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Foster v. National Collegiate Student Loan Trust 2007-4

Court of Appeals of Texas, First District

March 1, 2018

LADANTA D. FOSTER, Appellant
v.
NATIONAL COLLEGIATE STUDENT LOAN TRUST 2007-4, Appellee

         On Appeal from the 412th District Court Brazoria County, Texas Trial Court Case No. 84872-CV

          Panel consists of Chief Justice Radack and Justices Massengale and Brown.

          MEMORANDUM OPINION

          Sherry Radack Chief Justice

         Appellant, Ladanta D. Foster, appeals the trial court's judgment, entered after a bench trial, in favor of appellee, National Collegiate Student Loan Trust 2007-4 ("the Trust"), in its suit against Foster for breach of a student loan agreement. In two issues, Foster challenges the legal and factual sufficiency of the evidence and contends that the trial court erred in admitting evidence.

         We suggest a remittitur of damages. Conditioned on the suggestion of remittitur, we affirm the trial court's judgment.

         Background

         In its original petition, the Trust[1] alleged that, in 2007, Foster, a student at Texas Southern University, obtained a student loan from JPMorgan Chase Bank, N.A. ("Chase"). Prior to Foster's first payment date, and at a time while the loan was still in good standing, the note was assigned to the Trust. The Trust, as owner and holder of the note, asserted that Foster had defaulted by not paying as agreed. On December 9, 2015, the Trust sent Foster a letter demanding payment in full, however, Foster did not comply. Subsequently, the Trust brought a breach-of-contract claim against Foster, seeking damages of $45, 277.02. Foster answered, generally denying the allegations, filed a verified denial, and asserted various affirmative defenses.

         At trial, although no witnesses were called, the Trust moved to admit into evidence, as "Exhibit 1, " the "Business Records Affidavit" of Dudley Turner, a Legal Case Manager for Transworld Systems Inc. ("TSI"), who testified, in pertinent part, as follows:

1. I am employed by [TSI], the subservicer for [the Trust] pertaining to the educational loan forming the subject matter of this action.
2. TSI has been contracted to perform the duties of the Subservicer for [the Trust] by U.S. Bank, National Association, the Special Servicer of [the Trust]. TSI, as the Subservicer of the [Trust], is the designated custodian of records for [Foster's] educational loan. Additionally, TSI maintains the dedicated system of record for electronic transactions pertaining to [Foster's] educational loan, including, but not necessarily limited to, payments, credits, interest accrual and any other transactions that could impact [Foster's] educational loan. . . .
3. . . . . As an employee of TSI, I am duly authorized by [the Trust] and U.S. Bank, National Association to make the representations contained in this Affidavit.
4. I have access and training on the system of record utilized by TSI to enter and maintain loan account records and documentation concerning [Foster's] educational loan for [the Trust].
5. I am familiar with the process by which TSI receives prior account records, including origination records from the time the loan was requested and/or disbursed to [Foster] and/or the student's school on their behalf.
6. As custodian of records it is TSI's regularly-conducted business practice to incorporate prior loan records and/or documentation into TSI's business records.
7. I am further competent and authorized to testify regarding this educational loan through personal knowledge of the business records maintained by TSI as custodian of records, including electronic data provided to TSI related to [Foster's] educational loan, and the business records attached to this Affidavit.
8. This lawsuit concerns an unpaid loan owed by [Foster] to [the Trust]. Specifically, [Foster] entered into an educational loan agreement at [Foster's] special instance and request. A loan was extended for [Foster] to use pursuant to the terms of the loan agreements. [Foster] has failed, refused, and/or neglected to pay the balance pursuant to the agreed terms.
9. Educational loan records are created, compiled and recorded as part of regularly conducted business activity at or near the time of the event and from information transmitted from a person with personal knowledge of said event and a business duty to report it, or from information transmitted by a person with personal knowledge of the accounts or events described within the business record. Such records are created, kept, maintained, and relied upon in the course of ordinary and regularly conducted business activity.
10. I have reviewed the educational loan records described in this affidavit regarding account number xxxxx7063-004-PHEA. No payment has been received on this account. After all payments, credits and offsets have been applied, [Foster] owes the principal sum of $45, 277.02, together with accrued interest in the amount of $6, 179.73, totaling the sum of $51, 456.75 as of 11/30/2016. Attached hereto and incorporated within are 31 pages of [the Trust's] business records further described below.
11. Attached hereto and incorporated herein as Exhibits "B" through "G" are 31 pages of [the Trust's] business records. These records are created, compiled and recorded as part of regularly conducted business activity at or near the time of the event and from information transmitted from a person with personal knowledge or said event and a business duty to report it, or from information transmitted by a person with personal knowledge of the account or events described within the business record. Such records are created, kept, maintained, and relied upon in the course of ordinary and regularly conducted business activity . . . .
. . . .
13. [Foster] opened an educational loan with [Chase] and funds were disbursed on 5/31/2007. [Foster's] educational loan was then transferred, sold and assigned to National Collegiate Funding LLC, who in turn transferred, sold and assigned [Foster's] educational loan to [the Trust] on 9/20/2007 for valuable consideration, in the course of the securitization process. [Foster's] educational loan was in good standing and not in default on 9/20/2007.
To his affidavit, Turner attached 31 pages of documents, as follows:

Exhibit A is a November 13, 2014 letter from U.S. Bank, as special servicer for the Trust, "confirm[ing]" that TSI is the "dedicated records custodian with respect to all student loans owned by [the Trust]" and is "fully authorized to execute affidavits regarding account documents" and to "provide testimony on behalf of [the Trust]."

         Exhibit B is a "Credit Agreement" signed by Foster and a "Note Disclosure Statement." The Credit Agreement, dated May 23, 2007, states that Foster applied for an educational loan of $25, 000.00 from Chase. The Note Disclosure Statement reflects that a loan amount of $25, 000.00 was disbursed to Foster, or on her behalf, and that she agreed to make 240 monthly payments of $381.45, beginning on July 12, 2009.

         Exhibit C contains a "Pool Supplement, " "Loan Transfer Schedule, " and "Deposit & Sale Agreement, " pertaining to Chase's assignment of loans through an intermediary to the Trust.

         Exhibit D is a "Loan Financial Activity Report, " which reflects the monthly balance and interest accrued on Foster's loan, that she did not make any payments, and a final "Principal Balance" of $43, 560.51. Exhibit E is a

         "Deferment/Forbearance Summary, " showing Foster's deferment and forbearance periods. Exhibit F is a "Repayment Schedule." Exhibit G is a "Loan Payment History Report."

         Foster objected to the admission of the evidence, and the trial court overruled the objection and admitted the evidence, as follows:

THE COURT: . . . . Any objection to this business records affidavit?
[Foster]: Well, the only objection I will make, Your Honor, is that the affiant [Turner] asserts that he is the custodian of records for [TSI] whereas the Plaintiff is [the Trust]. So we would like to see how those are interrelated, if he is representing-if he's custodian of [TSI] what relationship does that bear to [the Trust]? In looking at the affidavit I'm not entirely sure if that's clear. If [the Trust's] counsel wants to point [to] something I may be missing out or that the Court may not see and present any evidence to that. Otherwise, we object to the entire submission of evidence as hearsay.
THE COURT: Well, of course that's what business records affidavit filed the requisite period of time [sic], it allows hearsay evidence. It's an exception to the hearsay rule.
. . . .
Now what connection does [TSI] have to this transaction?
[The Trust]: Your Honor, TSI, as you can see from the affidavit, is both [the Trust's] designated custodian of records and they also create and maintain the records pertaining to the loan. Proof and confirmation of TSI's capacity as sub servicer can actually be found in Exhibit A which starts on page 7. Actually it just is page 7. As you'll see, there is a letter from U.S. Bank who is the indentured trustee for National Collegiate Student Loan Trust which is a matter of public record and they state that [TSI] is also the record custodian with respect to all student loan accounts. . . .
[Foster]: We would like to see that entered as an exhibit if we could please, just to establish the standing issue. If U.S. ...

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