It has been too long since this blog was updated, but with the disruption to all of our lives caused by the Coronavirus, it is an opportune time to catch up on a few rulings that have been issued that affect our business clients.  Although much of the business world has been grinding to a halt, courts do remain open for business and have been on a daily basis issuing new rulings.  The courts are not physically open at this time, but we do continue to receive opinions of interest that we are sharing with our clients and the general public so that all can stay better informed.

Previous posts in this blog have talked about the fact that many of the Rules of Civil Procedure have not necessarily kept up with modern business practice.  One of the difficulties faced in commercial litigation is often centered around how to properly introduce evidence related to loans that were made many years ago.  Often times the witness who is being asked to introduce/identify those loan documents is not the person who made the loan, is not the person who has a relationship with the borrower, not employed by the lender who made the loan, and likely has very little if any personal knowledge about the loan when it was made.  There are rules in place to assist in introducing those loan documents which, without these rules, would be considered hearsay and therefore inadmissible.

Part of the difficulty in this world that we now live in is that loans and credit relationships are often sold several times before a borrower actually goes into default. By the time three, four or more sales have occurred, the new bank loan officer has absolutely no idea who these borrowers may be, and would have no chance to be able to testify about the loan was made, whether these people actually signed the documents, etc.

In some recent cases, borrowers have objected to the introduction of evidence based upon fact that the bank was not the “not the true plaintiff” and therefore it lacked standing to bring this action, and that the plaintiff had not made the loan originally and therefore its sole witness could not “authenticate” the loan documents.  Again, this is an issue that more and more banks are facing as loans have been sold over the years.

While these borrowers have had some sporadic success at the trial court level, the Indiana Court of Appeals has noted that it is not necessary that the witness have “actual personal knowledge” concerning the loan since its inception. There are rules in place that allow documents to be properly identified and introduced into evidence, and so long as those rules are followed, it typically results in a successful verdict for the lender/plaintiff (because rarely is there any dispute that the borrower actually received the money that is sought to be collected).

We would note that some challenges like this are sometimes successful because the witness truly may not be able to properly identify the documents or the witness’s testimony does call into question whether or not the plaintiff has the ability to collect on the particular loan. In addition, sometimes in an effort to save on costs the evidence presented is done in a sloppy manner and courts do not allow that to slip through.   As with everything in the law, it will vary on a case by case basis, and the ultimate outcome will be determined by the specific facts of the case.