US Bank Trust, N.A. v. Jones , 925 F.3d 534 ( 2019 )

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)).
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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
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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
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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
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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
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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.
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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
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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
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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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