In Re: RFC and RESCAP Liquidating Trust Litigation

Background

The dispute concerned ResCap Liquidating Trust’s objections to DDX-11, a demonstrative chart that Primary Residential Mortgage, Inc. (PRMI) intended to use during the cross-examination of ResCap’s re-underwriting expert, Steven Butler. The chart used RFC’s Investor Repurchase Database, which contained entries concerning nearly 10,000 loans for which investors had made repurchase requests under various circumstances.

DDX-11 purported to show the number of database loans for which investors demanded repurchase based on alleged fraud or misrepresentations, RFC’s repurchase rate for those loans, and differences in repurchase rates among trusts with different contractual provisions. The parties stipulated to the database’s authenticity, but disputed whether DDX-11 accurately summarized its contents.

Parties’ Arguments

ResCap argued that DDX-11 contained inaccurate results and was prepared using an unreliable methodology, making it unfairly prejudicial, confusing, misleading, and wasteful of trial time. ResCap identified at least four loans that, in its view, did not involve investor allegations of fraud or misrepresentation even though DDX-11 treated them as such. ResCap also pointed to blank database entries that did not identify the reason for a repurchase request or RFC’s response. It argued that the chart was inadmissible under Federal Rule of Evidence 1006 because PRMI could not show that it fairly summarized the underlying evidence or that the person who prepared it was available for cross-examination.

PRMI argued that ResCap had directed it in written discovery responses to rely on the database. PRMI maintained that it used objective and conservative search terms and filters, that the chart fairly summarized the database, and that it would assist the factfinder in understanding approximately 10,000 entries. PRMI also argued that a sponsoring witness was unnecessary because the parties had stipulated to the database’s authenticity. It alternatively offered to make available the defense attorney who created the chart.

Court’s Analysis

The court explained that a demonstrative aid must have an adequate foundation and fairly and accurately summarize the evidence it illustrates. Under Rule 1006, a summary chart may be used to prove the contents of voluminous records that cannot conveniently be examined in court only if it fairly summarizes the evidence, assists the jury in understanding testimony already introduced, and was prepared by a witness available for cross-examination with the documents used to create it.

The court found that DDX-11 inaccurately summarized the database because its underlying methodology was unreliable. At minimum, the chart misidentified four loans as subject to repurchase demands based on investor allegations of fraud or misrepresentation. The court also found that blank database entries undermined the chart’s overall conclusions because some entries did not show the reason for the repurchase request or RFC’s response. PRMI had not designated a fact witness or expert to establish the methodology used to create DDX-11 and had delayed disclosing the information until the eve of trial.

The court separately held that the chart did not satisfy Rule 1006 because it was prepared by an attorney for the law firm representing PRMI, rather than by a witness who would be available for cross-examination. PRMI’s offer to make that attorney available did not cure the problem.

Disposition

Judge Susan Richard Nelson sustained ResCap’s objections to the use or admission of DDX-11. PRMI was precluded from using DDX-11 as a demonstrative aid during cross-examination and from introducing it as a Rule 1006 exhibit at trial.