Editor’s note: This is the first in a series of articles covering actual Notary errors and omissions (E&O) claims that did not go as anyone expected.
A Notary watched a 94-year-old signer read every page, tear up the documents twice, and finally sign. Then the signer died, the family scattered, and the Notary was the only one left to sue.
That’s what happened to a Notary Public sued for notarizing an elderly woman’s signature on estate documents in a rehabilitation facility. The signer appeared alert, engaged, and in charge of her own affairs. She signed estate documents, including a power of attorney and a will, along with a revocation of transfer on death deed that disinherited her son. When she died, the son sued. By the time the dust settled, the Notary’s $100,000 E&O policy was almost gone, and the story had become a cautionary tale of what happens when a Notary does everything right but is targeted by a lawsuit due to unforeseen circumstances.
What the Notary saw
By every measure that matters to a careful Notary Public, this was a clean job. The Notary performed the notarizations in the signer’s presence, and there was no question about the signer’s identity. The Notary credibly recounted the signer’s mental state in court. While the signer was 94, her memory was sharp. She read the documents. She asked questions. She paid close attention to what she was signing.
However, she initially refused to sign the documents. At the first visit, the signer tore up the documents and sent the Notary away. Only at a later appointment, when the signer was ready, did she choose to sign the documents and have her signature notarized.
There is nothing wrong with coming back to a signer who isn’t ready. In fact, walking away when a signer hesitates is exactly what a careful Notary should do. But what a Notary sees in real life can look very different in a courtroom.
What the Notary didn’t see coming
After the signer’s death, the disinherited son sued. He sued the family members who had gained from the new estate plan. He sued the Notary as well.
Then the case took two turns that no Notary would expect.
First, the family members didn’t defend themselves and never appeared in court. The disinherited son obtained default judgments against them. That left the Notary as the only remaining defendant and the only realistic source of financial recovery. Whatever the truth of the underlying dispute, the Notary’s E&O policy was now what the lawsuit was really about.
Second, the signer had died, and the family members were unavailable. No living witness could back up the Notary’s account of how clear, alert, and willing the signer had been. The Notary’s testimony was credible. But honest testimony alone doesn’t always win a case. The son argued that his mother was confused, resistant to signing (as shown by her repeatedly tearing up the documents), and ultimately pressured into signing by other family members. The son claimed she was not sharp and signing of her own free will, as the Notary had observed.
The E&O eye-opener
Even so, the insurer and the Notary’s defense counsel believed the Notary would likely win at trial. The problem was that the E&O policy would be exhausted by the conclusion of the case.
The Notary’s defense had already cost a lot. Taking the case all the way to a verdict would have used up what was left of the $100,000 policy and may have required the Notary to pay out of pocket for additional legal defense costs. If the Notary had lost at trial, the Notary could have been on the hook personally for the judgment itself. The Notary’s future financial well-being was at great risk, so the insurer chose instead to settle at mediation to protect the Notary’s best interests.
The settlement amount of $72,000 plus the legal fees already spent, used up the policy. There was one piece of good news, though. The settlement agreement released the Notary from any further claims or liability arising from the notarization. In the end, the policy did what it was designed to do: protect the Notary.
The takeaways for Notaries in this lawsuit
No Notary plans to be in this kind of situation. But every Notary can learn something from it. Here is what every Notary can do to avoid costly legal entanglements:
- Write down the signer’s awareness and willingness in your journal. When a signer’s mental capacity could be questioned, note what you see, including how the signer acts, responds, and shows understanding.
- Write down refusals and hesitation, too. Coming back over several days can be the right thing to do, but if left unexplained, those visits can be twisted in court to look like pressure. Note what happened, and why, every time in your journal records.
- Try to bring in independent witnesses. A living witness who can later confirm the signer was aware and willing can be the difference between a case you can defend and one you have to settle.
- Make sure you’re comfortable with your policy amount. When the Notary is the last defendant standing, the policy limit becomes the size of the case. And litigation is expensive. Make sure you have enough coverage.
- Check the settlement agreement. If your case is ever settled, make sure the settlement agreement releases you from any further claims by the other party, not only the claims currently being asserted against you.
Bill Anderson is Vice President of Government Affairs at the National Notary Association.