North American Title Company, Inc. v. Gugasyan

Facts: An individual applies for a mortgage to be secured by a property the individual appears to own. A title company acting as the individual’s escrow holder selects a notary public to notarize the trust deeds for the funds to be disbursed. The notary obtains a California driver’s license from the individual to confirm their identity. Unknown to the notary, the driver’s license is fake. The fake license and signature match the signature entered and acknowledged by the individual. The notary notarizes the trust deed. The funds are disbursed to the individual on recording the trust deed. The title company incurs money losses due to the fraudulent trust deeds and makes a demand on the notary to recover the amount lost.

Claim: The title company claims the notary was negligent when checking the California driver’s license since the notary failed to observe the license was fake.  

Counterclaim: The notary claims they were not negligent under safe harbor protections since the California driver’s license appeared to be a license issued by the Department of Motor Vehicles (DMV), the signature acknowledged match the signature on the license, and there was no reason to question the authenticity of the license.

Holding: A California appeals court holds the notary is not negligent and thus not liable for the title company’s losses since the notary complied with the safe harbor requirements as the individual presented a seemingly valid California driver’s license from the DMV which the notary had no legitimate reason to doubt. [North American Title Company, Inc. v. Gugasyan (2021) 73 CA5th 380]

Read North American Title Company, Inc. v. Gugasyan here.

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