Bayview Loan Servicing LLC v. Wicker

[J-79-2018]

IN THE SUPREME COURT OF PENNSYLVANIA

WESTERN DISTRICT

SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

BAYVIEW LOAN SERVICING LLC, : No. 3 WAP 2018

:

Appellee : Appeal from the Order of the Superior

: Court entered May 17, 2017 at No.

: 1832 WDA 2015, affirming the

v. : Judgment of the Court of Common

: Pleas of Jefferson County entered

: November 4, 2015 at No. 516-2012-

JAMES BERNARD WICKER AND BERYL : CD.

G. WICKER, :

: ARGUED: October 24, 2018

Appellants :

OPINION

JUSTICE BAER DECIDED: MARCH 28, 2019

We granted review to consider the application of Pennsylvania’s business records

exception to the rule against hearsay, pursuant to Pennsylvania Rule of Evidence 803(6)

and the Uniform Business Records as Evidence Act, 42 Pa.C.S. § 6108. The parties

before the Court agree that current Pennsylvania precedent allows a records custodian

to authenticate documents even if the witness did not personally record the specific

information in the documents. The parties disagree, however, as to whether a records

custodian can lay a foundation for documents incorporated into the files of the custodian’s

employer when the information in the documents was recorded by a third party, a process

which has been allowed under the similar but not identical Federal Rule of Evidence

803(6), pursuant to the so-called adopted business records doctrine. For the reasons

that follow, we affirm the Superior Court in concluding that the trial court did not abuse its

discretion in allowing the testimony of the records custodian and admitting the documents

under the facts of this case.

James and Beryl Wicker signed a mortgage agreement for their residence in

Punxsutawney, Pennsylvania in favor of Countrywide Bank, FSB (Countrywide) in

February 2008, which secured a promissory note executed by James Wicker in

consideration for a loan with a principal amount of $119,000. The mortgage agreement

indicated that Mortgage Electronic Registration Systems, Inc. (MERS) would act as

nominee for Countrywide and its successors and assigns and was designated as the

mortgagee. In an assignment of mortgage recorded in November 2011, MERS, as

nominee for Countrywide, assigned the mortgage to Bank of America.

In May 2012, Bank of America filed a mortgage foreclosure action against the

Wickers alleging that the Wickers defaulted on their mortgage as of September 1, 2010.

It further averred that it had provided the Wickers with the statutorily required foreclosure

notice pursuant to 41 P.S. § 403 on September 21, 2011. Subsequently, Bank of America

filed a motion for summary judgment, which the trial court granted in part and denied in

part. In so doing, the trial court narrowed the issues for trial to determining whether Bank

of America had provided proof of (1) the required foreclosure notices; (2) the date of

default; and (3) the amount of indebtedness.

On July 14, 2015, counsel for Bank of America filed a praecipe to substitute

Bayview Loan Servicing, LLC (Bayview) as plaintiff in the mortgage foreclosure action

following an assignment of the mortgage from Bank of America to Bayview recorded on

June 15, 2015. A non-jury trial occurred on August 13, 2015, at which Bayview presented

only one witness, Terrance Schonleber, a litigation manager for Bayview, and the Wickers

did not present any witnesses. Bayview intended for Schonleber to authenticate its

business records, which would provide information relating to the Wickers’ mortgage and

[J-79-2018] - 2

promissory note; their alleged default and indebtedness; and the foreclosure process.

The Wickers’ counsel objected at the beginning of Schonleber’s testimony and renewed

the objection in regard to the individual exhibits. He argued that the testimony would

constitute hearsay because Schonleber did not have the requisite personal knowledge of

the records Bayview sought to admit, given that the records originated from Bank of

America, rather than his employer, Bayview.

In response to the initial objection, Bayview’s counsel questioned Schonleber to

provide a foundation for his testimony. Schonleber explained that he had worked for

Bayview as a litigation manager for approximately two years. In this role, he had access

to Bayview’s “master servicing records” of delinquent borrowers and was familiar with the

Wickers’ file. Notes of Testimony (N.T.), August 13, 2015, at 8. He additionally described

the interaction between Bayview and Bank of America regarding the records and

explained the “loan boarding process,” which occurred when a loan was purchased by

Bayview from another servicer. Id. at 11. He asserted that the boarding process involves

“[fourteen] project coordinators, data mapping, imaging, [and] loan review,” which all

worked to “basically safeguard and check all figures that come from the prior servicer into

ours.” Id.

He stated that the Wickers’ loan was “less complex” than some because of

Bayview’s longstanding business relationship with Bank of America and the fact that both

companies used the same mortgage platform, MSP, which he asserted was an industry

standard. Id. at 11. The platform, according to the testimony, is used for making records

“at or near the time [of] each occurrence of each event” in order to create “an accurate

depiction of every transaction and every occurrence for each loan.” Id. at 13. He

additionally stated that Bayview and Bank of America “work in conjunction, hand-in-hand,

for each loan,” in order to “make sure that all the safeguards are in place in order that

[J-79-2018] - 3

there are no mistakes.” Id. at 13-14. He further established that this process is part of

“regularly conducted activity at Bayview.” Id. at 14.

Following this proffer, the Wickers’ counsel reiterated his objection, arguing that

Schonleber’s testimony constituted double hearsay because he did not have personal

knowledge of the records as required by Pa.R.E. 6021 given that he did not create the

documents and that the records did not originate from Bayview but instead from Bank of

America. Id. at 14-15. While counsel tacitly acknowledged that Schonleber could have

overcome the first level of hearsay under the business records exception of Pa.R.E.

803(6) in regard to the documents originating from Bayview, id. at 17, he asserted that

Schonleber could not authenticate the records to the extent they contained information

derived from Bank of America because he had never worked for Bank of America.2

1 Pennsylvania Rule of Evidence 602, entitled “Need for Personal Knowledge” provides

in full as follows:

A witness may testify to a matter only if evidence is introduced

sufficient to support a finding that the witness has personal

knowledge of the matter. Evidence to prove personal

knowledge may consist of the witness’s own testimony. This

rule does not apply to a witness’s expert testimony under Rule

703.

Pa.R.E. 602.

2 Pennsylvania Rule of Evidence 803(6) provides:

Rule 803. Exceptions to the Rule Against Hearsay--

Regardless of Whether the Declarant Is Available as a

Witness

The following are not excluded by the rule against hearsay,

regardless of whether the declarant is available as a witness:

****

[J-79-2018] - 4

After a brief recess to consider Rule 602 in conjunction with Rule 803(6), as well

as the Uniform Business Records as Evidence Act, 42 Pa.C.S. § 6108(b) (the Act),3 the

(6) Records of a Regularly Conducted Activity. A record

(which includes a memorandum, report, or data compilation in

any form) of an act, event or condition if:

(A) the record was made at or near the time by - or from

information transmitted by - someone with knowledge;

(B) the record was kept in the course of a regularly

conducted activity of a “business”, which term includes

business, institution, association, profession,

occupation, and calling of every kind, whether or not

conducted for profit;

(C) making the record was a regular practice of that

activity;

(D) all these conditions are shown by the testimony of

the custodian or another qualified witness, or by a

certification that complies with Rule 902(11) or (12) or

with a statute permitting certification; and

(E) the opponent does not show that the source of

information or other circumstances indicate a lack of

trustworthiness.

Pa.R.E. 803(6).

3 The Uniform Business Records as Evidence Act provides in full as follows:

§ 6108. Business records

(a) Short title of section. - This section shall be known and

may be cited as the “Uniform Business Records as Evidence

Act.”

(b) General rule. - 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

[J-79-2018] - 5

trial court concluded that requirements of the Rules and the Act were met in this case.

Initially, it found that the witness indicated that information was recorded “at the time or

near the time of each occurrence or event,” kept in the ordinary course of its business,

and constituted a regular part of their activity. N.T. at 20-21. Finally, the trial court

provided the following analysis under Rule 803(6) and the Act:

In total, I'm looking at all of the evidence, but my thought,

looking at where we are here, Bayview with its servicing

platform, it works in conjunction with Bank of America and

regularly gets these records, they regularly rely on them, they

regularly use them, and, as such, relying on their business

and using that in the regular course of business, I think they

are admissible through this witness because he has personal

knowledge that this is how the records come in and this is how

they are used. And there’s also been no testimony, and

there’s no evidence that there’s motive or opportunity to

prepare an inaccurate record.

N.T. at 22-23. Accordingly, the court overruled the Wickers’ objections to Schonleber’s

testimony and permitted the admission of the questioned records into evidence. The

court observed that counsel could still dispute the weight to be accorded the documents.

N.T. at 22. Schonleber then proceeded to testify in regard to the various documents

regarding the foreclosure notices, the default date, and the amount of indebtedness, and

was subjected to cross-examination on all relevant points by the Wickers’ counsel.

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 tribunal, the sources of information,

method and time of preparation were such as to justify its

admission.

(c) Definition. - As used in this section “business” includes

every kind of business, profession, occupation, calling, or

operation of institutions whether carried on for profit or not.

42 Pa.C.S. § 6108.

[J-79-2018] - 6

On September 4, 2015, the trial court issued a brief order and opinion concluding

that the documents authenticated by Schonleber established that (1) the appropriate

foreclosure notice had been sent to the Wickers’ last known address, which was also the

mortgaged property; (2) the default date was September 1, 2010; and (3) that the amount

due as of the date of trial was $155,413.54.4

On September 14, 2015, the Wickers filed a motion for reconsideration in which

they reasserted their challenge to Schonleber’s testimony. The trial court denied the

motion. After the court entered judgment against the Wickers, the Wickers filed a notice

of appeal to the Superior Court, raising what the trial court counted as thirty-two separate

claims of error in a thirty-five paragraph Statement of Issues Complained of on Appeal

pursuant to Pa.R.A.P. 1925(b). The trial court issued a one paragraph opinion pursuant

to Pa.R.A.P. 1925(a), referencing its prior decisions in the matter.5 After the Wickers

narrowed their claims to a more manageable four issues in their brief, the Superior Court

directed the trial court to file an opinion addressing those issues, to the extent they were

preserved below.

The trial court responded by observing that the Wickers failed to file a post-trial

motion pursuant to Pa.R.C.P. 227.1 and thus arguably waived their issues on appeal.

However, it correctly predicted that the Superior Court would treat the motion for

reconsideration as a post-trial motion and addressed the issues preserved in that motion

4 In so doing, the court also rejected the Wickers’ factual challenge based upon a

difference between the indebtedness indicated in a document dated May 14, 2015

($153,849.02) and that stated in a document dated August 13, 2015 ($155,413.54). The

court observed that the earlier document clearly indicated that additional interest and

charges would continue to accrue.

5 Prior to trial, the court had issued opinions and orders addressing the numerous motions

filed by the parties, which will not be discussed here.

[J-79-2018] - 7

including the challenges related to Schonleber’s testimony which are currently before this

Court.

In its opinion, the court relied upon its analysis at trial, as set forth above, as well

as citing the Superior Court’s decision in U.S. Bank v. Pautenis, 118 A.3d 386 (Pa. Super.

2015), which, as discussed in detail below, involved similar issues related to a records

custodian in a mortgage foreclosure case involving multiple assignments of the mortgage.

The trial court recognized that the Superior Court in Pautenis reaffirmed the test set forth

in Boyle v. Steiman, 631 A.2d 1025, 1032-33 (Pa. Super. 1993), for determining whether

a witness attempting to authenticate business records pursuant to Rule 803(6) and the

Act can provide sufficient information to justify a presumption of trustworthiness.

Specifically, it observed that “[a]s long as the authenticating witness can provide sufficient

information relating to the preparation and maintenance of the records to justify a

presumption of trustworthiness for the business records of a company, a sufficient basis

is provided to offset the hearsay character of the evidence.” Tr. Ct. Op. at 7 (quoting

Pautenis, 118 A.3d at 401).6

The trial court recognized that the Superior Court in Pautenis affirmed the

exclusion of documents where the witness in that case was not familiar with the record or

the record-keeping process. The trial court in this case applied the same test but reached

the opposite conclusion given that Schonleber was familiar with Bayview’s record-keeping

system, that Bank of America utilized the same system, that he was able to confirm that

the entries would have been made near the time of the relevant events, and that he had

reviewed the Wickers’ file prior to trial. The court concluded that this was sufficient to

justify the admission of the business records without the need for Schonleber’s personal

knowledge of the underlying facts.

6As noted infra, this test was initially set forth by this Court in In re Indyk's Estate, 413

A.2d 371, 373 (Pa. 1979).

[J-79-2018] - 8

On appeal, the Superior Court affirmed in a unanimous published opinion.

Bayview Loan Servicing LLC v. Wicker, 163 A.3d 1039 (Pa. Super. 2017). As relevant to

the issues currently before this Court, the Superior Court held that the trial court did not

abuse its discretion in concluding that Schonleber could authenticate the business

records based upon the court’s application of the analysis previously set forth in Boyle

and Pautenis. Id. at 1048. After the Wickers filed a petition for allowance of appeal, this

Court granted limited review to consider whether the Superior Court erred in affirming the

trial court’s decision to allow Schonleber to authenticate the documents and to resolve an

asserted conflict in the Superior Court decisions addressing the business records

exception to the rule against hearsay.7

Before this Court, the Wickers reiterate their argument that Bayview failed to satisfy

the business records exception of Rule 803(6) and the Act because the information

contained in the admitted documents was recorded by Bank of America. They assert that

Pennsylvania’s business records exception does not permit a business’s records

custodian to authenticate documents which contain statements of people who are not

employed by the business and thus do not have a duty to report accurately to that

business. The Wickers concede that the witness need not have been personally involved

7 We granted review of the following issues, as phrased by the Wickers:

(1) Did the Superior Court err in affirming the decision of the

trial court which found [Bayview’s] witness competent to

testify and received evidence under the business records

exception to the hearsay rule?

(2) As to the contested evidence received by the Court, will a

grant of allocatur, here, resolve the conflict between both U.S.

Bank v. Pautenis; Boyle v. Steiman and Commonwealth

Financial Systems v. Smith as to the admissibility of witness

testimony at a debt collection trial?

Bayview Loan Servicing LLC v. Wicker, 178 A.3d 1289, 1290 (Pa. 2018).

[J-79-2018] - 9

in the recording process of the specific evidence but contend that the witness must have

“firsthand knowledge” of the business’s recording process Wickers’ Brief at 23.

Moreover, the Wickers maintain that the trial court improperly placed the burden on them

to demonstrate that the records were unreliable, rather than placing the burden on

Bayview, as the proponent of the evidence, to demonstrate that the records were

trustworthy. The Wickers propose that Bayview should have either authenticated the

documents through a witness from Bank of America or utilized the process sanctified by

Rule 803(6) for certification of the document pursuant to Pa.R.E. 902(11), which involves

the prior certification of the record by a custodian or other qualified person of the creating

entity.8

8 Pennsylvania Rule of Evidence 902(11) and the related provision of Rule 902(12)

provide as follows:

Rule 902. Evidence That is Self-Authenticating

The following items of evidence are self-authenticating; they

require no extrinsic evidence of authenticity in order to be

admitted:

****

(11) Certified Domestic Records of a Regularly Conducted

Activity. The original or a copy of a domestic record that

meets the requirements of Rule 803(6)(A)-(C), as shown by a

certification of the custodian or another qualified person that

complies with Pa.R.C.P. No. 76. Before the trial or hearing,

the proponent must give an adverse party reasonable written

notice of the intent to offer the record - and must make the

record and certification available for inspection - so that the

party has a fair opportunity to challenge them.

(12) Certified Foreign Records of a Regularly Conducted

Activity. In a civil case, the original or a copy of a foreign

record that meets the requirements of Rule 902(11), modified

[J-79-2018] - 10

They additionally maintain that a conflict exists in the Superior Court’s precedent

relating to the application of the business records exception in debt collection and

mortgage foreclosure cases. The Wickers observe that the Superior Court has utilized

the standard adopted by this Court, which states that a party seeking to introduce

business records pursuant to the hearsay exception must “provide sufficient information

relating to the preparation and maintenance of the records to justify a presumption of

trustworthiness.” Wickers’ Brief at 31 (quoting the standard set forth by this Court in In re

Indyk's Estate, 413 A.2d 371, 373 (Pa. 1979). As applied in the debt collection arena, the

Wickers favor the Superior Court’s decisions in Pautenis and Commonwealth Financial

Systems, Inc. v. Smith (CFS), 15 A.3d 492 (Pa. Super. 2011), which they view as requiring

witnesses authenticating business records to have personal knowledge of the prior

servicer’s record-keeping practices. They emphasize that the court in CFS declined to

follow what has been termed the “federal rule of incorporation” or the “adoptive business

records doctrine,” which the party in CFS had characterized as allowing for authentication

of the third-party’s records based upon “mere acceptance or incorporation into an

assignees’ business records.” Id. at 37 (quoting CFS, 15 A.3d at 499).

In contrast, they contend that the Superior Court in the case at bar and other

unpublished decisions has diverged from Pautenis and CFS. They urge this Court to

reject the rulings in these cases and their reliance on the prior decision in Boyle, which

as follows: the certification rather than complying with a

statute or Supreme Court rule, must be signed in a manner

that, if falsely made, would subject the maker to a criminal

penalty in the country where the certification is signed. The

proponent must also meet the notice requirements of Rule

902(11).

Pa.R.E. 902(11), (12).

[J-79-2018] - 11

they imply is moving toward the federal adopted business records doctrine.9 They argue

against the adoption of an evidentiary rule that would allow loan servicers and other debt

collectors to incorporate the records of prior companies into their own records, which they

view as particularly dangerous given what they allege are frequent errors in the loan

servicing industry due to the repeated transfers. In contrast, they contend that witnesses

in debt collection cases should only be able to testify pursuant to their personal knowledge

of the record-keeping processes of the recording company to establish the elements listed

in Rule 803(6).

Several non-profit organizations representing low-income consumers filed an

amici curiae brief in support of the Wickers.10 Amici contend that debt servicers, such as

Bayview, regularly transfer servicing rights during the life of a mortgage or other debt.

They argue that errors are rampant in the recording systems and during the transfer

process, especially in regard to loans in default. Amici provide a litany of errors found in

the loan histories of their own clients and instances where current servicers could not

explain fees placed on the accounts by prior servicers.

9 Notably, the Superior Court’s decision in Boyle did not involve loan servicing or the

acquisition of records from a prior entity, but instead related to a private investigator’s

attempts to collect fees he claimed an attorney owed him for investigative work on

personal injury cases. The business record exception became relevant following the

investigator’s death and the estate’s use of the investigator’s son to authenticate his

father’s business ledgers. The son testified that he had knowledge of his father’s record-

keeping because he had been “secondarily” involved in the recording process which

occurred in the regular course of business at or near the time of the relevant events.

Boyle, 631 A.2d at 1033. In affirming the trial court allowance of the testimony, the

Superior Court in Boyle utilized the standard established by this Court in In re Indyk’s

Estate, 413 A.2d at 373.

10 The following organizations submitted the brief: Community Legal Services,

Philadelphia Legal Assistance, Neighborhood Legal Services Association, Community

Justice Project, Pennsylvania Legal Aid Network, and the National Consumer Law

Center.

[J-79-2018] - 12

Amici emphasize that the business records exception has been adopted by courts

because of the inherent reliability of records kept in the ordinary course of business.

Given the errors listed above, Amici assert that the records in the loan service industry

should not be deemed inherently reliable. Amici characterize Bayview and other debt

servicers as proposing a rule of incorporation contrary to Pennsylvania law that would

deem business records admissible “simply because they were made by a business.”

Amici Brief at 4. Like the Wickers, they instead maintain that debt servicers should

present the records solely through a witness from the prior servicer or via the Rule 902(11)

certification process. They urge this Court to maintain a strict interpretation of the

business records rule, which they contend was applied by the Superior Court in Pautenis

and CFS.

In response, Bayview asserts that the Superior Court correctly concluded that the

trial court did not abuse its discretion in allowing Schonleber to authenticate Bayview’s

records pursuant to the business records exception. Moreover, Bayview contends that

the decision in the case at bar is entirely consistent with the decisions in Pautenis, CFS,

Boyle, and several other unpublished Superior Court decisions that apply the test set forth

by this Court in In re Indyk’s Estate. It asserts that the differences in the cases derive not

from the standard applied but because of distinctions in the trustworthiness of the specific

evidence and the credibility of the witnesses as determined by the trial courts. In those

cases denying admissibility, Bayview contends that the trial courts heard evidence that

the witnesses were unfamiliar with the prior servicers’ record-keeping processes or that

the records contained errors or discrepancies. It additionally emphasizes the wide

discretion granted to trial courts’ evidentiary decisions. Notably, Bayview does not call

for this Court to embrace the federal “adoptive business records doctrine,” arguing instead

[J-79-2018] - 13

that the evidence in this case was admissible under the current precedent regarding

Pennsylvania’s business records exception as set forth in Rule 803(6) and the Act.

In reviewing evidentiary decisions, this Court has repeatedly emphasized that the

admissibility of evidence is within the sound discretion of the trial court, which appellate

courts will not disturb absent an abuse of discretion or error of law. See In re A.J.R.-H.,

188 A.3d 1157, 1167 (Pa. 2018). “An abuse of discretion may not be found merely

because an appellate court might have reached a different conclusion,” but instead

requires demonstration that the lower court’s decision was “a result of manifest

unreasonableness, or partiality, prejudice, bias, or ill-will, or such lack of support from the

evidence or the record so as to be clearly erroneous.” Polett v. Public Communications,

Inc., 126 A.3d 895, 914 (Pa. 2015) (internal quotation marks and alteration designations

omitted). In this case, we consider whether the trial court abused its discretion or erred

as a matter of law in allowing Schonleber to testify to exhibits which included information

recorded by a prior loan servicer under the business records exception to the rule against

hearsay. Accordingly, we turn first to the underpinnings of the exception.

Our rules of evidence mandate that a witness may testify to a matter only if “the

witness has personal knowledge of the matter.” Pa.R.E. 602. Moreover, Pennsylvania’s

rule against hearsay provides that a statement, which includes a “written assertion,” is

excludable if the person who made the statement does not make it “while testifying at the

current trial” and if the evidence is offered “to prove the truth of the matter asserted in the

statement.” Pa.R.E. 801, 802. As applied to the case at bar, there is no question that

the exhibits constituted hearsay as they were offered to prove the details of the mortgage

and default and included statements that were not made by Schonleber and about which

he did not have personal knowledge at the time they were recorded.

[J-79-2018] - 14

Nevertheless, evidence may be admissible, despite its hearsay attributes, if it falls

within an exception established by this Court’s rules or by statute. Pa.R.E. 802.

Importantly, where a document contains multiple levels of hearsay, each level of hearsay

must satisfy a recognized exception. See In re A.J.R.-H., 188 A.3d at 1169. This Court

has observed that exceptions to the rule against hearsay have developed to allow the

admission of specified types of evidence “based upon (1) the necessity for such evidence,

and (2) the circumstantial probability of its trustworthiness.” Fauceglia v. Harry, 185 A.2d

598, 601 (Pa. 1962) (citing 5 Wigmore, Evidence § 1420 (3d ed. 1940)). In regard to the

business records exception, the circumstantial trustworthiness arises from the regularity

with which business records are kept and the reliance that businesses place on the

accuracy of those records. See id.; Williams v. McClain, 520 A.2d 1374, 1376 (Pa. 1987);

1 West's Pennsylvania Practice, Evidence § 803(6)-1 (4th ed.).

The business records exception has been incorporated into Pennsylvania law

through the Uniform Business Records as Evidence Act (Act), 42 Pa.C.S. § 6108, which

was originally enacted in 1939, and Pennsylvania Rule of Evidence 803(6), originally

adopted in 1998, which generally tracks Federal Rule of Evidence 803(6), supra at 5 n.3

and 4 n.2, respectively. The Act and the Rule substantially overlap in that both generally

require that a custodian or other qualified witness testify that the record was made “at or

near the time” of the event recorded and that the record was kept in the regular course of

business.11 Id. Moreover, both provide for the trial court to make a determination in

regard to whether the circumstances surrounding the record “justify its admission” or

“indicate a lack of trustworthiness.” Id.

11 As discussed infra, our Rule additionally provides that the requirements may be

satisfied by “a certification that complies with Rule 902(11) or (12) or with a statute

permitting certification,” which are set forth supra at 10, n.8. Pa.R.E. 806(3).

[J-79-2018] - 15

As this Court explained in Fauceglia, the purpose of the Act “was to enlarge the

old common-law shopbook exception to the hearsay rule by eliminating the many illogical

distinctions which had evolved during the period” when individual shopkeepers were the

predominant business organization.12 Fauceglia, 185 A.2d at 600. Recognizing the

transition to large, complex business organizations, this Court addressed the difficulty of

presenting witnesses with personal knowledge of the details of each transaction:

Quite often different individuals have personal knowledge of

the various phases of a transaction so that no one individual

has knowledge of the entire transaction. In addition, the

frequent turnover of personnel often makes it impossible to

identify the employee - if it were only one - who took part in

the transaction. Under these circumstances, to require the

entrant to have personal knowledge of the event recorded,

and to require proof of the identity of the recorder, would

exclude almost all evidence concerning the activities of large

business organizations - a result diametrically opposed to the

purpose and spirit of the Business Records as Evidence Act.

Id. (citing Wigmore, Evidence § 1530 at 378 (3d ed. 1940); McCormick, Evidence 602

(1954)) (footnote omitted).

While our holding in Fauceglia provided for an expansive view of the business

records exception, we nevertheless used language suggesting a limitation to the

exception, holding that “as long as someone in the organization has personally observed

the event recorded, the evidence should be admitted.” Id. at 600. In that case, however,

we were not faced with considering whether evidence recorded by someone outside the

12Shopbooks are “[b]ooks of original entry kept by merchants, shop-keepers, mechanics,

and the like, in which are entered their accounts and charges for goods sold, work done,

etc.” Blacks Law Dictionary 961 (6th abr. ed. 1991). Apparently, various requirements

arose to allow for the admission of shopbooks kept in the normal course of business,

while guarding against the potential of self-serving entries by the shopkeepers. See e.g.

Freedman v. Mutual Life Ins. Co. of New York, 21 A.2d 81, 85–86 (Pa. 1941).

[J-79-2018] - 16

organization could ever be admissible under the business records exception, the issue

currently before the Court.13

This Court also considered the business records exception in In re Indyk's Estate,

413 A.2d 371 (Pa. 1979), and set forth the standard relied upon by the parties and the

courts in the case at bar. In that case, we concluded that the trial court did not abuse its

discretion in admitting exhibits where the authenticating witness only had personal

knowledge of the record-keeping practices utilized after the witness’s employer acquired

the company that originally created the record. We found no error in the admission of the

records where the witness testified that he had personally been in charge of the records

since the acquisition and had found that the “records had been kept in conformity with the

record-keeping practice of the insurance industry” and in compliance with the

governmental regulations prior to the acquisition. Id. at 374. After contemplating the logic

of Fauceglia as set forth above, we opined that the import of the Act is to “require that the

basic integrity of the record-keeping is established.” Id. at 373. We further concluded

that the hearsay character of business records evidence could be offset “[a]s long as the

authenticating witness can provide sufficient information relating to the preparation and

maintenance of the records to justify a presumption of trustworthiness for the business

records of a company.” Id.

Having reviewed the contours of Pennsylvania’s business records exception, we

now consider its application in the context of the increasingly common situation where a

loan, in this case a mortgage, is originated by one company but is later acquired by a

13 In Fauceglia, the Court considered the admissibility of army medical records kept by

the Veterans’ Administration as authenticated by a records custodian. We held the

evidence admissible under the Act, concluding that it was “extremely unlikely that entries

made on the standard form in a regular fashion pursuant to army regulations had no basis

in fact,” even though no individual could testify to recording the information personally.

Fauceglia, 185 A.2d.at 600.

[J-79-2018] - 17

separate company. The question is whether the records containing information originally

recorded by the first company may be authenticated by an employee of the current holder

of the loan or whether the litigant must provide an employee of each of the prior holders

of the loan or a certification of the records under Rule 902(11) or (12), as discussed below.

In Commonwealth Financial Systems, Inc. v. Smith (CFS), 15 A.3d 492 (Pa. Super.

2011), the Superior Court recognized that it was addressing a question of first impression

in determining “whether computerized files of an original creditor are admissible as the

business records of a successor debt buyer,” a question that mirrors the issue currently

before this Court. Id. at 496. Specifically, the Superior Court in CFS faced the application

of the business records exception to credit card records where the credit card was

originally issued by one company but the credit card debt was later purchased by the

litigant, CFS, after the card holder defaulted. Thus, similar to the case at bar, CFS

attempted to introduce into evidence records created by its predecessors.

The Superior Court properly looked to the requirements for Pennsylvania’s

business records exception set forth in Rule 803(6) and the Act. In so doing, it first

rejected CFS’s invitation to adopt the federal “rule of incorporation” which the company

described as allowing for the admission of a third party’s document “as part of the

business records of the acquiring business, if the business integrated the document into

its records and relied upon it.” CFS, 15 A.3d at 497. The Superior Court then determined

that the trial court in CFS did not abuse its discretion in excluding evidence which it had

good reason to find untrustworthy. The court emphasized that CFS attempted to

introduce an unsigned credit card agreement from the incorrect calendar year that

included interest rates and counsel fees that did not conform to those alleged in the

complaint. Additionally, the witness offered by CFS acknowledged that he was unfamiliar

with how the prior entities created or maintained their business records and that he did

[J-79-2018] - 18

not have personal knowledge that the information was recorded at or near the time of the

events. Id. at 494. As the Superior Court in CFS observed, the Pennsylvania business

records exception under Pa.R.E. 803(6) and the Act require “the proponent of

documentary evidence to establish circumstantial trustworthiness.” Id. at 499. Thus, the

Superior Court justifiably concluded that CFS failed to meet that standard and that the

trial court did not abuse its discretion in excluding the evidence.

Similarly, in U.S. Bank, N.A. v. Pautenis, 118 A.3d 386 (Pa. Super. 2015), the

Superior Court again considered application of the business records exception under

Rule 803(6) and the Act and applied the test originally set forth in In re Indyk’s Estate.

The fact pattern in Pautenis is even more similar to the case at bar than that of CFS, as

Pautenis involved a mortgage and promissory note that had been assigned twice during

the course of the loan. As with the instant case, the company filing the foreclosure action

in Pautenis attempted to introduce documents related to the mortgage and note which

derived from records created by the prior companies.

The trial court in Pautenis excluded the records because it found that the

documents “totally lack[ed] trustworthiness.” Id. at 389. The lack of trustworthiness

resulted from several discrepancies on the face of the records, including the absence of

more than one year’s worth of payment records and an unexplained $6,000 difference in

the principal loan amount set forth on two of the records. Id. at 401-02. Additionally, the

proffered witness testified that he did not know how the prior companies had created or

maintained their records. Id. Moreover, the trial court discounted the witness’s testimony

that the acquiring company engaged in an extensive validation process when it obtained

records from the prior companies, given the apparent errors that occurred despite the

validation. Thus, we find it unsurprising that the Superior Court concluded that the trial

court acted within its discretion in excluding the evidence given its supported factual

[J-79-2018] - 19

determination that the bank “failed to present complete, accurate and trustworthy records

evincing the actual amount due and owing.” Id. at 402 (internal citation omitted).

We emphasize that the facts of the case at bar are readily distinguishable from

those in CFS and Pautenis and, instead, are more akin to the facts of In re Indyk’s Estate.

In contrast to the witnesses’ lack of knowledge of the prior recording system in CFS and

Pautenis, Schonleber testified that he was personally acquainted with the recording

process used by Bank of America as it was the same process used by Bayview, which

allowed him to speak to whether the information was likely to have met the requirements

of Rule 803(6)(A-C), including that the record was made at or near the time of the event

and that it was kept in the regular course of business. Additionally, Schonleber explained

that Bayview engaged in an extensive process of “boarding” the documents, during which

it checked the various figures. It is also relevant that Bayview did not merely place Bank

of America’s documents in its files but relied upon the documents for its business.

Significantly, the records presented in this case did not include the facial lapses and errors

that existed in CFS and Pautenis, or the litany of errors documented in the Amici’s brief

that would undoubtedly cast a shadow on the trustworthiness of the documents.

Accordingly, we agree with the Superior Court that the trial court acted within its discretion

in admitting the evidence under the facts of this case.

We further observe that the courts in CFS, Pautenis, and this case properly looked

to the circumstances of the individual cases to determine whether the elements of the

business records exception were met. The fact that the courts reached opposite results

does not indicate a conflict between the cases but rather distinctions in the factual

circumstances. Thus, we neither adopt a bright line rule forbidding the authentication of

documents recorded by a third party, nor do we endorse an automatic incorporation

doctrine. Instead, we will continue to allow our trial courts to utilize their broad discretion

[J-79-2018] - 20

in evidentiary matters by applying the business record exception of Rule 803(6) and the

Act to determine if the witness “can provide sufficient information relating to the

preparation and maintenance of the records to justify a presumption of trustworthiness”

subject to the opponent rebutting the evidence with any other circumstances indicating a

lack of trustworthiness. In re Indyk's Estate, 413 A.2d at 373.

We additionally observe that Rule 803(6) provides litigants with an alternative

method of authenticating documents through the use of Rule 902(11) and (12)’s

certification process. Use of this process would arguably reduce the risk that a trial court

will find supporting documents to be insufficiently trustworthy based on aspects of the

specific documents, the recording process, or the witness’s familiarity with them.

Nevertheless, we emphasize that Rule 803(6) does not require certification but rather

offers it as an alternative.

For the reasons set forth above, we conclude that the trial court did not abuse its

discretion in admitting the documents and allowing Schonleber’s testimony under the

facts of this case. Accordingly, we affirm the order of the Superior Court.

Chief Justice Saylor and Justices Todd, Donohue, Dougherty, Wecht and Mundy

join the opinion.

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