Vancura v. Katris

• Decision Date: 07 October 2010
• Docket Number: No. 108652.,108652.
• Citation: 238 Ill.2d 352,939 N.E.2d 328,345 Ill.Dec. 485
• Parties: Richard P. VANCURA, Appellee,v.Peter KATRIS et al., (Kinko's Inc., Appellant).
• Court: Illinois Supreme Court

238 Ill.2d 352

939 N.E.2d 328

345 Ill.Dec. 485

Richard P. VANCURA, Appellee,

v.Peter KATRIS et al., (Kinko's Inc., Appellant).

No. 108652.

Supreme Court of Illinois.

Oct. 7, 2010.

Ruth A. Bahe–Jachna, Gregory E. Ostfeld, of Greenberg Traurig, LLP, of Chicago, Elliott H. Scherker, Brigid F. Cech Samole, of Greenberg Traurig, P.A., of Miami, FL, for Appellant.Martin F. Hauselman, Daniel H. Olswang, of Hauselman, Rappin & Olswang, Ltd. of Chicago, for Appellee.

[345 Ill.Dec. 489 , 238 Ill.2d 355] OPINION

Justice GARMAN delivered the judgment of the court, with opinion.

Plaintiff Richard Vancura brought an action against Peter Katris, Glenn Brown, and Randall Boatwright, alleging that the defendants had colluded to deprive Vancura of his interest in a mortgage note by forging Vancura's signature on an assignment of that interest. Vancura also sued Gustavo Albear, the notary public whose seal was used to notarize the fraudulent mortgage assignment, and Albear's employer, Kinko's, Inc. (Kinko's). Relevant to this appeal, the circuit court of Cook County held a bench trial and found Kinko's liable to Vancura based on a violation of section 7–102 of the Illinois Notary Public Act (Act) (5 ILCS 312/7–102 (West 1996)) and a common law claim based on theories of negligent training and negligent supervision. The appellate court reversed the finding of liability under the Act, but it affirmed the judgment of the trial court on the common law negligence claim. We granted Kinko's petition for leave to appeal pursuant to Supreme Court Rule 315 (210 Ill.2d R. 315).

Kinko's argues that the common law duty of care for employers of notaries is defined by the Act. Thus, it maintains that where its training and supervision adhered to the standards set forth in the Act, it cannot be liable. Kinko's further asserts that it had no statutory duty to train its notary employees, and therefore that its liability is limited to the scope of its undertaking by the voluntary undertaking doctrine. See Frye v. Medicare–Glaser Corp., 153 Ill.2d 26, 32, 178 Ill.Dec. 763, 605 N.E.2d 557 (1992). Plaintiff responds that the Act is not the only source of common law duty for a notary's employer, and that Kinko's training and supervision were negligent regardless of the extent of Kinko's duty.

For the reasons given below, we reverse the trial court's judgment against Kinko's and remand with directions to enter judgment in favor of Kinko's on both counts.

BACKGROUND

Plaintiff Vancura, a real estate investor, agreed to help defendant Glenn Brown

[345 Ill.Dec. 490 , 939 N.E.2d 333]

finance the purchase and rehabilitation of a single-family home in Wheaton, Illinois, as an investment. Vancura loaned $100,000 to a land trust Brown established, and in return the trust executed a $110,000 installment note that was secured by a first mortgage on the investment property. Brown also personally guaranteed the note. However, Brown had difficulty selling the Wheaton house, and when the note matured he did not have the money to repay Vancura. Vancura and Brown each sought advice from defendant Randall Boatwright, another real estate investor, who offered suggestions on how to improve the property. Boatwright then left town to look for investors for his own project, a new video transmission company called Multi Path Communications.

When Boatwright returned from his trip, his business partner, Robert Brown, told him that Vancura was willing to trade the installment note for a share of Multi Path Communications.¹ Boatwright told Glenn Brown about the potential trade with Vancura and offered to accept $90,000 in payment for the note, which was then worth $117,333. Glenn Brown then asked another business acquaintance, defendant Peter Katris, to pay Boatwright in exchange for $90,000 and half of the profits from the sale of the Wheaton house, whenever that occurred. Katris agreed, and Glenn Brown arranged for his attorney, Karl Park, to conduct a real estate closing to reflect the transactions. Thus, Glenn Brown understood that Vancura would receive a share of Multi Path Communications and in return he would assign the installment note and accompanying mortgage to Boatwright, who would accept $90,000 in satisfaction of both. Glenn Brown then paid the $90,000 to Boatwright with money borrowed from Peter Katris, whom Glenn Brown repaid with $90,000, plus half of the profits from the sale of the house.

Prior to the closing, Park drafted an “Assignment of Mortgage” for Vancura to sign, along with a loan discount agreement for Boatwright and Glenn Brown to sign and a release deed for Boatwright to sign. According to Boatwright, against whom a default judgment was entered in this case and who testified by way of an evidence deposition, Robert Brown took the assignment of mortgage to Vancura for his signature the night before the closing. When Boatwright and Robert Brown met the next morning, they realized that the assignment of mortgage and the release deed required notarization, and they took the documents to the Kinko's store in Oak Lawn, Illinois. Later, when the closing was conducted, both the assignment of mortgage and the release deed bore the apparent signature and notary seal of Kinko's employee Gustavo D. Albear, an Illinois notary.

At the bench trial in this case, it was undisputed that Vancura never signed the mortgage assignment, and he was not present when the document was notarized. According to Boatwright, when he and Robert Brown arrived at the Oak Lawn Kinko's, he went to make some photocopies while Robert Brown greeted an employee he knew as “Gus.” When Boatwright approached Gus and Robert Brown at the counter, the employee asked for Boatwright's driver's license. Boatwright provided his license, and Gus notarized the release deed bearing Boatwright's signature. Boatwright did not remember whether he signed the deed in Gus's presence. Boatwright claimed to know nothing

[345 Ill.Dec. 491 , 939 N.E.2d 334]

about how the mortgage assignment bearing Vancura's forged signature was notarized.

At the trial, 10 years after the occurrence, Gustavo Albear, the Kinko's employee whose notary seal appears on the notarizations, testified that he did not remember specifically notarizing the assignment of mortgage or the release deed. When presented with both documents, he acknowledged that the notary stamp on each appeared to be his. Similarly, he testified that the signature on the release deed appeared to be his. However, he was “pretty certain” that the notary signature on the forged assignment of mortgage was not his. According to Albear, the two signatures appeared slightly different from one another, and the assignment of mortgage signature read “Gustavo David Albear” rather than “Gustavo D. Albear.” Albear explained that he never signed anything with his middle name “for some private reasons and religious reasons,” and that he had not used his middle name for an official purpose since he had become a United States citizen.² Albear also testified that he had kept a logbook of all notarizations he performed while working for Kinko's, but that logbook could not be located for trial.

The closing occurred as planned, and when Vancura discovered the fraudulent mortgage assignment, he brought suit against Boatwright, Glenn Brown, Katris, Albear, and Kinko's. Glenn Brown and Katris also filed claims against Albear and Kinko's. Only the claims against Kinko's are at issue in this appeal, and we therefore review only the facts that are relevant to those claims.

Each of the three complaints against Kinko's included a claim based on common law theories of negligent supervision and negligent training, as well as a claim based on section 7–102 of the Illinois Notary Public Act (5 ILCS 312/7–102 (West 1996)). Section 7–102 provides:

“§ 7–102. Liability of Employer of Notary. The employer of a notary public is also liable to the persons involved for all damages caused by the notary's official misconduct, if:

(a) the notary public was acting within the scope of the notary's employment at the time the notary engaged in the official misconduct; and

(b) the employer consented to the notary public's official misconduct.” 5 ILCS 312/7–102 (West 1996).

“Official misconduct” under the Act is defined in section 7–104:

“The term ‘official misconduct’ generally means the wrongful exercise of a power or the wrongful performance of a duty and is fully defined in Section 33–3 of the Criminal Code of 1961. The term ‘wrongful’ as used in the definition of official misconduct means unauthorized, unlawful, abusive, negligent, reckless, or injurious.” 5 ILCS 312/7–104 (West 1996).

Albear, who settled with Vancura before trial, testified that he became a notary at the request of Kinko's in 1995, and participated in a required notary training course taught by a Kinko's trainer. According to Albear, he learned at the training that there were three types of notarizations. First, “notarization through identification, a card or some type of written identification”; second, notarization of a person known personally to Albear; and third, notarization based on an identification made by someone known personally to Albear.

[345 Ill.Dec. 492 , 939 N.E.2d 335]

However, Albear testified that he always requested identification to “feel comfortable with a situation.” According to Albear, Kinko's taught him to ask for identification with a signature, but the identification need not include a photograph. When asked how an identification with a signature but no photo would enable him to verify that the bearer of the identifying document was the person he claimed to be, Albear responded, “Well, that is not my job. My job is to verify your signature based on what I have in front of me.”

With respect to the training program itself, Albear testified that it was a two- or three-day program that was “more marketing than anything else.” The instructor taught Albear to keep a logbook of his...