Federal Evidence Review

In suit against banks for delay in transfer of funds, representation of two defendant banks by the same attorney did not render statements made by that attorney on behalf of one of the defendant banks (which was later dismissed from the case) admissible as an admission by the other defendant bank under FRE 801(d)(2)(D), in Lechoslaw v. Bank Of America, N.A., __ F.3d __ (1st Cir. Aug. 30, 2010) (No. 09-1425)

One of the essential foundational elements for admission of a party opponent under FRE 801(d)(2)(D) is proof of the agency of the declarant. In a recent case, the First Circuit considered a unique twist on the agency determination question involving an attorney. The circuit considered the application of the rule when the same attorney represented different clients in an action. The circuit noted that the question of agency should be evaluated according to what agency was being expressed by the attorney and so not all statements made by the agent with regard to one principal could be considered as party admissions by the other principal.

In the case, plaintiff Lechoslaw sued a bank that was subsequently acquired by Bank of America ("BofA") and Handlowy w Warszawie (“Bank Handlowy”) in Poland. He alleged that in purchasing a bank check from BofA, he was unable to cash it at Bank Handlowy. "The check was apparently lost in transit between Poland and BoA's offices in New Jersey and it took a few months before the money was finally in Lechoslaw's account in Poland. Claiming that the four-and-a-half month delay in receiving his $31,787.34 disrupted the construction of a motel and restaurant in Poland and caused him severe emotional distress, Lechoslaw sued to recover consequential damages for his loss." Lechoslaw, __ F.3d at __. The trial court dismissed the case with regard to Bank Handlowy because the plaintiff failed to secure jurisdiction; during trial on the complaint against BofA, the court granted directed verdicts on some counts for BofA and the jury returned a verdict for BofA on the claims it considered. The plaintiff appealed, contending in part that the trial judge erred in "excluding admissions of Bank Handlowy's counsel that the check was mailed" which the plaintiff contended was an admission by a party opponent as BofA was represented by the same attorney who had represented BankHandlowy.

The First Circuit rejected the plaintiff's evidentiary claim as misleading. As explained by the circuit, the statement sought to be introduced by the plaintiff came in the context of when Bank Handlowy was still a party to the litigation and had not been dismissed from the suit:

"During the course of one its filings ... Bank Handlowy, through its counsel, made certain admissions regarding the mailing of the check to Bo[f]A. After Bank Handlowy was dismissed from the case, Lechoslaw attempted to bring these statements in as nonhearsay because, Lechoslaw claims, they were admissions by a party opponent since Bank Handlowy had the same counsel as BoA. BoA filed a motion in limine to exclude the statements and the District Court granted it. Lechoslaw objects. BoA counters that these statements are not admissible against it regardless of its common counsel with Bank Handlowy. We agree."

Lechoslaw, __ F.3d at __ (citation omitted).

The circuit set forth why, despite the two parties having the same counsel, the statement of counsel for one party could not be used against the other party that the attorney represented:

"The Federal Rules of Evidence make clear that a statement is not hearsay if 'the statement is offered against a party and is ... a statement by the party's agent or servant concerning a matter within the scope of the agency or employment, made during the existence of the relationship.' Lechoslaw attempts to confuse the issue by citing cases holding that attorneys serve as agents of their clients. See, e.g., Blake v. Henrickson, 40 Mass.App.Ct. 579, 666 N.E.2d 164, 166 (Mass.App.Ct.1996). There is no question that Bank Handlowy's counsel was its agent, and that BoA's counsel was also its agent. But the fact that both banks shared counsel does not change the application of the rules of evidence. Here, Bank Handlowy's attorney made certain statements during its representation of Bank Handlowy. Those statements may have been admissible against Bank Handlowy if it were a party to this litigation, but it was dismissed. There was no abuse of discretion on the facts here in the court's exclusion of the statement as offered against BoA."

Lechoslaw, __ F.3d at __ (citing Fed.R.Evid. 801(d)(2)(D); Gómez v. Rivera Rodríguez, 344 F.3d 103, 116 (1st Cir. 2003) ("Parties wishing to introduce statements into evidence under the aegis of Rule 801(d)(2)(D) must establish, by a preponderance of the evidence, (1) that an agency relationship existed; (2) that the statements were made during the course of the relationship; and (3) that the statements relate to matters within the scope of the agency. Although the Evidence Rules do not define “agent” or “servant,” federal courts grappling with Rule 801(d)(2)(D) proffers have adopted and applied the traditional meanings of those terms as reflected in the federal common law of agency." (citation omitted))).

While no other circuit has faced problems of a statement of a single agent with dual clients, as the circuit in Lechoslaw, they have addressed similar issues, such as statements made by counsel when acting under different agencies. See, e.g., United States v. Brandon, 50 F.3d 464, 468-69 (7th Cir. 1995) ("The Seventh Circuit has held that an attorney may be the agent of his client for purposes of Rule 801(d)(2)(D) so long as the important policies concerning effective assistance of the counsel of one's choosing are preserved. In the present case, the attorney who made the admitted statements did not represent the Defendant in the criminal matter and there is no suggestion that he would have but/for the government's presentation of this evidence. Therefore, the policies weighing against admissibility of the evidence are not present in this case. Further, there is no dispute that the former attorney who made the statement was an agent of his client when he responded to the subpoena; his statement in response to the grand jury subpoena was made within the scope of that relationship. Therefore, for purposes of Rule 801(d)(2)(D), the statement was not hearsay and was properly admissible against Harris.")