Friday, May 20, 2011

foreclosure - HSBC affidavits "inherently untrusworthy" - business-record exception not established

HSBC v. Murphy - Maine Supreme Judicial Court - May 19, 2011

Because we determine that the affidavits submitted by HSBC are inherently untrustworthy and, therefore, do not establish the foundation for admission of the attached documents as business records pursuant to M.R. Evid. 803(6), we vacate the judgment without reaching the substantive issues raised.

HSBC’s statement of material facts was supported by record references to an affidavit of John Gonzalez, who was identified in the affidavit as a Foreclosure Manager at HSBC. In its statement of material facts, HSBC asserted that it was the “holder of the Note and Mortgage” by virtue of the assignment from MERS and through “endorsement and delivery of the aforesaid Note from Calusa.” However, there was no endorsement on the face of, or appended to, the copy of the note attached to the Gonzalez affidavit or the complaint.

In residential mortgage foreclosure actions, certain minimum facts must be included in a mortgage holder’s statement of material facts on summary judgment.. . . We have repeatedly emphasized “the importance of applying summary judgment rules strictly in the context of residential mortgage foreclosures.” . . . We have also repeatedly emphasized that a party’s assertion of material facts must be supported by record references to evidence that is of a quality that would be admissible at trial. . . . This qualitative requirement is particularly important in connection with mortgage foreclosures where the affidavits submitted in support of summary judgment are commonly signed by individuals who claim to be custodians of the lender’s business records. Thus, the information supplied by the affidavits is largely derivative because it is drawn from a business’s records, and not from the affiant’s personal observation of events.

It is, perhaps, stating the obvious that an affidavit of a custodian of business records must demonstrate that the affiant meets the requirements of M.R. Evid. 803(6)7 governing the admission of records of regularly conducted business. A business’s records kept in the course of its regularly conducted business may be admissible notwithstanding the hearsay rule if the necessary foundation is established “by the testimony of the custodian or other qualified witness.” M.R. Evid. 803(6). “A qualified witness is one who was intimately involved in the daily operation of the [business] and whose testimony showed the firsthand nature of his knowledge.”. . . The foundation that the custodian or qualified witness must establish is four-fold:

(1) the record was made at or near the time of the events reflected in the record by, or from information transmitted by, a person with personal knowledge of the events recorded therein;

(2) the record was kept in the course of a regularly conducted business;

(3) it was the regular practice of the business to make records of the type involved; and

(4) no lack of trustworthiness is indicated from the source of information from which the record was made or the method or circumstances under which the record was prepared.

In this case, the affidavits submitted by HSBC contain serious irregularities that make them inherently untrustworthy [noting discrepancies in dates, etc.]. . . .Because the information contained in the affidavits, and the business records attached to them, are not of a quality that would be admissible at trial, the court erred by granting a summary judgment.

forum selection clause

NJ Dept. of Treasure v. Merrill Lynch - 3d Cir. - May 18, 2011

The court held that a forum selection clause that provides: "exclusive jurisdiction . . . shall lie in the appropriate courts of the State [of] New Jersey" should be interpreted to be a waiver of the right to remove the litigation to the federal district courts in New Jersey, rejecting defendant's argument that the clause contemplates jurisdiction in either the state or the federal courts located in New Jersey.

The court noted that

- the "parties in this case, sophisticated organizations both, were represented by counsel during the negotiation and adoption of the forum selection clause at issue." While contra proferentem may be the general rule, "[a]pplication of the rule may be . . . limited by the degree of sophistication of the contracting parties or the degree to which the contract was negotiated." The doctrine of construing a document against the interests of the party who drafte dit is "inapplicable where parties, both sophisticated entities, had equal bargaining power in drafting agreement."

- every Court of Appeals confronted with a similar forum selection clause "ha[d] ruled that the reference to courts of the state . . . limits jurisdiction to state rather than federal tribunals." The "vast majority of our sister circuits have held that forum selection clauses like the one at issue here required remand to the state court."

- a defendant can contractually waive his right to remove . . . an action brought . . . in a state court. Such waivers are usually upheld if they are reasonable and voluntary and if their enforcement is not inconsistent with public policy. A forum selection clause is unreasonable where party makes "strong showing" that inconvenience of designated forum will effectively deprive him of day in court or that clause resulted from fraud or duress.