Hudson v. Martingale Investments, LLC (In re Hudson)

Summarized by David Hercher , U.S. Bankruptcy Court, District of Oregon
12 years 1 month ago

Citation:

In re Hudson, No. CC-13-1264-BaPaKu (9th Cir. B.A.P. Jan. 14, 2014).

Tag(s):

Ruling:

An exhibit attached to a declaration, not made by the declarant, was inadmissible under the business-records hearsay-rule exception because the declaration did not state that (1) the declarant kept the exhibit in the regular course of the declarant’s business and (2) the declarant relied on the exhibit. Not for publication.

Procedural context:

The chapter 13 debtor appealed to the 9th Circuit B.A.P. the bankruptcy court’s order annulling the automatic stay in reliance on the content of an exhibit to two declarations.

Facts:

Martingale Investments, LLC, held a deed of trust on the debtor’s home. According to Martingale, a trustee’s sale occurred at 10:01 a.m. on the petition date. The petition was filed 27 minutes later. Two weeks later, Martingale sued to evict the debtor from the home. The next month, Martingale filed a stay-relief motion to continue the eviction action, asserting that it bought the home before the petition was filed and later began the eviction action without knowledge of the bankruptcy case, and seeking annulment of the stay to avoid re-filing the eviction action. Martingale submitted two declarations in support of its motion, the first from a Martingale employee and the second from an employee of the foreclosing deed of trust trustee, NDex West, LLC. Both declarations stated that the foreclosure concluded before the petition was filed, and both based that statement on an attached sale report from a third company, Priority Posting & Publishing, Inc., which apparently conducted the sale on behalf of the trustee. The court admitted both declarations and found that the sale preceded the petition filing. Reversing, the B.A.P. held that the sale report was not admissible under the business-records exception to the hearsay rule, Fed. R. Evid. 803(6). For the sale report to be properly admitted, Martingale would have had to establish that it or NDex kept and relied on the sale report in the regular course of their businesses. Neither declaration stated that the sale report was kept and relied on in the regular course of Martingale’s or NDex’s businesses.

Judge(s):

Eddward P. Ballinger, Jr. (Bankruptcy Judge for the District of Arizona, sitting by designation), Pappas, and Kurtz.

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