FV-I, Inc. v. Dolan

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE
CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING
EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

FV-I, Inc., in trust for Morgan Stanley Mortgage Capital
Holdings LLC, Respondent,

v.

Bryon J. Dolan; Lisa S. Dolan; First Citizens Bank and
Trust Company, Inc.; Wells Fargo Bank, N.A.; Branch
Banking and Trust Company, Defendants,

Of whom Bryon J. Dolan and Lisa S. Dolan are
Appellants.

Appellate Case No. 2014-001384

Appeal From Lexington County
R. Keith Kelly, Circuit Court Judge

Unpublished Opinion No. 2017-UP-031
Submitted November 1, 2016 – Filed January 11, 2017

AFFIRMED

Andrew Sims Radeker, of Harrison & Radeker, P.A., of
Columbia, for Appellants.
Charles Stuart Gwynne, Jr. and Jason David Wyman,
both of Rogers Townsend & Thomas, PC, of Columbia
for Respondent.

PER CURIAM: Bryon J. Dolan and Lisa S. Dolan (collectively, the Dolans)
appeal the circuit court order denying their motion for a new trial after the circuit
court granted FV-I, Inc., in trust for Morgan Stanley Mortgage Holdings LLC's
(FV-I's) motion for a directed verdict on the Dolans' claim under the South
Carolina Unfair Trade Practices Act (SCUTPA), and the jury returned a verdict for
FV-I on the Dolans' breach of contract claim. On appeal, the Dolans argue the
circuit court erred by (1) admitting into evidence loan payment history from a
previous mortgage servicer, Saxon Servicing Group (Saxon), under the business
records exception to hearsay; (2) allowing FV-I's sole witness, Loretta Poch, to
testify regarding the content of the Saxon loan payment history; and (3) granting
FV-I's motion for a directed verdict as to the Dolans' SCUTPA claim. We affirm.1

1. We find the circuit court did not abuse its discretion by admitting into evidence
the Saxon loan payment history under the business records exception to hearsay.
See Menne v. Keowee Key Prop. Owners' Ass'n, Inc., 368 S.C. 557, 568, 629
S.E.2d 690, 696 (Ct. App. 2006) ("The admission or exclusion of evidence is
within the sound discretion of the [circuit] court, whose ruling will not be reversed
on appeal absent an abuse of discretion.").

We find the Saxon loan payment history was relevant in this matter because it
tended to establish whether the Dolans remitted sufficient funds to reinstate their
mortgage. See Rule 401, SCRE ("'Relevant evidence' means evidence having any
tendency to make the existence of any fact that is of consequence to the
determination of the action more probable or less probable than it would be
without the evidence."). Because the Saxon loan history was offered to prove the
amount owed on the Dolans' mortgage, it constituted hearsay; however, we find the
loan history fit squarely within the business records exception, making it
admissible in these proceedings. See Rule 801(c), SCRE ("'Hearsay' is a statement,
other than one made by the declarant while testifying at the trial or hearing, offered
in evidence to prove the truth of the matter asserted."); Rule 802, SCRE ("Hearsay
is not admissible except as provided by these rules or by other rules prescribed by
[the South Carolina Rules of Evidence] . . . ."); Rule 803(6), SCRE
("A . . . record . . . made at or near the time by, or from information transmitted by,

1
We decide this case without oral argument pursuant to Rule 215, SCACR.
a person with knowledge, if kept in the course of a regularly conducted business
activity, and if it was the regular practice of that business activity to make
the . . . record . . . all as shown by the testimony of the custodian or other qualified
witness, unless the source of the information or the method or circumstance of
preparation indicate lack of trustworthiness . . . .").

We find FV-I demonstrated the Saxon loan history met the requirements for the
circuit court to admit it under the business records exception. See Ex parte Dep't of
Health & Envtl. Control, 350 S.C.243, 249-50, 565 S.E.2d 293, 297 (2002) ("Rule
803(6), SCRE, provides that memorandum, reports, records, etc. in any form, of
acts, events, conditions, or diagnoses, are admissible as long as they are (1)
prepared near the time of the event recorded; (2) prepared by someone with or
from information transmitted by a person with knowledge; (3) prepared in the
regular course of business; (4) identified by a qualified witness who can testify
regarding the mode of preparation of the record; and (5) found to be trustworthy by
the court.").

We find the Saxon loan history was made at or near the time of the events
recorded. See Rule 803(6), SCRE; Dep't of Health & Envtl. Control, 350 S.C. at
249-50, 565 S.E.2d at 297 (requiring business records be "prepared near the time
of the event recorded" in order to be admissible under the business records
exception). Here, the Saxon loan history reflected 143 entries recorded over the
nineteen months Saxon serviced the Dolans' mortgage, the principal amount of the
mortgage, late fees assessed for missed payments, disbursements for hazard
insurance and property taxes, and the $65,250 payment the Dolans allege should
have brought their mortgage current. Accordingly, we find the Saxon loan history
met the mandate that records be created at or near the time of the event recorded,
ensuring the Saxon loan history was honestly and fairly kept. See S.C. Nat'l Bank
v. Jones, 302 S.C. 154, 155, 394 S.E.2d 323, 324 (1990) ("[A] requisite for the
admissibility of business records is that entries therein must have been made at or
near the time of the transactions to which they relate. The purpose of this mandate
is to aid in establishing that the record was honestly and fairly kept.").

We also find the Saxon loan history shows it was prepared in the regular course of
business by Saxon employees with knowledge. See Rule 803(6), SCRE (providing
business records are admissible "if kept in the course of a regularly conducted
business activity" and were "made at or near the time by . . . a person with
knowledge"); Dep't of Health & Envtl. Control, 350 S.C. at 249-50, 565 S.E.2d at
297 (requiring business records be "prepared by someone with or from information
transmitted by a person with knowledge . . . in the regular course of business" in
order to be admissible under the business records exception). While Poch
conceded she never worked for Saxon and had no personal knowledge of its
internal procedures, she also testified she knew Saxon matched industry-standard
practices and her employer, Specialized Loan Servicing (SLS), rigorously screened
all loan histories sent to it for onboarding to ensure no anomalies or inconsistencies
existed. We find this testimony, coupled with the Saxon loan history showing
entries that were made at or near the time the events occurred, demonstrate Saxon
employees with knowledge of the Dolans' mortgage prepared Saxon's loan history
in the ordinary course of business.

Further, we find Poch was qualified to identify the Saxon loan history and to testify
regarding the mode of its preparation, even though she did not personally
participate in creating the loan history and Saxon did not employ her. See Rule
803(6), SCRE (providing a record custodian or other qualified witness must testify
the evidence to be submitted under the business records exception meets the
requirements of Rule 803(6), SCRE); Dep't of Health & Envtl. Control, 350 S.C. at
249-50, 565 S.E.2d at 297 (requiring business records be "identified by a qualified
witness who can testify regarding the mode of preparation of the record" in order
to be admissible under the business records exception). We find Poch was not
required to have personally participated in the creation of the Saxon loan history
nor to have been the custodian of those records at the time they were created. See
Deep Keel, LLC v. Atl. Private Equity Grp., LLC, 413 S.C. 58, 73, 773 S.E.2d 607,
615 (Ct. App. 2015) ("[A] witness is qualified to testify about a business record,
despite the fact he or she did not personally participate in creating the record and
was not the custodian 'at or near the time' the record was made."). Rather, to be
considered a "qualified witness," Poch needed only to convey information from a
person with knowledge. See id. ("[A] person is a 'qualified witness' under the rule
if the testimony conveys information from a person 'with knowledge' at the time
the records were created."). We find Poch's testimony regarding Saxon's
conformance with industry standards and SLS's rigorous onboarding process
demonstrated Poch, in effect, relayed information on behalf of Saxon employees
who obtained knowledge in the ordinary course of business when they entered
information regarding the Dolans' mortgage.

Finally, we find the circuit court considered the Saxon loan history trustworthy.
See Rule 803(6), SCRE (providing a business record is admissible under Rule
803(6), SCRE, unless the source of the information or method of preparation
indicate the business record to be admitted is not trustworthy); Dep't of Health &
Envtl. Control, 350 S.C. at 249-50, 565 S.E.2d at 297 (requiring the circuit court to
find records submitted pursuant to the business records exception are trustworthy).
Accordingly, we find the circuit court did not abuse its discretion by admitting the
Saxon loan history under the business records exception contained in Rule 803(6),
SCRE.

2. We find the circuit court erred by allowing Poch to offer testimony regarding
the Dolans' mortgage and the amount required to bring the mortgage current;
however, because Poch's testimony was cumulative, its admission did not prejudice
the Dolans and therefore does not constitute reversible error. See Small v. Pioneer
Mach., Inc., 329 S.C. 448, 470, 494 S.E.2d 835, 846 (Ct. App. 1997) ("[T]he
improper admission of hearsay is reversible error only when the admission causes
prejudice."); id. ("Where the hearsay is merely cumulative to other evidence, its
admission is harmless."). We find Poch's testimony was hearsay, as she conceded
at trial her only knowledge of the Dolans' mortgage was based on her review of the
Saxon loan history. See Deep Keel, 413 S.C. at 71, 773 S.E.2d at 614 ("By
testifying to a conclusion based only on statements [witness] read in documents,
[witness] necessarily testified to the truth of those statements [and] [h]is testimony,
therefore, was offered to prove the truth of the statements and was hearsay.").
Even though Poch's testimony regarding the Dolans' mortgage and the amount
required to bring the loan current was hearsay, we find the testimony was
cumulative for the following reasons: (1) email correspondence between Bryon
and Saxon demonstrated Bryon received a reinstatement quote informing the
Dolans an additional $35,000 was required to bring their mortgage current after the
$65,250 payment was applied; (2) an escrow shortfall of $26,039.05 existed; and
(3) the Dolans had a variety of options available to bring their loan current. In
light of this evidence, Poch's testimony did not prejudice the Dolans because the
Dolans showed they knew more money was required in order to reinstate their
loan.

3. We find the circuit court properly granted a directed verdict for FV-I on the
Dolans' SCUTPA claim. See Wright v. Craft, 372 S.C. 1, 22, 640 S.E.2d 486, 498
(Ct. App. 2006) ("When the evidence yields only one inference, a directed verdict
in favor of the nonmoving party is proper."); Guffey v. Columbia/Colleton Reg'l
Hosp., Inc., 364 S.C. 158, 163, 612 S.E.2d 695, 697 (2005) ("On review, [appellate
courts] will affirm a directed verdict where there is no evidence on any one
element of the alleged cause of action."). We find the Dolans failed to show the
second prong to recover under SCUTPA: FV-I's conduct affected the public
interest. See Wright, 372 S.C. at 23, 640 S.E.2d at 498 ("To recover in an action
under [SCUTPA], the plaintiff must show: (1) the defendant engaged in an unfair
or deceptive act in the conduct of trade or commerce; (2) the unfair or deceptive
act affected the public interest; and (3) the plaintiff suffered monetary or property
loss as a result of the defendant's unfair or deceptive act(s)."). Here, the Dolans
failed to show FV-I's alleged wrongful misrepresentation of the amount required to
bring their mortgage current occurred prior to the Dolans working with FV-I, and
they failed to show it was likely to occur again in the future. See Crary v. Djebelli,
329 S.C. 385, 387, 496 S.E.2d 21, 23 (1998) ("Unfair or deceptive acts or practices
have an impact upon the public interest if the acts or practices have the potential
for repetition."); id. ("The potential for repetition may be shown in two ways: [(]1)
by showing the same kind of actions occurred in the past, thus making it likely
they will continue to occur absent deterrence, or [(]2) by showing the company's
procedures create a potential for repetition of the unfair and deceptive acts."); id.
("[Our supreme court] specifically declined . . . to hold that these are the only
means for showing potential repetition and stated each case must be evaluated on
its own merits."). Here, the circumstances underpinning the Dolans' efforts to
bring their mortgage current by selling a portion of their property were rare and are
unlikely to repeat. Therefore, we find the Dolans failed to show FV-I's actions
affected the public interest, and the circuit court properly granted FV-I's motion for
a directed verdict on the Dolans' SCUTPA claim.

AFFIRMED.

WILLIAMS, THOMAS, and GEATHERS, JJ., concur.