Truth in Lending Act

In a case of first impression, the Illinois First District Court of Appeal has ruled that copy shop Kinko’s may not be held liable under the Illinois Notary Public Act for misconduct by a notary it employed, but may be held liable for common-law negligence. In Vancura v. Katris, No. 1-06-2750 (Ill. 1st. Dec. 26, 2008) , the appeals court found that Kinko’s did not consent to the misconduct and vacated $233,000 in jury awards.

Plaintiff Richard Vancura helped fund a real estate investment by defendant Glenn Brown, who had trouble reselling the property. A mutual acquaintance, Randall Boatwright, agreed to give Vancura shares in his company in exchange for Brown’s debt to Vancura, which he agreed to lower. Brown then struck a related deal giving defendant Peter Katris an interest in the property and arranged a real estate closing at which all of these deals would be sealed. Boatwright and his business partner had Vancura sign some papers on the day before the closing, but then realized that some would have to be notarized. They visited a local Kinko’s for that purpose, but without Vancura. One of the documents they left with had purported signatures from Vancura and Gustavo Albear, the notary.

Several months later, Vancura called Brown and discovered that Brown believed the debt was resolved. Vancura, who had not been paid, did not agree, and eventually sued a variety of defendants, including Albear and Kinko’s; Brown and Katris also sued those defendants, along with Boatwright. After a bench trial, the trial court found Kinko’s liable to Vancura, Brown and Katris for violations of the Notary Public Act as well as negligent supervision and training of Albear. Kinko’s appealed both.

In a case based on the federal Truth in Lending Act (TILA) and Illinois Consumer Fraud and Deceptive Business Practices Act, the Seventh Circuit has ruled that a victim of a bait-and-switch scheme for title insurance may sue his lender. Doss v. Clearwater Title Co., No. 07-2400 (7th Cir. Dec. 24, 2008). Charles Doss refinanced his mortgage in 2004, using a company called The Loan Arranger that did indeed arrange a loan for Doss with Franklin Financial Company. Franklin asked Doss to get title insurance, which he did through Clearwater Title Company.

Clearwater turned out to be an unlicensed company with a secret affiliation with The Loan Arranger. Doss was told via closing documents that the title insurance cost was $500, but was actually charged $1,470. In late 2006, Doss sued all three companies plus JP Morgan Chase, which held his mortgage, and Saxon Mortgage Services, Inc., which serviced it. However, Chase and Saxon had filed for foreclosure against Doss earlier in that year, and in response to the lawsuit, filed papers claiming that Doss had no claim because he had already sold his home. Doss replied that their quitclaim deed was a forgery and that indeed, he had filed documents showing he was still the owner. The trial court sided with Chase and Saxon and dismissed the homeowner’s claims.

Doss appealed; while the appeal was pending, an Illinois trial court found that the property had not changed hands. The Seventh Circuit first examined the claim by Chase and Saxon that the trial court had no jurisdiction under the TILA because Doss had sold the property. That was irrelevant, the court said, because the question was whether Doss had actually sold the property. On the dismissal itself, the Seventh found that the trial court should have treated the sale allegations by Chase and Saxon as a motion for summary judgment, which would have given Doss a chance to present and support his own assertions. This would have led the trial court to conclude that there was indeed a genuine issue of material fact in the case and continued the litigation, the opinion said.

Articles Posted in Truth in Lending Act

Business Liable for Notary’s Misconduct Under Common Law But Not Statute, First District Rules

Homeowner May Sue for Lending Fraud by Mortgage Insurer, Seventh Circuit Rules