The Deposition Not Taken: Eighth Circuit Holds Third Party Document to be Business Records of Another Entity Admissible Under FRE 803(6)

In Residential Funding Co., LLC v. Terrace Mortgage Co., (Docket No. 12-2569, August 7, 2013) the Eighth Circuit upheld a grant of summary judgment, including damages evidenced by records created by a third party and supported by the third party’s affidavit. Ordinarily, an affidavit of a third party, if authenticated under FRE 902(11) (See Klock, New Jersey Practice, V2D, 555 (West 2009) is admissible if an appropriate foundation is laid. See Klock, New Jersey Practice, V2E, 342-43 (West 2012). Proper authentication requires notice of intent to use the affidavit. The affidavit in question apparently was not authenticated in that manner.

The case grew out of mortgage swaps. The defendant had sold mortgages to the plaintiff pursuant to an agreement. They got along fine until the 2008 fiscal crisis when the plaintiff tendered some mortgages back to the defendant, who refused to buy them back. Summary judgment was awarded to the plaintiff because the language of the governing agreement was clear. The damages that the court awarded were supported by documents created by a third party and substantiated by the affidavit of a third party. Apparently, no deposition of the affiant was taken nor was relief sought under FRCP 56(d) to hold the summary judgment in abeyance pending the resolution of the motion. Defendant argued that the affidavit had inconsistencies which resulted in a supplemental affidavit that indicated the damages document in question was made "at or near the time of the occurrence of the underlying matter." However since there was no countervailing evidence the court dismissed the argument by saying the statement in the affidavit meant that the records were made shortly after the plaintiff’s repurchase demand of the 13 mortgages in question. Slip. Op. 15. As a result, the court held that the damage calculations in the documents were admissible under FRE 803(6) as a third party business record. The court noted, "We have held a record created by a third party and used as part of another entity’s records meets the business records exception, so long as the entity relied on the accuracy of that record and the remaining requirements of Rule 803(6) are met." The court rejected the defendant’s attempt to discredit the affidavit on summary judgment rather than to take a deposition to either attack the methodology or timing or to lay a foundation to impeach the testimony. If a document is authenticated under FRE 902, it is admissible if it contains the elements under FRE 803(6). The Court need not go beyond the document if there is no factual basis to do so.

The lesson for practitioners is to seek the deposition of the affiant before summary judgment.

John H. Klock is a Director in the Gibbons Real Property & Environmental Department.

Print