LLC v. Gemma J. Lumpkin (2011)

MEMORANDUM OF DECISION

In this debt collection action, the parties appeared before the court for a bench trial on June 1, 2011.   The plaintiff, Cuda & Associates, LLC, has sued the self-represented defendant, Gemma Lumpkin, on causes of action sounding in breach of contract and account stated.   In particular, the plaintiff alleges in its complaint that (1) it is presently the owner of a $4,087.28 debt, plus interest, that was originally incurred by the defendant's use of a credit card issued by FIA Card Services, Inc.;  (2) the defendant has failed to pay this debt although a written demand for payment has been made;  and (3) FIA issued monthly statements to the defendant referencing the amount due on her credit card account and the defendant never objected to the information disclosed in those statements.

At trial, the court received testimony and documentary evidence from the parties with respect to the plaintiff's claims.   Donna Garamella, vice president of the plaintiff company, testified that the plaintiff purchased the alleged debt in question from an intermediary creditor, Hudson & Keyse, LLC, who in turn had purchased the debt from the original creditor, Bank of America, whose credit card services were administered by FIA. As proof of the alleged debt and the corresponding chain of title, the plaintiff introduced into evidence:  (1) a copy of a Bank of America cardholder agreement;  (2) a bill of sale assigning certain unidentified “accounts” from Bank of America to Hudson & Keyse;  (3) an affidavit attesting to Hudson and Keyse's purchase of the debt from Bank of America;  (4) a bill of sale assigning certain accounts from Hudson & Keyse to the plaintiff;  (5) Garamella's affidavit attesting to the plaintiff's ownership of the debt;  and (6) a payment demand letter from the plaintiff to the defendant.   The defendant, on her part, testified at trial that she never possessed a FIA or Bank of America credit card with the account number specified in the complaint, that she did not recall ever having a Bank of America credit card and that she believes this action is a result of her name getting “mixed up” or “some sort of confusion” related to the plaintiff's purchase of credit card debt.

In order for the plaintiff to prevail on its breach of contract action, namely, that the defendant breached a credit card agreement by failing to pay a credit card debt, it is axiomatic that the plaintiff must demonstrate in the present case that it is the valid assignee of an existing debt.  “It is a well established principle of contract law that assignment of one's rights under a contract results in [s]uccession by an assignee to exclusive ownership of all or part of the assignor's rights respecting the subject matter of the assignment, and a corresponding extinguishment of those rights in the assignor.”  (Internal quotation marks omitted.)  Bouchard v. People's Bank, 219 Conn. 465, 473, 594 A.2d 1 (1991).   In other words, an “assignee steps in [the] shoes of [the] assignor and obtains all rights and obligations of [the] assignor ․” (Internal quotation marks omitted.)  DaimlerChrysler Services North America, LLC v. Commissioner, 274 Conn. 196, 212, 875 A.2d 28 (2005).   “If [however] the assignor suffered no damages or is not owed anything under a contract, the assignee cannot recover anything.   Nothing will pass to the assignee if the assignor never had the right claimed under the assignment ․” 6A C.J.S. Assignments § 110 (2004).   Moreover, “[t]he assignee's burden of proving the existence of the assignment is met by evidence that is satisfactory in character to protect the defendant from another action by the alleged assignor, and which shows that there was a full and complete assignment of the claim from an assignor who was the real party in interest with respect to the claim.”   6A C.J.S. Assignments, supra, § 147.

Here, the plaintiff has failed to prove that the defendant ever had a credit card account with Bank of America, that the defendant was indebted to Bank of America or, in any event, that Bank of America ever sold such an account and debt to the intermediary creditor, Hudson & Keyse.   As evidence of a credit card account, the plaintiff submits what appears to be a generic Bank of America “cardholder agreement” that does not reference the defendant in any manner.   Garamella's enigmatic testimony that she was “told” the agreement pertains to the defendant carries no probative value.   Garamella also conceded at trial that she does not possess the defendant's signed credit card application or any credit card statements to support the claim that the defendant had an account and debt with Bank of America.   While the plaintiff does submit a bill of sale, dated May 22, 2009, which states that Bank of America “does hereby sell, assign and convey” to Hudson & Keyse “certain accounts as defined in the Agreement and as set forth on Exhibit B,” these accounts are not identified;  neither “the Agreement” nor “Exhibit B” are attached for the court's consideration and the defendant is not named or referenced in any way.

The plaintiff relies on the affidavit of Mary Tomaro, who states in the affidavit that she is employed by Hudson & Keyse as a records custodian, and, “to the best of [her] knowledge,” Bank of America assigned to Hudson & Keyse an account bearing the defendant's name, an account number of “4888936119667057” and a corresponding debt of $4,087.26.   Initially, the court admitted the affidavit into evidence over the defendant's hearsay objection.   At the conclusion of trial, however, the court determined that the affidavit may have been improvidently admitted and therefore “reopened” the case;  see C.H.R.O. v. Forvil, 302 Conn. 263, 271, 25 A.3d 632 (2011);  and ordered the parties to file briefs arguing whether Tomaro's affidavit statements constitute inadmissible hearsay.   On consideration of the parties' post-trial briefs and upon closer examination of the affidavit, the court now concludes that Tomaro's statements are indeed hearsay because they are out-of-court statements offered in evidence to establish the truth of the matter asserted.   Conn.Code Evid. §§ 8–1, 8–2.¹  Moreover, contrary to the plaintiff's claim, the statements are not admissible under the “business records” exception to prove that Hudson & Keyse purchased the alleged debt in question.   The business records exception provides:  “Any writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence or event, shall be admissible as evidence of the act, transaction, occurrence or event, if the trial judge finds that it was made in the regular course of any business, and that it was the regular course of the business to make the writing or record at the time of the act, transaction, occurrence or event or within reasonable time thereafter.”  General Statutes § 52–180(a);  see also Conn.Code Evid. § 8–4(a).   Here, the plaintiff did not properly establish a foundation for the affidavit as a business record because Garamella did not testify that Hudson & Keyse made the affidavit in the regular course of business at the time of the transaction;  rather, she testified only that the plaintiff “kept” the affidavit in the regular course of business.   It is also facially apparent that the affidavit is not a record of Hudson & Keyse's purchase of the alleged debt, but instead is merely a document purporting to authenticate such a record.   Specifically, Tomaro states in the affidavit that “the annexed statement of the Account of ․ [the defendant] ․ is to the best of my knowledge, true and correct ․” Yet, as the defendant correctly points out in her brief, this “annexed statement” was not submitted with the affidavit for the court's consideration.

The Tomaro affidavit also possesses serious marks of untrustworthiness, which therefore precludes its admissibility under the residential hearsay exception.  “Section 8–9 of the Connecticut Code of Evidence provides:  ‘A statement that is not admissible under any of the [hearsay] exceptions [enumerated in the code] is admissible if the court determines that (1) there is a reasonable necessity for the admission of the statement, and (2) the statement is supported by equivalent guarantees of trustworthiness and reliability that are essential to other evidence admitted under traditional exceptions to the hearsay rule.’  “ State v. Merriam, 264 Conn. 617, 633 n.22, 835 A.2d 895 (2003).  “The second prong, reliability, is met in a variety of situations, one of which is when the circumstances are such that a sincere and accurate statement would naturally be uttered, and no plan of falsification be formed ․ At minimum, the statement must independently bear adequate indicia of reliability to afford the trier of fact a satisfactory basis for evaluating [its] truth ․” (Citation omitted;  internal quotation marks omitted.)  State v. Hines, 243 Conn. 796, 810, 709 A.2d 522 (1998).   A closer examination of the present affidavit immediately reveals an alarming discrepancy:  although Tomaro attests that Bank of America assigned the debt to Hudson & Keyse on May 21, 2009, her signature and that of the notary are both dated August 24, 2008, the previous year.   In the least, this strongly suggests that Tomaro did not read the contents of her affidavit prior to signing it and casts doubt not only on the contents of the affidavit but also on the procedures followed by the individual who notarized it.   While this trial is not about the integrity of Hudson & Keyse's business practices, this worrisome feature of the Tomaro affidavit provides yet another basis for inadmissibility.²

The plaintiff's other evidence consists of a bill of sale describing an assignment of “certain” accounts from Hudson & Keyse to the plaintiff, an attached spreadsheet entry with the defendant's name, address, social security number and certain information purporting to pertain to a Bank of America account, as well as Garamella's testimony that the information contained in the entry was provided to the plaintiff by Hudson & Keyse at the time of sale.   This evidence, however, proves only that the plaintiff purchased information purporting to be an account and debt from an entity with no relationship with the defendant.   In other words, it does not prove that the defendant ever entered into a credit card agreement with Bank of America, that the defendant incurred an outstanding credit card debt or that Bank of America ever sold an account and debt of the defendant to the intermediary, Hudson & Keyse.

The court especially notes Garamella's testimony that, although the plaintiff ordinarily requests the corresponding credit card applications when it purchases a portfolio of credit card accounts, in this case “[she] was told that the credit card application wasn't available at the time and in pursuing that, to follow up on that the company Hudson & Keyse has gone out of business.”   As with any business enterprise, purchasing second-hand debt carries certain risks, including the expiration of intermediary purchasers and sellers.   In the present case, the plaintiff did not obtain proper documentation of the account in question before Hudson & Keyse went bankrupt.   The court simply cannot countenance the resulting deficiencies in the plaintiff's evidence if it insufficiently proves its causes of action.

Based on the foregoing, because the plaintiff failed. to prove either that it is a valid assignee of a credit card account and debt or even that the defendant entered into a credit card agreement, the plaintiff may not prevail on its breach of contract claim.   For similar reasons, the plaintiff cannot prevail on its account stated claim.  “The theory of account stated is described as follows:  The delivery by the [creditor] to the [debtor] of each statement of the latter's account, with the [documentation] upon which the charges against [the debtor's account] were based, [is] a rendition of the account so that retention thereof for an unreasonable time constitute[s] an account stated which is prima facie evidence of the correctness of the account.”  (Internal quotation marks omitted.)  Citibank, N.A. v. Eward, 128 Conn.App. 843, 844 n.2, 18 A.2d 682 (2011).   As mentioned, the plaintiff has not proven that the defendant had a credit card account with Bank of America.   Moreover, contrary to the plaintiff's allegation that FIA “issued” to the defendant monthly credit card statements referencing her balance information, no such evidence was introduced at trial and, as discussed, Garamella testified that she did not have in her possession any credit card statements issued to the defendant by FIA or Bank of America.   Consequently, with respect to both causes of action, the court renders judgment in favor of the defendant.

Woods, J.

FOOTNOTES

FN1. “ ‘Hearsay’ means a statement, other than one made by the declarant while testifying at the proceeding, offered in evidence to establish the truth of the matter asserted.”   Conn.Code Evd. § 8–1.  Section 8–2 of the Code of Evidence prohibits the admissibility of hearsay evidence except as otherwise provided in the Code, General Statutes or the Practice Book..  FN1. “ ‘Hearsay’ means a statement, other than one made by the declarant while testifying at the proceeding, offered in evidence to establish the truth of the matter asserted.”   Conn.Code Evd. § 8–1.  Section 8–2 of the Code of Evidence prohibits the admissibility of hearsay evidence except as otherwise provided in the Code, General Statutes or the Practice Book.

FN2. Furthermore, with respect to the first prong of the residual hearsay exception, “[r]easonable necessity may be established by showing that unless the hearsay statement is admitted, the facts it contains may be lost, either because the declarant is dead or otherwise unavailable, or because the assertion is of such a nature that evidence of the same value cannot be obtained from the same or other sources.”  State v. Merriam, supra, 264 Conn. 633 n.21. The plaintiff has not made any showing that Tomaro is either dead or unavailable and has not provided any explanation as to why she could not testify at trial..  FN2. Furthermore, with respect to the first prong of the residual hearsay exception, “[r]easonable necessity may be established by showing that unless the hearsay statement is admitted, the facts it contains may be lost, either because the declarant is dead or otherwise unavailable, or because the assertion is of such a nature that evidence of the same value cannot be obtained from the same or other sources.”  State v. Merriam, supra, 264 Conn. 633 n.21. The plaintiff has not made any showing that Tomaro is either dead or unavailable and has not provided any explanation as to why she could not testify at trial.

Woods, Glenn A., J.