Opinion ID: 1262900
Heading Depth: 2
Heading Rank: 2

Heading: Maintenance Expenses

Text: MFM also sought to recover what it characterized as Lorenz's share of the expenses it paid for the maintenance of Maronjo. MFM claimed maintenance expenses of $2,051.38 for the period of time prior to the contract for sale, and of $1,493.37 for the time period from the contract of sale until Maronjo was sent to California for auction. These figures constituted one-third of the net costs of Maronjo's maintenance during the two time periods. In support of its claims, MFM offered the testimony of Sharyn Nicholson. Nicholson testified that since December 1987 she had been engaged by MFM as an independent contractor, earning between $1,000 and $3,000 per month. She testified that she handled MFM's books and billings and that usually everything ultimately goes through me before it goes to the accountant. Beginning in December 1988, Nicholson handled all the billings that related to Maronjo, and prepared statements for Lorenz in accordance with the partnership agreement formula. MFM attempted to introduce two exhibits through Nicholson. Exhibit 12 was a collection of documents and work sheets, including bills MFM received for Maronjo's maintenance, statements sent to Lorenz for her portion of the maintenance costs, and copies of checks MFM received for Maronjo's stud fees. Exhibit 10 was an exhibit Nicholson prepared based on the exhibit 12 documents that summarized the expenses and the credits applied to Lorenz's account for Maronjo's care from December 2, 1988 until the date of trial. Lorenz objected to the introduction of exhibits 10 and 12, arguing that there was no proper foundation for their admission. Although the trial court deferred ruling on the issue at that time, the record does not reflect that the trial court ever ruled on the admission of these exhibits. Consequently, we are unable to determine whether the trial court took these exhibits into consideration in making its decision. For purposes of our review, we will first consider the admissibility of the exhibits, and then whether sufficiently clear evidence has been presented to support MFM's recovery of Lorenz's share of Maronjo's maintenance expenses. MFM argues that Nicholson was a proper witness to support the admission of these exhibits under the shop book exception to the hearsay rule. We agree. The shop book rule allows admission into evidence of the books and records of a business entity without requiring proof from the originators of the record. E.I. duPont de Nemours & Co. v. Universal Moulded Prod. Corp., 191 Va. 525, 567-68, 62 S.E.2d 233, 252 (1950). While this rule generally covers only items within the personal knowledge of the recorder, practical necessity requires the admission of written factual evidence based on considerations other than the personal knowledge of the recorder, provided there is a circumstantial guarantee of trustworthiness.  Automatic Sprinkler Corp. v. Coley & Petersen, Inc., 219 Va. 781, 792, 250 S.E.2d 765, 773 (1979). The trustworthiness or reliability of the records is guaranteed by the regularity of their preparation and the fact that the records are relied upon in the transaction of business by the person[s]... for [whom] they are kept. Id. at 793, 250 S.E.2d at 773. The evidence shows that the documents contained in exhibit 12 were regularly prepared and were relied upon in the transaction of the partnership business by both MFM and Lorenz. Lorenz received statements and remitted monies to MFM based on the documents contained in exhibit 12. That evidence provides the necessary guarantee of trustworthiness and reliability. We conclude that exhibit 12 consists of trustworthy documents and records kept within the regular course of business and, therefore, that it was admissible. Exhibit 10 is also admissible as a summary of these documents, which assists the fact finder and obviates the task of sifting through all of the bills and statements. duPont Co., 191 Va. at 567-68, 62 S.E.2d at 252-53. Lorenz's argument that Nicholson was not qualified to secure the admission of exhibits 10 and 12 into evidence because she had not been the recipient of the bills and could not testify as to the reasonableness or accuracy of the bills is based on Walters v. Littleton, 223 Va. 446, 290 S.E.2d 839 (1982), and McMunn v. Tatum, 237 Va. 558, 379 S.E.2d 908 (1989). These cases, however, are inapposite. Both were personal injury actions involving medical bills received by an individual person, rather than records kept in the course of business. Ordinarily, the inability of the recorder to testify directly as to the reasonableness of certain charges may affect the weight to be given to that evidence, but does not affect its admissibility. Considering the testimony of Nicholson and exhibits 10 and 12, we hold that MFM met its burden of providing sufficient evidence of the amounts it claims it is entitled to recover from Lorenz for Maronjo's maintenance. Lorenz next argues that proof of these amounts does not establish that she was liable for them. She maintains that she was not liable for the expenses because she did not authorize or approve them and that paragraph 8 of the partnership agreement imposes liability upon her for only those expenses which she specifically approved. To sustain Lorenz's position, we would have to ignore other parts of the agreement. Paragraph 5 of the partnership agreement contemplates reimbursement of the ordinary expenses of maintaining Maronjo on a monthly basis, divided by the partners on the basis of their ownership interests. The expenses contemplated included, inter alia, training costs, veterinary fees, farrier fees, entrance fees, and advertising costs. These are expenses of the character of those claimed by MFM. Paragraph 8, requiring expense approval, begins with the phrase [e]xcept as hereinabove specifically provided. The provisions of paragraph 5 regarding monthly reimbursement of ordinary expenses are within the paragraph 8 exception. This reading of the agreement is supported by the fact that Lorenz paid, without question or objection, and over a considerable period of time, the monthly billings she received from MFM for these expenses. The partnership agreement, therefore, establishes Lorenz's liability for the expenses claimed by MFM prior to the contract for sale between the parties. With regard to liability for expenses claimed subsequent to the contract of sale, MFM asserts that it had the legal right to consider all expenses those of Lorenz, incurred to preserve her property. Nevertheless, MFM did not seek full reimbursement, but based its claim on a proportional allocation of the expenses and credits in accordance with the partnership agreement. Assuming that MFM was entitled to recovery of the full amount of the maintenance expenses for Maronjo during this time period, its decision not to claim the full amount does not preclude it from claiming and recovering a lesser amount. Whether considered under the partnership agreement, the contract of sale, or the terms of the trial court's order involving the appointment of a receiver and sale of Maronjo, Lorenz's liability for the maintenance of Maronjo continued from the time the contract of sale was made until Maronjo was sold in California. Under no theory was Lorenz absolved from liability for these maintenance costs. Therefore, the trial court erred when it failed to award MFM a recovery for Lorenz's share of the expenses of Maronjo's maintenance.