Arrowood Indemnity Co V. Fasching

The business records exception to the rule against hearsay extends to "[a] memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, 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 the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, unless the source of information or the method of circumstances of preparation indicate lack of trustworthiness." Rule 803(6) (ORS 40.460).

Fasching defaulted on loans owed to Discover Bank, whose insurer (“Arrowood”) brought this case to seek subrogation and reimbursement. The trial court granted summary judgement to Arrowood. Fasching appealed and assigned error to the court’s denial of his objection to Arrowood’s "proof-of-loss record." Fasching argued that third-party records are hearsay and inadmissible. Arrowood argued that the supplementary affidavit sufficiently qualified the record within the business records exception. Hearsay is a declaration, not made in court, “offered in evidence to prove the truth of the matter asserted.” Rule 801(3). Under Rule 802, hearsay is inadmissible in evidence. However, an exception is business records, i.e. records of activities “in the ordinary course of business” and regularly kept by a custodian. Rule 803(6). Third-party records can qualify only if the third-party (1) was obligated to keep the record accurately, (2) was obligated to deliver the record to the party offering the record, and (3) the party offering the record ordinarily “adopts and relies” on such information. See State v. Cain, 260 Or App 626, 635-36 (2014). The Court held that the "proof-of-loss record," albeit a third-party document, qualified within the business record exception. The Court found that Discover Bank was statutorily obligated to truthfully report Fasching’s loans to Arrowood as its insurer. E.g., ORS 746.100. Also, as the affidavit showed, Arrowood relied on and adopted such records. Affirmed.