On June 7, 2014, Alana McNutt was towing her mother-in-law’s horse trailer when she was struck by another driver. The other driver, a minor, was driving with the permission of his mother, Christine Warth. State Farm Insurance insured the horse trailer. In December 2015, State Farm filed a subrogation action against Warth claiming $16,406 in damages as a result of the accident which it paid to the trailer owner. In June 2017, Warth conceded liability leaving only the amount of damages the remaining issue for trial.
At the bench trial, State Farm called its adjuster as the sole witness. Through her testimony, State Farm offered several exhibits, including Exhibit 2 which was an invoice for the repair of the trailer which indicated as “Estimate Only” of $12,373 for parts and labor. The Court admitted the exhibit over the hearsay and lack-of-foundation objections from Warth’s counsel. On August 9, 2017, the district court entered a trial order on damages for $12,373.03 for the repair of the trailer.
Warth appealed the damages award arguing the “estimate only” invoice was inadmissible hearsay. Further, Warth argued that State Farm failed to lay the proper foundation for admitting the invoice. State Farm only called two witnesses: the auto claims adjuster and the trailer owner. The claims adjuster testified that she had reviewed the invoice while reviewing the file, and further testified State Farm followed standard industry practices in paying out the claim based on the invoice.
The Iowa Court of Appeals reversed and remanded for a new trial, and held that the adjuster’s testimony did not lay a sufficient foundation to submit the invoice into evidence. The Court held that the invoice was not admissible as a business record because the adjuster lacked personal knowledge of how the invoice was created or kept the record.
State Farm Insurance v. Christine Warth, as parent of Z.W. and Z.W., a minor child, Case No. 17-1469 (filed Sep. 26, 2018).
Available at https://www.iowacourts.gov/courtcases/2319/embed/CourtAppealsOpinion