POTAMKIN CADILLAC CORP. V. B.R.I. COVERAGE CORP. 38 F.3d 627 (2nd Cir. 1994) CASE BRIEF

POTAMKIN CADILLAC CORP. V. B.R.I. COVERAGE CORP.

38 F.3d 627 (2nd Cir. 1994)

NATURE OF THE CASE: Defendant insurance brokers appealed from a judgment, which dismissed their counterclaims against plaintiff auto dealers for $776,368 in insurance premiums advanced by defendants to insurers on behalf of plaintiffs.

FACTS: Potamkin (P) retained BRI (D) as its insurance broker in 1980. In 1987, the relationship soured, and P sued D for RICO violations alleging fraud, unjust enrichment, and insurance malpractice. D denied counterclaimed to recover amounts allegedly owed by P, including amounts for premiums allegedly advanced by D to insurance companies, for which P had never reimbursed D. Four years later, the action came to trial. After a jury had been empaneled and opening statements had been made, the parties entered into settlement negotiations. The trial was terminated. The parties entered into a stipulation for adjudication only (a) an accounting with respect to P's claims for return of premiums, unapplied payments, overbillings, and overpayments, and (b) D's counterclaims for, inter alia, unreimbursed premium advances. After receiving written submissions and hearing oral argument, the district court suggested that the parties submit the accounting disputes to a special master who would make a recommendation to the court as to the resolution of outstanding issues. The parties agreed. D prepared an accounting history by the computer. That affidavit was silent as to why the History had been prepared, what documents were the sources for the computer tapes from which the History had been prepared, and why, despite P's requests covering such documents, the tapes themselves had not been produced during the four years of discovery. A 'test sample review' of the History revealed a number of 'keypunch errors, misapplication of cash or billings among policies, and policies mislabeled as unassigned. For many of the claimed advances D produced no canceled checks, and many entries on the History showed D's payment on behalf of Potamkin as having been made by 'check no. 0000.' P argued that portions of the History constituted admissions by BRI of Potamkin's payment of certain premiums. Expert opinions were submitted by both parties backing up their contentions. The special master intended to recommend denial of all of D's counterclaims for unreimbursed premium advances, D then argued that the History was presumptively reliable as a business record admissible under Fed. R. Evid. 803(6), and (b) that P had admitted in its complaint that D had made the pertinent premium advances on P's behalf. The master rejected D's contention that P had admitted those claims and concluded that the evidence produced by D was 'insufficient to prove that it advanced moneys on behalf of P.' D objected arguing principally that direct proof of payment in the form of checks was not necessary since BRI and the insurers often simply offset amounts owed with credits, and that the P History should have been accepted as a business record that 'itself constitutes direct prima facie evidence of D's claims -- the veracity of which having been duly established, and having gone uncontroverted, renders defendants['] claims undeniable.' Judgment was entered in favor of P. This appeal followed.

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LEGAL ANALYSIS:

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