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U.S. First Circuit Court of Appeals Allows Integrated Business Record Exception to Hearsay

Posted By USFN, Monday, June 17, 2019

by Robert Wichowski, Esq.
Bendett & McHugh, PC
USFN Member (CT, MA, ME, NH, RI, VT)

On May 30, 2019, the First Circuit United States Court of Appeals handed down its decision affirming the judgment for Plaintiff in an appeal taken from the United States District Court for the State of Maine.  In an opinion written by former United States Supreme Court Justice David Souter, the First Circuit held that the District Court did not err in allowing into evidence a prior mortgage loan servicer’s business records without live witness testimony from the prior servicers where Maine State Courts require live witness testimony or testimony from a qualified witness with personal knowledge of the record keeping practices of the prior servicers for the admission of such records.

In the District Court case, US Bank (“plaintiff”) sued Jones (“defendant”) for breach of contract and breach of the underlying promissory note for her failure to make payments on her mortgage loan.  During plaintiff’s case, it submitted computer printouts which contained an account summary of the loan.  The account summary contained entries from a time before the current servicer serviced the loan.  The District Court admitted the summary as proof of the amount due on the loan with only witness testimony from a representative of the current servicer.

On appeal, defendant claimed that the records relied upon by the District Court should not have been admitted into evidence or relied upon by the court because the records were not supported by the testimony of a custodian or qualified witness with personal knowledge of the record keeping of the prior servicers.  Defendant argued that the witness for the servicer was not a qualified witness because she lacked knowledge about how prior servicers kept their records. Defendant also argued that to allow this exhibit into evidence would be inconsistent with the corresponding state court rule of evidence.    

Maine state courts, both on the trial level and upon appellate review, have been disallowing the entry of business records into evidence where there was no live witness testimony containing personal knowledge of the record keeping practices of prior loan servicers. (see KeyBank National Association v. Estate of Eula W. Quint, 2017 ME 237 (Dec. 21, 2017)). The Court of Appeals rejected both arguments holding that the Federal Rules of Evidence did not preclude the admission of such records and that since the Maine Rules of Evidence were functionally identical to the corresponding federal rules, they were procedural and not substantive and thus, the District Court did not have to defer to the state court’s interpretation of the rules. 

As such, and as the District Court found the witness to be knowledgeable, trained and experienced in analyzing the servicer’s records, the District Court did not abuse its discretion in allowing these records because the evidence presented demonstrated that the exhibit is what it claims to be and accurately reflects the data in the servicer’s database. The court was very clear that decisions of this type were to be made on a case by case basis and should involve a determination of the trustworthiness of the underlying information. 

While this decision is not blanket authority to proceed with prior servicer business records in the federal, and certainly not in the State Court in Maine, it provides a basis for admission of such records in Federal Court actions and brings some rare good news from a case that began in Maine.


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