## Facts

- Vee Vinhnee filed a Chapter 7 petition in July 2003 with modest income, no secured debt, and substantial priority tax debt.
- American Express held most of Vinhnee’s unsecured debt, arising from two credit cards: a long-standing “gold” card (with sub-accounts and an additional user) and a newer “platinum” card issued in 2003.
- American Express brought an adversary proceeding seeking a determination that the credit-card debt was nondischargeable under 11 U.S.C. § 523.
- At a bench trial, American Express attempted to prove the account history primarily through computerized business records (electronically stored billing statements and related data).
- The bankruptcy court refused to admit the electronic records for lack of adequate authentication and foundation, then permitted a post-trial submission to cure the defects.
- The post-trial submission did not satisfy the court’s foundational requirements; judgment was entered for the debtor, and the court stated the creditor would have prevailed on one count had the records been admitted.
- On appeal, the excluded records were not part of the evidentiary record and functioned only as an offer of proof.

## Issues

1. Whether the bankruptcy court abused its discretion by excluding American Express’s computerized business records for inadequate authentication and foundation.
2. Whether a trial court may require a complete evidentiary foundation for electronic business records even without an objection from the opposing party.
3. What foundational showing is required to authenticate and admit electronically stored business records under the Federal Rules of Evidence.

## Decision

- The Bankruptcy Appellate Panel affirmed the judgment for the debtor.
- The panel held the trial court could insist, even absent an objection, that all elements of a proper foundation be established for electronic business records.
- The panel concluded the bankruptcy court did not abuse its discretion in excluding the records, particularly given the additional post-trial opportunity to cure and the continued failure to provide an adequate foundation.

## Legal Principles

- Authentication requires evidence sufficient to support a finding that the offered item is what its proponent claims; electronic records are subject to this requirement under Fed. R. Evid. 901(a).
- Electronically stored business records may qualify under the business-records hearsay exception (Fed. R. Evid. 803(6)), but the proponent must also establish trustworthiness and proper authentication.
- For computer-stored records, a foundation should address the reliability of the relevant information system (e.g., hardware/software, data entry methods, safeguards, controls or audits, security, backup/preservation, and retrieval practices) to show ongoing data integrity.
- Conclusory testimony that a system is “standard” or “reliable,” without competent detail about controls and integrity measures for the specific system and records, can be insufficient.
- Trial courts have discretion to exclude evidence lacking proper foundation and may raise foundational deficiencies sua sponte; appellate review of such evidentiary rulings is for abuse of discretion.

## Conclusion

The court affirmed exclusion of American Express’s electronic account records because the creditor failed to lay an adequate, system-focused foundation establishing authenticity and trustworthiness, and it held that a trial judge may demand full compliance with evidentiary requirements for electronic business records even when the opposing party does not object.


In re Vinhnee, 336 B.R. 437 (B.A.P. 9th Cir. 2005)