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Gillespie v. National Collegiate Student Loan Trust 2005-3

Court of Appeals of Texas, Second District, Fort Worth

June 29, 2017






         In this appeal from a bench trial and final judgment, we are asked to determine the admissibility of a business-records affidavit and attendant documents and to determine the sufficiency of the evidence to support several of the trial court's findings of fact. We conclude that even considering the challenged evidence, the trial court's findings and resulting judgment were not supported by legally sufficient evidence. Accordingly, we reverse and render a take-nothing judgment.

         I. BACKGROUND

         A. The Loan

         On May 1, 2002, Bank One, N.A. entered into a loan-purchase agreement with The First Marblehead Corporation (First Marblehead) "for loans that were originated under Bank One's . . . EDUCATION ONE Loan Program." Three years later on July 12, 2005, appellant Padraic Gillespie, [2] as the borrower, and appellant Tracy Gillespie, as a cosigner (collectively, the Gillespies), signed a note[3] with "Bank One (JP Morgan Chase Bank, N.A.)" under which Bank One agreed to lend $12, 500 to the Gillespies under its Education One loan program. Under the terms of the note, the Gillespies' repayment obligations would begin on December 20, 2008, but interest on the loan amount accrued as of the date the funds were disbursed to the Gillespies. Bank One's records reflected that it disbursed the principal amount of the loan-$13, 368.98[4]-to the Gillespies on July 26, 2005.

         On October 12, 2005, First Marblehead, The National Collegiate Funding LLC (National Funding), and Bank One entered into "Pool Supplements" regarding "loans that were originated under Bank One's . . . EDUCATION ONE Loan Program" (the pool supplement). That same day, National Funding entered into a deposit and sale agreement (DAS) with appellee National Collegiate Student Loan Trust 2005-3 (the Trust) under which National Funding sold and assigned to the Trust "the student loans listed on Schedule 2 to each of the Pool Supplements set forth on Schedule A." The Gillespies made no payments on their loan between December 2008 and April 2010, but were granted four deferments of their repayment obligations extending from February 1, 2010, through May 31, 2011. Even so, the Gillespies did not meet their repayment obligations.[5]

         B. The Trust's Suit

         On November 14, 2014, the Trust filed suit against the Gillespies seeking repayment of the unpaid balance on the note-$20, 824.84-and asserting that it had either originated or acquired the Gillespies' loan through a "qualified financial institution."[6] The Trust raised a claim for breach of contract against Padraic directly and against Tracy based on her personal guarantee of the note. The Gillespies answered by filing a general denial along with a verified denial raising their assertion that the Trust did not have the capacity to sue because it is not a legal entity. They also raised the affirmative defense of limitations.

         A nonjury trial was held on March 29, 2016. No witnesses were called, but the Trust offered into evidence the business-records affidavit of Kayla Chandler, who was a legal case manager for the Trust's loan servicer.[7] The affidavit attempted to authenticate thirty-six pages of records ostensibly related to the Gillespies' loan. See Tex. R. Evid. 901(a), 902(10). The Gillespies objected to portions of Chandler's affidavit as inadmissible hearsay. The trial court sustained those objections and struck those statements that went beyond certifying that the attached records were true and correct-beyond the authentication requirements of rules 901 and 902. The remainder of the affidavit was admitted, authenticating the attached business records. See Tex. R. Evid. 901(a), 902(10).

         The Gillespies also objected to the admissibility of portions of the attached, authenticated records: (1) the pool supplement, which supplemented the May 1, 2002 note-purchase agreement between First Marblehead and Bank One; (2) a single page following the pool supplement (the orphan page), which the Trust asserted was included as part of the pool supplement's schedule 1 and showed that the Gillespies' note was included in those pooled for sale; (3) the DAS, assigning National Funding's rights and interests under the pool supplement to the Trust; and (4) a February 2016 printout of the financial activity on the Gillespies' loan from its inception to the date the Trust declared it to be in default. The trial court overruled most of the objections but sustained the Gillespies' objection to the pool supplement.[8] The trial court concluded that the pool supplement was not a business record but indicated that it might be admissible as a public record "[i]f [the Trust] wish[es] to introduce it in a different way." The Trust did not re-offer the pool supplement.

         At the conclusion of the trial, the trial court found the Gillespies jointly and severally indebted to the Trust for $20, 824.84 and awarded that amount in the final judgment. The Gillepsies requested that the trial court enter findings of fact and conclusions of law, which it did. In its findings, the trial court found that the Gillespies entered into a loan agreement with Bank One, [9] that Bank One transferred and assigned the Gillespies' note to National Funding, and that National Funding simultaneously transferred it to the Trust. In its conclusions, the trial court stated that the Trust's "Business Records Affidavit, and the documents and records attached thereto, were properly admitted into the evidentiary record at trial." It also concluded that because the Trust "acquired" the Gillespies' loan through Bank One and National Funding, the Trust had standing to bring suit to recover under the loan, which was a "valid contract" that the Gillespies breached. The Gillespies now appeal and challenge several of the trial court's evidentiary rulings and the sufficiency of the evidence to support some of the trial court's findings and conclusions.

         II. SUFFICIENCY ...

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