and submitted September 15, 2016
County Circuit Court 1204679CV; Marci Warner Adkisson, Judge.
D. Nelson argued the cause for appellant. With him on the
briefs was Bullivant Houser Bailey PC.
W. Kelly argued the cause and fled the brief for respondents.
DeVore, Presiding Judge, and Garrett, Judge, and Wollheim,
Senior Judge. [*]
appeal arises from an insurance dispute after a warehouse
fire. Defendant appeals judgments entered against it, arguing
that the trial court erred by admitting an inventory
spreadsheet that purported to show the warehouse's
contents. The trial court ruled that the spreadsheet, which
had been prepared by plaintiffs' adjusters, satisfied the
business-record exception to the hearsay rule under OEC
803(6). Held: The trial court erred in admitting the
spreadsheet as a business record under OEC 803(6) because the
information in the spreadsheet about dollar values originated
from outside sources who were not under a duty to report such
information to the adjusters.
Or.App. 455] DeVORE, P. J.
appeal arises from an insurance dispute after a warehouse
fire. The issue in this case concerns the admissibility of an
inventory spreadsheet of the warehouse contents that the jury
was allowed to consider before awarding plaintiffs $832, 000
in damages. The trial court admitted the spreadsheet over
defendant's hearsay objections, ruling that the
spreadsheet, which had been prepared by plaintiffs'
adjusters, satisfied the business-record exception to the
hearsay rule under OEC 803(6). Defendant challenges that
ruling. We agree that the spreadsheet was not admissible as a
business record because its information about dollar values
originated from outside sources who were not under a duty to
report such information to the adjusters. See State v.
Cain. 260 Or.App. 626, 632-34, 320 P.3d 600 (2014)
(discussing duty to report requirement). We reverse and
review the trial court's factual determinations for any
evidence in the record that supports them, and we review the
court's legal conclusions regarding the admissibility of
a hearsay statement under an exception to the hearsay rule
for legal error. State v. Cook, 340 Or. 530, 537,
135 P.3d 260 (2006).
Jerry and Debbie Morgan own and operate Boyd's Meat Co.,
a meat processing and restaurant supply company, which was
insured under a policy unrelated to the one at issue in this
case. Boyd's leased a warehouse a few blocks away from
its meat processing plant to store its supplies and
equipment. Boyd's had a second insurance policy to cover
its property in the warehouse. The warehouse and the property
inside were destroyed in a fire. Under that second policy,
Boyd's received the policy limits, $125, 000, for its
lost business property.
Morgans had a separate, personal, homeowners' insurance
policy with defendant (Valley) that covered fire losses to
their personal property with a blanket policy limit of $832,
000. Their policy covered personal property owned or used by
an insured "anywhere in the world." That [289 Or.App.
456] homeowners' policy is the policy at issue in this
case. The Morgans claimed that personal property was also
stored and destroyed at the warehouse. They reported that the
personal property included old meat processing, restaurant,
and other industrial equipment acquired over the years-
equipment that Mr. Morgan spent his spare time repairing or
restoring. They contended that the loss of those commercial
items should be covered under the homeowners' policy.
after the fire, the Morgans hired Adjusters International
Pacific Northwest (Adjusters International), a claims
adjusting company, to prepare their personal property claim.
In turn, Adjusters International hired three separate
independent contractors to perform related tasks to assist in
the creation of an inventory spreadsheet to support the
Morgans' claim. Adjusters International did not engage
any employee of its own in the preparation of the
spreadsheet. The independent contractors worked for Adjusters
International, not one for another. Their resulting
spreadsheet listed nearly 1, 300 items destroyed in the fire,
showed the replacement cost values for each item, and
concluded with the actual cash value of each item after
subtraction of depreciation. The total value exceeded $1, 000,
000, but the claim was limited to the policy limit of $832,
after the spreadsheet was submitted, Valley sought additional
information about the claim. In response, the Morgans filed
this action against Valley for breach of contract. Valley
moved in limine to exclude the spreadsheet, arguing
that it included inadmissible hearsay. The Morgans
acknowledged that the spreadsheet included hearsay but argued
that it was admissible under the business-record exception to
the hearsay rule. The trial court denied Valley's motion,
reasoning that the spreadsheet would be admissible as a
business record of "the adjusters who do this regularly
in the normal course of their business" under OEC
803(6), provided that the Morgans could lay a proper
foundation at trial.
Or.App. 457] At trial, adjuster Randy Gower, of Gower, Inc.,
testified that Adjusters International had hired him to
oversee and submit the inventory spreadsheet to Valley. Gower
explained that he is an independent public adjuster licensed
in Oregon and Washington who works for insurers or insureds
and who does 90 percent of his work for Adjusters
International. He acknowledged that Adjusters International
was to be paid by receipt of 10 percent of the Morgans'
total recovery from Valley and that he was to receive 25 to
27 percent of that 10 percent. Asked if he earns more money
if the Morgans do, Gower replied, "Absolutely."
provided an overview of the process of creating the inventory
spreadsheet. Adjusters International had told him that he
would work with two other independent contractors that
Adjusters International had hired. The first was Craig
Ritchie, who was responsible for visiting the warehouse site
and identifying the losses. The second was Heather Connell,
who was responsible for creating a spreadsheet and
researching replacement costs. Ritchie sent photographs and
recorded statements to Connell. She listed Ritchie's
information in the spreadsheet.
addition to the items inventoried by Ritchie, Gower explained
that Mr. Morgan made a "memory list" of hundreds of
items that Ritchie could not identify. Those items were added
to the spreadsheet over the course of several months. Mr.
Morgan also identified the ownership interest of each item on
the list. Relying on Mr. Morgan's notes, Gower had those
changes incorporated into the spreadsheet. Gower did not know
how many different people provided information that was
entered into the spreadsheet. After Gower received the final
spreadsheet from Connell with replacement cost values, Gower
next worked with Mr. Morgan to ...