Tag: Rocco

Computer-Generated Business Records and Summary Judgment Affidavits – IL Law

bizrecordsIn US National Bank v. Avdic, 2014 IL App (1st) 121759-U, the First District provides a detailed analysis of both the evidentiary foundation requirements for computer-generated business records and the requirements of a valid summary judgment affidavit.

The plaintiff lender filed a foreclosure suit against the borrower defendant and moved for summary judgment.  The lender supported its motion with the affidavit of a bank officer who attached sworn copies of key loan documents, the promissory note and a computer-generated payment history for the defendant borrower’s account.

The defendant moved to strike the bank’s affidavit on the basis that it failed to lay a sufficient foundation for the attached loan and payment records and didn’t establish that the bank employee who signed the affidavit had first-hand knowledge of the defendant’s payment history.  The trial court entered summary judgment for the lender and denied the borrower’s motion to strike the affidavit.  The borrower appealed.

Result: Trial court affirmed. Plaintiff-lender wins.

Q: How Come?

A: The lender’s summary judgment affidavit complied with Illinois Supreme Court Rule 191 – the rule that governs summary judgment affidavits.  Rule 191 requires affidavit to state specific facts and to be based on personal knowledge instead of conclusions or guess-work.  Affidavits are substitutes for live trial testimony and because of that, must pass a stringent test for admission in evidence.  US Bank, ¶¶ 22-25.

To lay a foundation for admitting business records as a hearsay exception, the party must show that the records were (1) made in the regular course of business; and (2) at or near the time of the event or occurrence.  Rule 803(6) and Supreme Court Rule 236 work in tandem to codify the business records exception to the hearsay rule.  US Bank, ¶¶ 24-26.

Where computer-generated records are involved, the proponent must demonstrate (1) that the computer equipment is standard equipment, (2) the computerized entries were made in the regular course of business (3) at or reasonably near in time to the events recorded and (4) that the sources of information, the method of data entry and preparation are all trustworthy.  US Bank, ¶26.

The Court found that the lender’s affidavit met the relevant Rule 191 criteria.  The bank officer testified that she was familiar with the lender’s business practices, records and its manner of inputting, tracking and generating payment information.  She also testified in detail what steps the bank takes when creating, storing and printing loan and payment records.  The officer also said she reviewed the loan file, promissory note and related documents.  She also attached the key loan documents to the affidavit. ¶¶ 30-31.

The affidavit also met the admissibility standards for computer-generated payment records.  The bank officer described the computer software used by the bank to create and print out loan payment histories and testified that the software program used was standard and customary in the banking industry.  The officer even said that the computer equipment was periodically checked for accuracy. ¶¶ 29-30.

The court also found there was no requirement that the officer have first-hand knowledge of the borrower’s account or that she (the officer) personally made the payment entries into the bank’s computer for the affidavit to conform to Rule 191’s requirements.  Under Rule 236 and Illinois Evidence Rule 803(6), a lack of personal knowledge can affect the weight given to testimony; but it won’t bar that testimony outright.

Take-aways:  To get computer business records into evidence on summary judgment, the mo any should itemize each foundational requirement for those records.  A business entity plaintiff especially should establish that the person signing a summary judgment affidavit is familiar with the business’s record-keeping and billing processes and can testify to any unique billing and payment software used by the business.

Contractor’s Failure to Provide Sworn Statement Dooms Mechanics Lien Suit

A contractor lost its nearly $400,000 mechanics’ lien when it failed to serve a “Section 5 statement”, which lists subcontractors and amounts owed and owing, after the property owner requested one.  770 ILCS 60/5 (the “Lien Act”).

In Cityline Construction v. Roberts, 2014 IL App (1st) 130730, the parties entered into an oral contract for fire restoration work.  The plaintiff contractor sued to foreclose a mechanics lien and for breach of contract and quantum meruit.  The owners, in turn, filed a declaratory judgment counterclaim seeking to invalidate the mechanics’ lien.  During discovery, the contractor admitted in response to the homeowner’s request to admit facts that it (the contractor) never provided a Section 5 statement despite the owner’s request for the statement.  The trial court granted summary judgment for the homeowners on their counterclaim.  The court held that the contractor’s failure to supply the statement was fatal to its lien claim.

Held: Affirmed.

Rules/reasoning:

The Lien Act is strictly construed and its provisions must be scrupulously followed.  Section 5 of the Lien Act requires a contractor to provide (and an owner to request) a sworn statement listing names and addresses of all parties furnishing labor and materials to a job and the amounts due or to become due each party.  770 ILCS 60/5.  The contractor admitted not providing a Section 5 statement but argued that strict compliance should be relaxed and that the failure to give the statement didn’t harm the owners.  Cityline, ¶¶ 11-12.

Rejecting this “no harm, no foul” argument, the Court provided a synopsis of several Illinois cases from the past several years that, in unison, have held that the technical requirements of Section 5 of the Lien Act must be strictly complied with for a lien to be valid.  Cityline, ¶¶ 13-17.  The Court refused to read any exceptions into or engraft any limitations on the Lien Act’s statutory language.  Since the evidence was clear that (a) the owners requested a Section 5 statement, and (b)  the contractor failed to supply the statement, the lien was invalid.

All is not lost for the contractor though.  The contractor still has valid breach of contract and quantum meruit claims.  The Cityline court stressed that a contractor’s failure to provide a Section 5 statement doesn’t defeat a breach of contract or alternative quantum meruit action.  But losing the lien claim is an obvious blow to the contractor though.  With no security for its claim, the contractor must now hope that if it wins a money judgment against the owners, they (the owners) will have non-real estate assets with which to satisfy a judgment.

Take-aways:

An example of strict statutory construction.  The contractor’s equitable (the purpose of the section was met) and policy arguments (the court shouldn’t vaunt form over substance) were discarded.  Lost in the analysis is that Section 5 also imposes a duty on the owner to specifically request a Section 5 statement.  The Court suggests that if the owner fails to ask for the statement, it possibly won’t defeat a contractor’s lien claim.  Cityline, ¶ 22.  But even so, the cases cited by the Court that hold that a Section 5 statement can be waived where the owner fails to request one, are more than 100 years old and involve an outdated version of the Lien Act.  Clearly, the prudent practice is for the owner to request a Section 5 statement and for the contractor to provide a Lien Act-compliant statement in response.

 

Stored Communications Act Claim Survives Summary Judgment In Social Media Account Hijacking Case

Maremont v. Fredman, 2014 WL 812401 (N.D.Ill. 2014) examines an employee’s claims under the Stored Communications Act (18 U.S.C. § 2701)(the “SCA”) where the employer accessed the employee’s social media accounts     that she used for both personal and business purposes.

The Court found that plaintiff submitted evidence to raise triable fact questions on each element of the Complaint’s SCA count. 

The SCA aims to deter computer hacking and gives a private right of action to someone whose private electronic information is intentionally breached. 

The SCA plaintiff must establish that the defendant either (a) intentionally accessed the plaintiff’s private computer communication or (b) intentionally exceeded authorized access and obtained, altered or prevented authorized access to plaintiff’s private communications. *6.

For their part, the Defendants argued that Plaintiff voluntarily provided her Twitter and Facebook password information so that Defendants could continue marketing their company from plaintiff’s pages. 

Plaintiff disputed this: she claimed that she kept her Twitter and Facebook passwords in a locked electronic folder on Defendants’ server.  This fact dispute led the court to deny summary judgment on the SCA claim.

Another disputed fact question concerned plaintiff’s damages.  The SCA provides for both actual damages and minimum statutory damages of $1,000.  The case law is in flux as to whether actual damages are required before a plaintiff can recover the statutory minimum damages.  The Court looked to other jurisdictions to find that an SCA plaintiff  does not have to first prove actual damages (e.g. medical bills, lost wages, pain/suffering, etc.) before she can recover statutory damages.

But the Court still found plaintiff raised a disputed and triable fact question on actual damages.  Plaintiff, her husband and her father all testified to plaintiff’s acute mental anguish in the wake of Defendants’ unauthorized Tweeting and Facebooking barrage.  Under Federal Rule of Evidence 701 – witness observations of the Plaintiff’s mental distress was competent “lay opinion testimony”, based on the witnesses’ personal observations.  *7.

Take-aways: Clearly a pro-employee ruling; at least on the SCA claim.  The plaintiff not only stored her computer information on her employer’s computer server, but several witnesses for defendants also claimed that plaintiff willingly gave out her account passwords so that defendants could use the accounts as a marketing platform. 

Still, the Court found that plaintiff’s privacy and commercial interest (the Court found that plaintiff could enhance her reputation in the design community via social media) in her Twitter and Facebook accounts trumped the employers’ right to access those accounts.