Opinion
No. C3-96-184.
Filed September 24, 1996.
Appeal from the District Court, Scott County, File No. C9414441.
Robert M. McClay, (for Respondent)
James H. Gilbert, Konstandinos Nicklow, (for Appellant)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1996).
UNPUBLISHED OPINION
Appellant challenges the district court's denial of her motion for amended findings of fact, conclusions of law and judgment, or, alternatively, for a new trial. We reverse and remand for a new trial.
FACTS
Appellant Donna L. Hartmann began working for respondent Q. Mc. Plastic Machinery, Inc. in October 1989. Hartmann's compensation included a SEP/IRA plan that was fully funded by respondent. As of 1992, Hartmann was authorized to sign her name to corporate checks for normal business expenses. She was never authorized to sign anyone else's name. Respondent terminated Hartmann after she allegedly confessed to diverting money from respondent's corporate checking account for her personal use.
Respondent brought an action in conversion and unjust enrichment against Hartmann. During a deposition, respondent referred Hartmann to photocopies of checks that she had allegedly signed. Hartmann objected to these photocopies, arguing that they were not authenticated and that it was unclear whether the fronts and backs of the checks, as photocopied, belonged together. Also during the deposition, Hartmann invoked her Fifth Amendment privilege against self-incrimination and refused to answer questions concerning the converted funds or her retirement account.
Respondent brought a motion seeking an order of the district court to deem as admitted all matters to which Hartmann responded by asserting her privilege against self-incrimination. The district court initially granted the motion as to questions concerning Hartmann's retirement account, but reserved all other matters. The district court later granted respondent's motion to deem as admitted all matters to which Hartmann responded by refusing to answer.
At trial, respondent introduced exhibits 1 and 2, which included 89 statements deemed as admitted facts and microfiche copies of checks, purporting to be signed by Hartmann. Respondent also introduced a bank employee's written certification that microfiche copies of certain checks were authentic. Hartmann again objected to the introduction of the checks on the basis of foundation and lack of authentication. The district court overruled the objection.
The district court made the following conclusions:
1. That [respondent] has shown by a preponderance of the evidence that [Hartmann] converted $329,733.35 of [respondent's] money for her own use.
2. That the proceeds of [Hartmann]'s SEP/IRA plan are not exempt from attachment or garnishment pursuant to Minn. Stat. § subd. 1 and 24.
The district court denied Hartmann's motion for amended findings of fact, conclusions of law, and judgment, or, alternatively, a new trial.
DECISION
An appellate court is subject to a stringent standard of review when examining a trial court's denial of a new trial motion. On review, this court merely considers whether the trial court exercised reasonable discretion in denying the motion for a new trial.
Red River Spray Serv., Inc. v. Nelson, 404 N.W.2d 332, 334 (Minn.App. 1987).
1. Admissions.
Hartmann argues the trial court erred by deeming as admitted, under Minn.R.Civ.P. 37.02, those matters to which she responded by invoking her Fifth Amendment privilege against self-incrimination. We agree.
Minn.R.Civ.P. 37.02(b)(1) provides:
If a party * fails to obey an order to provide or permit discovery, *the court in which the action is pending may make*:
(1) An order that the matters regarding which the order was made or any other designated facts shall be taken to be established for the purposes of the action *
(Emphasis added.)
Under the plain language of the rule, matters may only be deemed admitted after a party fails to comply with an order to compel discovery of those matters. Here, the trial court did not order Hartmann to provide answers to deposition questions. The trial court could have drawn a negative inference from Hartmann's refusal to answer, but under rule 37.02, it could not deem Hartmann's silence an admission regarding each question she refused to answer.
2. Documentary evidence
Hartmann argues the trial court erred by admitting into evidence exhibits 1 and 2, which included microfiche copies of checks, purporting to be either signed and/or endorsed by Hartmann. Hartmann argues the trial court should have excluded the checks for lack of foundation and authentication and for violating the hearsay rule. We agree.
Minn.R.Evid. 901(a) requires that a document be authenticated or identified prior to its admission into evidence. A document may be authenticated through
[e]vidence describing a process or system used to produce a result and showing that the process or system produces an accurate result.
Records made at or near the time of regularly conducted business activity are excluded from the hearsay rule if it is shown by the testimony of the record custodian or other qualified witness that (1) the records were made by a person with knowledge, (2) the records were kept in the regular course of business, and (3) it was the regular practice of that business activity to make the records. Minn.R.Evid. 803(6). "It is not required that the person who prepared the report testify." Kohn v. La Manufacture Francaise Des Pneumatiques Michelin, 476 N.W.2d 184, 188 (Minn.App. 1991), review denied (Minn. Dec. 13, 1991). However, some qualified witness must testify. A witness cannot
provide foundation when he was not present in court to identify the records. The practice is fraught with danger and highly irregular, and we strongly discourage its use.
In re Martin, 458 N.W.2d 700, 703-04 (Minn.App. 1990) (holding it was an abuse of discretion to allow the qualified witness to testify via telephone).
Here, Lisa Pearson, a legal process specialist at Norwest Corporation, provided only a written certification that: (1) certain listed exhibits are "copies of the original bank records that are kept in the normal course of business;" and (2) "the fronts and backs of the checks correspond with one another." Pearson's certification was inadequate because it did not describe the microfiche process or system used by the bank, it did not apply to all of the checks submitted in exhibits 1 and 2, and Pearson did not testify at trial.
After the trial was completed, respondent provided additional written certifications prepared by Pearson. Because the certifications were not presented at trial, we will not consider them.
3. Retirement plan
Hartmann argues the trial court erred by ordering her to forfeit her retirement plan to respondent. Hartmann contends her retirement account is exempt from attachment under the Employee Retirement Income Security Act (ERISA). We agree.
ERISA supersedes "all State laws insofar as they may now or hereafter relate to any [qualified] employee benefit plan." 29 U.S.C. § 1144(a) (1994). Minn. Stat. § subd. 24(2) (1994), "relates to" employee benefit plans because
[i]t expressly refers to such plans in describing the type of funds that are exempt from attachment. Unless one of ERISA'S narrow exceptions to preemption applies, an express reference to employee benefit plans results in preemption by ERISA.
Community Bank Henderson v. Noble, ___ N.W.2d ___, ___ (Minn.App. July 23, 1996) (citing Shaw v. Delta Airlines, 463 U.S. 85, 96-100, 103 S.Ct. 2890, 2899-902 (1983)).
"[B]enefits provided under [an ERISA-qualified] plan may not be assigned or alienated." 29 U.S.C. § 1056 (d)(1) (1994). Plans governed by ERISA are entirely exempt, without limitation. Estate of Jones by Blume v. Kvamme, 529 N.W.2d 335, 339 (Minn. 1995).
[T]o approve any generalized equitable exception — either for employee malfeasance or for criminal misconduct — to ERISA's prohibition on the assignment or alienation of pension benefits
would be inappropriate. Guidry v. Sheet Metal Workers Nat'l Pension Fund, 493 U.S. 365, 376, 110 S.Ct. 680, 687 (1990). Hartmann may not be ordered to forfeit her retirement plan.
4. Motion to strike reply brief
Respondent requests that this court strike Hartmann's reply brief because it is not confined to new matters raised in respondent's brief. The motion to strike is denied. Although Hartmann's reply brief does not respond directly to each argument made in respondent's brief, the reply brief does not address issues that were not raised by respondent.