503 P.3d 1233
Or.2022Background
- Arrowood (insurer) sued Fasching in subrogation after paying a claim on student loans that originated with Citibank and were later owned by Discover; Arrowood relied on documents received from Discover (bill of sale, loan transmittals, loan applications, disclosure forms, loan-history summaries, and transfer documents).
- Arrowood submitted those Discover documents with an affidavit from its custodian (McGough) stating the records were produced by or adopted from Discover and were relied on in Arrowood’s business; McGough did not attest to Citibank’s or Discover’s record‑making practices or how the loan‑history summaries were generated.
- The trial court admitted the Discover documents under OEC 803(6) (business‑records exception) based on Arrowood’s adoption/reliance, granted Arrowood summary judgment, and denied Fasching’s cross‑motion; the Court of Appeals affirmed.
- The Oregon Supreme Court granted review to resolve what foundation is required to admit third‑party business records under OEC 803(6).
- The Supreme Court held that a proponent must present evidence about the record‑making practices of the business that created the records (sufficient to show the statutory elements of OEC 803(6)); Arrowood’s McGough affidavit was insufficient and the trial court erred; case remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether third‑party records received by a proponent can be admitted under OEC 803(6) without evidence of the original maker’s record‑making practices | Adoption and reliance by the proponent suffices; trial court may exercise discretion based on indicia of trustworthiness | Proponent must present testimony showing the original business’s record‑making practices and the OEC 803(6) elements | Held: Proponent must present evidence about the business that created the record showing the specific OEC 803(6) elements; mere adoption/reliance is insufficient |
| Whether a custodian’s affidavit that records were "received, incorporated, and relied upon" establishes foundation under OEC 803(6) | Yes — such an affidavit establishes the records are business records of the proponent | No — such statements do not show when/how the records were made or that they were made by a person with knowledge as required by OEC 803(6) | Held: Custodian must provide foundation showing the record‑making practices sufficient to satisfy OEC 803(6); the McGough affidavit failed to do so |
| Whether layered or "integrated" business records can be admitted on a showing of comparable indicia of reliability instead of each layer satisfying an exception | Court of Appeals: comparable indicia or reliance may suffice (analogy to hearsay‑within‑hearsay) | Each layer must independently meet an exception’s requirements or be otherwise admissible | Held: OEC 805 requires each layer to satisfy a hearsay exception; comparable indicia alone do not substitute for showing OEC 803(6) elements for the original records |
| Effect of erroneous admission on summary‑judgment rulings | Admitted documents supported Arrowood’s summary judgment and defeat of Fasching’s motion | Without those documents admissible under OEC 803(6), Arrowood lacks admissible proof and summary judgment should be denied | Held: Trial court erred admitting the records; because alternative admissibility arguments were not ruled on, case remanded for the circuit court to determine admissibility and then reconsider summary judgment motions |
Key Cases Cited
- Allan v. Oceanside Lumber Co., 214 Or. 27 (Or. 1958) (document summarizing another record held inadmissible where mode and timing of preparation were not shown)
- Snyder v. Portland Traction Co., 182 Or. 344 (Or. 1947) (police report based on bystanders’ statements not admissible as business records)
- State v. Cunningham, 337 Or. 528 (Or. 2004) (legal issues about whether hearsay exception requirements are met are reviewed as questions of law)
- United States v. Davis, 571 F.2d 1354 (5th Cir. 1978) (reversed admission of third‑party forms where proponent failed to show original maker’s record‑keeping practices)
- NLRB v. First Termite Control Co., 646 F.2d 424 (9th Cir. 1981) (emphasized need for a witness familiar with how the producing company made and kept records)
- United States v. Rosenstein, 474 F.2d 705 (2d Cir. 1973) (witness need not have personally kept records but must be sufficiently familiar with the business practice)
- United States v. Carranco, 551 F.2d 1197 (10th Cir. 1977) (freight bill became carrier’s admissible record where carrier’s employee used and annotated it)
- U.S. Bank Trust v. Jones, 925 F.3d 534 (1st Cir. 2019) (federal courts admit integrated third‑party records in some circumstances but analyze reliability and integration)