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HSBC Bank USA, National Association v. Gill

Court of Appeals of Ohio, First District, Hamilton

July 10, 2019

KULWINDER GILL, and AMARJIT S. GILL, Defendants-Appellants.

          Civil Appeal From: Hamilton County, TRIAL NO. A-1201799, Court of Common Pleas

          Buchanan Ingersoll & Rooney PC and Timothy P. Palmer, for Plaintiff-Appellee.

          Gary F. Franke, for Defendants-Appellants.


          Bergeron, Judge.

         {¶1} While the defendants-appellants challenge sundry aspects of the damage award in this case, at bottom, their appeal turns on the question of whether the plaintiff-appellee laid a proper foundation for the evidence establishing its award. The trial court admitted the evidence in question under the business-records exception to the hearsay rule, and our review of the record confirms the propriety of this decision. We therefore affirm the judgment of the trial court.


         {¶2} The history of this case traces to a foreclosure action on a commercial loan for a hotel against two sets of guarantors; defendants Amarjit S. and Kulwinder Gill are one set of the guarantors. The underlying note was in the principal amount of $1, 333, 000 to Business Loan Center, LLC, f.k.a. Business Loan Center Inc. ("BLC"), which plaintiff-appellee HSBC Bank USA, National Association ("HSBC") eventually acquired via assignment. Upon default, HSBC received $1, 090, 018.28 from a short sale of the collateral property in 2007.

         {¶3} HSBC then commenced a collection action against the guarantors to collect the balance owed on the loan, including interest and fees. In 2015, however, the Gills exited from this litigation after reaching a tentative settlement with HSBC pending Small Business Administration ("SBA") approval. HSBC proceeded to trial against the other guarantors, ultimately receiving a judgment in the amount of $461, 477.44 plus interest against the other set of guarantors, with whom it settled for a $400, 002 payment on the deficiency.

         {¶4} The tentative settlement between the Gills and HSBC, however, ultimately collapsed when the SBA did not approve the deal. This prompted HSBC to sue the Gills to collect the balance of the deficiency from them, and when the dust settled from this litigation, the trial court entered a judgment against the Gills in the amount of $145, 274.94.

         {¶5} With no serious dispute about their liability or enforceability of their guaranty, the Gills' arguments revolve around the amount and propriety of the damages award. The Gills frame a single assignment of error challenging the damages award, with multiple separate issues for review. Ultimately, the predicate for most of these issues concerns the admissibility of the relevant evidence, so we begin our analysis there.



         {¶1} Before undertaking the substantive analysis, we pause for a moment at the standard of review, which appears to be a bit of a quagmire. Generally, "the trial court enjoys broad discretion in admitting or excluding evidence. An appellate court will not disturb the exercise of that discretion absent a showing that the [party against whom the evidence was admitted] has suffered material prejudice." (Citations omitted.) State v. Sage, 31 Ohio St.3d 173, 182, 510 N.E.2d 343 (1987). While that proposition is familiar enough, when it comes to hearsay and its exceptions, Ohio courts have proven less-than-precise at times in terms of the standard of review, generating conflicting precedent. We see this even in our own district. Several years ago, in Meyers v. Hot Bagels Factory, Inc., 131 Ohio App.3d 82, 100, 721 N.E.2d 1068 (1st Dist.1999), this court held that the abuse-of-discretion standard is not appropriate relative to the admissibility of hearsay in the civil context. We squarely addressed this question and determined that deferential review should not govern because the admissibility of hearsay is not optional:" 'This rule does not provide the trial court with discretion to admit hearsay; rather, the rule mandates its exclusion unless the exceptions found at Evid.R. 803, 804, or 807 apply.'" Id. at 100, quoting Smith v. Seitz, 4th Dist. Vinton No. 97CA515, 1998 WL 393880, *1 (July 9, 1998). Given the distinction between hearsay and garden-variety evidentiary decisions, we accordingly held:" 'Unlike those evidentiary rulings which relate to matters either explicitly or implicitly within the trial court's discretion, the admissibility of hearsay should be reviewed with little deference to the trial court's decision.'" Id., quoting Smith at *1.

         {¶2} Since that time, a split developed amongst the appellate districts between those that view the admission of hearsay as question of law for which de novo review is appropriate, and those that treat hearsay as falling within the general abuse-of-discretion standard. Compare, e.g., John Soliday Fin. Group, L.L.C. v. Pittenger,190 Ohio App.3d 145, 2010-Ohio-4861, 940 N.E.2d 1035, ¶ 28 (5th Dist.) ("[W]hile the trial court has discretion to admit or exclude relevant evidence, it has no discretion to admit hearsay. * * * Thus, we review de novo the trial court's decision * * *."); Monroe v. Steen, 9th Dist. Summit No. 24342, 2009-Ohio-5163, ¶ 11 ("Whether evidence is admissible because it falls within an exception to the hearsay rule is a question of law, thus, our review is de novo."); with Abrams v. Abrams,2017-Ohio-4319, 92 N.E.3d 368, ¶ 31 (2d Dist.) ("We review rulings regarding hearsay under an abuse-of-discretion standard."); Bishop v. Munson Transp., Inc.,109 Ohio App.3d 573, ...

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