Notice Under The Residual Hearsay Exception

On summary judgment in a diversity insurance contract suit by insured for "losses resulting from the lack of ... access to the property," admitting an affidavit by the now-deceased bank's former president, who was the originator of the policy, which "directly and comprehensively” addressed the contracting parties' knowledge and intent, “a key issue for which very little alternative evidence [otherwise] exist[ed]”; on pretrial notice, concluding that the plaintiff had "the affidavit months before the evidence was used" and provided sufficient opportunity to determine its trustworthiness, in Cynergy, LLC v. First American Title Ins. Co., _ F.3d _ (11th Cir. Jan. 28, 2013) (No. 12-10495)

Aside from the residual hearsay exception in FRE 807, few rules in the FRE explicitly require an offering party to provide pretrial notice. Most notably, FRE 404(b)(2) provides a criminal defendant's the option to request notice of other act evidence to be used in his prosecution, FRE 609(b)(2) provides for notice of an intent to seek admission of a conviction older than a decade, FRE 902(11) and (12) require notice for self authentication of certain records, and FRE 1004 provides for notice of using other evidence of content of a writing.

In a recent case, the Eleventh Circuit touched on the rather expansive requirement of notice involved in the admission of evidence under the residual hearsay exception, FRE 807. In considering this issue, the circuit noted that the form of the notice is not a formal one so long as the objectives of pretrial notice are met.

In the case, land investors defaulted on a loan they obtained from a creditor bank for the purpose of acquiring land for a residential subdivision. The land that the investor's sought lacked current access to the public roads unless passage could be gained through an agreement with an adjoining property owner. To protect itself from the risks of making this loan to the investors, the bank "took out a title insurance policy" with defendant First American, insuring against "loss or damage incurred due to a 'lack of a right of access to and from the land.'” A year after the investors bought the subdivision development property, they were unable to resolve the access problems and defaulted on the loan to the bank. Some of the investors formed a new company, Cynergy, which purchased the investor's promissory note from the bank -- "essentially purchasing the bank's loan" and so "Cynergy became the successor in interest to the bank under the insurance policy." Cynergy now sought to collect on the insurance policy. Not succeeding at this, Cynergy sued in state court. First American removed the case to the federal district court, and eventually both sides filed for summary judgment in the matter.

In grating First American's motion for summary judgment, the trial court relied "primarily on the sworn affidavit of George C. Leverett III, the Bank's former president and the officer who personally handled the" loan; he stated "at the time of the loan application he knew the problem of the landlocked development site." The district court concluded that the affidavit "demonstrated both the Bank's knowledge of the lack of access and its appreciation of the significance of that condition," as one basis for granting summary judgment. Cynergy, _ F.3d at _. Cynergy appealed, contending that the Leverett's affidavit should have been excluded as hearsay. The Eleventh Circuit rejected this argument, noting:

Leverett was still the Bank's president, but he was undergoing treatment for cancer. He died in early April 2010, before the affidavit was ever produced in discovery for this lawsuit. Cynergy argued to the district court that the affidavit constituted inadmissible hearsay. The court disagreed, concluding after careful analysis that the affidavit was admissible under Rule 807 of the Federal Rules of Evidence. This “catch-all exception to the hearsay rule” permits admission of a hearsay statement “if it is particularly trustworthy; it bears on a material fact; it is the most probative evidence addressing that fact; its admission is consistent with the rules of evidence and advances the interests of justice; and its proffer follows adequate notice to the adverse party.
Cynergy, __ F.3d at __ (citing United States v. Rodriguez, 218 F.3d 1243, 1246 (11th Cir. 2000))

The Eleventh Circuit noted the requirements of FRE 807 and found them satisfied. Of particular note, however, was how the circuit dealt with Cynergy's argument that it had not received the notice FRE 807 required. The rule contains a pretrial notification requirement: the statement is admissible under the exception “only if, before the trial or hearing, the proponent gives an adverse party reasonable notice of the intent to offer the statement and its particulars, including the declarant's name and address, so that the party has a fair opportunity to meet it.” According to Cynergy, it was impermissible for the district court to consider the affidavit because First American did not provide notice to Cynergy of its intent to offer the Leverett affidavit. Cynergy, __ F.3d at __ (citing FRE 807(b)).

The circuit disagreed, noting that the defendant:
First American disputes Cynergy's interpretation of Rule 807(b), arguing that it supplied notice of its intent to rely on the affidavit well before any “trial or hearing,” as required by the Rule, and that First American had no obligation to ensure that such notice was provided before Leverett passed away. Indeed, First American scarcely could have done so, because Leverett was already deceased by the time that Cynergy filed this lawsuit in late April 2010. Cynergy offers no authority (and we are aware of none) precluding the district court's consideration of the affidavit for the purposes of summary judgment based on a lack of notice under these circumstances. Cynergy was provided with the affidavit months before briefing on the dispositive motions took place. It does not create a categorical ban on the admission of statements made by deceased persons. Nor does it impose what in this case would be the functional equivalent: a requirement that a defendant supply notice of its intent to offer a statement at trial before the plaintiff has even filed suit.
Cynergy, __ F.3d at __ (citing United States v. Evans, 572 F.2d 455, 489 (5th Cir. 1978) (discussing predecessor Rule 803(24), noting that the notice requirement “is intended to afford the party against whom the statement is offered sufficient opportunity to determine its trustworthiness in order to provide a fair opportunity to meet the statement.”); United States v. Munoz, 16 F.3d 1116, 1122 (11th Cir. 1994) ("There is no particular form of notice required under the rule. As long as the party against whom the document is offered has notice of its existence and the proponent's intention to introduce it—and thus has an opportunity to counter it and protect himself against surprise—the rule's notice requirement is satisfied.")).

The circuit acknowledged that the notice involved in this case was not an explicit type of notice, yet it was sufficient. The main criterion of the notice requirement is that the adverse party received "a fair opportunity ... to meet it." Within this ambit, it appears the courts and parties have a fair degree of flexibility. As noted by the ACN to FRE 803(24), a precdecessor of FRE 807, the rule should operate so as to "provide[ ] that a party intending to request the court to use a statement under this provision must notify any adverse party of this intention as well as of the particulars of the statement, including the name and address of the declarant. This notice must be given sufficiently in advance of the trial or hearing to provide any adverse party with a fair opportunity to prepare to contest the use of the statement." In Cynergy it was clear that the plaintiff had ample time to deal with the affidavit and its use.


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