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COA overturns judgment in favor of credit card debt collector

January 20, 2017

The Indiana Court of Appeals has reversed judgment in favor of a credit card debt collector after determining that the collector failed to establish that it owned the account it was trying to collect on.

In Kevin T. Williams v. Unifund CCR, LLC, 71A04-1604-CC-901, Kevin Williams opened a credit card account with Citibank and accumulated a monthly credit debt in the aggregate amount of $10,402.90 over the course of seven years. In March 2013, Williams’ account was sold to Pilot Receivables Management and assigned to Unifund CCR Partners.

In January 2014, Unifund filed a complaint against Williams alleging breach of contract, account stated, promissory estoppel and unjust enrichment. Williams, in turn, moved to dismiss and strike Unifund’s exhibits, arguing that the affidavit of debt, account statement and bill of sale and assignment were based on hearsay.

Unifund then moved for summary judgment, but the St. Joseph Circuit Court denied that motion and instead ordered that any additional exhibits offered at trial should be exchanged between the parties by Aug. 17, 2015. When the court conducted a bench trial on Aug. 31, Unifund offered two exhibits into evidence that contained documents that were not previously provided to Williams. The trial court admitted the evidence over Williams’ objection and found in favor of Unifund, awarding it $10,402.90.

Williams then moved to correct error, but the court denied that motion, prompting his appeal. The Indiana Court of Appeals found in Williams’ favor Friday, writing that the admission of both exhibits was an abuse of discretion.

In regard to Exhibit 1, which contained 17 credit card statements from Williams’ account with Citibank, Judge Patricia Riley noted that the statements failed to meet all of the exceptions to Indiana hearsay rules. Specifically, Nathan Duvelius, an authorized representative and custodian of records for Unifund, conceded that he was not familiar with Citibank’s bookkeeping methods. Thus, Riley wrote, Duvelius did not have personal knowledge of Citibank’s policies, so he could not qualify as a witness under the hearsay exception rules.

Exhibit 2, which was also admitted through Duvelius’ testimony, also did not meet hearsay exceptions, Riley wrote. The first document, a bill of sale and assignment, was signed by Patricia Hall, a financial account manager at Citibank. Thus, because Duvelius was unfamiliar with Citibank’s business practices, his testimony could not qualify, Riley wrote. Similarly, a 30-page spreadsheet generated by Citibank also could not qualify for a hearsay exception because Duvelius conceded that he did not know whether the spreadsheet was kept as part of Citibank’s regular business practices.

The second exhibit also contained two assignments between Pilot and Unifund that “fail to specify the transfer of rights in Williams’ account.” The assignments refer to “rights in the Receivables,” but the “Receivables” were likely more closely defined in a Servicing Agreement that was not admitted at trial, Riley wrote. Thus, the assignments fail to adequately establish that Unifund was assigned or had ownership of Williams’ account.

Finally, Riley wrote that the last evidence in Exhibit 2, an affidavit, is admissible under Indiana Evidence Rule 803(6), but did not satisfy Unifund’s burden of proof because Unifund failed to present admissible evidence proving that it owns Williams’ account.

Thus, the unanimous appellate panel reversed the trial court’s judgment in favor of Unifund.

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