Zayre Corp. v. S.M. & R. Co., Inc.

• Decision Date: 09 August 1989
• Docket Number: No. 88-1070,88-1070
• Citation: 882 F.2d 1145
• Parties: 9 UCC Rep.Serv.2d 465, 28 Fed. R. Evid. Serv. 793 ZAYRE CORPORATION, Plaintiff-Appellee, v. S.M. & R. CO., INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1145

882 F.2d 1145

9 UCC Rep.Serv.2d 465, 28 Fed. R. Evid. Serv. 793

ZAYRE CORPORATION, Plaintiff-Appellee, v. S.M. & R. CO., INC., Defendant-Appellant.

No. 88-1070.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 20, 1988.

Decided Aug. 9, 1989.

Robert Dunn Glick, Schwartz, Cooper Kolb & Gaynor, Chtd., Narcisse A. Brown, Laura A. Lipinski, Chicago, Ill., for defendant-appellant.

James A. Cherney, Latham & Watkins, Kenneth K. Dort, Chicago, Ill., for plaintiff-appellee.

Before BAUER, Chief Judge, and CUDAHY and MANION, Circuit Judges.

MANION, Circuit Judge.

In October 1980, Zayre Corporation agreed to allow SM & R Company to operate jewelry departments in Zayre's stores. Zayre and SM & R executed a Master Concession Agreement, a detailed document that set forth Zayre's and SM & R's rights and obligations. One of Zayre's obligations was to pay jewelry department employees' wages and benefits on SM & R's account, and to periodically charge SM & R for these payments. SM & R, in turn, agreed to reimburse Zayre for the payments Zayre made to the employees.

The Master Agreement provided that at specified times after the first Saturday of January 1984, Zayre could terminate its concession arrangement with SM & R. During the summer of 1984, Zayre indicated that it would be terminating the Master Agreement in February 1985. In anticipation of the Master Agreement's termination, Zayre and SM & R began to prepare the jewelry departments for the transfer of management to Zayre. Two letters from Malcolm Sherman, Zayre's president, to Maxwell Pohn, SM & R's president and CEO, summarized the preparations. Those letters revealed, among other things, that SM & R was to continue managing the jewelry departments through the end of January 1985 as it had in the past. As part of its ongoing management, SM & R was to buy merchandise in the fall of 1984 for resale at Zayre stores in the spring of 1985.

As of February 1985, the Master Agreement was officially terminated. Zayre and SM & R reconciled accounts and executed a Settlement Agreement to settle disputes that had arisen during the reconciliation. The Settlement Agreement provided, among other things, that SM & R would reimburse Zayre for any additional vacation pay to jewelry department employees that had accrued during the time that SM & R had operated the jewelry departments. Zayre subsequently sent invoices to SM & R for the vacation pay SM & R owed; those invoices showed a total balance due of $61,539.40. The invoices included computer printouts that showed Zayre's payments to jewelry department employees. Despite Zayre's requests, however, SM & R refused to pay.

In July 1986, Zayre sued SM & R in the district court. Counts I, II, and III sought reimbursement of the $61,534.40 from SM & R. (The complaint also included other unrelated claims that are not at issue in this appeal.) SM & R responded to Zayre's suit by filing a counterclaim. Count II of the counterclaim (the only counterclaim count before us on this appeal) alleged that Zayre had agreed with SM & R that SM & R would design, buy, and sell at a markup to Zayre, jewelry anticipated to be sold at Zayre stores in the spring of 1985. SM & R alleged that it bought the jewelry but that Zayre breached the contract by failing to buy it; as a consequence, SM & R alleged that it lost $400,000 in profit by having to sell the jewelry to somebody else.

Zayre filed a motion for summary judgment on Counts I-III of its complaint and Count II of SM & R's counterclaim. The district court granted that motion. The court also awarded Zayre prejudgment interest, and properly entered final judgment pursuant to Fed.R.Civ.P. 54(b). SM & R appeals the summary judgment and the prejudgment interest award.

I.

Summary judgment is appropriate where no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56. The moving party bears the initial burden of showing that no genuine issue of material fact exists. See Federal Deposit Ins. Corp. v. Meyer, 781 F.2d 1260, 1267 (7th Cir.1986). Once the moving party has demonstrated the absence of any genuine factual issues, the nonmoving party may not merely rest upon the allegations or denials in its pleadings but must present specific facts showing that a genuine issue exists for trial. See Fed.R.Civ.P. 56(e).

Regarding Zayre's claim for reimbursement, SM & R concedes that it owes Zayre money for vacation pay Zayre paid on SM & R's account. The only dispute is over the amount. To support its motion for summary judgment on the reimbursement claim, Zayre submitted an affidavit from its vice president-controller, Donald Campbell. Along with Campbell's affidavit, Zayre submitted invoices that it had sent to SM & R. Attached to the invoices were computer printouts that showed the amounts of vacation pay that Zayre had paid to jewelry department employees on SM & R's account. The invoices and printouts showed that Zayre had paid $61,539.40.

Campbell's affidavit stated that he personally knew, and was competent to testify to, the facts in the affidavit. According to the affidavit, Zayre had sent a number of invoices (including the computer printouts) at various times to SM & R but SM & R failed to reimburse Zayre for any of the vacation pay. The affidavit went on to state that Campbell had reviewed copies of the unpaid invoices and printouts and that the printouts were "based upon information kept in Zayre's ordinary course of business, and accurately reflect Zayre's actual payment to [jewelry store employees] for vacation pay which accrued during SM & R's occupancy of the ... jewelry ... departments."

SM & R contends that the district court erred in entering summary judgment for Zayre on the reimbursement claim because the computer printouts supporting Zayre's claim would not have been admissible in evidence. See Martz v. Union Labor Life Ins. Co., 757 F.2d 135, 138 (7th Cir.1985); James W. Moore & Jeremy C. Wicker, 6 Moore's Federal Practice, p 56.22, at 56-759 (2d ed. 1988) ("Submitted exhibits and documents must be admissible in evidence."). According to SM & R, Zayre has failed to properly authenticate the printouts, or to establish a sufficient foundation to admit the printouts--admittedly hearsay--as business records because Zayre has failed to present evidence regarding, among other things, the source of data for the printouts, the data's accuracy, the input procedures used to feed the data into the computer, or whether the computer was working properly. See Fed.R.Evid. 901(b)(9) (authentication); Fed.R.Evid. 803(6); United States v. Croft, 750 F.2d 1354, 1363-65 (7th Cir.1984); United States v. Weatherspoon, 581 F.2d 595, 598 (7th Cir.1978). SM & R also complains that Zayre has not established that Campbell was qualified to establish the foundation because his affidavit does not show that he was the "custodian or [an] otherwise qualified witness," Fed.R.Evid. 803(6), and that Zayre has not established that the printouts were made as a routine company practice. Finally, SM & R claims that the printouts were summary evidence under Fed.R.Evid. 1006 and that they were inadmissible as summaries because Zayre had not made the documents underlying the summaries available to SM & R.

It is not entirely clear that the computer printouts are summaries. Cf. United States v. Russo, 480 F.2d 1228, 1240-41 (6th Cir.1973) (computer printout listing every claim paid by health insurer during a year was not a summary but an original record). But even if they are, SM & R's Rule 1006 argument is meritless. The record reveals that Zayre did offer to make the underlying records available at its individual stores. SM & R does not deny this but argues that such a process would have been unduly burdensome because it would have required SM & R's counsel to visit hundreds of Zayre stores to examine the records. Such a procedure might very well have been impractical. But SM & R never filed an affidavit under Fed.R.Civ.P. 56(f) requesting a continuance to pursue discovery, or a motion for a protective order under Rule 26(c), or a motion to compel discovery under Rule 37(a), or in any other way ask the district court to require Zayre to make the underlying records more conveniently available before the district court entered summary judgment. SM & R cannot now complain about the burden that inspecting the underlying records would have imposed. Cf. Davis v. City of Chicago, 841 F.2d 186, 189 (7th Cir.1988) (nonmovant cannot raise lack of discovery as grounds for reversing summary judgment on appeal when he took no action in district court to obtain additional discovery time). Since Zayre literally did make the underlying records available, the printouts (if indeed they were summaries) were not inadmissible under Rule 1006.

SM & R's authentication and foundation arguments, however, raise more complicated issues. Campbell's affidavit indicates that whoever prepared it gave little thought to authenticating the printouts or qualifying them as business records. The affidavit states nothing about why Campbell would be familiar with the computer system and data processing procedures that produced the printouts. Zayre has attempted to bolster Campbell's affidavit by emphasizing that he was Zayre's controller, who Zayre claims was "the very individual responsible for maintaining the accuracy of Zayre's accounting records." But the record contains no evidence of Campbell's duties with Zayre, and absent such evidence Campbell's title is meaningless. Not all companies use the same labels for the same functions, and for all we know from the record Zayre could have given the title "controller" to its head of maintenance.

Still, Campbell did testify that he reviewed the printouts and that the printouts accurately reflected the amounts of vacation pay that Zayre had paid on SM & R's account. Campbell also testified that he personally knew about...