding. Likewise,

Emily Walker, another Midland Credit Management legal specialist, averred to nearly the exact

same statements in her July 2015 affidavit. Walker also averred that the record attached to the

notice were “records regarding the account and/or payment(s) received, being a reproduction

from the records on file on behalf of [Midland Funding] based upon [her] review.”2

At trial, Bassett objected to the admission of the records, arguing that he had received

insufficient notice under MRE 902(11) because the notice and records had only been delivered

the day before trial. The trial court admitted the records, finding that Bassett was not prejudiced

because, with the exception of two of the affidavits included in the notice, he had already seen all

of the records. Thereafter, Midland Funding moved for a directed verdict. Bassett maintained

that the evidence failed to show that his account had been assigned to Midland Funding.

However, the trial court disagreed, granted Midland Funding’s motion for directed verdict, and

entered a judgment against Bassett in favor of Midland Funding.

1

On appeal, Bassett does not argue that he had no liability for the debt incurred on his FIA Card

Services account. Instead, he appears to solely argue that even if he owed the money, Midland

Funding is not entitled to collect it because it cannot prove that there was a valid assignment of

rights. We note that during the trial court proceedings Bassett never produced any evidence

suggesting that he did not owe the original debt. Moreover, during the bench trial, Bassett

conceded that “perhaps” he owed money to the original debt holder.

2

It appears that Walker’s affidavit was intended to satisfy the requirements in MRE 902(11)(A)

– (C).

-2-

II. ADMISSIBILITY OF EVIDENCE

A. STANDARD OF REVIEW

Bassett argues that the trial court abused its discretion in admitting into evidence

affidavits submitted by Midland Funding. He also argues that the trial court erred in granting a

directed verdict because there was no evidence that Midland Funding had properly been assigned

his FIA Card Services account. “This Court reviews a trial court’s decision to admit evidence

for an abuse of discretion[.]” Detroit v Detroit Plaza Ltd Partnership, 273 Mich App 260, 275;

730 NW2d 523 (2006). “An abuse of discretion occurs when the trial court chooses an outcome

falling outside the range of principled outcomes.” Edry v Adelman, 486 Mich 634, 639; 786

NW2d 567 (2010). We review de novo a trial court’s decision on a motion for a directed verdict.

Meagher v Wayne State Univ, 222 Mich App 700, 708; 565 NW2d 401 (1997).

B. ANALYSIS

MRE 901 requires that an item be authenticated before it is admitted into evidence. MRE

902 allows for certain items to be self-authenticated without extrinsic evidence, such as witness

testimony. Under MRE 902(11) records “of regularly conducted business activity that would be

admissible” under MRE 803(6)3 can be self-authenticated “by written declaration under oath by

its custodian or other qualified person certifying that” the record meets certain enumerated

requirements.4 In addition to setting forth specific information that must be included in the

written declaration, MRE 902(11) contains the following notice requirement:

A party intending to offer a record into evidence under this paragraph

must provide written notice of that intention to all adverse parties, and must make

the record and declaration available for inspection sufficiently in advance of their

offer into evidence to provide an adverse party with a fair opportunity to

challenge them.

Here, because Bassett was only given notice of Midland Funding’s intention to offer the records

under MRE 902(11) one day before trial, the notice and some of the records were clearly not

“available for inspection sufficiently in advance of their offer into evidence” and Bassett was not

given “a fair opportunity to challenge them.” Although Bassett objected to the admission of the

records on this basis, the trial court concluded that the late notice did not prejudice Bassett

because some of the records had been previously attached to Midland Funding’s motion for

summary disposition and were therefore available sufficiently in advance of trial. However, the

affidavits from Walker and Lashinski were first provided to Basset one day before trial, and it is

the admission of those affidavits in particular that Bassett is challenging on appeal.

3

MRE 803(6) is the business records exception to the hearsay rule.

4

“Together with a concurrently adopted amendment of MRE 803(6), [MRE 902(11)] allows a

written certification of business records to substitute for a court appearance and testimony by the

records’ custodian.” MRE 902, note to 2001 amendment.

-3-

Contrary to the trial court’s finding, Bassett was prejudiced by the admission of those

affidavits because neither had been produced previously and both directly provided that Midland

Funding had been properly assigned the rights to Bassett’s FIA Card Services account. The

other records had already been evaluated by the trial court during Midland Funding’s motion for

summary disposition, and the court had concluded that they were insufficient to establish that

there was a proper assignment. Accordingly, the only evidence that Midland Funding was the

party entitled to collect on the account was Lashinski and Walker’s affidavits, which were

produced one day before trial. Moreover, it was on account of those affidavits, that the trial

court concluded Midland Funding was entitled to directed verdict. Because the affidavits were

admitted in violation of MRE 902(11)’s notice requirements, the proper foundation to self-

authenticate them was never established, and it was improper to admit the them into evidence.

See MRE 901. Likewise, although Bassett does not directly challenge the admission of the other

evidence included in the late notice under MRE 902(11), we note that because Walker’s

affidavit, i.e., the written declaration required by MRE 902(11), was improper, there was no

adequate written notice provided with regard to any of the submitted evidence, so none of them

were properly authenticated or admitted.5

Because none of the exhibits were properly admitted at trial and because there was no

other evidence admitted, we conclude that the trial court necessarily erred in granting Midland

Funding’s motion for directed verdict. See Meagher, 222 Mich App at 708 (holding that a

directed verdict is only appropriate if, viewing the evidence in the light most favorable to the

nonmoving party, there are no disputed factual questions remaining). Thus, we vacate the trial

court’s judgment in favor of Midland Funding and remand for a new trial.6 On remand, Midland

Funding must follow the notice requirements of MRE 902(11) if it wants to introduce business

records without having the record’s custodian testify.7

5

Our holding is limited to a finding that the records admitted at trial were not properly admitted

because they were not properly authenticated. We make no findings with regard to whether the

evidence was substantively admissible in the absence of the identified procedural deficiencies.

6

We remand for new trial in lieu of ordering the trial court to grant directed verdict in Bassett’s

favor because, had the trial court not abused its discretion in admitting Midland’s proffered

evidence, Midland Funding may have taken other actions in an effort to prove its case, such as

asking for a continuance to allow for proper notice, or producing otherwise admissible evidence.

7

Basset also argues that the trial court erred in admitting the affidavits because Midland Funding

failed to file a witness list. Because we are remanding for new trial, we need not address this

issue. However, we note that the trial court has discretion to allow a witness list to be filed late

or to dismiss a case as a sanction for failing to timely disclose a witnesses under certain

circumstances. See Dean v Tucker, 182 Mich App 27, 31; 451 NW2d 571 (1990).

-4-

Reversed and remanded for new trial. We do not retain jurisdiction. Bassett, as the

prevailing party, may tax costs. MCR 7.219.

/s/ Michael J. Kelly

/s/ Peter D. O'Connell

/s/ Jane M. Beckering

-5-