Turtles All the Way Down

Unifund v. Dear, No. APP1400181 (Riverside App. Div. Dec. 21, 2015)

So this is one of those collections cases like they talked about on a pretty interesting This American Life where a debt collector buys a debt to enforce it needs to prove that it is a rightful assignee and that the debt records are real. As Ira and crew explained, the collectors in these cases are often unprepared to come up with the goods when the evidence is put to the test. But not in this case, or so says the court. But this one seems to whiff of a hearsay issue.



Defendant’s account was with A, which assigned it to B, which assigned it to C, which assigned it to Plaintiff. Plaintiff put in a declaration from its custodian, purporting to establish that each of the assignments as well as Defendant’s account statements with A were legit business records. Plaintiff also put in a declaration from a document person at A, who didn’t provide any foundation for the statements, she just stated that Defendant had an account there and that account number was the same as that in Plaintiff’s file.


The trial court found and its appellate division affirms that Plaintiff’s custodian could provide business records foundation for the whole shebang. (The trial court rejected the banker declaration about the account number because it wasn’t properly sworn, which isn’t challenged here.) The opinion relies on a bunch of cases interpreting the business records exception to the hearsay rule in Evidence Code § 1271. The cases basically say that, to give business records foundation, the witness doesn’t need to be the actual custodian, to know who created the doc, or to know all that much about the manner in which the doc was created. Relying on an old Court of Appeal case, the court here notes that these requirements are particularly lax when it comes to bank records, which are subject to considerable regulation and have generally standard formats.

All fair points.

But the elephant in the room here is that—with the exception of C’s assignment to plaintiff—none of these documents are Plaintiff’s own records. The best its custodian could say is that they were docs passed on from C that ultimately wound up in Plaintiff’s files and that they looked more or less like what they purported to be. While that might show that the docs were a legit part of Plaintiff’s file, there is a gaping hearsay within hearsay issue here that the court here fails to grapple with.

Under Evidence Code § 1201, “[i]n order for [multiple] hearsay to be admitted into evidence, each level must qualify for its own hearsay exception.” People v. Whitt, 51 Cal. 3d 620, 643 n.15 (1990). Although the necessary showing to establish business records foundation might be slight, there’s no way that Plaintiff’s custodian could lay foundation for any of the elements necessary to prove that the documents it received from its assignors were appropriate business records of those entities.

Now, for the assignments, that doesn’t mean Plaintiff loses. After all, assignments are contracts and contracts are not offered for their truth, but for their legal significance, regardless of truth or falsity. They are not hearsay. See Jazayeri v. Mao, 174 Cal. App. 4th 301, 316 (2009) (“[D]ocuments containing operative facts, such as the words forming an agreement, are not hearsay.”). So long as Plaintiff’s custodian could provide some evidentiary basis to authenticate the assignments—which, in the absence of evidence to the contrary, is extremely slight—those probably come in.

But not so for the bank records, which are classic business records hearsay. Again, the burden under § 1271 isn’t particularly weighty, especially when records are the standardized output of a bureaucracy like a bank. It would be generally adequate if a declaration from someone at the bank said: “We have and rely upon a computerized record system for our customers’ accounts. I looked up Defendant’s account in that system. Attached is a true and correct copy of what came up.” 

But Plaintiff’s declarant here can’t provide even that minimal foundation. All he can say is that these are documents that look like bank records, which were given to Plaintiff by someone who he understands got them from someone who he understands got them from someone who he understands was the bank. That doesn’t cut it. Otherwise, the fact that completely hearsay documents originating with some other business legitimately show up in a business’s files somehow gets makes them non-hearsay all the way through. That’s not the rule.