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Portfolio Recovery Associates, LLC v. Schultz

Court of Appeals of Missouri, Eastern District, Second Division

November 18, 2014

PORTFOLIO RECOVERY ASSOCIATES, LLC, Plaintiff/Appellant,
v.
JUANITA SCHULTZ, Defendant/Respondent

Page 428

Appeal from the Circuit Court of St. Louis County. Hon. Brenda Stith Loftin.

For Plaintiff/Appellant: Karen L. Mayfield-Jones, St. Louis, MO.

For Defendant/Respondent: Mark G. Arnold, Jason M. Husgen, Clayton, MO.

Sherri B. Sullivan, J. Mary K. Hoff, J., and Philip M. Hess, J., concur.

OPINION

Page 429

Sherri B. Sullivan, J.

Introduction

Portfolio Recovery Associates, LLC (Appellant) appeals from the trial court's judgment entered in favor of Juanita Schultz (Respondent) on Appellant's claims and Respondent's counterclaim. We reverse and remand.

Factual and Procedural Background

Appellant is in the business of purchasing charged-off accounts from original creditors. On September 19, 2012, Appellant filed a three-count petition against Respondent for account stated, money had and received, and breach of contract. Appellant's petition alleged its claims were based on its purchase of Respondent's credit card debt with GE Money Bank/Sam's Club (n/k/a GE Capital Retail Bank) (hereinafter " GE" ). Appellant alleged the defaulted account had a balance of $6,644.16. With respect to each count in its petition, Appellant alleged " [Appellant] is the holder of a valid assignment of the Account with [GE]. [Appellant] has been assigned all of [GE's] power and authority to do and perform all acts necessary for the settlement, satisfaction, compromise and/or adjustment of the Account."

On October 30, 2012, Respondent filed her answer and counterclaim, later amended on June 25, 2013, denying there was a valid assignment from GE to Appellant and thus Appellant had no standing to sue her. Respondent also alleged violations of

Page 430

the Fair Debt Collections Practices Act, 15 U.S.C. § 1692 et seq. (hereinafter " FDCPA" ) in her counterclaim, stating Appellant was " attempting to collect amounts that it knows it has no right to collect, including without limitation amounts under accounts for which [Appellant] holds no valid assignment or other rights in said account thereby misrepresenting the legal status of the purported debt in violation of 15 U.S.C. § 1692e...."

On July 24, 2013, a bench trial was held on the matter. Appellant presented documentary evidence of the existence and assignment of the debt from GE to Appellant via a Business Records Affidavit (Exhibit 4) prepared by GE and 30 attached documents, as well as the testimony of Appellant's own custodian of records. Each separate attachment to the affidavit was labeled and presented to the trial court for admission into evidence as a separate exhibit, to-wit: a two-page Bill of Sale (Exhibit 1), a one-page Affidavit of Sale (Exhibit 2), twenty-one pages of Account Statements (Exhibit 3), a one-page Notification File, referred to within the Bill of Sale showing what accounts were purchased, redacted except for Respondent's account information (Exhibit 5), and a six-page Cardholder Agreement (Exhibit 6).

Appellant noted the Business Records Affidavit and accompanying documents were the same business records used in support of its Motion for Summary Judgment filed on May 2, 2013, and denied by the trial court on July 10, 2013. Within Appellant's Motion for Summary Judgment, the Business Records Affidavit and records were presented as a single exhibit (Exhibit 1). The attachments to the affidavit were listed as 1.1 (Bill of Sale), 1.2 (Affidavit of Sale), 1.3 (Account Statements), and 1.4 (Card Agreement).

Respondent argued all of this evidence constituted hearsay, and Exhibit 4, the Business Records Affidavit, was insufficient on its face to get the attached documents into evidence under the business records exception, because it did not specify what the 30 attached pages of documents were. Appellant maintained the affidavit did not have to make such a specification. The trial court ruled it would take the admissibility issue under submission with the case.

Respondent offered into evidence Exhibit A, her affidavit which stated " I, Juanita Schultz, deny this is my debt and if it is my debt, I deny that it is a valid debt and if it is a valid debt, I deny the amount sued for is the correct amount." Appellant objected to Exhibit A on the ground that it stated legal conclusions and was provided to Appellant only one day prior to trial. The trial court admitted Exhibit A over Appellant's objection.

On September 13, 2013, the trial court entered judgment in favor of Respondent and against Appellant on both the petition and counterclaim. The trial court held the GE Business Records Affidavit (Exhibit 4) was insufficient and therefore the attachments purported to be admissible as business records by virtue of Exhibit 4 were likewise inadmissible. As such, the trial court found Appellant failed to produce competent documentation of a valid assignment of the account from GE, leaving Appellant without standing to pursue the claims asserted in its Petition.

In finding in favor of Respondent on her counterclaim, the trial court determined Appellant's actions constituted a misleading representation in connection with the collection of a debt in violation of 15 U.S.C. § 1692e of the FDCPA and awarded Respondent $500 as statutory damages pursuant to 15 U.S.C. § 1692k(a)(2)(A). This appeal follows.

Page 431

Points Relied On

In its first point, Appellant asserts the trial court erred in finding in favor of Respondent on her counterclaim because she failed to present evidence Appellant is a " debt collector," Respondent is a " consumer," the amount owed was a " debt," or that Appellant violated a provision of the FDCPA.

In its second point, Appellant maintains the trial court erred in finding the Business Records Affidavit and its attachments were inadmissible because the affidavit failed to state what records were attached, when the affidavit was not required to state what records were attached.

In its third point, Appellant claims the trial court erred in finding the Business Records Affidavit was insufficient for failure to state the affiant had knowledge of the mode of preparation of the records, because the affiant did have knowledge of the mode of preparation of the records.

In its fourth point, Appellant contends the trial court erred in finding it lacked standing to sue, because it presented a bill of sale, a redacted notification file, and testimony in support of standing.

In its fifth point, Appellant states the trial court erred in admitting Respondent's Exhibit A, an affidavit signed by Respondent, because it lacked foundation and was testimonial, hearsay, a legal conclusion, self-serving, contradictory, and not based on personal knowledge nor timely produced to Appellant's counsel.

Standard of Review

In a court-tried case, the judgment of the trial court will be upheld unless there is no substantial evidence to support it, it is against the weight of the evidence, it erroneously declares the law, or it erroneously applies the law. C & W Asset Acquisition, LLC v. Somogyi,136 S.W.3d 134, 141 (Mo.App. S.D. 2004). The power to set aside a judgment on the ground that it is against the weight of the evidence must be exercised with caution and only ...


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