Court Opinion

ID: 4402141
Source: CourtListenerOpinion
Date Created: 2019-05-30 21:00:13.553606+00
Date Added: 2024-06-11T12:20:22.461897
License: Public Domain

United States Court of Appeals
                      For the First Circuit

No. 18-1719
                       U.S. BANK TRUST, N.A.,
          as Trustee for LSF9 Master Participation Trust,

                       Plaintiff, Appellee,

                                v.

                          JULIA L. JONES,

                       Defendant, Appellant.

           APPEAL FROM THE UNITED STATES DISTRICT COURT
                     FOR THE DISTRICT OF MAINE

         [Hon. John A. Woodcock, Jr., U.S. District Judge]

                              Before

                       Lynch, Circuit Judge,
                    Souter, Associate Justice,
                     and Stahl, Circuit Judge.

     Thomas A. Cox for appellant.
     Matthew A. Fitzgerald, with whom Ashley P. Peterson was on
brief, for appellee.
     Michael A.F. Johnson and Dirk C. Phillips on brief for Federal
Housing Finance Agency, amicus curiae.
     Stuart Rossman, Geoff Walsh, J.L. Pottenger, Jr., and Jeffrey
Gentes on brief for National Consumer Law Center and Jerome N.
Frank Legal Services Organization, amici curiae.
     Frank D’Alessandro and Jonathan E. Selkowitz on brief for
Pine Tree Legal Assistance, Inc., amicus curiae.

     
       Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
May 30, 2019

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             SOUTER, Associate Justice.      In this diversity case,

appellee U.S. Bank Trust, N.A., sued appellant Julia Jones for

breach of contract and breach of promissory note, among other

claims, after Jones stopped making payments due to U.S. Bank on

her mortgage loan.     At trial, U.S. Bank sought to establish the

total amount owed on the loan account by introducing a computer

printout, marked as Exhibit 8, that contained an account summary

and a list of transactions related to the loan. The District Court

admitted Exhibit 8 into evidence and relied on it in granting

judgment to U.S. Bank in the amount of $226,458.28.       We affirm.

                                   I

             Jones argues on appeal that admitting Exhibit 8 violated

the Federal Rules of Evidence.         "We review the district court's

interpretation of the Federal Rules of Evidence de novo, but its

application of those Rules for abuse of discretion."        Bradley v.

Sugarbaker, 891 F.3d 29, 33 (1st Cir. 2018).        "[T]his court will

not substitute its judgment" in a discretionary evidentiary ruling

"for that of the district court unless left with a definite and

firm conviction that the court below committed a clear error of

judgment."     Clukey v. Town of Camden, 894 F.3d 25, 34 (1st Cir.

2018) (quoting Paolino v. JF Realty, LLC, 830 F.3d 8, 13 (1st Cir.

2016) (internal quotation marks omitted)).

                                 - 3 -
                                     A

            Rule 803(6), known as the business records exception,

authorizes the admission of certain documents under an exception

to   the   usual   prohibition    against     the   admission   of    hearsay

statements,   that   is,   statements    by   an    out-of-court     declarant

offered into evidence to prove the truth of the matter asserted.

Fed. R. Evid. 801(c), 802.       Rule 803(6) provides that "[a] record

of an act, event, condition, opinion, or diagnosis" is "not

excluded by the rule against 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 activity of a business,
            organization, occupation, or calling, whether
            or not for profit;
               (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 a certification that
            complies with Rule 902(11) or (12) or with a
            statute permitting certification; and
               (E) the opponent does not show that the
            source of information or the method or
            circumstances of preparation indicate a lack
            of trustworthiness."

            Jones says that Exhibit 8 does not meet the requirements

of this rule because of the nature of the information the Exhibit

contains or is said to rest upon.             Exhibit 8 is a summary of

Jones's account as a mortgage borrower, and, in particular, of the

transactions the mortgage history comprises, that is maintained by

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the current independent servicer of Jones's account, Caliber Home

Loans, Inc.     Critically, however, this record is a product of

records of some transactions that took place before Caliber became

servicer of Jones's account.      The prior entries were created by

two other loan servicers, Seterus and Bank of America, and were

integrated into Caliber's database when Caliber succeeded them as

servicer.    According to Jones, these integrated business records

from the prior servicers preclude admission of Exhibit 8 under the

quoted rule unless supported by testimony of a custodian or

qualified witness with personal knowledge of the record keeping of

the respective prior servicers.

            But there is no categorical rule barring the admission

of integrated business records under Rule 803(6) based only on the

testimony    from   a   representative    of   the   successor    business.

"[W]hether a third party's records . . . can be integrated into

the records of the offering entity . . . for purposes of admission

under the business records exception is not an issue upon which

this circuit has reached a uniform conclusion" covering every

instance.     United States v. Savarese, 686 F.3d 1, 12 (1st Cir.

2012).   Rather, the admissibility of the evidence turns on the

facts of each case.

            Thus, we have affirmed the admission of business records

containing third-party entries without third-party testimony where

the   entries   were    "intimately   integrated"    into   the   business

                                  - 5 -
records, FTC v. Direct Marketing Concepts, Inc., 624 F.3d 1, 16

n.15 (1st Cir. 2010), or where the party that produced the business

records "relied on the [third-party] document and documents such

as those[] in his business," United States v. Doe, 960 F.2d 221,

223   (1st    Cir.    1992)     (internal     quotation     marks      omitted).

Conversely,    in    the   absence   of   third-party     evidence,     we   have

rejected the admission of business records containing or relying

on the accuracy of third-party information integrated into the

later record where, for example, the later business did not "use[]

a procedure for verifying" such information, lacked a "self-

interest in assuring the accuracy of the outside information,"

United States v. Vigneau, 187 F.3d 70, 77 & n.6 (1st Cir. 1999)

(emphasis omitted), or sought admission of third-party statements

made "by a stranger to it," Bradley, 891 F.3d at 35 (quoting

Vigneau, 187 F.3d at 75 (alterations omitted)).             The key question

is whether the records in question are "reliable enough to be

admissible."    Direct Marketing Concepts, 624 F.3d at 16 n.15.

             In answering that question, we are mindful that the

"reliability of business records is said variously to be supplied

by systematic checking, by regularity and continuity which produce

habits of precision, by actual experience of business in relying

upon them, or by a duty to make an accurate record as part of a

continuing    job    or    occupation."      Fed.   R.   Evid.   803   advisory

committee's note to 1972 proposed rules.                 The rule seeks "to

                                     - 6 -
capture these factors and to extend their impact" by applying them

to a "regularly conducted activity."         Id.

            Based on the facts presented here, we cannot say that

the District Court abused its discretion in finding Exhibit 8 with

its integrated elements reliable enough to admit under Rule 803(6).

Facts in the record, including testimony provided by an employee

of Caliber, Letycia Lopez, establish that the servicer relied on

the accuracy of the mortgage history and took measures to verify

the same.      As the District Court explained, Lopez testified that

Caliber incorporated the previous servicer's records into its own

database and "plac[ed] its own financial interest at stake by

relying   on    those   records,"   and     that   "Caliber's   acquisition

department took steps to review the previous servicer's records in

a way that assured itself of the accuracy of the records."           330 F.

Supp. 3d 530, 543 (D. Me. 2018); see Trial Tr. 28:3-6, 60:17-19.

The District Court also soundly noted that Jones did not "dispute

the transaction history by claiming overbilling or unrecorded

payments," as she surely could have done if the records were

inaccurate.     330 F. Supp. 3d at 544; see Fed. R. Evid. 803(6)(E).

Nor has Jones contested the District Court's conclusion that the

data revealed "no discrepancies" giving rise to doubt that the

business records were trustworthy.          330 F. Supp. 3d at 541; see

id. at 544.

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           Jones     seeks   to   eliminate   the   significance   of   the

testimony from Lopez by arguing that she was not a "qualified

witness" within the meaning of subsection (D) of Rule 803(6).

According to Jones, Lopez was not personally involved in the

creation of Caliber's records and lacked knowledge about how prior

loan servicers maintained their records. But a "qualified witness"

"need not be the person who actually prepared the record." Wallace

Motor Sales, Inc. v. Am. Motors Sales Corp., 780 F.2d 1049, 1061

(1st Cir. 1985).     Rather, a "qualified witness" is "simply one who

can explain and be cross-examined concerning the manner in which

the records are made and kept." Id. Here, Lopez provided detailed

testimony regarding how Caliber maintained its records, Trial Tr.

8-13, and how it verified the accuracy of the records it got from

other   servicers,    id.    at   26:22-28:16.      Lopez   therefore   was

"qualified" within the meaning of Rule 803(6).

           Jones not only fails to eliminate Lopez's competence as

a witness, but she also fails to discredit the substance of Lopez's

testimony that the incorporated records were reliable owing to the

very fact that Caliber put its financial interest at stake by

relying on them.     Jones claims that any reliance is of little, if

any, evidentiary worth, simply because Caliber is a contractor

that services the mortgage account, not the holder of the note.

According to Jones, if the incorporated information turns out to

be unreliable so as to defeat any action to collect the balance

                                    - 8 -
Caliber says is due, the loser will be U.S. Bank, not Caliber.

But this is simply unrealistic. If Caliber is shown to be claiming

unsupportable facts about an account's history, to the financial

detriment of U.S. Bank as assigned payee of a mortgagor's note,

Caliber's business with U.S. Bank will suffer accordingly, as will

its appeal in the eyes of other note holders who contract or might

contract with Caliber for its services.         Since Jones gives us no

sufficient reason to refuse to apply the evidence of reliance here,

we treat it as we did in Doe, 960 F.2d at 223, as evidence of

incorporation's reliability.

             Nor are we persuaded by Jones's fallback argument that

it   was   error   to   interpret   Federal   Rule   803(6)   in   a   manner

inconsistent with the corresponding state rule of evidence in

Maine, where this diversity suit was brought.          The District Court

was doing nothing other than following the ordinary practice of

federal courts to apply the Federal Rules of Evidence in diversity

cases.     See Downey v. Bob's Discount Furniture Holdings, Inc., 633

F.3d 1, 8 (1st Cir. 2011).

             Of course, we leave open the possibility that there could

be instances in which the State rule counts as a "substantive"

rule that must be applied under the doctrine of Erie Railroad Co.

v. Tompkins, 304 U.S. 64 (1938).       See McInnis v. A.M.F., Inc., 765

F.2d 240, 245 (1st Cir. 1985).         But this is no such case, given

that Federal Rule 803(6) "endeavor[s] to reach almost identical

                                    - 9 -
results" as its Maine counterpart.   Id.   While Federal Rule 803(6)

and Maine Rule 803(6) were not entire facsimiles of one another at

the time the District Court decided this case, an authoritative

treatise on Maine evidence had noted that the State and Federal

versions of the rule were "substantively the same," Richard H.

Field & Peter L. Murray, Maine Evidence 417 (4th ed. 1997), and

the State has recently revised its Rule 803(6) so that its text is

now identical to the Federal Rule, Me. R. Evid. 803(6) advisory

committee's note to August 2018 amendment (amending the Maine Rule

"to follow a corresponding 2014 amendment" to the Federal Rule).

Maine cases also take the same basic approach as our cases do:

Maine permits the admission of integrated business records if the

evidence "demonstrate[s] the reliability and trustworthiness of

the information."   Beneficial Me. Inc. v. Carter, 25 A.3d 96, 102

(Me. 2011).1   Because there is no material conflict between the

Maine Rule and the Federal Rule, there is no ground for requiring

the Maine Rule to be applied in this case.

     1 Jones alleges that two recent decisions of the Supreme
Judicial Court of Maine reject an integrated business records
exception. See KeyBank Nat'l Ass'n v. Estate of Quint, 176 A.3d
717, 721-722 (Me. 2017); Deutsche Bank Nat'l Tr. Co. v. Eddins,
182 A.3d 1241, 1244-45 (Me. 2018).     But both decisions rely on
Carter and explicitly acknowledge that integrated business records
may be admitted into evidence. KeyBank, 176 A.3d at 721; Deutsche
Bank, 182 A.3d at 1244. Even if these Maine cases are not identical
to our cases in all of their particulars, they follow the same
case-by-case reliability approach to the admissibility of
integrated business records. See Carter, 25 A.3d at 101.

                              - 10 -
          In sum, we reject Jones's challenge under Rule 803(6) to

the District Court's admission of Exhibit 8.                  We do so, however,

while acknowledging that the business records of loan servicers

may not always carry the requisite indicia of reliability.                      See,

e.g., Brief for National Consumer Law Center and Jerome N. Frank

Legal Services Organization as Amici Curiae 12-18.                    It therefore

bears repeating: the admission of integrated business records in

this context must turn, as it does here, on the particular facts

of each case.

                                         B

          Jones also claims that the District Court's admission of

Exhibit 8 violated Federal Rules of Evidence 901, 1001, and 1002.

Rule 901(a) provides that "the proponent must produce evidence

sufficient to support a finding that the item is what the proponent

claims it is."         The related Rule 1002 requires "[a]n original

writing, recording, or photograph . . . in order to prove its

content   unless       these   rules    or      a   federal    statute     provides

otherwise," while Rule 1001(d) includes the provision that for

"electronically    stored       information,"        an   "original"      is    "any

printout . . . if it accurately reflects the information."

          The District Court did not abuse its discretion in

concluding that Exhibit 8 satisfied these rules.                    Lopez testified

that she "reviewed personally the records in this particular case"

and   "found    them     to    be   accurate,"      Trial     Tr.    28:9-13,    and

                                       - 11 -
specifically attested that Exhibit 8 was "an account summary and

payment history" printed from Caliber's records.             Trial Tr. 25:19-

26:15.     That testimony is sufficient to "support a finding" that

Exhibit 8 "is what the proponent claims it is," as Rule 901(a)

requires, and it also suffices to support a finding that Exhibit

8 is a "printout" that "accurately reflects" the data in Caliber's

database and is thus an "original writing," as Rules 1001(d) and

1002 require.

               Jones   argues   that   Lopez's   testimony    was   inadequate

because it did not supply "[e]vidence describing a process or

system and showing that it produces an accurate result," as is

contemplated by Rule 901(b)(9).            But Rule 901(b)(9) offers just

one illustrative "example[] . . . of evidence that satisfies the

requirement" of Rule 901(a), and a proponent may satisfy Rule

901(a) by other means.          Fed. R. Evid. 901(b).       Thus, even in the

absence of expert testimony regarding the accuracy of the process,

we have held that the testimony of "someone knowledgeable, trained,

and experienced in analyzing" the program's results may show that

"the item is what the proponent claims it is," as Rule 901(a)

requires.       United States v. Espinal-Almeida, 699 F.3d 588, 612-

613 (1st Cir. 2012).         Here, Lopez's testimony amply demonstrates

that     she    was    "knowledgeable,     trained,   and    experienced"   in

analyzing Caliber's records.           Id.; see Trial Tr. 32:1-33:11.       And

her testimony indicated that Exhibit 8 is an accurate printout

                                       - 12 -
from Caliber's database.     Trial Tr. 25:19-26:15.      There was no

abuse of the District Court's discretion in admitting Exhibit 8.

                                 II

            There is one final matter of housekeeping.   Jones claims

that the District Court erred by awarding U.S. Bank approximately

$23,000 in charges for escrow, title fees, and inspections that

were not recoverable under the terms of her promissory note.

Because she did not raise that claim in the District Court, our

review is for plain error.    Blockel v. J.C. Penney Co., 337 F.3d

17, 25 (1st Cir. 2003).    Jones's note permits recovery for "costs

and expenses in enforcing this Note to the extent not prohibited

by applicable law."    Note 6(E).     Amounts owed for escrow, title

fees, and inspections qualify as "costs and expenses" incurred in

"enforcing this Note," for they stem from U.S. Bank's efforts to

maintain the property securing the note, and they likely would not

have been incurred absent Jones's breach. Jones has not identified

any contrary evidence demonstrating that the award of these charges

was error, plain or otherwise.

Affirmed.

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