The Ninth Circuit held an insurer's computer-generated summaries of payments were admissible as a business record in U-Haul International v. Lumbermens Mutual Cas. Co., No. 07-16187, 2009 U.S. App. LEXIS 17889 (9th Cir. Aug. 12, 2009).
U-Haul had a primary policy with Republic Western up to a total limit of $7,000,000 per occurrence in excess of $25,000 in self-insurance. An excess policy from Lumbermens became payable when the $25,000 self-insurance and $7,000,000 from the Republic Western policy were exhausted.
U-Haul settled three claims implicating these policies. Republic Western and Lumbermens defended and paid settlement costs, but agreed under a reservation of rights to later address issues as to each party's coverage obligations. A central issue was whether investigation, negotiation, and defense costs paid by Republic Western should be considered in determining whether its policies had been exhausted.
Republic Western sued Lumbermens. After granting summary judgment to Republic Western on several issues, the district court held a bench trial to decide the amount Republic Western had paid on each claim. This would determine when Lumbermens' excess policy was triggered and how much Lumbermens would be required to pay.
At trial, a Republic Western claims manager, Thomas Matush, testified about exhibits which contained computer-generated summaries of payments for loss adjustment expenses made by Republic Western on the claims. Lumbermens objected to the exhibits, arguing they were inadmissible hearsay and not subject to the business records exception in FRE 803 (6). Further, Lumbermens argued the summaries were not properly authenticated pursuant to FRE 901. The district court admitted the exhibits and entered judgment in favor of Republic Western in the amount of $1.9 million.
On appeal, the Ninth Circuit affirmed. Evidence compiled from a computer database was admissible as a business record, provided it met the criteria of Rule 803 (6). Here, the exhibits summarizing loss adjustment expense payments for each claim fit squarely within the business records exception. Matush testified that Republic Western employees input a record of each loss adjustment expense payment into a database at the time each payment was made. Republic Western employees would then query the database to compile the payment information, generating a summary of the defense costs for each of the claims.
Further, the computer summaries were properly authenticated under Rule 901. "Evidence describing a process or system used to produce a result and showing that the process or system produces an accurate result" was an example of a method of authenticating a process or system under Rule 901 (b)(9). The description of the process used to create the summaries was sufficient to authenticate the evidence.
