Reported / Citable
Background
PNC Bank moved for summary judgment against TSG II Investments, LLC and Ted Groesbeck. A magistrate judge recommended granting the motion, dismissing the case with prejudice, and holding the defendants jointly and severally liable for $990,867.14, plus interest, costs, and reasonable attorney’s fees.
The defendants objected principally to an affidavit from Christopher Martin, a PNC vice president and records custodian. They argued that Martin lacked sufficient knowledge of how records originating with BBVA USA had been obtained, verified, and incorporated into PNC’s files after the banks’ merger, making the affidavit and associated records inadmissible.
The Court’s Holding
After de novo review, the district court overruled the defendants’ objections and adopted the magistrate judge’s report and recommendation. The court held that Martin’s affidavit established the requirements of the business-records exception because it described records kept in PNC’s regular course of business, explained that BBVA USA’s records were acquired and incorporated through the merger, and stated that PNC relied on those records in servicing and collecting the account.
The court rejected the defendants’ trustworthiness and layered-hearsay arguments. It found that Martin’s duties made him familiar with PNC’s records and that his statements rested on his review of those records. Because the defendants’ remaining objections depended on exclusion of the affidavit, the court overruled them as well and granted PNC summary judgment.
The court entered judgment against TSG II Investments and Groesbeck jointly and severally for $990,867.14, with prejudgment interest at the contractual default rate of 18% annually from June 22, 2022, through entry of judgment, post-judgment interest at the applicable legal rate, court costs, and reasonable and necessary attorney’s fees to be determined by separate motion.
Key Takeaways
- A successor entity may authenticate business records received through a merger when the evidence shows that it incorporated and relied on those records in its regular operations.
- Federal Rule of Evidence 803(6) did not require Martin to have personally created the predecessor bank’s records or supervised their preparation.
- Once the court admitted PNC’s affidavit and records, the defendants’ derivative objections failed, supporting summary judgment and a joint-and-several monetary award.
Why It Matters
The ruling illustrates how a successor bank can establish the admissibility of acquired loan records through testimony from its own records custodian. The relevant foundation focuses on incorporation, regular business use, reliance, and trustworthiness rather than firsthand knowledge of the predecessor’s recordkeeping process.
For parties challenging transferred financial records, a general assertion that the successor’s custodian did not independently verify every predecessor record may be insufficient where the affidavit explains how the records entered the successor’s system and how the successor relies on them.