Does Sub-Prime Student Loan Debt Deserve Sub-Prime Jurisprudence? Sheila Kirk v. National Collegiate Student Loan Trust 2003-1

GIVING CREDIT WHERE CREDIT IS DUE 

Democrat Richard Hightower botches his first National Collegiate Student Loan Trust case after taking office as a member of Houston Court of Appeals 

Sheila Kirk v. National Collegiate Student Loan Trust 2003-1, 

No. 01-17-00722-CV (Tex.App. - Houston [1st Dist.] Feb. 28, 2019, no pet.). 

Following affirmance of a take-nothing judgment against one of the National Collegiate Student Loan Trusts by the Fort Worth Court of Appeals and reversal of a judgment in favor of another Trust -- both decided in 2017 based on insufficient proof of assignment* -- another Texas appellate court in 2018 took a different approach to such private student loan cases. In three appeals decided that year, the First Court of Appeals pared down the amount of the damages awarded by the trial courts, and affirmed the judgments for the reduced amount after the Trust accepted the court's suggestion of remittitur, thereby avoiding reversal and remand. The Houston-based appellate court did what it did based on absence of evidence of a valid acceleration of maturity of the loans--each with a 20-year amortization period.

* Nat'l Collegiate Student Loan Trust 2006-2 v. Ramirez, No. 02-16-00059-CV, 2017 WL 929527,  (Tex. App.-Fort Worth Mar. 9, 2017, no pet.) (mem. op.); Gillespie v. National Collegiate Student Loan Trust 2005-3, No. 02-16-00124-CV, 2017 WL 2806780 (Tex. App.-Fort Worth June 29, 2017, no pet.) (mem. op.)

In the latest chapter of the ongoing saga involving the use of the court system to improve yields on these troubled private student loans originated and securitized before the financial crisis under the National Collegiate moniker, a panel of the same court in February 2019 ignored its own prior holdings and affirmed a judgment for the Trust. It did so based on mistaken facts and extemporized legal grounds that do not hold up upon closer scrutiny.

Here is a litany of what went wrong in the case culminating in a memorandum opinion by Richard Hightower in Sheila Kirk v. National Collegiate Student Loan Trust 2003-1, No. 01-17-00722-CV (Tex.App. - Houston [1st Dist.] Feb. 28, 2019, no pet.). 

FACTS SHOULD NOT BE CUT & PASTED FROM ONE CASE TO THE NEXT 

As an initial matter, and leaving aside the numerous errors in spelling and grammar, which betray serious copy-editing failures prior to release, the opinion got the facts wrong as they appear in the record for this case. Apparently because the facts were taken from the first student loan trust case, rather than the case-specific appellate record for the most recent one that made it to the appellate level. The first one was Foster v. Nat'l Collegiate Student Loan Tr. 2007-4, No. 01-17-00253-CV, 2018 WL 1095760 (Tex. App.-Houston [1st Dist.] Mar. 1, 2018, no pet.) (mem. op.). 

But the opinion in Kirk does not follow Foster in the analysis and resolution of the acceleration-of-the-outstanding-balance issues; nor does it even acknowledge the existence of two opinions in other NCSLT cases that the same court had handed down in the interim: Mock v. Nat'l Collegiate Student Loan Tr. 2007-4, No. 01-17-00216-CV, 2018 WL 3352913 (Tex. App. — Houston [1st Dist.] July 10, 2018, no pet. h.) (mem. op.), and Savoy v. National Coll. Student Loan Trust 2005-3, 557 S.W.3d 825 (Tex.App. - Houston [1st Dist.] 2018).

All four cases involved a core set of proof and legal sufficiency issues. The fourth one has now become an aberration in light of the three opinions that preceded it. Kirk stands in stark contrast to the three cases decided consistently last year, with the final one in the trilogy having precedental value as a published case.

APPELLATE COURT MUST BE FAMILIAR WITH ITS OWN PRECEDENTS BECAUSE THEY ARE BINDING ON SUBSEQUENT CASES INVOLVING THE SAME LEGAL ISSUE 

As for the reference to the first case, Kirk cites Foster for a non-doctrinal point; a supposed briefing deficiency by the same lawfirm that also handled all of the other cases for the respective appellants. The Panel opinion faults the appellant for failing to cite sufficient caselaw on the matter of the creditor's burden to substantiate the interest component of its claim with competent evidence. 

Kirk contends that the evidence is insufficient because the Trust did not provide evidence of what the LIBOR rate was for each month. In Foster v. National Collegiate Student Loan Trust 2007-4, No. 01-17-00253-CV, 2018 WL 1095760 at *11 (Tex. App.-Houston [1st Dist.] 2018, no pet.), we rejected an argument identical to Kirk's. We noted that that the appellant "provide[d] no authority for her assertion that the Trust was required to support its claim with calculations supporting each month's interest computation over the life of the loan." Id. at *11. The same is true here. Accordingly, we overrule Kirk's argument that the Trust failed to provide legally and factually sufficient evidence indicating how her loan was calculated.

Note that the opinion does not say that the court couldn’t find any authority for the proposition, based on its own research, as appellate courts sometimes do when presented with novel issues or unusual factual scenarios. There is good reason for the coyness here: There actually happens to be such caselaw, including caselaw from the Houston courts of appeal, but the Panel chose to ignore it, apparently because it would have helped the Appellant, rather than the Trust.  

In Hay v. Citibank, the Fourteenth Court of Appeals, which also sits in Houston and lords over the same trial courts in ten surrounding counties, did not merely hold that use of credit card and payments to account demonstrated existence of contract (thus ruling against the Defendant on that issue), but also reversed the judgment in part because the bank had not adduced any evidence of what the variable interest rate was at the relevant time (thereby sustaining one of the Defendant’s complaints of error raised on appeal). See Hay v. Citibank (South Dakota) N.A., No. 14-04-01131-CV, 2006 WL 2620089, at *3 (Tex.App.-Houston [14th Dist.] Sept. 14, 2006, no pet.).

In addition to purchases, the Citibank statements contain charges for late fees and over credit limit fees, the amounts of which are flat fees plainly specified in the terms and conditions in exhibit C.  However, the statements also impose finance charges, which are generally described in the terms and conditions, but neither the statements nor Citibank’s other summary judgment evidence provides an explanation showing how these amounts were calculated.  In addition, although the card agreement states that Citibank may increase the annual percentage rates on all balances to a default rate of up to 19.99% plus the applicable prime rate, nothing in the evidence establishes what the applicable prime rate was for the relevant time periods on the statements.  Citibank argues that the default rate of 24.24% reflected on some of the statements minus the 19.99% factor provided in the card agreement indicates that the applicable prime rate was 4.25%.  Although this reflects what prime rate was used, it provides no evidence of what the applicable prime rate for any date or time period actually was, such as by reference to a source of that information.  Because Citibank’s summary judgment materials are therefore insufficient to prove that Hay owed the amounts claimed for finance charges, we sustain her fifth issue as to those amounts, and we need not address her other challenges to those amounts.

Accordingly, the summary judgment is: (1) reversed as to the finance charges and remanded to the trial court for further proceedings thereon; and (2) affirmed as to the remainder of the judgment.

The First Court of Appeals itself cited Hay v. Citibank in one of the most-often cited opinions involving collection of credit card debt: Winchek v. Am. Exp. Travel Related Servs. Co., 232 S.W.3d 197, 204 (Tex. App.-Houston [1st Dist.] 2007, no pet.), but left unmentioned the partial reversal of the summary judgment in Hay for insufficient proof of the interest rate. There are several other cases from the Houston courts of appeals and elsewhere, that resulted in reversal for insufficient proof of the interest rate likewise. 

It appears that the Panel in Kirk was so committed to thwarting the appeal of the student loan debtor that it ignored its own existing jurisprudence in consumer debt cases to the extent it would favor the student loan defendant's arguments in the case before it. 

But that was not all. The Panel additionally rephrased—without offering any reason or justification--the quoted portions from the Trust’s business records affidavit. The affidavit was signed by a self-described employee of Transworld Systems, Inc., whom the Panel elevated to the status of a custodian of records for the occasion. The Panel then modified the quoted portions of the affidavit to make them refer to only one defendant--the appellant--even though there were two defendants in the trial court, and even though the affidavit referred to both of them. 

APPELLATE COURT SHOULD NOT REWRITE THE RECORD, WHICH IS WHAT HAPPENED HERE WHEN TWO DEFENDANTS WERE REDUCED TO ONE  

Does it matter? Or is it merely another instance of sloppy treatment of a consumer debt case that is considered a low priority given the small amount in controversy, compared to tort and business-vs-business cases?

There is good reason to conclude that the alteration does matter here. For it changed the nature of the case and its procedural posture on appeal. There was a second defendant (Merle Kirk), whose signature appears on the loan application as a co-signer. He was sued along with the student-borrower (Sheila Kirk), but he did not file an answer in the court below, and he did not appear for trial. After judgment was entered following a truncated trial in which the judge cut off the Sheila Kirk's attorney, who attempted to press evidentiary issues, only the student-borrower (as primary obligor) pursued an appeal.

The problem is with the wording of the judgment that is the subject of Sheila Kirk’s appeal: it grants judgment for the Trust as Plaintiff, but only against one defendant, and it does not identify that single defendant by name as required by the rules. What happened to Merle Kirk? The co-defendant against who a judgment by default would normally have been entered?

THE TRIAL COURT'S JUDGMENT WAS AND REMAINS DEFECTIVE ON ITS FACE 

When a purportedly final judgment is not clear, the court of appeals would normally request clarification from the trial court or advise the parties of a possible defect affecting the court’s jurisdiction, and ask for briefing, and supplementation of the record, if appropriate. Sometimes the defect involving non-finality is cured with a nonsuit, or with an order of severance.

This did not happen here. While the Panel went out of its way to affirm the judgment for the Trust, and even endeavored to extemporize a novel construction of rule 93(12)--a pleading rule--for that purpose, it is questionable whether the Houston appellate court, and therefore the three-member panel to which the case was assigned, ever even acquired jurisdiction to reach the merits to begin with. 

GOTCHA JURISPRUDENCE

When litigants appeal without a lawyer, they are routinely rebuffed for a variety of procedural failures and blamed for not producing a brief as would be expected of appellate attorneys. They are told that they failed to preserve error in the trial court, and that they cannot raise objections and new arguments for the first time on appeal. If they did raise objection in the trial court, they are blamed for not obtaining a ruling, or for not obtaining a ruling in writing, or for not making an objection specifically enough, or for not obtaining a specific-enough written order disposing of it.

The pro-se-and-doomed-to-lose scenario did not apply to Sheila Kirk, however, who had attorney representation both at trial and on appeal. But she did not fare much better.

In the trial court, her attorney was cut off by the judge when she objected to the Trust’s business records affidavit and started to argue that the Trust had failed to establish its status as assignee with proper evidence of assignment.

On appeal, the Panel overruled her argument regarding the proffered assignment proof by distinguishing the case the Second Court of Appeals had cited when it revered a judgment in the trust’s favor.* It then refused to address Kirk’s objections to other pieces of documentary evidence on the basis that she had not first presented them to the trial court. 

* See Gillespie v. National Collegiate Student Loan Trust 2005-3, No. 02-16-00124-CV, 2017 WL 2806780 (Tex. App.-Fort Worth June 29, 2017, no pet.) (mem. op.), citing Jenkins v. CACH, LLC, No. 14-13-00750-CV, 2014 WL 4202518, at *6-7 (Tex. App.-Houston [14th Dist.] Aug. 26, 2014, no pet.) (mem. op.)

How could Kirk be at fault for not asserting objections in the trial court when the judge of that court prevented her from making them, cut the trial short, and granted judgment for the Trust instanter?

Worse, the Panel made short shrift of the Trust’s failure to plead that it was suing as an assignee (as opposed to original creditor), but manufactured a pleading defect for the defendant instead. It did so by re-purposing rule 93(12), which addresses notice of loss/claim in the insurance and indemnity context, and applying it for the first time to a consumer debt collection case. Unsurprisingly, the Panel cited no existing caselaw to support this deus-ex-machina stratagem to save the Trust from suffering reversal or reduction of damages as in the previous cases.   

Rejecting Kirk’s contention that the Trust had failed to meet the requirements for acceleration of loan maturity under Texas law--the same contention that had resulted in the downward adjustment of damages in the other three NCSLT cases decided in 2018—the Panel transmuted the same deficiency in the Trust’s proof into a supposed pleading deficiency on the part of the Defendant instead.

Lastly, Kirk contends that because the Trust did not produce any documents establishing that it notified Kirk that it was accelerating her loan following her failure to maintain the monthly payments, the Trust was entitled to recover past-due payments only and not the full amount. Again, Kirk waived this issue by not filing a verified denial that raised it. See TEX. R. CIV. P. 93(12) (stating that party's failure to file verified denial "[t]hat notice and proof of loss or claim for damage has not been given as alleged" results in "notice and proof . . . be[ing] presumed"); see also Brown, 414 S.W.3d at 285-86. We therefore reject Kirk's notice-of-acceleration argument.

What the Panel stooped to here is to fault Kirk for failing to follow a pleading rule that did not exist until the Panel made it up for the purpose of denying Kirk the relief that the other student loan debtors had obtained in three similar cases decided by the very same court less than a year earlier.

In all three opinions handed down in 2018, the First Court had treated proper acceleration of loan maturity under Texas law as an issue on which the Trust had the burden of proof as plaintiff suing for the full amount alleged outstanding on loans which had not yet matured by their own terms. See Savoy v. Nat. Coll. Student Loan Tr., 557 SW 3d 825 (Tex.App. – Houston [1st Dist.] 2018) (excerpt below).  

E. Insufficient evidence of acceleration

The Savoys contend that there is insufficient evidence that the maturity of the loan was accelerated.

The Disclosure Statement reflects that the Savoys agreed to pay the loan over a period of 20 years, with payments beginning in July 2007. The Credit Agreement states that, to the extent permitted by law, in the event of a default on the loan, the Trust "will have the right to give [the Savoys] notice that the whole outstanding principal balance, accrued interest, and all other amounts payable to [the Trust] under the terms of this Credit Agreement are due and payable at once."

"Where the holder of a promissory note has the option to accelerate maturity of the note upon the maker's default, equity demands notice be given of the intent to exercise the option." Ogden v. Gibraltar Sav. Ass'n, 640 S.W.2d 232, 233 (Tex. 1982). "The accelerated maturity of a note, which is initially contemplated to extend over a period of months or years, is an extremely harsh remedy." Allen Sales & Servicenter, Inc. v. Ryan, 525 S.W.2d 863, 866 (Tex. 1975). A creditor "must give the debtor an opportunity to pay the past due installments before acceleration of the entire indebtedness; therefore, demand for payment of past due installments must be made before exercising the option to accelerate." Williamson v. Dunlap, 693 S.W.2d 373, 374 (Tex. 1985) (emphasis omitted). The note holder must also notify the maker both of its intent to accelerate and of the acceleration. Ogden, 640 S.W.2d at 233-34.

There is no evidence in the record before us that the Trust provided the Savoys with either of the required notices. The Trust alleged in its petition that, as a prerequisite to acceleration, it served the Savoys with a letter demanding payment in full. However, the demand letter is not part of the record, and pleadings are not evidence.

We hold that the evidence is legally and factually insufficient to support the full amount of actual damages awarded. See Mock, 2018 WL 3352913, at *8 (holding that evidence was insufficient to show acceleration when trust presented no evidence that it provided debtor with notice 840*840 of acceleration); Foster, 2018 WL 1095760, at *11-12 (same).

When acceleration is invalid, the plaintiff is entitled to judgment against the defendant only "for past due installments plus accumulated interest as provided in the note." Williamson, 693 S.W.2d at 374.

The Savoys request that we "reform the judgment to an amount commensurate with the sum of missed installment payments through the date the petition was filed" or, alternatively, "suggest a remittitur to accomplish a proper adjustment of the amount of contract damages proven by the admissible evidence as having been caused by breach of contractual duties." The evidence shows that, the sum of all monthly payments due, beginning on July 1, 2007, as stated in the Disclosure Statement, through the date of the filing of suit, April 15, 2016, is $15,894.70.

A court of appeals may suggest a remittitur when there is insufficient evidence to support the full amount of damages awarded but sufficient evidence to support a lesser award. Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat'l Dev. & Research Corp., 299 S.W.3d 106, 124 (Tex. 2009); see TEX. R. APP. P. 46.3. If part of a damage verdict lacks sufficient evidentiary support, the proper course is to suggest a remittitur of that part of the verdict, giving the party prevailing in the trial court the option of accepting the remittitur or having the case remanded for a new trial. Akin, Gump, 299 S.W.3d at 124.

As set out above, the record contains some evidence that breach-of-contract damages exist, but, without evidence of notice of acceleration, the evidence does not support the full amount awarded by the trial court. The evidence does, however, allow us to determine a lesser award. See ERI Consulting Eng'rs, Inc. v. Swinnea, 318 S.W.3d 867, 877-78, 880 (Tex. 2010) (holding there was "legally sufficient evidence to prove a lesser, ascertainable amount of lost profits with reasonable certainty," and remanding case to court of appeals to consider suggestion of remittitur).

Based on the record, the evidence is legally and factually sufficient to support a lesser damages finding of $15,894.70, which represents the sum of all monthly payments due, beginning on July 1, 2007, as stated in the Disclosure Statement, through the filing of suit on April 15, 2016. See Mock, 2018 WL 3352913, at *9 (suggesting remittitur when plaintiff-trust failed to prove acceleration of loan's maturity); Foster, 2018 WL 1095760, at *12 (same); see also PNS Stores, Inc. v. Munguia, 484 S.W.3d 503, 513 (Tex. App. — Houston [14th Dist.] 2016, no pet.)(suggesting remittitur to "the highest amount of actual damages supported by the evidence").

We sustain in part and overrule in part the Savoys' second issue.

[…]

 Conclusion

We conclude that the evidence is insufficient to support the trial court's award of actual damages in the amount of $20,492.05 but is sufficient to support an award of actual damages in the amount of $15,894.70. Thus, we suggest a remittitur of the actual damages award to $15,894.70. In accordance with Rule 46.3 of the Texas Rules of Appellate Procedure, if the Trust files with this Court, within fifteen days of the date of this opinion, a remittitur to that amount, the trial court's judgment on damages will be modified and affirmed. See TEX. R. APP. P. 46.3. If the suggested remittitur is not timely filed, the trial court's judgment will be reversed and the cause will be remanded for a new trial on liability and damages. See Rancho La Valencia, Inc. v. Aquaplex, Inc., 383 S.W.3d 150, 152 (Tex. 2012)(holding that if party rejects remittitur, court of appeals must remand for new trial on liability and damages

SHEILA C. KIRK AKA SHEILA MOON AKA CHRISTINE S. ALLEN, Appellant,
v.
NATIONAL COLLEGIATE STUDENT LOAN TRUST 2003-1, Appellee.

No. 01-17-00722-CV 

Court of Appeals of Texas, First District, Houston.

Opinion issued February 28, 2019.

On Appeal from the County Civil Court at Law No. 4, Harris County, Texas, Trial Court Case No. 1087683.

Panel consists of Justices Lloyd, Kelly, and Hightower.

MEMORANDUM OPINION

RICHARD HIGHTOWER, Justice.

Appellee National Collegiate Student Loan Trust 2003-1 sued appellant Shelia Kirk for breach of contract following her failure to make payments on the student loan that the Trust claimed it was assigned.^[1] After a short bench trial, the trial court entered judgment in favor of the Trust. On appeal, Kirk contends that the Trust lacked standing to sue because it failed to prove that it was in fact assigned her loan, that the trial court improperly admitted the Trust's business-records affidavit and the exhibits that accompanied it, that the breach-of-contract evidence was legally and factually insufficient to support the judgment, and that the Trust's pleadings did not support the judgment.

We conclude that the Trust did submit evidence of the loan's assignment to it; that the trial court reasonably could have concluded that the business-records affidavit and its exhibits satisfied Rule of Evidence 803(6)'s requirements; that the breach-of-contract evidence was legally and factually sufficient; and that Kirk failed to adequately brief her argument that the Trust's pleadings did not support the judgment.

Accordingly, we affirm.

Background

In 2003, appellant Shelia Kirk signed a non-negotiable credit agreement to secure a $20,000 student loan from Bank One. The loan was disbursed less than a month later. Bank One later assigned Kirk's loan to appellee National Collegiate Student Loan Trust 2003-1. Kirk defaulted on the loan in 2013, and the Trust demanded payment in full, but Kirk did not comply. The Trust then brought a breach-of-contract claim against Kirk, seeking $24,028.94 in damages. Kirk answered, generally denied the allegations, and asserted the statute of limitations as her sole defense.

At trial, the Trust offered into evidence the business-records affidavit of Alicia Holiday, the custodian of records at Transworld Systems Inc., the subservicer for the Trust. In her affidavit, Holiday averred:

2. TSI has been contracted to perform the duties of the Subservicer for Plaintiff by U.S. Bank, National Association, the Special Servicer of Plaintiff. TSI, as the Subservicer of the [Trust], is the designated custodian of records for [Kirk's] educational loan. Additionally, TSI maintains the dedicated system of record for electronic transactions pertaining to [Kirk's] educational loan, including, but not necessarily limited to, payments, credits, interest accrual and any other transactions that could impact the Defendants' educational loan.

3. . . . . As an employee of TSI, I am duly authorized by [the Trust] . . . to make representations contained in this Affidavit.

4. I have access and training on the system of record utilized by TSI to enter and maintain loan account records and documentation concerning [Kirk's] education loan for the [Trust].

5. I am familiar with the process by which TSI receives prior account records, including origination records from the time the loan was requested and/or disbursed to [Kirk] and/or the student's school on their behalf.

6. As custodian of records it is TSI's regularly-conducted business practice to incorporate prior loan records and/or documentation into TSI's business records.

7. I am further competent and authorized to testify regarding this educational loan through personal knowledge of the business records maintained by TSI as custodian of records, including electronic data provided to TSI related to the Defendants' educational loan, and the business records attached to this Affidavit.

8. This lawsuit concerns an unpaid loan owed by [Kirk] to [the Trust]. Specifically, [Kirk] entered into an educational loan agreement at [her] special instance and request. A loan was extended for [Kirk] to use pursuant to the terms of the loan agreements. [Kirk has] failed, refused, and/or neglected to pay the balance pursuant to the agreed terms.

9. Educational loan records are created, compiled and recorded as part of regularly conducted business activity at or near the time of the event and from information transmitted from a person with personal knowledge of said event and a business duty to report it, or from information transmitted by a person with personal knowledge of the accounts or events described within the business record. Such records are created, kept, maintained, and relied upon in the course of ordinary and regularly conducted business activity.

10. I have reviewed the educational loan records described in this affidavit regarding account number xxxxxl080-001-PHEA. No payment has been made since 11/4/2013. After all payments, credits and offsets have been applied, [Kirk] owe[s] the principal sum of $21,867.96, together with accrued interest in the amount of $2,160.98, totaling the sum of $24,028.94 as of 4/12/2017. Attached hereto and incorporated . . . is a true copy of the underlying Credit Agreement/Promissory Note and Note Disclosure Statement. . . .

11. [Kirk] opened an educational loan with [Bank One] and funds were disbursed on 9/25/2003. [Kirk's] educational loan was then transferred, sold and assigned to [the Trust] on 12/11/2003 for valuable consideration, in the course of the securitization process. [Kirk's] educational loan was in good standing and not in default on 12/11/2003. Attached hereto and incorporated . . . is a true and correct copy of the Pool Supplement Agreement. [This document] contains a redacted copy of the Schedule of transferred loans referenced within the Pool Supplement.

Holiday attached exhibits to her affidavit. Exhibit A is a November 3, 2013 letter from U.S. Bank, as special servicer for the Trust, confirming that TSI is the "dedicated record custodian with respect to all student loan accounts owned by [the Trust]" and is "fully authorized to execute affidavits regarding account documents, verify responses to discovery and provide testimony on behalf of [the Trust]." Exhibit B is a non-negotiable Credit Agreement signed by Kirk and a Note Disclosure Statement. The Credit Agreement, dated September 18, 2003, states that Kirk applied for an education loan of $20,000 from Bank One. The Note Disclosure Statement reflects that a loan amount of $20,000 was disbursed to Kirk, or on her behalf, and that she agreed to make 240 monthly payments of $174.44 beginning on December 15, 2005. Exhibit C contains a Pool Supplement that details Bank One's assignment of loans through an intermediary to the Trust. The Pool Supplement references a schedule that lists the loans assigned to the Trust. Following the Pool Supplement are two pages that lists Kirk's loan. Holiday's affidavit identifies these latter two pages as a redacted version of the exhibit referenced in the Pool Supplement. Exhibit D is a Loan Financial Activity Report that reflects the monthly balance and interest accrued on Kirk's loan and that she did not make any payments. Exhibit E is a document noting that Kirk had no existing loans that would have resulted in her repayment of the loan at issue being deferred. Exhibit F is a document reflecting the repayment schedules associated with Kirk's loan. Exhibit G is a document reflecting a month-to-month breakdown of the interest accrual on Kirk's loan.

When the Trust offered into evidence Holiday's affidavit and the attached exhibits, Kirk objected, and the following exchange occurred:

[Kirk]: Okay. Now I want to go to the attached exhibits. You can't tell on these that — where the originator is, where the originator —

The Court: I mean, did you file — did you file an objection to the affidavit? Then I think your time for — I don't think now is the time. No ma'am, I don't think that — I think it has to be brought up at the time. You have to file some type of controverting affidavit. It's been on file.

[Kirk]: Objections to it — I can't make objections at trial?

The Court: No, I don't think so. Show me in the Texas Rules of Civil Procedure where it says you can.

[Kirk]: I was just going to argue Jenkins, Your Honor. So, what you're saying —

The Court: I mean, it's been on file since —

Kirk: A dollar short and a day late.

The Court: Well, I don't know. Yeah, I don't know that, you know, it's your doing. But I mean, this has been on file since May 25th, 2017. And I assume you were just recently —

[Kirk]: Right. This is my first appearance. The Court: Right, right. And I assume that you met — well, I won't assume that, but I assume that you haven't been on this case since May of 2017.

[Kirk]: I've been on this case since about last Friday.

The Court: Yes, ma'am. And so —

[Kirk]: That's what you're saying.

The Court: Yes, ma'am. I mean, I think that when these are on file, you can controvert it.

After a discussion off the record, the trial court entered a judgment in favor of the Trust on its breach-of-contract claim, and awarded the Trust damages in the amount of $24,028.94, plus interest and costs. Kirk appeals.

Analysis

Kirk raises four issues. She argues that the Trust lacked standing to sue, the trial court erroneously admitted the Trust's business-records affidavit, the evidence was legally and factually insufficient to sustain the Trust's breach-of-contract claim, and the judgment was not supported by proper pleadings. We overrule each issue.

I. The Trust's standing and business-records evidence

Kirk contends that the Trust lacked standing to bring this suit. Plaintiffs must have standing to sue. Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848 (Tex. 2005). Standing is a component of subject-matter jurisdiction and may therefore be raised for the first time on appeal. Id. at 849. The "standing doctrine requires that there be (1) `a real controversy between the parties' that (2) `will be actually determined by the judicial declaration sought.'" Id. (quoting Nootsie, Ltd. v. Williamson Cty. Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996)). Whether a plaintiff has standing is a legal question that we review de novo. See Tex. Dep't. of Transp. v. City of Sunset Valley, 146 S.W.3d 637, 646 (Tex. 2004).

According to Kirk, had the trial court properly excluded the Trust's business-records affidavit and its accompanying exhibits, the Trust would have been incapable of establishing that it was assigned the loan and therefore could not have established its standing to sue. Because Kirk's standing issue encompasses her issue concerning the admission of the business-record affidavit, we address both issues here.

We review a trial court's evidentiary ruling for an abuse of discretion. Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998). A trial court abuses its discretion by ruling without reference to guiding rules or principles. Id.The trial court overruled Kirk's objection to the business-record affidavit and its attached exhibits after concluding that Kirk waived her evidentiary challenge by failing to file a written objection to the documents before trial began. 

We agree with Kirk that the trial court's rationale was erroneous. It is possible, as Kirk suggests, that the trial court inadvertently applied a summary-judgment evidentiary rule. See, e.g., Scott v. Hunt, No. 01-11-00042-CV, 2012 WL 983339, at *5 (Tex. App.-Houston [1st Dist.] Mar. 22, 2012, no pet.) (mem. op.) ("A party must object in writing and obtain an express or implied ruling from the trial court to preserve a complaint about the form of summary judgment evidence.") (citing TEX. R. CIV. P. 166a(f); TEX. R. APP. P. 33.1(a)(2)(A); Grand Prairie I.S.D. v. Vaughan, 792 S.W.2d 944, 945 (Tex. 1990)). But outside the summary-judgment context, we are aware of no rule that requires parties to file written objections to a business-record affidavit before trial. Nevertheless, we "must uphold the trial court's evidentiary ruling if there is any legitimate basis for the ruling." Malone, 972 S.W.2d at 43. Accordingly, we address the merits of Kirk's evidentiary argument.^[2]

Certain business records are excepted from the general rule prohibiting the admission of hearsay—out-of-court statements offered to prove the truth of the matter asserted. TEX. R. EVID. 802, 803, 901(d). The business-records exception states that a record of an act, event, condition, or opinion is not excluded as hearsay if:

(A) the record was made at or near the time by—or from information transmitted by—someone with knowledge;

(B) the record was kept in the course of a regularly conducted business activity;

(C) making the record was a regular practice of that activity;

(D) all these conditions are shown by the testimony of the custodian or another qualified witness, or by an affidavit or unsworn declaration that complies with Rule 902(10); and

(E) the opponent fails to demonstrate that the source of the information or the method or circumstances of preparation indicate a lack of trustworthiness.

TEX. R. EVID. 803(6). Documents created or authored by third parties are admissible as the business records of another business if: "(a) the document is incorporated and kept in the course of the testifying witness's business; (b) that business typically relies upon the accuracy of the contents of the document; and (c) the circumstances otherwise indicate the trustworthiness of the document." Simien v. Unifund CCR Partners, 321 S.W.3d 235, 240-41 (Tex. App.-Houston [1st Dist.] 2010, no pet.).

Holiday, the Trust's business-records affiant, provided sufficient testimony demonstrating that the exhibits attached to her affidavit complied with Rule 803(6). In her affidavit, Holiday averred that TSI is the Trust's loan subservicer and the designated custodian of records for the Kirk loan; that she is employed by TSI and authorized by the Trust to make representations in her affidavit and to testify about the Kirk loan; and that she has personal knowledge of the business records maintained by TSI as the custodian of records, including the business records attached to her affidavit. See TEX. R. EVID. 803(6)(D). She stated that the records are created, compiled, and recorded as part of regularly conducted business activity at or near the time of the event and from information transmitted by a person with knowledge of the event and a business duty to report it, or from information transmitted by a person with personal knowledge of the accounts or events described within the business records. See id. at (6)(A). She further stated that the records are created, kept, maintained, and relied upon in the course of regularly conducted business activity. See id. at (6)(B). And she stated that it is TSI's regularly conducted business practice to incorporate prior loan records and documentation into TSI's business records and that she is familiar with the process by which TSI receives prior account records, including origination records. See Simien, 321 S.W.3d at 240-41 (stating circumstances under which document authored or created by third party may be admissible as business record of different business). With these statements, the trial court reasonably could have concluded that Rule 803(6)'s requirements were satisfied. We therefore reject Kirk's contention that the trial court abused its discretion.

Kirk also contends, however, that some of the exhibits attached to Holiday's affidavit were improperly admitted, namely, the heavily redacted schedule referenced by the Pool Supplement and other numerical data exhibits. According to Kirk, these documents failed to qualify as business records because they were untrustworthy. We analyze each of the exhibits separately.
  

In making her argument that the trial court should have excluded the heavily redacted schedule referenced by the Pool Supplement, Kirk primarily relies on Jenkins v. CACH, LLC, No. 14-13-00750-CV, 2014 WL 420518 (Tex. App.-Houston [14th Dist.] 2014, no pet.) (mem. op.). Jenkins is inapplicable.

Jenkins, similar to this case, involved a breach-of-contract action brought by an alleged assignee of the defendant's credit-card debt. Id. at *1. At trial, the plaintiff offered into evidence a business-record affidavit that was accompanied by exhibits. With those exhibits, the plaintiff sought to prove that the defendant had a debt with Bank of America, that Bank of America assigned the defendant's debt to the plaintiff, and that the defendant defaulted on the debt. The trial court admitted the business-record affidavit and the attachments over the defendant's objections that the proffered evidence did not qualify for the business-records exception, that the documents were unreliable, and that none of the documents showed that the defendant's account was in fact assigned to the plaintiff.

The Fourteenth Court of Appeals reversed the trial court's judgment, concluding that the documents lacked sufficient indicia of trustworthiness and reliability to qualify for admission as business records under Rule 803(6). In reaching this conclusion, the court stressed that the business-records affidavit relied in large part on a separate affidavit created by Bank of America that was allegedly a record of Bank of America's sale of the defendant's debt to the plaintiff. The problem with that affidavit, the court noted, was that it was not actually created "at or near the time of the event" that it purported to record. Id. at *6. Rather, the affidavit was created about a year after the alleged sale occurred and three months before the plaintiff filed its suit. Additionally, the Bank of America affidavit claimed that the sale of the defendant's debt to the plaintiff took place on November 9, 2011, but the actual Bill of Sale that was also submitted with the defendant's business-record affidavit was dated November 15, 2011. Further, evidence suggested that the Bank of America affidavit was created at plaintiff's request. To the court, these circumstances suggested that the Bank of America affidavit "was created in anticipation of litigation rather than in the course of a regular business activity, which casts doubt on its trustworthiness."

The court then turned to the Bill of Sale, which allegedly documented the sale of the defendant's debt to the plaintiff. Like the Pool Agreement involved in this case, the Bill of Sale noted that the loans transferred were identified in a separate "schedule." The court then stated, "immediately following the Bill of Sale . . . is a heavily redacted document in different typeface that lists the [defendant's] account. . . . However, there is no indication on the redacted document that it was meant to be the loan schedule referenced in the Bill of Sale." In concluding that the Bill of Sale and purported loan schedule were untrustworthy, the court noted "there is no evidence that the [purported loan schedule] was attached to the bill of sale, other than by its proximity to the bill of sale in the loan exhibit. It is not labeled as the loan schedule . . ., and there is no indicator of what the document purports to be." Accordingly, the court held that "there is no legitimate basis upon which the trial court's overruling of [the defendant's] hearsay objections can be supported."

Kirk contends that the factual similarities between this case and Jenkins demand that we reach the same result. We disagree. Unlike Jenkins, Holiday's affidavit explicitly notes that the Pool Agreement "Exhibit contains a redacted copy of the Schedule of transferred loans referenced within the Pool Agreement." Further, and with respect to the assignment of Kirk's loan to the Trust, Kirk has identified no evidence that suggests the Holiday's affidavit relies on or contains documents that were created in anticipation of litigation rather than during the course of regular business. There is no dubious third-party affidavit, nor are there any date discrepancies among the documents. These are material differences between the facts of Jenkins and this case that prevent us from concluding that the heavily redacted schedule was improperly admitted.

Kirk maintains that, under Alphaville Ventures, Inc. v. First Bank, 429 S.W.3d 150 (Tex. App.-Houston [14th Dist.] 2014, no pet.), the Pool Agreement should have been excluded from evidence. This argument is unavailing.

In Alphaville, another suit to recover a debt, the Fourteenth Court of Appeals concluded that the plaintiff failed to establish that the defendant's debt was assigned to it. The court reasoned that the documents relied on by the plaintiff as supposedly proving assignment did not contain actual language of a present transfer but instead contemplated a future transfer. Here, in contrast, the Pool Agreement acknowledges that the transfer was completed and that the Trust was assigned the loans identified in the schedule, which included Kirk's loan. We therefore reject Kirk's Alphaville argument. Because the trial court reasonably could have concluded that the Trust's business-records affidavit and the exhibits attached to it satisfied Rule 803, we overrule Kirk's argument that the trial court abused its discretion.

Although Kirk raises a number of other arguments challenging the trial court's admission of other exhibits attached to Holiday's affidavit, those arguments are waived. To preserve an issue for review, the complaining party must state a clear and specific objection that enables the trial court to make an informed ruling on the objection and that affords the opposing party an opportunity to remedy the defect, if possible. McKinney v. Nat'l Union Fire Ins. Co., 772 S.W.2d 72, 24 (Tex. 1989); see also TEX. R. APP. P. 33.1(a). As mentioned above, Kirk cited Jenkins in her objection to the business-records evidence. Jenkins did not involve the kinds of challenges that Kirk makes here, such as her objection that the Trust failed to lay a proper predicate for summary records. Jenkins, as discussed at length above, concerned documents related to proving that a debt was assigned to another. Kirk's objection lacked the level of clarity and specificity necessary to preserve her challenges that were unrelated to the issue of assignment. See, e.g., Clark v. Walker-Kurth Lumber Co., 689 S.W.2d 275, 281 (Tex. App.-Houston [1st Dist.] 1985, writ ref'd) (holding that objection to personal knowledge of sponsoring witness to assert business-records exception did not preserve appellate issues that invoices were not generated at or near time of transaction and that appellee failed to lay proper predicate for introduction of summary of business records); see also In re N.C.M., 66 S.W.3d 417, 420 (Tex. App.-Tyler 2001, no pet.) (holding that general hearsay objection to business records was insufficient to inform trial court of specific grounds of objection or to preserve error).

Finally, because we conclude that Holiday's affidavit and the accompanying exhibits were properly admitted—including the Pool Agreement and the schedule that follows it, both of which together establish that Kirk's loan was in fact assigned to the Trust—we reject Kirk's argument that the Trust lacked standing to sue because it failed to offer any evidence that it was assigned Kirk's loan.

II. Legal and factual sufficiency

Kirk next argues that the Trust's evidence was legally and factually insufficient to support the trial court's judgment that she breached the contract between her and the Trust. We presume that the trial court made all fact findings that have support in the record and that are necessary to uphold the ruling. Moki-Mac River Expeditions v. Drugg, 221 S.W.2d 569, 574 (Tex. 2007). Evidence is legally insufficient to support a judgment if the record lacks any evidence supporting a vital fact, the law prohibits a factfinder from giving weight to the only evidence offered to prove a vital fact, no more than mere scintilla of evidence supports a vital fact, or the evidence conclusively establishes the opposite of a vital fact. JBS Carriers, Inc. v. Washington, 564 S.W.3d 830 (Tex. 2018). Evidence is factually insufficient if the evidence supporting the finding is so weak as to be clearly wrong and manifestly unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986). Under both sufficiency standards, we are mindful that the factfinder is the sole judge of credibility of the evidence and that we may not substitute our judgment for the factfinder's. City of Keller v. Wilson, 168 S.W.3d 802, 819 (Tex. 2005); Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003).

A plaintiff alleging breach of contract must prove that a contract existed, that the contract was performed, that the defendant breached the terms of the contract, and that the defendant's breach caused the plaintiff damages. Winchek v. Am. Express Travel Related Servs. Co., 232 S.W.3d 197, 202 (Tex. App.-Houston [1st Dist.] 2007, no pet.).

Kirk first contends that the Trust failed to prove that a contract existed. To establish the existence of a valid contract, the plaintiff must prove that there was an offer, acceptance of that offer, a meeting of the minds, each party's consent to the terms, and execution of the contract with the intent that it be mutually binding. Id.Specifically, Kirk maintains that the Trust failed to present sufficient evidence establishing her acceptance of an offer. However, Rule of Civil Procedure 93(7) states that a party denying that she executed a written instrument must file a verified denial to that effect, otherwise the "instrument shall be received in evidence as fully proved." Kirk did not file a verified denial that denied her acceptance of the loan at issue, and therefore her acceptance argument is waived. See, e.g., Brown v. Mesa Distribs., Inc., 414 S.W.3d 279, 285-86 (Tex. App.-Houston [1st Dist.] 2013, no pet.) (holding that appellant waived issue on appeal because he failed to comply with Rule 93 by filing a verified denial).

Kirk's failure to file a verified denial does not, however, result in automatic enforcement of the contract; the Trust was still required to prove the terms of that contract. See, e.g., Preston State Bank v. Jordan, 692 S.W.2d 740, 744 (Tex. App.-Fort Worth 1985, no pet.) ("The fact that appellee failed to deny under oath under [Rule] 93(7) that he had executed the contract, does not excuse appellant from having to prove the terms of the contract."). And Kirk contends that the Trust presented insufficient evidence to support the amount of damages awarded because there is no evidence of the Trust's calculation of interest on the loan nor is there evidence that the Trust provided Kirk notice of its intent to accelerate the debt or of its actual acceleration of the debt.

The material terms of a contract, such as the interest rate on a loan, must have been agreed upon before a court can enforce a contract. Williams v. Unifund CCR Partners Assignee of Citibank, 264 S.W.3d 231, 235-36 (Tex. App.-Houston [1st Dist.] 2009, no pet.). In Williams, this court concluded that the plaintiff failed to provide sufficient evidence establishing the specific terms of the contract at issue. Id. at 236. The plaintiff did not produce any document "that established the agreed terms, including the applicable interest rate or the method for determining the applicability and amount of finance charges." Id. Further, the statements offered by the plaintiff showed that the interest rate significantly varied over time, ranging from 5% to 22.4%; yet, the plaintiff presented no evidence explaining how the interest rate changed or why it changed at all. Id.

Here, in contrast, the Trust offered into evidence the Credit Agreement that specifically lays out how interest on Kirk's loan was to be calculated and provides for capitalization of interest during deferment. Further, the Note Disclosure Statement the Trust offered into evidence states that the loan's annual percentage rate is 6.661%. The statement then provides,

VARIBALE RATE: The Annual Percentage Rate, which is based on an index plus a margin, may increase during the term of the loan if the index rate increases. The index is . . . LIBOR Index Adjusted Quarterly — The average of the one-month London Interbank Offered Rates published in the "Money Rates" section of The Wall Street Journal on the first business day of each of the three calendar months immediately preceding the first day of each calendar quarter.

The statement then provides a more thorough explanation of how the interest rate affects the principal balance and even gives an example. Despite this description and the Trust submitting a document listing the loan's financial activity and indicating the amount of interest accrued each month on Kirk's loan, Kirk contends that the evidence is insufficient because the Trust did not provide evidence of what the LIBOR rate was for each month. In Foster v. National Collegiate Student Loan Trust 2007-4, No. 01-17-00253-CV, 2018 WL 1095760 at *11 (Tex. App.-Houston [1st Dist.] 2018, no pet.), we rejected an argument identical to Kirk's. We noted that that the appellant "provide[d] no authority for her assertion that the Trust was required to support its claim with calculations supporting each month's interest computation over the life of the loan." Id. at *11. The same is true here. Accordingly, we overrule Kirk's argument that the Trust failed to provide legally and factually sufficient evidence indicating how her loan was calculated.'

Lastly, Kirk contends that because the Trust did not produce any documents establishing that it notified Kirk that it was accelerating her loan following her failure to maintain the monthly payments, the Trust was entitled to recover past-due payments only and not the full amount. Again, Kirk waived this issue by not filing a verified denial that raised it. See TEX. R. CIV. P. 93(12) (stating that party's failure to file verified denial "[t]hat notice and proof of loss or claim for damage has not been given as alleged" results in "notice and proof . . . be[ing] presumed"); see also Brown, 414 S.W.3d at 285-86. We therefore reject Kirk's notice-of-acceleration argument.

III. Judgment

In her last argument, Kirk contends that the judgment was erroneous because it was not supported by proper pleadings. She cites an unpublished decision by an Ohio court of appeals that reversed a trial court order denying a motion for relief from a default judgment in part because the Ohio court concluded that the plaintiff failed to state a claim upon which relief could be granted. Kirk does not draw an analogy to the Ohio case or otherwise explain how it applies here. This is not a default-judgment case, and this is a Texas court. Kirk's argument that the judgment is not supported by proper pleadings is therefore inadequately briefed. See TEX. R. APP. P. 38.1(i). Accordingly, we overrule Kirk's last issue.

Conclusion

We affirm the judgment of the trial court.

[1] The trust also sued Merle Kirk, but the record reveals that Merle did not appear in the trial court and that there was no appeal filed on his behalf. Accordingly, any issue pertaining to Merle is not before this court.

[2] Kirk also maintains that the Trust's business-record affidavit was not actually admitted into evidence. As the Dallas Court of Appeals has noted, "evidence treated by the trial court and the parties as if it had been admitted is, for all practical purposes, admitted." See Travelers Indem. Co. v. Starkey, 157 S.W.3d 899, 904 (Tex. App.-Dallas 2005) (collecting cases). Kirk does not dispute that she, the Trust, and the trial court all treated the affidavit as though it had been admitted at trial. We therefore reject Kirk's argument that the business-record affidavit and its attachments were not admitted into evidence.