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Electronic Records Are Admissible

New York

,

United States of America

Issue

What evidentiary foundation is required for the admission of electronic accounting records as business records at trial?

Conclusion

Any writing or record made as a memorandum or record of any act, transaction, occurrence, or event is admissible in evidence in proof of that act if it was made in the regular course of business and it was the regular course of business to make the writing or record at the time of the act or within a reasonable time thereafter. (CPLR 4518)

Electronic records are admissible. An electronic record may be admitted into evidence pursuant to the provisions of CPLR 4539. (State Technology Law § 302, State Technology Law § 306)

CPLR 4539(b) provides that reproductions that create an image of an original are admissible if the method of reproduction does not allow for additions, deletions, or changes without leaving a record of such changes and are authenticated by evidence setting out the manner or method by which tampering or degradation of the original is prevented.

A proper foundation for the admission of a business record must be provided by a witness with personal or firsthand knowledge of the record maker's business practices and procedures. (Viviane Etienne Med. Care, P.C. v. Country-Wide Ins. Co., Bank of N.Y. Mellon v. Gordon)

With electronic records submitted into evidence in paper form, the party relying on the record must establish how or by whom the paper form was made and that the printed document submitted to the court is a true and accurate representation of the electronic record. (Palisades Collection, LLC v. Kedik, Bank of N.Y. Mellon v. Gordon, Am. Express Centurion Bank v. Badalamenti, Med. Transp. Mgmt. v. Xpress Transp. & Multi Servs.)

In Am. Express Centurion Bank v. Badalamenti, the Second District Court of New York, Nassau County held that electronic records (in paper form) documenting an unpaid credit card balance were not admissible because the affidavit did not establish when, how, or by whom the exhibits were created, nor did the affidavit describe whether the party's electronic record-keeping system permitted additions, deletions, or changes without leaving a record of such changes, or how tampering or degradation of the records was prevented.

In the unreported case of Med. Transp. Mgmt. v. Xpress Transp. & Multi Servs., the Supreme Court of New York, New York County, found that electronic accounting records were inadmissible hearsay because the plaintiff had not laid any foundation for their admission. The records were attached as an exhibit to an affidavit, but the affidavit did not indicate that the affiant had personal or firsthand knowledge of the maker's business practices or procedures, did not describe the practices or procedures, and did not attest that the procedures were followed with respect to the records in issue.

Law

CPLR 4518(a) provides that any writing or record made as a memorandum or record of any act, transaction, occurrence, or event is admissible in evidence in proof of that act if it was made in the regular course of business and it was the regular course of business to make the writing or record at the time of the act or within a reasonable time thereafter. Electronic records are also admissible under this rule:

(a) Generally. Any writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence or event, shall be admissible in evidence in proof of that act, transaction, occurrence or event, if the judge finds that it was made in the regular course of any business and that it was the regular course of such business to make it, at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter. An electronic record, as defined in section three hundred two of the state technology law, used or stored as such a memorandum or record, shall be admissible in a tangible exhibit that is a true and accurate representation of such electronic record. The court may consider the method or manner by which the electronic record was stored, maintained or retrieved in determining whether the exhibit is a true and accurate representation of such electronic record. All other circumstances of the making of the memorandum or record, including lack of personal knowledge by the maker, may be proved to affect its weight, but they shall not affect its admissibility. The term business includes a business, profession, occupation and calling of every kind.

"Electronic record" is defined in State Technology Law § 302 as:

For the purpose of this article:

1. "Electronic" shall mean of or relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.

2. "Electronic record" shall mean information, evidencing any act, transaction, occurrence, event, or other activity, produced or stored by electronic means and capable of being accurately reproduced in forms perceptible by human sensory capabilities.

[...]

State Technology Law § 306 provides that an electronic record may be admitted into evidence pursuant to the provisions of CPLR 4539:

In any legal proceeding where the provisions of the civil practice law and rules are applicable, an electronic record or electronic signature may be admitted into evidence pursuant to the provisions of article forty-five of the civil practice law and rules including, but not limited to section four thousand five hundred thirty-nine of such law and rules.

CPLR 4539 governs the admission of reproductions of an original. Subrule (b) provides that reproductions that create an image of an original are admissible if the method of reproduction does not allow for additions, deletions, or changes without leaving a record of such changes and are authenticated by evidence setting out the manner or method by which tampering or degradation of the original is prevented:

(a) If any business, institution, or member of a profession or calling, in the regular course of business or activity has made, kept or recorded any writing, entry, print or representation and in the regular course of business has recorded, copied, or reproduced it by any process, including reproduction, which accurately reproduces or forms a durable medium for reproducing the original, such reproduction, when satisfactorily identified, is as admissible in evidence as the original, whether the original is in existence or not, and an enlargement or facsimile of such reproduction is admissible in evidence if the original reproduction is in existence and available for inspection under direction of the court. The introduction of a reproduction does not preclude admission of the original.

(b) A reproduction created by any process which stores an image of any writing, entry, print or representation and which does not permit additions, deletions, or changes without leaving a record of such additions, deletions, or changes, when authenticated by competent testimony or affidavit which shall include the manner or method by which tampering or degradation of the reproduction is prevented, shall be as admissible in evidence as the original.

In Palisades Collection, LLC v. Kedik, 67 A.D.3d 1329, 890 N.Y.S.2d 230, 2009 NY Slip Op 8259 (N.Y. App. Div. 2009), the Appellate Division, Fourth Department explained that a proper foundation for the admission of a business record must be provided by a witness with personal or firsthand knowledge of the record maker's business practices and procedures. Furthermore, when electronic records are submitted into evidence in paper form, the party relying on the record must establish how or by whom the paper form was made, and that the printed document submitted to the court is a true and accurate representation of the electronic records (at 1330-1331):

A business record is admissible if "it was made in the regular course of any business and...it was the regular course of such business to make it, at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter" (CPLR 4518 [a]; see generally People v Kennedy, 68 NY2d 569, 579-580 [1986]). "A proper foundation for the admission of a business record must be provided by someone with personal

[67 A.D.3d 1331]

knowledge of the maker's business practices and procedures" (West Val. Fire Dist. No. 1 v Village of Springville, 294 AD2d 949, 950 [2002]). Although plaintiff's agent averred that the spreadsheet was kept in the regular course of business and that the entries therein were made in the regular course of business, the agent did not establish that he was familiar with plaintiff's business practices or procedures, and he further failed to establish when, how, or by whom the electronic spreadsheet submitted in paper form was made (see CPLR 4518 [a]; West Val. Fire Dist. No. 1, 294 AD2d at 950). Furthermore, although an electronic record "shall be admissible in a tangible exhibit that is a true and accurate representation of such electronic record" (CPLR 4518 [a]), plaintiff's agent failed to establish that the printed electronic spreadsheet submitted to the court was a true and accurate representation of the electronic record kept by plaintiff.

In Viviane Etienne Med. Care, P.C. v. Country-Wide Ins. Co., 2015 NY Slip Op 4787, 25 N.Y.3d 498, 35 N.E.3d 451, 14 N.Y.S.3d 283 (N.Y. 2015), the New York Court of Appeals found that a party had not laid a sufficient foundation for the admissibility of certain forms when the witness had personal knowledge of the forms' mailing but not of the record-keeping procedures or practices in creating the documents that the forms were based on (at 514-515):

However, the affidavit proffered by plaintiff to support admission of the NF–3 forms—which must be received for their truth to establish the “fact and amount of loss sustained” (Insurance Law § 5106[a] ), as should be required—falls short. Although the affidavit of Roman Matatov, the president of plaintiff's third-party billing service, stated that he had personal knowledge of the mailing of the

[35 N.E.3d 464]

[14 N.Y.S.3d 296]

NF–3 forms to defendant, he had no personal knowledge of plaintiff's record-keeping procedures or practices in creating the documents based on which he compiled those forms. Thus, Matatov was unable to lay a sufficient foundation for the admissibility of the NF–3 forms under the business records exception to the hearsay rule (see CPLR 4518[a]; People v. Brown, 13 N.Y.3d 332, 341, 890 N.Y.S.2d 415, 918 N.E.2d 927 [2009]; People v. Cratsley, 86 N.Y.2d 81, 90, 629 N.Y.S.2d 992, 653 N.E.2d 1162 [1995]; Matter of Leon RR, 48 N.Y.2d 117, 122–123, 421 N.Y.S.2d 863, 397 N.E.2d 374 [1979] ), and inadmissible hearsay is insufficient to establish a prima facie case entitling plaintiff to summary judgment (see generally Zuckerman, 49 N.Y.2d at 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 ). I simply

[25 N.Y.3d 515]

do not see why it would be unduly burdensome to require plaintiff to submit a proper affidavit, either from Matatov or a knowledgeable employee of the medical provider's practice.

In Am. Express Centurion Bank v. Badalamenti, 2010 NY Slip Op 52238, 30 Misc.3d 1201, 958 N.Y.S.2d 644 (N.Y. Dist. Ct. 2010), the Second District Court of New York, Nassau County, held that electronic records (in paper form) documenting an unpaid credit card balance were not admissible because the affidavit did not establish when, how, or by whom the exhibits were created, nor did the affidavit describe whether the party's electronic record-keeping system permitted additions, deletions, or changes without leaving a record of such changes, or how tampering or degradation of the records was prevented as required by CPLR 4539(b) (at 1201):

In the case at bar, Ms. Hartje's affidavit provides only some of the information that plaintiff must submit to lay a proper foundation for introduction of the annexed “reproductions” of plaintiff's electronic records respecting defendant's indebtedness. It appears from her description of plaintiff's business practices that plaintiff's employees record account transactions in the regular course of its business, and that it was the regular course of plaintiff's business to record such transactions at or about the time they occurred. CPLR 4518(a). She swears that the exhibits are “true and faithful reproductions” of parts of defendant's electronic file. SeeCPLR 4518(a). She also describes, albeit in cursory terms, the manner by which electronic account records are stored, maintained and retrieved: such records are “maintained on optical discs in an electronic format” (Hartje affidavit, ¶ 4) and can be “reproduced ... by ... authorized American Express representatives” (Hartje affidavit, ¶ 12).

Accepting all the above as true, Ms. Hartje's knowledge of plaintiff's business practices is nonetheless limited. She works for the company's “Litigation Unit” in New York on matters involving “account holders who are involved in active litigation with American Express” (Hartje affidavit, ¶ 2). Plaintiff's business, in contrast, ranges across the United States. According to plaintiff's account statements, defendant's payments were sent to an address in Newark, New Jersey. Customer service for the account was located in El Paso, Texas. American Express Centurion Bank, itself, is PAGE 5INDEX # 16489/10AMEX V. BADALAMENTI located in Utah. Presumably, representatives of plaintiff in each of these locations had access to defendant's electronic records, and absent evidence to the contrary, the Court assumes that representatives had the ability to make and revise electronic entries on those records from time to time.

Significantly, although Ms. Hartje avers that the copies generated for the instant motion are “exact duplicates of the documents delivered to the card member” (Hartje affidavit, ¶ 12), her affidavit fails to establish “when, how or by whom” plaintiff's exhibits were created. Such proof is ordinarily required to lay a proper foundation for the submission of electronic records in paper form. See Palisades Collection, LLC v. Kedik, 67 AD3d 1329, 1331 (4th Dept.2009). More importantly, she does not describe whether plaintiff's electronic record keeping system permits “additions, deletions or changes without leaving a record of such additions, deletions or changes.” Nor does her affidavit address “the manner or method” (if any) by which “tampering or degradation” of the reproduced records is prevented. See CPLR 4539(b). The absence of such evidence is telling. Without an affidavit from an individual “with personal knowledge of the care and maintenance” of plaintiff's electronic business records, cf. Education Resources Institute, Inc. v. Piazza, 17 AD3d 513, 514 (2d Dept 2005), plaintiff cannot satisfy its burden, under State Technology Law 306 and CPLR 4539(b), of laying a proper foundation for submitting the subject reproductions. Plaintiff accordingly has failed to set forth “evidentiary proof in admissible form” respecting the business records that document the amount of defendant's alleged indebtedness. See Palisades Collection, LLC v. Kedik, supra.

Consequently, to the extent that plaintiff seeks judgment, as a matter of law, upon its claim that defendant owes it $14,115.64, as established by the account statements submitted with Ms. Hartje's affidavit, plaintiff's motion must be denied. Without a proper foundation for the submission of the “reproductions” in question, plaintiff has not met its prima facie burden of proof on damages, requiring denial of its request for summary determination of its damages.

In Bank of N.Y. Mellon v. Gordon, 171 A.D.3d 197, 97 N.Y.S.3d 286 (N.Y. App. Div. 2019), the Appellate Division, Second Department explained that when a party seeks to introduce an electronic record under the business records rule, a court may consider the method or manner by which the electronic record was stored, maintained, or retrieved in determining whether the exhibit is a true and accurate representation of such electronic record; however, all other circumstances of the making of the record, including lack of personal knowledge by the maker, only affect the weight of the evidence, not its admissibility. The Court found that a proper foundation was laid for the admission of a loan document as a business record where an employee stated in her affidavit her employer's record-keeping practices and procedures when they received loan documents from a client, stated that this occurred in the normal course of the employer's business, and affirmed that the copy was a true and accurate copy of the original loan document. The employee was not required to demonstrate her familiarity with the record-keeping practices and procedures of the original lender (at 204-207):

The current version of the business records rule provides that

"[a]ny writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence or event, shall be admissible in evidence in proof of that act, transaction, occurrence or event, if the judge finds that it was made in the regular course of any business and that it was the regular course of such business to make it, at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter" (CPLR 4518[a]).

An "electronic record ... shall be admissible in a tangible exhibit that is a true and accurate representation of such electronic record" (id.). A court "may consider the method or manner by which the electronic record was stored, maintained or retrieved in determining whether the exhibit is a true and accurate representation of such electronic record" (id.). However, "[a]ll other circumstances of the making of the memorandum or record, including lack of personal knowledge by the maker, may be proved to affect its weight, but they shall

[171 A.D.3d 205]

not affect its admissibility" (id.; see People v. Kangas, 28 N.Y.3d 984, 985–986, 41 N.Y.S.3d 189, 63 N.E.3d 1133 ; cf. Fed Rules Evid rule 803 [6]).

Accordingly, to establish a foundation for the admission of a business record, the proponent of the record must satisfy the requirements identified in the statute (see CPLR 4518[a] ). First, the proponent must establish "that the record be made in the regular course of business—essentially, that it reflect a routine, regularly conducted business activity, and that it be needed and relied on in the performance of functions of the business" (People v. Kennedy, 68 N.Y.2d at 579, 510 N.Y.S.2d 853, 503 N.E.2d 501 ). Second, the proponent must also demonstrate "that it be the regular course of such business to make the record ... essentially, that the record be made pursuant to established procedures for the routine, habitual, systematic making of such a record" (id. at 579–580, 510 N.Y.S.2d 853, 503 N.E.2d 501 ). Third, the proponent must establish "that the record be made at or about the time of the event being recorded—essentially, that recollection be fairly accurate and the habit or routine of making the entries assured" (id. at 580, 510 N.Y.S.2d 853, 503 N.E.2d 501 ).

In addition to these statutory requirements, the Court of Appeals has held that "[u]nless some other hearsay exception is available, admission may only be granted where it is demonstrated that the informant has personal knowledge of the act, event or condition and he [or she] is under a business duty to report it to the entrant" (Matter of Leon RR, 48 N.Y.2d 117, 123, 421 N.Y.S.2d 863, 397 N.E.2d 374 [citation omitted]; see

[97 N.Y.S.3d 294]

People v. Patterson, 28 N.Y.3d 544, 550, 46 N.Y.S.3d 511, 68 N.E.3d 1242 ; Johnson v. Lutz, 253 N.Y. at 127–128, 170 N.E. 517; Murray v. Donlan, 77 A.D.2d 337, 346, 433 N.Y.S.2d 184). That said, "[i]t would clearly defeat the utility of CPLR 4518 to require the testimony of all persons involved in creating the record" (Jerome Prince, Richardson on Evidence § 8–306 [Farrell 11th ed 1995] ).

Finally, under the circumstances here, it bears noting that the business record exception to the hearsay rule applies to a "writing or record" (CPLR 4518[a] ). Although "[t]he foundation for admission of a business record usually is provided by the testimony of the custodian, the author or some other witness familiar with the practices and procedures of the particular business" (Jerome Prince, Richardson on Evidence § 8–306 [Farrell 11th ed 1995] ), it is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted (see generally Great Am. Ins. Co. v. Auto Mkt. of Jamaica, N.Y., 133 A.D.3d 631, 632–633, 19 N.Y.S.3d 329; 35 Carmody–Wait 2d § 194:94 [2019]; cf. 9 Weinstein–Korn–Miller, N.Y. Civ Prac CPLR ¶ 4518.20). Accordingly, "[e]vidence of the contents of business

[171 A.D.3d 206]

records is admissible only where the records themselves are introduced" (35 Carmody–Wait 2d § 194:94 [2019]; see People v. Barnes, 177 A.D.2d 989, 578 N.Y.S.2d 9; see also People v. Olivero, 27 Misc.3d 1218[A], 2010 N.Y. Slip Op. 50794[U], 2010 WL 1797036 [Civ. Ct., Kings County]; People v. Ross, 12 Misc.3d 755, 764, 814 N.Y.S.2d 861 [Crim. Ct., Kings County 2006]). "Without their introduction, a witness's testimony as to the contents of the records is inadmissible hearsay" (35 Carmody–Wait 2d § 194:94 [2019]; see U.S. Bank Natl. Assn. v. 22 S. Madison, LLC, 170 A.D.3d 772, 774, 95 N.Y.S.3d 264, 2019 N.Y. Slip Op. 01635, *2, 2019 WL 1051220 [2d Dept. 2019]; People v. Barnes, 177 A.D.2d 989, 578 N.Y.S.2d 9 ). Of course, generally speaking, a witness may always testify as to matters which are within his or her personal knowledge through personal observation (see Jerome Prince, Richardson on Evidence §§ 4–301, 6–210 [Farrell 11th ed 1995]; see also People v. Daddona, 81 N.Y.2d 990, 992, 599 N.Y.S.2d 530, 615 N.E.2d 1014; Pease v. Smith, 61 N.Y. 477, 484–485; People v. Duffy, 124 A.D.2d 258, 260, 508 N.Y.S.2d 267; Levy v. Huwer, 80 App.Div. 499, 501–502, 81 N.Y.S. 191, affd 176 N.Y. 612, 68 N.E. 1119 ).

Here, Schwartz stated in her affidavit that she was employed by the law firm that represented the plaintiff in this action. Schwartz stated that she was "employed as the manager of a group of employees ... that is responsible for receiving original loan documents from the firm's clients [and] documenting the receipt of [those] original loan documents." She stated that, when a client forwards a file containing original loan documents, "[her] staff makes a computer entry ... confirming [their] receipt." These entries were made "at or about the time of the receipt of the original loan documents," and the records of such events were "created and maintained in the ordinary course of [the] business" of the plaintiff's attorneys. Finally, Schwartz stated that "[i]t was the normal course of [the firm's] business to store these records as computer entries."

Schwartz further stated that she reviewed the firm's business records relative to this case, which records showed that the original note was received on August 19, 2011. Attached to Schwartz's affidavit was "a true and accurate printout [she] made of the computer entry confirming the receipt ... of the original note." Schwartz also attached a copy of the original note to her affidavit, and affirmed that she had compared this copy "to the original note which remains in storage under the custody

[97 N.Y.S.3d 295]

of [her] team" and that the copy was "a true and accurate copy of the original note."

[171 A.D.3d 207]

Contrary to Gordon's contention, Schwartz did not need to demonstrate her familiarity with the record-keeping practices and procedures of the plaintiff, the original lender, Countrywide Home Loans, Inc. (hereinafter Countrywide), or MERS, in order to lay a proper foundation for the admission of the business record attached to her affidavit. Schwartz sought to lay a foundation for the admission of a business record maintained by her employer, the plaintiff's attorneys. She did not seek to lay a foundation for business records produced or maintained by any of the other entities identified by Gordon. As this Court has previously observed, "[t]here is no requirement that a plaintiff in a foreclosure action rely on any particular set of business records to establish a prima facie case, so long as the plaintiff satisfies the admissibility requirements of CPLR 4518(a), and the records themselves actually evince the facts for which they are relied upon" (Citigroup v. Kopelowitz, 147 A.D.3d 1014, 1015, 48 N.Y.S.3d 223; see HSBC Bank USA, N.A. v. Ozcan, 154 A.D.3d 822, 826, 64 N.Y.S.3d 38). Accordingly, under the circumstances, since Schwartz only sought to lay a foundation for a business record produced and maintained by her own employer, she was only required to set forth her familiarity with her employer's record-keeping practices and procedures (see generally CPLR 4518[a] People v. Kennedy, 68 N.Y.2d at 579–580, 510 N.Y.S.2d 853, 503 N.E.2d 501; cf. Aurora Loan Servs., LLC v. Baritz, 144 A.D.3d 618, 41 N.Y.S.3d 55; US Bank N.A. v. Handler, 140 A.D.3d 948, 34 N.Y.S.3d 463; Aurora Loan Servs., LLC v. Mercius, 138 A.D.3d 650, 29 N.Y.S.3d 462).

In the unreported decision of Med. Transp. Mgmt. v. Xpress Transp. & Multi Servs., 2021 NY Slip Op 31563(U) (N.Y. Sup. Ct. 2021), the Supreme Court of New York, New York County, found that electronic accounting records were inadmissible hearsay because the plaintiff had not laid any foundation for their admission. The records were attached as an exhibit to an affidavit, but the affidavit did not indicate that the affiant had personal or firsthand knowledge of the maker's business practices or procedures, did not describe the practices or procedures, and did not attest that the procedures were followed with respect to the records in issue (at 7-8):

Moreover, questions of fact exist regarding Plaintiff's performance under the Agreement and with respect to Defendant's counterclaims. In support of its motion, Plaintiff submits an affidavit of Crystal Cooper, the General Manager of its New York office, who purports to have personal knowledge of the facts set forth in her affidavit (Cooper Aff. ¶ 1, NYSCEF Doc 75). Cooper avers that "[d]uring the course of the litigation, [Plaintiff] has produced to [Defendant] detailed electronic database records of all rides and transportation services provided by [Defendant]. See EXHIBIT F. There are no outstanding balances for which [Plaintiff] owes [Defendant] money. All rides and transportation services provided by [Defendant] have been paid in full at the agreed-upon fee rate." (Id. ¶ 6.) The referenced Exhibit F is a copy of the Pieter deposition testimony, but the attached exhibit G is what purports to be Plaintiff's

Page 8

electronic accounting records (NYSCEF Doc 81). However, Plaintiff does not lay any foundation for admission of these records as evidence.

In general, any writing or record shall be admissible in evidence as proof of an act, transaction, occurrence or event, if it was made in the regular course of any business at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter (CPLR 4518 [a]). Nevertheless, it is well established that a proper foundation for the admission of a business record must be provided by someone with personal or firsthand knowledge of the maker's business practices and procedures (Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498, 503 [2015]). The Cooper Affidavit does not comply with the requirements of CPLR 4518 because no authentication, business records foundation, or other evidentiary basis was provided for the records. The affiant does not indicate that she has personal or firsthand knowledge of the maker's business practices or procedures, does not describe the practices or procedures, and does not attest that the procedures were followed with respect to the records in issue (see Oldham v City of N.Y., 155 AD3d 477, 477-478 [1st Dept 2017] [records inadmissible where affiants failed to indicate they possessed personal knowledge and failed to lay a proper foundation pursuant to CPLR 4518]). Therefore, the records are inadmissible hearsay.

Alexsei publishing date:
2022-03-10 23:08:14.210316
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