Nettie's Flower Garden, Inc. v. SIS, Inc., No. 62750

• Decision Date: 21 December 1993
• Docket Number: No. 62750
• Citation: 869 S.W.2d 226
• Parties: NETTIE'S FLOWER GARDEN, INC., Plaintiff/Appellant, v. SIS, INC., Defendant/Respondent.
• Court: Missouri Court of Appeals

Page 226

869 S.W.2d 226

NETTIE'S FLOWER GARDEN, INC., Plaintiff/Appellant, v. SIS, INC., Defendant/Respondent.

No. 62750.

Missouri Court of Appeals,

Eastern District,

Division Two.

Dec. 21, 1993.

Motion for Rehearing and/or Transfer to

Supreme Court Denied Jan. 20, 1994.

Application to Transfer Denied Feb. 22, 1994.

William I. Rutherford, Brown & James, P.C., St. Louis, for plaintiff, appellant.

Ben Ely, Jr., Ralph Hart, Kortenhof & Ely, St. Louis, for defendant, respondent.

CRANE, Presiding Judge.

Nettie's Flower Garden, Inc. (Nettie's) appeals from a judgment entered on a jury verdict in favor of defendant SIS, Inc. (SIS) ¹ on Nettie's' damage claim alleging SIS's negligence resulted in a failure of Nettie's' computer software to copy data onto backup tapes. We affirm on the grounds that Nettie's failed to make a submissible case.

FACTUAL BACKGROUND

Nettie's is a retail florist with several locations in St. Louis. In 1982, Nettie's purchased a Rexon computer, with a 56 megabyte hard drive, and software from the Detroit based computer sales company Independent Management Systems, Inc. (I.M.S.). The software package, which included a backup system, was unique. It was specifically designed for retail florists by Roger Kelly, president of I.M.S., who copyrighted this software. I.M.S. trained Nettie's' employees to use the computer and the software, including the backup system. After purchasing the system Nettie's entered into a software maintenance contract with I.M.S., but contracted with SIS, a local company, for hardware maintenance.

In 1984, Nettie's purchased a second hard drive from I.M.S. This drive had 140 megabytes, which it added to its original 56 megabyte hard drive. With I.M.S.'s assistance and instruction, it increased the number of backup tapes it used to six.

In 1986, Nettie's purchased a 140 megabyte drive from SIS to replace the original 56 megabyte hard drive. SIS installed this hard drive through its hardware maintenance representative, Larry Nobs. Because neither Nobs nor Nettie's' then-accountant, Jack Cook, knew how to load the backup tapes, Cook called I.M.S. He informed I.M.S. of the purchase and requested assistance in loading the backup tapes. Cook then gave the telephone to Nobs. The I.M.S. representative instructed Nobs how to load the data back onto the hard drive. Neither Cook, Nobs, nor the I.M.S. representative discussed additional changes to the backup program.

In June, 1987 the computer sustained a headcrash and there was extensive loss of data, including customer accounts stored on the computer. When the parties attempted to retrieve the lost information using the backup tapes, it was discovered that certain backup tapes were blank.

A former I.M.S. employee testified that the backup tapes were blank because the location of data was changed when the 140 megabyte drive replaced the 56 megabyte disk drive. What had previously been logical drives four and five on the 1984 system became logical drives ten and eleven on the 1986 system. However, the backup tapes Nettie's filed a petition against SIS and I.M.S. seeking damages for negligence for failure to change the backup program or warn of the consequences of such failure. Prior to trial, I.M.S. settled with Nettie's. Nettie's proceeded to trial and submitted its case against SIS on the theory that SIS failed to warn it of the necessity of changing its backup program. The jury returned a verdict in favor of SIS on which the trial court entered judgment.

were still programmed to back up logical drives four and five which no longer contained data, resulting in blank tapes. Accordingly, any data stored on logical drives ten and eleven after June, 1986 was not copied onto the backup tapes.

ISSUES ON APPEAL

Hearsay

Nettie's appeals, contending that the trial court prejudicially erred in admitting hearsay. At trial, the court allowed former Nettie's' accountant Cook to testify, over Nettie's' objection, as follows:

Q. (by Mr. Hart) Did Roger Kelly of I.M.S. make any statements to you about I.M.S.'s responsibilities as far as them being responsible for not having caught this backup problem?

A. (Jack Cook) Yes. He indicated that they should have caught it.

Hearsay is an out of court statement offered in evidence to prove the truth of the matter asserted. Mattes v. Black & Veatch, 828 S.W.2d 903, 907-08 (Mo.App.1992). It is ordinarily not admissible unless the statement falls under one of the exceptions to the hearsay rule. At trial, Nettie's objected on the grounds that the statement did not fall within any of the exceptions to the hearsay rule. SIS argued that the statement was both an admission and a declaration against interest. The trial judge overruled the objection on the grounds that the statement was an "admission against interest by the principal [sic] of a co-defendant...." On appeal Nettie's argues that the statement was neither an admission nor a declaration against interest. We agree.

A statement by a party-opponent is an admission and admissible as an exception to the hearsay rule if it meets the following requirements:

(1) a conscious or voluntary acknowledgment by a party-opponent of the existence of certain facts; (2) the matter acknowledged must be relevant to the cause of the party offering the admission; and (3) the matter acknowledged must be unfavorable to, or inconsistent with, the position now taken by the party-opponent.

United Services of America v. Empire Bank, 726 S.W.2d 439, 444 (Mo.App.1987). It is admissible regardless of whether the declarant is available to testify. Id.

Nettie's argues that I.M.S. was not a party in this action, and therefore the statements of its officers could not be admitted as admissions of a party. An admission by a party-opponent is made by a party to the litigation or by one in privity with or identified in legal interest with that party. Carpenter v. Davis, 435 S.W.2d 382, 384 (Mo. banc 1968).

In this case I.M.S. was neither a party at trial nor in privity with SIS. Privity is the "mutual or successive relationship to the same rights of property." McMullin v. Borgers, 806 S.W.2d 724, 732 (Mo.App.1991). The two entities were separate companies and were not in privity. Further, the parties agree that I.M.S. was no longer a party to this action at trial. Thus, the statement cannot be used as an admission of a party-opponent.

SIS responds that the party-opponent exception applies because Kelly admitted making the statement in a deposition (not offered into evidence) taken while I.M.S. was still a party. However, the exception requires that the admission be contrary to the position "now taken" by the party-opponent. United Services, 726 S.W.2d at 444. An admission of a party-opponent is admissible because it conflicts with a party's trial position. As stated in Carpenter, in an adversary proceeding,

a party should be held responsible for statements of fact or opinion, previously made, which conflict with the position taken by him in the judicial proceeding. Such statements may affect credibility and proof, and may aid the jury in arriving at the truth. In any event, the declarant is available in court to advance or defend his position.

435 S.W.2d at 384. Thus, the declarant must be a party at the time the admission is offered. Because I.M.S. was not a party at trial, the trial court erred in admitting this statement as an admission of a party-opponent.

Further, the statement was not admissible as a declaration against interest. Declarations against interest are "made by persons not a party or in privity with a party to the suit, are secondary evidence and constitute an exception to the hearsay rule, admissible only when the declarant is unavailable as a witness." Carpenter, 435 S.W.2d at 384. A declaration against interest is admissible when (1) the declarant is unavailable as a witness, (2) the declaration, when made, relates to a fact against the apparent pecuniary, proprietary or penal interest of the declarant, (3) the declaration concerns a fact personally cognizable by the declarant, and (4) the declaration is made under circumstances which render it improbable that a motive to falsify exists. United Services, 726 S.W.2d at 444.

Nettie's contends that Kelly's statement was an opinion as to fault and not a statement of fact, and therefore not a declaration against interest. An opinion as to fault is not admissible as a declaration against interest. Carpenter, 435 S.W.2d at 384-385. See also, Moore v. Mills, 623 S.W.2d 586, 589 (Mo.App.1981). Thus, in Carpenter, the declarant's statement to the other driver, "[I]t's not your fault", referring to an auto accident in which she was involved, was held to be an inadmissible opinion as to fault. Id. The court explained the rationale of this rule as follows:

An opinion as to fault in a negligence action is particularly susceptible to error. A witness at trial may, intentionally or otherwise, change a word and convey a meaning completely different from that intended by the declarant. An opinion as to fault may be ambiguous, and yet persuasive, where, as here, no opportunity exists for explanation or denial.

Id. at 384.

In this case, Kelly's reported statement was that "they should have caught it." Under the circumstances this statement was made, it was an opinion as to fault and thus not admissible. The circumstances under which this statement was made do not indicate reliability. The record does not show what prompted Kelly to make his statement. Kelly was not present at Nettie's when the problem occurred and the record does not indicate he ever viewed the computer or tapes. Thus, his statement could not be based on what he observed, but only in response to what Cook or others told him. Further, Cook did not testify to what he told Kelly in that conversation. Given the unreliability of the circumstances in which this opinion was expressed and the ambiguity of the opinion, we do not find any reason not to...