The following is a case update prepared by Dan Schechter, Professor Emeritus, Loyola Law School, Los Angeles, analyzing a recent decision of interest:
The California Supreme Court has held that when a creditor proffers a declaration in lieu of live testimony in a limited civil case, the affiant must be available for service of process within 150 miles of the place of trial, under some circumstances. [Meza v. Portfolio Recovery Associates, LLC, 2019 Westlaw 641517 (Cal.).]
Facts: A consumer brought an action against a debt collector under the Fair Debt Collection Practices Act (“FDCPA”), claiming that the creditor’s use of a declaration in lieu of live testimony during a collection suit was misleading and in violation of California Code of Civil Procedure § 98. The consumer alleged that the declarant lived more than 150 miles from the courthouse, in violation of that statute. The creditor moved for summary judgment, which was granted by the trial court.
On appeal, the creditor argued that the statute simply says that the declarant must be available for service at a specific address within 150 miles of the courthouse, which could include service on a law firm on behalf of the declarant. But the court decided that the statute was ambiguous and certified the following question to the California Supreme Court: “Under section 98(a) . . . must the affiant be physically located and personally available for service of process at the address provided in the declaration that is within 150 miles of the place of trial?”
Reasoning: The California Supreme Court acknowledged that the statute was ambiguous and relied on legislative history to clarify the meaning of the statute. The court provided a lengthy answer to the Ninth Circuit’s question:
Upon our review of the language, purpose, and history of section 98(a), we answer this question as follows: A section 98(a) affiant’s personal availability for service at an address within 150 miles of the place of trial often will be required for his or her affidavit to be admissible as evidence under that section, but such presence is not invariably necessary for all affiants. To explain, section 98’s limited exception to the hearsay rule is predicated on the party or parties against whom a sworn statement is offered having an opportunity to examine the maker of the statement under oath. Section 98(a) thus requires the provision of an address within 150 miles of the place of trial at which the affiant can be lawfully served with a form of process designed to secure his or her appearance at trial, at which time the affiant can be called as a witness. Although one such type of process, a subpoena ad testificandum (i.e., a subpoena to testify), typically must be personally served, there are exceptions to this general rule, and at least some prospective witnesses can be called to appear at trial through another form of process that does not require personal service. Section 98(a) therefore does not categorically require that all affiants be personally present for service at an address within 150 miles of the place of trial for a reasonable period during the 20 days prior to trial. Such personal presence is required only if it is necessary for lawful service, at the specified location, of process that directs the affiant to appear at trial, under the standard rules prescribing the pertinent types of process and how such process is to be served.
Author’s Comment: Frankly, I found the court’s answer to be confusing. I am concerned about the continuing viability of “limited civil cases” in California, CCP § 90 et seq. Those cases usually involve the collection of consumer debts of under $25,000. Declarations in lieu of live testimony are needed in order to authenticate the facts underlying the creditor’s collection action, thus qualifying under the “business records” exception to the hearsay rule. Usually, the declarant in these small collection cases is the person in charge of the creditor’s books and records, who may be located far from the courthouse.
If the California Supreme Court’s decision means that the declarant really has to live within 150 miles of the courthouse, I am not sure what creditors with nationwide debt collection practices will do. It is manifestly impractical to use live testimony in these small cases. In order to use declarations in lieu of testimony, must the creditors then artificially create “deputy” custodians of their books and records at 150 mile intervals throughout the length and breadth of California? California is about 800 miles long and 300 miles wide. That will provide employment for many “deputy custodians.” (If my map and my math are right, each creditor would have to have 12 deputies.)
However, I may be reading too much into this opinion. Without expressly addressing the effect of this decision on small debt collection actions per se, the court’s discussion contained the following hint, perhaps in dicta:
When an affiant also can be summoned to appear at trial through a notice to attend served on an attorney . . . , however, either a local address where the affiant will be personally present for service of a subpoena or a local address of the attorney will suffice.
If that hint means what I think it means, then there may be some situations in which service upon counsel will be adequate. I do not know whether this solution completely obviates the problem as it relates to small debt collection suits. We will just have to wait and see how this issue plays out in the real world. If this ruling has a severe impact on limited civil cases, I would expect that the Legislature will fix the problem.
For a discussion of the Ninth Circuit’s opinion in this case, see 2017-27 Comm. Fin. News. NL 53, Ninth Circuit Certifies Question to California Supreme Court Re Interpretation of Statute Governing Declarations in Lieu of Live Testimony in Limited Civil Actions.
For discussions of cases involving related issues, see 2015-52 Comm. Fin. News. NL 105, Declaration of Debt Buyer’s Custodian of Records is Sufficient to Satisfy Business Records Exception to Hearsay Rule, Even Though Custodian Lacks Personal Knowledge of the Original Transaction, and 2016-48 Comm. Fin. News. NL 96, Declaration Filed by Bulk Debt Assignee Fails under Business Records Exception to Hearsay Rule Because Declarant Lacks Knowledge of Assignor’s Record-keeping Practices.
These materials were written by Dan Schechter, Professor Emeritus, Loyola Law School, Los Angeles, for his Commercial Finance Newsletter, published weekly on Westlaw. Westlaw holds the copyright on these materials and has permitted the Insolvency Law Committee to reprint them.