The Calloway conundrum: exploring the business records exception and Florida's evidence code.

• Author: Farach, Manuel

Organizations are often forced to litigate their disputes through business records since the individuals who possess personal knowledge of disputed facts are often numerous and dispersed throughout the organization. Getting business records into evidence at trial now appears to be an easier, less rigid process as the result of recent interpretations of the business records exception to the hearsay rule. Much of the discussion surrounding these recent changes centers on the Fourth District Court of Appeal's decision in Bank of New York v. Calloway, 157 So. 3d 1064 (Fla. 4th DCA 2015), rev. denied, 2015 WL 4886204 (Fla. 2015). Some argue that Calloway expands the business records exception and also allows corporate records obtained from other companies into evidence in a no-holds-barred fashion. These statements are not correct; Calloway is not an expansion of the law but instead a detailed explanation of the decade-old decision of WAMCO XXVIII, Ltd. v. Integrated Electronic Environments, Inc., 903 So. 2d 230 (Fla. 2d DCA 2005). As seen in this article, Calloway is not carte blanche permission to allow any and all business records into evidence without application of evidentiary protections.

I call these two cases and their progeny the WAMCO/Calloway doctrine because they are often cited together. Although the WAMCO/ Calloway doctrine arose in the mortgage foreclosure context, lawyers seeking to introduce evidence under the business records exception should be familiar with the doctrine as it applies across the board to all litigation.

The Doctrine

The business records exception to the hearsay rule is found at F.S. [section]90.803(6) and is straightforward; analysis focuses on subsection 6(a):

Hearsay exceptions; availability of declarant immaterial.--The provision of s. 90.802 to the contrary notwithstanding, the following are not inadmissible as evidence, even though the declarant is available as a witness: ...

(6) RECORDS OF REGULARLY CONDUCTED BUSINESS ACTIVITY.--

(a) A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinion, or diagnosis, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity and if it was the regular practice of that business activity to make such memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, or as shown by a certification or declaration that complies with paragraph (c) and [[section]]90.902(11), unless the sources of information or other circumstances show lack of trustworthiness. The term "business" as used in this paragraph includes a business, institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit.

The starting point for analysis of the doctrine is WAMCO, a Second District Court of Appeal opinion issued in 2005. Although the Second District did not go into great detail in its opinion, it clearly ruled a party seeking to introduce another business' records did not have to bring a witness from the prior company, i.e., the company that created the prior business records, to testify in order to lay the foundation necessary to have the prior records admitted. WAMCO signaled a departure from the customary practice of requiring a records custodian from the prior company to satisfy the business records requirements of the hearsay rule. The touchstone, as the WAMCO court pointed out, was whether "the sources of information or other circumstances show lack of trustworthiness." (1) Of note is the court's discussion that after the trial court properly admitted the records into evidence, the evidence was still subject to cross-examination and admission of contrary evidence. (2) The records in controversy in WAMCO consisted of financial records of a prior company that had received payment on guarantees, the accuracy of which the successor company and proponent of the evidence had independently verified.

The Calloway court took this principle, examined its legal foundation, and explained it in detail. First, the court explained that business records may be admitted three ways: by stipulation, by having a representative of the company that created the records testify as to their admissibility, or through a certification or declaration pursuant to F.S. [section]90.803. The Calloway court then discussed the Glarum v. LaSalle Bank Nat. Ass'n, 83 So. 3d 780, 782-83 (Fla. 4th DCA 2011), decision in detail since the trial court had excluded the business records evidence on the holdings of Glarum. The Calloway court pointed out the differences between the records custodian in its case and the records custodian in Glarum who "attested that he did not know whether his business's records were made in the regular course of business, whether the business made the data entries into its computer system, or who made the entries when the borrowers made payments." (3)

Moreover, the witness in Glarum "had no knowledge of how his own company's data was produced and he was not competent to authenticate that data," and his reliance on a prior servicer's records was problematic as "he was even less familiar" with how the prior servicer produced and maintained its business records. (4) To contrast this lack of knowledge with a proper foundation, the Glarum court pointed to the witness in Weisenberg v. Deutsche Bank Nat'l Trust Co., 89 So. 3d 1111 (Fla. 4th DCA 2012). The witness in Weisenberg knew how the data was produced, was familiar with how the records were maintained, and was familiar with how data was uploaded into the company's system. (5) This portion of the Calloway opinion might lead a reader to surmise the only way to authenticate business records is to bring the witness who created the business records to testify. The Calloway court, however, referred back to Glarum and pointed out this is not the case:

The law does not require an affiant who relies on computerized bank records to be the records custodian who entered or created the data, nor must the affiant identify who entered the data into the computer. The law is also clear...