For several years it ran tidy. Klein took in about $30,000 a month in net proceeds and tracked the circulation through Taylor’s statements. Then he relocated to end the relationship, citing what he stated was a failure to keep specific systems, and provided the 60 days observe the agreements called for.
That is when the numbers stopped building up. Klein requested the final June 2023 distribution – roughly $34,000 by his read of the Buildium statements. No final payout came. No final accounting came either. By July 2023, his Buildium gain access to was turned off, and the last statement he had actually was dated July 8. Klein put the total he was owed at about $58,000: $34,000 in undistributed income, $15,000 in cash, $7,000 in security deposits, and $2,000 in pre-paid lease. He sent out a demand letter; Taylor disputed the number without using proof, stated an audit was pending, and never ever produced a last accounting.
Klein’s companies sued for breach of contract and related claims. At a bench trial – one decided by a judge instead of a jury – the judge omitted three of Klein’s exhibits as hearsay. Those exhibits were the Buildium reports Taylor himself had prepared. Without them, the trial court discovered Klein had actually not proven his damages and dismissed the case.
The appeals court took it apart. It held that Klein’s own testimony – his payment history plus his itemized $58,000 tally – was enough to show damages by itself. It went even more and ruled the excluded reports ought to have been confessed anyway, both as company records and as ARESG’s own admissions, considering that Taylor produced them and Klein relied on them as the owner. The court reversed the dismissal and sent the case back for more proceedings, including an opportunity for ARESG to put on its own evidence.
The lesson for the business is plain. The monthly reports you produce for an owner are not just service – they are records that can land in proof. And an owner might be able to prove what he is owed from the witness stand, with or without your documentation in hand.