On April 17, 2024, the Second Department issued a decision in Bank of N.Y. Mellon v. Demasco, 2024 NY Slip Op. 02033, holding that a summary judgment motion failed for lack of proof that the evidence submitted in support of it were business records, explaining:
It is well-settled that in order to establish prima facie entitlement to judgment as a matter of law in a foreclosure action, a plaintiff must submit the mortgage and unpaid note, along with evidence of the default. Contrary to the court’s determination, the fact that Skyview is not the borrower does not relieve the plaintiff of its burden of establishing the borrower’s default.
Here, the affidavit of Elizabeth Gonzales, submitted by the plaintiff in support of its motion, failed to establish the borrower’s default by proof in admissible form. Gonzales, a default fulfillment manager at the plaintiff’s loan servicer, Carrington Mortgage Services, LLC (hereinafter Carrington), stated that she was familiar with Carrington’s records and record-keeping practices and that “[t]here is a default under the terms and conditions of the Promissory Note and Mortgage because the May 1, 2013 payment has not been made. To date, the default has not been cured.” Gonzales attached to her affidavit a limited power of attorney, permitting Carrington to act on the plaintiff’s behalf, dated November 18, 2020. Records made in the regular course of business are hearsay when offered for the truth of their contents. The current version of the business records rule provides, in part, that any writing or record made as a memorandum or record of any act, transaction, occurrence or event, shall be admissible in evidence in proof thereof if the judge finds that it was made in the regular course of any business and that it was the regular course of such business to make it, at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter. Although the mere filing of papers received from other entities, even if they are retained in the regular course of business, is insufficient to qualify the documents as business records such records may be admitted into evidence if the recipient can establish personal knowledge of the maker’s business practices and procedures, or establish that the records provided by the maker were incorporated into the recipient’s own records and routinely relied upon by the recipient in its own business.
Insofar as the borrower’s default allegedly occurred in 2013 and Carrington’s power of attorney is dated November 18, 2020, the plaintiff’s submissions reflect that Carrington was not the loan servicer at the time of the default and that Carrington began creating business records with respect to this mortgage loan on November 18, 2020. Carrington’s employee, Gonzalez, did not state that the records of any other relevant entity, such as a prior loan servicer or the plaintiff, were provided to Carrington and incorporated into its own records, that Carrington routinely relied upon such records in its business, or that she had personal knowledge of business practices and procedures of any other relevant entity. Thus, Gonzalez failed to lay a proper foundation for admission of any records reflecting the borrower’s alleged default in 2013. Although Gonzalez attached a transaction history document bearing Carrington’s logo, which dated back to 2007, she provided no explanation as to the source of any information entered prior to November 18, 2020, the date of Carrington’s limited power of attorney. Thus, the plaintiff failed to establish, prima facie, that the transaction history document was admissible under the business records exception to the hearsay rule.
(Internal quotations and citations omitted).