POSTED: Monday, February 15th, 2010 at 1:00 am

BY: dmc-admin

Nationwide, there is a consensus among the federal courts of appeal that third party business records are admissible evidence under the hearsay exception in FRE 803(6).

But on Feb. 4 the Wisconsin Court of Appeals held to the contrary – without personal knowledge of another company’s operations, a party’s employee cannot testify that the records were kept in the ordinary course of business.

As a result, a purchaser of credit card debt must establish the reliability of the records through an employee of the seller in order to get a judgment for the debt.

Palisades Collection LLC filed a complaint against Jackie Kalal, alleging that she had opened a credit card account with Chase Manhattan Bank and failed to make payments on an outstanding balance of more than $27,000.

Palisades had bought the account from Chase, and moved for summary judgment. With its motion, Palisades included the affidavit of an employee, Marie Oliphant, who averred that attached credit card statements were true and correct copies mailed to Kalal.

Oliphant further averred that the statements were prepared and maintained by Chase in the ordinary course of business.

The Kalals opposed the motion, but did not submit any affidavits or other factual materials. Instead, they contended that the affidavit was inadmissible hearsay. Dane County Circuit Court Judge Maryann Sumi concluded that the statements fell within the business records hearsay exception in sec. 908.03(6), and granted summary judgment in favor of Palisades.

The Kalals appealed, and the Court of Appeals reversed in an opinion by Judge Margaret J. Vergeront.

The court relied on its opinion in Berg-Zimmer & Associates, Inc., v. Central Mfg. Corp., 148 Wis.2d 341, 434 N.W.2d 834 (Ct.App.1988). In Berg-Zimmer, the court held that a manager for a company that paid a supplier was not a qualified witness with respect to invoices and supporting documentation prepared by the supplier.

Because the witness lacked personal knowledge about the documents, the court held that he was not qualified to testify that they were generated in the course of a regularly conducted business activity.

Applying Berg-Zimmer to the case at bar, Judge Vergeront wrote, “In order to be qualified to testify…, Oliphant must have personal knowledge of how the account statements were prepared and that they were prepared in the ordinary course of Chase’s business.”

Analysis

In its analysis, the Court of Appeals addresses only one case from another jurisdiction interpreting the federal equivalent of sec. 908.03(6), In re Denslow, 104 B.R. 761 (E.D.Va. 1989).

However, there is a plethora of federal cases holding that records created by a third party and integrated into another entity’s records is admissible as the record of the custodian entity, provided the custodian relied on the accuracy of the record. (U.S. v. Adefehinti, 510 F.3d 319 (D.C.Cir.2007); Air Land Forwarders, Inc. v. U.S., 12 F.3d 1338 (Fed.Cir.1999); U.S. v. Childs, 5 F.3d 1328 (9th Cir. 1993); U.S. v. Duncan, 919 F.2d 981 (5th Cir. 1990); Resolution Trust Corp. v. Eason, 17 F.3d 1126 (8th Cir. 1994).)

The Eighth Circuit reaffirmed this principle just last month in Brawner v. Allstate Indemnity Co., No. 08-3544 (8th Cir., Jan. 8, 2010).

In addition, on facts materially identical to those in the case at bar, Massachusetts highest court held that the records were admissible business records. (Beal Bank, SSB, v. Eurich, 831 N.E.2d 909 (Mass. 2005).)

Accordingly, if an attorney in a future case needs the Wisconsin Supreme Court to overrule the opinion in this case in order to prevail, there is plenty of persuasive authority from other jurisdictions to support the request.

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