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Univ. of South Carolina School of Law

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Monday, July 7, 2008

That Other Blue Book: Maine Bankruptcy Court Rules That Kelley Blue Book Evidence Is Admissible under Rule 803(17)

The recent opinion of the United States Bankruptcy Court for the District of Maine in In re Young, 2008 WL 2619960 (D. Me. 2008), reveals that courts typically allow for the admission of evidence from the Kelley Blue Book pursuant to Federal Rule of Evidence 803(17).  In Young, Bradley and Denise Young had separate Chapter 13 cases pending under joint administration, and Camelot Homes, Inc. held an identical undisputed claim in each case secured by a judgment lien.  Camelot asserted that its claims were secured by certain real property, the debtors' residence, and four vehicles (a Honda, a Ford, a Dodge, and a BMW), while Bradley claimed that the vehicles were exempt property.

In support of his argument, Bradley claimed that his opinion of the "fair market value and replacement value" of each vehicle was:

     -Honda: $1,435.00

     -Ford: $2,665.00

     -Dodge: $5,235.00

     -BMW: $18,240.00

The court found that:

     "If Bradley's opinions are accepted as accurate reflections of replacement value, Camelot's claim will not be secured by the Honda and the Ford because the value of each of those vehicles would be consumed by an allowed exemption. The same will be true for the Dodge if the tools of trade exemption is allowed. Similarly, the BMW could be beyond the reach of Camelot's lien because the record shows a prior lien on that vehicle in the amount of $19,061.83."

The court then reserved its decision on this issue until it held a further evidentiary hearing.  It did, however, note that while Bradley's opinions on fair market value were based upon the Kelley Blue Book website, this fact did not render his testimony inadmissible hearsay because evidence from the Blue Book is admissible pursuant to Federal Rule of Evidence 803(17), which allows for the admission of   "[m]arket quotations, tabulations, lists, directories, or other published compilations, generally used and relied upon by the public or by persons in particular occupations" as an exception to the rule against hearsay.  As support for this conclusion, the court cited to two bankruptcy cases reaching similar conclusions, and my own research indicates that other courts have reached similar conclusions even in non-bankruptcy cases. See, e.g., United States v. Meo, 1994 WL 12340 at *7 (9th Cir. 1994).

Looking at the Advisory Committee Note to Rule 803(17), this seems to me to be the correct ruling because the Committee indicated that "[t]he basis of trustworthiness" for such evidence "is general reliance by the public or by a particular segment of it, and the motivation of the compiler to foster reliance by being accurate."  It seems clear that both the car buying public and car dealers/sellers rely upon the Blue Book, with its compiler motivated to be accurate lest such reliance be undermined.

That said, I wasn't sure that what I saw as subjective Blue Book valuations could be considered as reliable as objective compilations such as phone books or market reports.  In looking at the FAQ on Kelly's site, though, I see that, inter alia, the New Car Blue Book Value reflects a vehicle's actual selling price and is based on tens of thousands of recent real sales transactions from auto dealers across the United States. The New Car Blue Book Value is not calculated or based on a proprietary formula; instead it is derived from actual new vehicle sales and extensive knowledge of the marketplace."  That makes the valuations seem a bit more objective to me, but it still seems to me that there is enough subjectivity to render their admissibility under Federal Rule of Evidence 803(17) questionable.  Are there any readers/car experts who want to weigh in?

-CM

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