NC: Debtor-creditor law
Facts: Plaintiff bank made a loan to Shamrock Country Club, which operated a golf course on land owned by the parents of Shamrock’s president (Walker). The loan was conditioned upon the signing of a guaranty by Walker’s parents. Defendant, who was Walker’s attorney, notarized the signatures at the closing. Walker died four years later, and the loan went into default. Plaintiff initiated collection efforts against Walker’s parents and his estate. The parents responded that their signatures on the guaranty were forgeries. Plaintiff sued the estate, Shamrock, and the parents. Default judgment was issued against the estate and Shamrock, but summary judgment was granted for the parents when they produced testimony of a handwriting expert. Plaintiff did not contest the summary judgment, but instead amended his complaint to add defendant, on theories including negligence, legal malpractice, negligent misrepresentation, breach of fiduciary duty, and constructive fraud. The trial court also granted summary judgment for defendant and dismissed all claims against him, finding them barred either by the statute of limitations or defendant’s immunity as a notary. Plaintiff appealed, arguing that the constructive fraud claim is governed by a 10 year statute of limitations, and that in notarizing the signatures for his client, defendant was actually acting in his capacity as attorney.
1) Is an attorney, in notarizing documents for a client in the course of a transaction, acting in his capacity as an attorney for malpractice purposes?
2) Are allegations of misrepresentations and breach of fiduciary duty sufficient to support a claim for constructive fraud if a defendant was paid for his services?
1) No. In North Carolina, a notary cannot be held liable for acts within his or her scope of duties, absent malice or corruption. This applies even if the notary is also an attorney, and even when the attorney-notary is performing notary functions in connection with his or her legal practice. Any misrepresentations as to the veracity of the signatures would been done in defendant’s capacity as notary, not as attorney.
2) No. An essential element of constructive fraud is that the defendant have received a benefit. The benefit has to be more substantial that simply an attorney’s or notary’s fee, or a continued relationship with a client.
Lesson(s): An attorney who is not serving as an attorney, but in a different capacity does not incur liability for mistakes made in his/her capacity as notary.
Posted in: North Carolina