By: Richard E. Guttentag, Esq. and David B. Stearns, Esq., Stearns, Roberts & Guttentag, LLC

No matter how large or small, most businesses create “business records”. Under the rules of evidence, the term “business records” has a specific meaning and purpose. If you meet the 3 requirements ofFlorida Statutes, §90.803(6), then business documents that would otherwise be “hearsay” and inadmissible, should be considered by the Judge or Jury at trial.

A business record may be admitted in evidence over a hearsay objection where the proponent of the evidence can show that: (1) the record was made at or near the time of the event; (2) by a person with knowledge (or from information transmitted by a person with knowledge); and (3) that the record was kept in the ordinary course of a regularly conducted business activity and that it was the regular practice of the business to make such records

In the case of Clark Well Drilling, Inc. v. North-South Supply, Inc. (2010 WL 3155006, Fla. App. 4 Dist.), a distributor of irrigation, well, and pool supplies, North-South Supply, Inc. (“North-South”) entered into a credit agreement with Clark Well Drilling, Inc. (“Clark Well”). After about a year and half, Clark Well’s account was past due over $27,000.00 resulting in North-South converting Clark Well’s account to a “C.O.D. + 10%” payment status. Under the new payment arrangement, Clark Well was to leave a blank check with North-South every Monday morning and at the end of the week, North-South’s store manager would total up the week’s purchases, and add an additional 10% to pay down Clark Well’s bill.

Clark Well could not keep up with the new payment arrangement, and the manager allowed Clark Well to pay what it could afford weekly even though it would be an unauthorized deviation from North-South’s business procedures. To accomplish this, the store manager kept handwritten lists of all the items purchased by Clark Well. Each week, the manager would enter only the purchases Clark Well could afford to pay for into the computer to generate an order acknowledgement. By failing to put all of Clark Well’s purchases into the computer, the manager was able to keep his accommodation for Clark Well from North-South’s corporate office. Items that were paid for would be stricken from the handwritten lists, and the lists were often condensed and rewritten to keep them concise and up to date.

A billing dispute subsequently took place between North-South and Clark Well, and North-South sued Clark Well for the past due balance. At trial, North-South relied upon the testimony of its store manager regarding the handwritten lists he maintained to establish the amount of its damages. North-South admitted the manager’s handwritten lists into evidence over Clark Well’s objection that the lists did not meet the requirements of business records and were inadmissible hearsay. The trial court allowed the lists into evidence, entered a judgment in favor of North-South, and Clark Well appealed the trial court’s decision.

The appellate Court held that the handwritten lists did not meet the requirements of a business record. The Court reasoned that while the manager made the lists at or near the time of the purchases by Clark Well, and while the manager was a person with knowledge of the purchases at the time the lists were made, the handwritten lists were not “business records” as they were against company policy, they were not kept in the ordinary course of North-South’s business, and it was not North-South’s regular practice to make such handwritten records to aid its customers in temporary financial difficulty. Thus, the appellate court reversed the trial court’s judgment, and ordered a new trial where North-South will need to prove the monies it alleges it is owed without the use of the handwritten notes.

This case demonstrates the importance for contractors, subcontractors, and suppliers to establish and maintain a regular business practice with respect to making and keeping records and data compilations. If records are not kept in accordance with the company’s regular business practice, the company may be prevented from using such records at trial.

About the Authors: Richard E. Guttentag is Board Certified in Construction Law by the Florida Bar. Mr. Guttentag exclusively in construction law including construction lien claims and defense, payment and performance bond claims and defense, bid protests, construction contract preparation and negotiation, and construction and design defect claims and defense. He can be reached for consultation at[email protected].

David B. Stearns is has been practicing law for 18 years and is admitted to practice in Florida and Ohio. Mr. Stearns practices in the areas of bankruptcy and civil litigation. He can be reached for consultation at [email protected].

Share Now:


Subscribe To Our Newsletter