Opinion
2 CA-CV 2020-0164
07-26-2021
Portfolio Recovery Associates, LLC, Plaintiff/Appellee, v. Sharon Eldred and Kareem Eldred, Defendants/Appellants.
Gordon Rees Scully Mansukhani LLP, Phoenix By Mary M. Curtin and Portfolio Recovery Associates LLC, San Diego, CA By Jacqueline Ligas Counsel for Plaintiff/Appellee Law Office of Richard Groves, Phoenix By Richard N. Groves Counsel for Defendants/Appellants
Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court
Appeal from the Superior Court in Pinal County No. S1100CV201901824 The Honorable Steven J. Fuller, Judge
Gordon Rees Scully Mansukhani LLP, Phoenix By Mary M. Curtin and Portfolio Recovery Associates LLC, San Diego, CA By Jacqueline Ligas Counsel for Plaintiff/Appellee
Law Office of Richard Groves, Phoenix By Richard N. Groves Counsel for Defendants/Appellants
Chief Judge Vasquez authored the decision of the Court, in which Presiding Judge Eppich and Judge Brearcliffe concurred.
MEMORANDUM DECISION
VASQUEZ, CHIEF JUDGE
¶1 Sharon and Kareem Eldred appeal from the trial court's grant of summary judgment in favor of Portfolio Recovery Associates, LLC (PRA), arguing that PRA's supporting documents were not properly authenticated and were not admissible business records. The Eldreds further argue that even if the documents were admissible, they did not support summary judgment because they did not contain evidence of all the transactions comprising the debt. For the following reasons, we affirm.
Factual and Procedural Background
¶2 In December 2019, PRA, a consumer debt collection agency, sued the Eldreds claiming they had failed to pay a $19,482.92 credit card debt that PRA had acquired from Comenity Bank. PRA moved for summary judgment, attaching to its statement of facts an affidavit from its records custodian stating that PRA purchased debt from creditors, obtained the business records associated with the underlying accounts, and integrated those records into its own in the ordinary course of its business. The custodian stated he had personally reviewed the Eldreds' records PRA had attached as exhibits to its statement of facts and each exhibit was a business record of PRA that had been acquired, kept, and maintained in PRA's ordinary course of business.
¶3 The attached records included an affidavit from the custodian of records for Comenity Bank, stating that a pool of charged-off accounts had been sold to PRA and that, as part of the transaction, records the bank kept in the ordinary course of its business had been transferred to PRA. He stated he was unaware of any errors in those records. Also attached was a bill of sale for the accounts signed by representatives of Comenity Bank and PRA, and pages from the list of transferred accounts showing an account for Sharon Eldred. The attached records also included a series of monthly bank statements addressed to Eldred, the most recent of which showed a balance due in the amount claimed, and the oldest of which showed a balance of over $18,000. The included statements showed several purchases made on the credit card in 2017 and 2018. They also showed several payments, the last of which was made in September 2018. The most recent statement in March 2019 informed Eldred that her account was "extremely past due" and would be written off as a bad debt if no payment was made by the end of the month. Finally, the attachments to PRA's statement of facts also included a letter from PRA to Eldred in April 2019, notifying her that PRA had acquired her debt. The letter advised her that if she did not dispute the debt within thirty days, PRA would assume the debt was valid. The letter was sent to the same address as the address on the bank statements.
¶4 In its statement of facts, PRA stated that it had not received a written response after sending the letter to Eldred. The Eldreds did not deny that PRA had sent a letter to them or that there had been no response. They did, however, deny PRA's assertions that they had opened an account with Comenity Bank, had used it, had ceased making minimum payments, and owed the claimed balance.
¶5 Without a hearing, the trial court granted summary judgment. The Eldreds timely appealed. We have jurisdiction under A.R.S. §§ 12-120.21(A)(1) and 12-2101(A)(1).
Discussion
¶6 The Eldreds argue that the documents submitted by PRA are inadmissible and in any event are insufficient to support summary judgment. They contend first that PRA's affidavit did not authenticate the documents showing the claimed debts and did not establish them as admissible business records. They further maintain that even if the documents were admissible, they do not support summary judgment because they do not show the transactions comprising the debt. We review a grant of summary judgment de novo, viewing the evidence in the light most favorable to the non-moving party. Normandin v. Encanto Adventures, LLC, 246 Ariz. 458, ¶ 9 (2019). "We will affirm summary judgment if it is correct for any reason supported by the record, even if not explicitly considered by the superior court." KB Home Tucson, Inc. v. Charter Oak Fire Ins. Co., 236 Ariz. 326, ¶ 14 (App. 2014).
The trial court did not explain its reasons for granting summary judgment. Although a court "should state on the record the reasons for granting or denying" a motion for summary judgment, Ariz. R. Civ. P. 56(a), and the Eldreds mention the court's failure to do so in the statement of facts section of their opening brief, they do not separately argue this omission amounted to error.
¶7 First, the Eldreds contend that PRA's records custodian could not authenticate Comenity Bank's business records because he did not establish personal knowledge of the bank's record keeping. But our supreme court has determined that an employee of an organization may authenticate records created by third parties when the organization "regularly relies on the information that third parties submit as part of their ordinary course of business." State v. Parker, 231 Ariz. 391, ¶ 33 (2013). The Eldreds cite to decisions in other jurisdictions that have taken a more restrictive view, see, e.g., Martinez v. Midland Credit Mgmt., Inc., 250 S.W.3d 481, 485 (Tex. Ct. App. 2008) ("Documents received from another entity are not admissible . . . if the witness is not qualified to testify about the entity's record keeping."), but our supreme court has followed cases that have taken a more permissive approach. See id. ¶¶ 30, 33 (citing with approval United States v. Adefehinti, 510 F.3d 319, 326 (D.C. Cir. 2007) (permitting entity to certify authenticity of business records of another if it relies on records and keeps them in ordinary course of business)). Because we are bound by our supreme court's decisions, the cases the Eldreds cite are inapposite. See Austin v. Austin, 237 Ariz. 201, ¶ 21 (App. 2015).
¶8 And although the Eldreds argue that business records are not self-authenticating, our rules of evidence expressly provide that business records can be self-authenticating if they are certified as such by a records custodian or other qualified person. See Ariz. R. Evid. 902(11). Here, PRA provided such a certification: an affidavit of its records custodian stating, among other things, that the records had been acquired, integrated, kept, and maintained in PRA's ordinary course of business of purchasing charged-off consumer debt. The affidavit does not specifically state that PRA "relied" on the records of third-party creditors in its ordinary course of business, but PRA's reliance on the records can be inferred; as a debt collector, PRA would necessarily rely on the records of the original creditor from whom it had purchased the account. Cf. Schneider v. Cessna Aircraft Co., 150 Ariz. 153, 160-61 (App. 1985) (rejecting view that "any combination of magic words must be used to qualify an item for admission" under hearsay exception). In sum, PRA's affidavit sufficiently certified the challenged records.
¶9 The Eldreds further contend that the documents offered in support of PRA's motion for summary judgment, even if admissible, did not support the motion on the alleged debt because the documentation did not provide any "means to evaluate the accuracy" of the amount claimed. A trial court "shall grant summary judgment if the moving party shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law." Ariz. R. Civ. P. 56(a). On a plaintiff's motion for summary judgment, the initial issue is whether the plaintiff "ha[s] presented sufficient undisputed admissible evidence to establish its entitlement to judgment." Wells Fargo Bank, N.A. v. Allen, 231 Ariz. 209, ¶ 17 (App. 2012). "To carry its burden of persuasion, a plaintiff who seeks summary judgment must submit 'undisputed admissible evidence that would compel any reasonable juror to find in its favor on every element of its claim.'" Id. ¶ 18 (quoting Comerica Bank v. Mahmoodi, 224 Ariz. 289, ¶ 20 (App. 2010)). "[I]f a moving party's summary judgment motion fails to show an entitlement to judgment, the nonmoving party need not respond to controvert the motion." Schwab v. Ames Const., 207 Ariz. 56, ¶ 16 (App. 2004). But if a motion is sufficiently supported, the "opposing party must . . . set forth specific facts showing a genuine issue for trial" through affidavits or other proper means; if not, the court must grant summary judgment. Ariz. R. Civ. P. 56(e).
¶10 The Eldreds point out that the oldest bank statement documenting the debt shows a substantial balance and there is no documentation of how that balance accrued. They assert that no Arizona cases address whether credit card debts must be itemized to prove the amount of debt. They therefore cite two out-of-state cases, Capital One Bank v. Denboer, 791 N.W.2d 264 (Iowa Ct. App. 2010), and Tucker Nursing Ctr., Inc. v. Mosby, 692 S.E.2d 727 (Ga.Ct.App. 2010), that they claim establish credit card debts do indeed need to be itemized.
¶11 However, Arizona cases also establish that a creditor seeking summary judgment on an "open account"-an account with a fluctuating balance, such as a credit card account -generally must show the items comprising the debt to obtain summary judgment against a debtor who has contested the debt. See Allen, 231 Ariz. 209, ¶ 20 &n.1 ("'mere[] general description'" of transactions comprising debt insufficient for summary judgment on open account; "there must be 'some descent into detail'" when debtor "appear[s] and defend[s]" (quoting Trimble Cattle Co. v. Henry &Horne, 122 Ariz. 44, 49 (App. 1979))). But when, as in this case, a creditor mails an account statement to the debtor and the debtor fails to object within a reasonable time, an inference arises that the debtor has assented to the stated total. See Trimble, 122 Ariz. at 48. In this circumstance, the lack of objection can serve as proof of the accuracy of the amount as an "account stated." See id. Thus, a credit card debt may be proved as an account stated by showing that "the account belongs to the consumer, the consumer used that account, the consumer received regular monthly statements, the consumer did not object to those statements within a reasonable period of time, and the balance sought to be recovered is consistent with those statements." Denboer, 791 N.W.2d at 280; see Trimble, 122 Ariz. at 48.
See Account, Black's Law Dictionary (11th ed. 2019) ("open account" is "[a]n account that is left open for ongoing debit and credit entries by two parties and that has a fluctuating balance until either party finds it convenient to settle and close, at which time there is a single liability").
¶12 Here, PRA sufficiently established an account stated on summary judgment. Sharon Eldred was listed as the account holder, and the statements were sent to the same address as the address to which PRA sent Sharon Eldred a notice in April 2019-correspondence the Eldreds did not deny-and the same address at which Kareem Eldred was personally served. These facts establish that the account is Sharon Eldred's. Additionally, there is evidence of Eldred's use of the account: the regular monthly statements show both several purchases and several payments in 2017 and 2018. Although the record did not include an express agreement between the bank and Sharon Eldred, "[a] cardholder's acceptance of the terms and conditions of a credit card account may be established" by a showing that "[a]ny cardholder or authorized user use[d] the credit card account." A.R.S. § 44-7802. Finally, the lack of timely response to PRA's letter shows the Eldreds' assent to the amount claimed-and that amount is consistent with the provided bank statements.
The Eldreds do not meaningfully support their contention that PRA needed to provide "credit card charge slip[s] signed by the Appellants" to show such use. We therefore do not address it further.
¶13 The Eldreds suggest that PRA has waived its right to collect under an account-stated theory because "[n]o 'account stated' claim was presented in [PRA]'s complaint or motion for summary judgment." But they fail to meaningfully support their contention that PRA's claim needed to be explicitly characterized as such. And although they argue that we must find the issue waived by pointing to instances where a court has declined to consider an appellee's argument made for the first time in an answering brief, see, e.g., Jennings v. Roberts Scott &Co., 113 Ariz. 57, 59 (1976), we have discretion whether to deem an issue waived, see Aleise H. v. Dep't of Child Safety, 245 Ariz. 569, ¶¶ 12-13 (App. 2018). We decline to apply waiver here and instead affirm for any reason supported by the record, even those not considered in the trial court. See KB Home, 236 Ariz. 326, ¶ 14.
¶14 Because PRA sufficiently established an account stated, the Eldreds needed to establish a genuine issue of material fact to withstand summary judgment. They did not do so. The Eldreds' affidavits contain nothing more than conclusory denials of the claimed debt based on the Eldreds' assertions that the documents establishing the debt were inadmissible. The controverting affidavits thus fail to "set forth specific facts showing a genuine issue for trial." Ariz. R. Civ. P. 56(e); see also Florez v. Sargeant, 185 Ariz. 521, 526-27 (1996) (conclusory affidavits insufficient to defeat motion for summary judgment). Therefore, the trial court did not err in granting PRA's motion for summary judgment.
Disposition
¶15 For the foregoing reasons, we affirm the trial court's grant of summary judgment to PRA. In our discretion after consideration of relevant factors, we deny PRA's request pursuant to A.R.S. § 12-341.01 for attorney fees on appeal. See Associated Indem. Corp. v. Warner, 143 Ariz. 567, 570 (1985). However, PRA is entitled to its costs on appeal upon compliance with Rule 21, Ariz. R. Civ. App. P. See A.R.S. § 12-341.