## I L L I N O I S 

## O F F I C I A L 

## RE P O R T S Appellate Court

Henry v. Waller , 2012 IL App (1st) 102068

Appellate Court Caption PAMEL A HENRY, Plaintiff, v. HARVEY J ACK WA L L E R
, I ndividually and d/b/a Har vey W al l er , Har

vey Waller, L td., Firsc h and Waller, and Har

vey Waller and Associates; and HARVEY WAL L ER, L TD., De fenda

nts-Appellee s (B ank of America , Def endant- Appellant).

District & N o. First District, Six th Division Docke t No. 1-10-2068

Filed J une 29, 2012

Held (Note : Thi s syl lab us

con st it ute s no par t o

f the opi nio n of the cour t but has bee n pre

par ed by the Repo rt er of D e c i s i o n s f

o r t h e

c o n v e n i e n c e o

f t h e

rea der

. ) Def endant bank was entitled to the fee s and costs it incurre d in litigation arising from the alleg edly fra udulent endorse ment and deposit of two checks defe ndant attorney obtained in the settlement of a jud gm en t h e

was re tained by a collection ag ency to collect, notwithstanding the attorney ’s contention t h at the fee s and costs arose from the criminal actions of a person at the ag ency who stole the funds d u e the judgme nt

cre ditor, since defe ndant attorney d eposi ted the fra udulently endorse d chec ks into his trust acc ount, he s en t the ag ency cer tified chec ks
repr esenting the funds, the ag ency paid the attorney his fee
, the rema ining fee s wer e stolen and the terms of the indem n i fi cation ag ree ment the attorney had with the bank a

pplied.

Dec ision Under
Review Appea l from the Circuit Court of Cook County
, No. 07-L -11515; the Hon. Danie l J . Ly

nch, Judge, pr esiding

.J udg ment Reverse d and re manded.

Counsel on Appea l Mark E. Wil son and Meg han W. Welch, both of Ker ns, Fr ost & Perlman, L L C, of Chicag o, for a

ppellant.

J oshua Sachs, of J oshua Sachs & Associates, of Evanston, for appellee s.

Panel J USTI CE PAL MER delivered the judgme nt of the cour t, with opinion.
J ustice Ga

rcia specia lly concur red, w ith opinion.
J ustice L ampkin dissented, with opinion.

OP INION

¶ 1 This appea l involves an indemnification ag ree ment i n an “Int er est on L awyers Tr ust Acc ount” (I OL TA). Specifica lly
, at all rele vant times, defe ndant Har vey Waller, an attorney , held an I OL TA acc ount at Ba nk of Americ a and its prede cessor in interest, L aSalle Talman FSB (collec tively
, Ba

nk of Americ a or the bank). One of the resolution s go v er n ing this

acc ount contained an indemnification ag ree ment requiring Waller to indemnify the bank for attorney fee s and costs that it incurre d under certa in circ umstances. Af ter pre vailing in the underlying litigat i o n involving the neg otiation of chec ks with alleg edly forg ed signatures, Ba nk of Americ a filed a petition seeking attorney fee s and costs from Waller that it alleg edly incurre d while defe nding the underly ing litigatio n

. Ba n k of Americ a soug ht fee s and
expe n s es p u rs uant to the indemnification ag ree ment and under cer tain provisions of the I llinois Uniform Commercial Code (UCC) (810 I L CS 5/1-101 et seq. (West 2006)). Following a bench tr ial, the circ uit court found that Waller wa s not oblig ated to inde mnify the bank and entered judgment in his favor

. Ba nk of America appeals, conte nding that the circ uit court err ed as a matter of law in denying its petition for attorney fee s u n d er the indemnification ag ree ment and in finding that the bank was not owed attorney fee s under the UCC. The bank also challeng es t he circuit court’s denial of a motion in limine that it filed prior to trial seeking to bar the te stimony of an e x pert witness. F or the re asons that follow,

we r ever se and r emand to the c ircuit court.

¶ 2 BA CKGROUND ¶ 3 The rele vant fac ts of this case are not in dispute. In 1993, plaintiff Pamela Henr y rec eived

a $500,000 judgme nt ag ainst her husband in a marria g e dissoluti on proce eding. Henry
eng ag ed defe ndant J eff

rey Olson of the collection ag ency Olson, Olson & Olson L td., to

rec over that judgme nt. I n October 1998, Henr y signe d a limit ed power -o f

- a tt o r n e y a g ree ment in connec tion with her eng ag ement of the Olson firm. ¶ 4 The Olson firm then hired defe ndant Wal l er t o as s i st in collecting the judgme nt. The

-2-Olson firm and Waller neg otiated a $450,000 settlement of the divorce judgme nt. The parties

stipulated at trial that Henr y orally ag ree d to a settlement in that amount. In Dec ember 1998, Waller rec eived the settl em en t in two cashie r’s chec ks pay able to “Pamela A. Henr y and Har vey Waller” in the amounts of $150,000 and $300,000. Waller did not send the che cks
to Henr y for her endorse ment b ef o re depositing them into his I OL TA acc ount at L aSalle Ba nk. I t is undisputed that at some point prior to Waller endorsing and depositing the chec ks, they wer e endorse d with the signature “Pamela Henr y .” There was no evidenc e prese nted at trial as t o how t he si g nature s in Henr y ’s nam e ap p ea re d o n the back of each check. Henry testified in an ev i d en ce deposition that she “neve r touched” the chec ks and the parties stipulated at trial that Henr y ’s endor sements wer e “not a uthentic.” ¶ 5 Waller endorse d and deposited eac h chec k into his I OL TA acc ount at t h e b an k

. The parties stipulated at trial that the bank acc epted in g ood faith the chec ks deposited in Waller’s I OL TA acc ount. Waller th en ca used the bank to issue two cashie rs chec ks pay able to the Olson firm for the entire amount of the settlement proce eds and Olson there afte r paid Waller $75,000. Henr

y did not rec eive any of the settlement money from Olson, who alleg edly stole the money and disappea

red. Olson has never been found. In 1999, Henr y sued Olson and his firm but was una

ble to serve the complaint and summons on them. ¶ 6 I n 2000, Henr y amende d her complaint to sue the bank and Waller, asser t i n g t h at t h e endorse ment signatures in her n am e o n the back of t he cashier’ s chec ks wer e forg erie s. In her leg al malprac tice, brea ch o f c ontrac t and fra udulent transfe r claims ag ainst Waller, Henr y alleg ed that Waller failed to procur e her signature on the settlement chec ks, failed to pay the settlement proce eds to her and fa i led to communicate with her reg arding the settlement. Henr y also sued the bank under section 3-420 of the UCC (810 I L CS 5/3-420 (West 2006)), alleg ing that the endorse ments in her name on the settlement chec ks wer e unauthorized and that the bank was liable for conver si o n b eca use it acc epted the chec ks for deposit over unauthorized signatures. ¶ 7 Ba

nk of Americ a, as succe ssor in i n t er es t t o L aS al l e Ba n k, ultimately moved for
summary judgme nt. The motion included aff idavits from two expert witnesses, who opined that the bank had exercised ordinary car e and had no liability under the compar ative
neg lige nce scheme of the UCC. The circ uit c ourt g rante d the bank’s motion, finding under sectio n 3-405(b) of the UCC (810 I L CS 5/3-405(b) (West 2006)) that Henr y had not prese nted any evidenc e that the bank failed to exercise ordinary car e in its han d l i n g of t he chec ks, and that the bank’s acc eptanc e of the chec ks did not cause any harm to Henr y

. Henr y and Waller ultimately rea ched a set t l ement ag ree ment with respe ct to the profe ssional
neg lige nce dispute. ¶ 8 Ba n k o f Am eric a then filed a petition for attorney fee s and expenses ag ainst W al l er , seeking to collect $225,000 in attorney fee s and expenses it incur red during the 11 y ear s of litigation in the Henr

y matter. The bank soug ht fe es o n t wo alt ernative g rounds. First, the bank claimed that Waller contra ctually ag ree d to indemnify it pursuant to the terms of his

acc ount a g ree ment. Second, the bank soug ht fee s and expenses under the transfe r war ranty provisions of the UCC. See 810 I L CS 5/ 4-207(a ), 3-416( a) ( West 2006). ¶ 9 A bench trial was held on the petit ion. Prior to trial, the b an k fi l ed a m otion in limine
,

-3-seeking to bar the testimony of Waller’s expert witness, Robert Markof f, a collection lawy er. The trial court denied that motion. Markof f testified that Waller would have had the authority

as Henr y ’s attorney to endorse her signature o n t h e chec ks and deposit them. The bank
prese nted the testimony

of David Mulvihill, the bank’s in-house attorney who oversa w the litigation. Mulvihil l testified about the ac co u nt resolutions and that the bank incurre d attorney fee s and expenses as a result of a ctions it took under specific acc ount resolutions. The bank also prese nted Henr y ’s evidenc e deposition, the rele vant testimony from which we set out above. ¶ 10 The trial court denied the bank’s petition for attorney fee s and costs, ruling that Waller’s
neg otiation of the chec k s t h ro u g h his acc ount neither trig g ere d the indemnification provisions of his acc ount ag ree ment nor brea ched the UCC transfe r war ranties. Wit h respe ct to Ba nk of Americ a’s contra ctual claim for indemnification, the court stated that the
neg otiation of the chec ks throug h the bank by Waller was “uneve ntful” and there fore “wa s not a trig g ering event for the contract u al indemnification obligations of this contra ct.” I nstead, the court stated, the cause of action was trig g ere d by a “subseque nt conver sion” by Olson. The court rea soned that the bank wa s not e ntitled to indemnification beca use “[t] he

conver sion here followed the otherwise proper settlement neg otiations and t h e n eg otiable instrument acts h er ei n throug h [t he bank]. *** This case sounds in criminal theft and in

conve rsi on, not in brea ch of war rant[y ] or cer

tainly not in brea ch of the [UCC ].” Ba nk of Americ a appe als.

¶ 11 ANALYSI S ¶ 12 Ba

nk of Americ a first contends that the trial court err ed as a matter of law in construing the t er m s o f t h e acc ount ag ree ment and holding that the bank was not entitled to be indemnified for its attorney fee s and ex penses. The bank claim s t h at i t incurre d those fee s and ex penses in connec tion with actions i t took under two resolu t i o n s governing Waller’s

acc ount and that it is therefor e entitled to indemnification. ¶ 13 B a

nk o f A me r ic a ’ s c o nte nti o n raises an issue of contra ct interpre tation. The interpr etati o n of a contra ct prese nts a question of law, which we revie w de novo

. Gallagher v. Lenart
, 226 I ll. 2d 208, 219 (2007); see also Erlenbush v. Largent
, 353 I ll. App. 3d 949, 952 (2004) (the appellate court revie ws the circ uit court’s interpre tation of a fee -shifting ag ree ment de novo ). ¶ 14 The indemnifica tion ag ree ment at issue in this case state s: “2) In order to induce said Ba nk to act pursuant to the fore g oing resolutions, this Corporation her eby

ag ree s as follows:

* * * (c) To indemnify the Ba

nk and save i t fr ee and harmless from any and all claims, demands, expenses (including attorney fee s and costs), losses or damag es it may suffe r resulting from or g rowing out of or in connec tion with any act taken by the Ba nk as a result of, or its failure to a ct under any or all the fore g oing resolutions, or its failure not

-4-to conform in all re spsects to the authorizations specifie d here under.” 1

The “for eg oi ng resolutions” ref err ed to in the indemnity ag ree ment include resolution I I
, which states that Waller wa s authorized to “ endorse for neg otiation, ne g otiate, and rec eive the proceeds of any neg otiable i nstru m en t s or orders for the pay ment of m oney payable to

or belong ing to this Corporation.” Additionally
, resolution I provides that for chec ks and other like obliga

tions en d o rs ed by Waller and deposited into the acc ount, “all prior endorse ments are g uara

nteed by t h i s C o rp o ration whether or not an express g uara nty is incorpora ted in this Corporations’s endorse ment.” ¶ 15 I ndemnification ag ree ments are contra cts and are subject to the ordinary rules of contra ct interpre tation. Buenz v. Frontline Transport ation Co.
, 227 I ll. 2 d 3 0 2
, 308 (2008). When construing the languag e of a n indemnity

ag ree ment, our primar

y objective is to g ive ef

fec t to the intent possessed by the parties at the time they enter ed the ag ree ment. Buenz
, 227 I ll. 2d at 308. Where the terms of a contra ct are clea r and unambig uous, they will be g iven their
natura l and ordinar

y meaning

. Buenz , 227 I ll. 2d at 308. When the re is no ambig uity in the lang uag e of the ag ree ment, courts should not adopt a strict construction of that languag e that

rea ches a differ ent result from that intended by the parties. Higgins v. Kleronomos
, 121 I ll. App. 3d 316, 321 (1984). ¶ 16 Applying these principles to the prese nt case , the indemnification ag ree ment clea rly and unambig uously require s Waller to indemnify Ba nk o f Am er i ca for “ any and all ” attorney fee s and expenses it incurs resulting from “ any act ” taken by the bank under any o f t h e

acc ount resolutions. (Emphase s added.) Ba sed upon the undisputed fac ts of this case , we conclude
, as a matter of law, that the bank acte d under two acc ount resolutions and that those actions resulted in the bank i n cu rr ing attorney fee s and costs for which it is contra ctually entitled to be indemnified. The essenc e of Henr y ’s complaint ag ainst the bank was that it was liable for conver sion beca use it allowed Waller to neg otiate the two settlement chec ks for deposit that contained forg erie s of Henr y ’s endorse ment. The bank’s actions in this respe ct

were first taken under resolution I I
, which specific ally authorized Waller to endorse
, neg otiate and rec eive the proce eds of any neg otiable instrument. Moreove r, in acc epting the chec ks for deposit and cre diting Waller’s acc ount, the bank relied on Waller’s g uara ntee of Henr y ’s prior endorse ment on those chec ks

. The bank’s actions wer e there fore also taken under resolution I
, pursuant to which Waller g uara nteed all prior endorse ments on all items deposited i nt o h i s ac count. The bank was sued by Henr y for these specific acts and it thus incurre d attorney fee s and costs as a result of a ctions it took under the acc ount r esolutions. Acc ording ly
, Wa l ler’s obligation to indemnify the bank for those attorney fee s and costs under the I OL TA ag ree ment was trig g ere d. ¶ 17 Waller argues that the indemnification ag ree ment was not trig g ere d beca use he acte d as

an “innoce nt depositor” whose actions did not cause the bank to incur th o s e ex p en ses.

Wa ll er ope ned the I OLT A acc ount thr ough an ent it y call ed “H ar v ey Wa ll er , Ltd .” However, 1 the par ti es st ipu la te d at tr ia l tha t the I ll ino is Sec re ta ry of Sta te dis sol ved tha t ent it y on Ma y 1, 1991

. Addi ti ona ll y, Wa ll er agre e s t h a t i n thi s cas e, he per son al ly was the acc ount hol der and tha t the

corpor at e r eso lut ion s governi ng the acc ount agree m ent app ly to him per son al ly.

-5-I nstead, Waller asser ts, the att o rn ey fee s and costs incurre d by the bank wer e the result of Olson’s criminal ac tions a nd, as such, those fee s and expenses fall outside the scope of the indemnification ag ree ment. ¶ 18 Waller essentially argues t hat his obligations under the indemnity ag ree ment would be trig g ere d in this cas e o nly if he, as opposed to Olson, conver ted the settlement chec ks or forg ed Henr

y ’s endorse ment on them. We disag ree

. The indemnification ag ree ment contains

no lang uag e limit ing Waller’s obligation to indemnify the bank to those situations in which he acts cr i m i n ally by conver ting chec ks or forg ing endorse ments. In other words, the indemnification ag ree ment does not limit the obligation to indemnify to situations in which Waller’s ac t i o n s , as o pposed to those of a third party such as Olson, wer e the direc t and i mmediate cause of the bank incurring attorney fee s. The indemnification ag reem en t i s trig g ere d whene ver the bank is compel l ed to incur attorney fee s and costs by virtue of the bank acc ount held and ut i l i z ed by the depositor. In fac t, under the plain and ordinary lang uag e of the ag ree ment, it does not matter whether the chec ks wer e conver ted or whether the endorse ments on the chec ks wer e actua lly forg ed. I t also does not matter whether Waller had authority to endorse Henr y ’s name on the chec ks under the limit ed power of attorney or that Olson is the person alleg ed to have stolen the money and disa p p ea re d

. Be cause the lang uag e of the indemnity ag ree ment is clea r and unambi gu o u s , we decline to adopt the

narr ow construction urg ed by Waller to limit its scope. See Higgins
, 121 I ll. App. 3d at 321. ¶ 19 I nstead, to deter m i n e whether the obligation to indemnify has been trig g ere d, the only rele vant question under the indemnity ag ree ment is whether the bank incurre d attorney fee s and costs “re sulting from or g rowing out of or in connec tion with any act” it took under any of the acc ount r esolutions. The bank did so in this case when it was sued by Henr y beca use it acc epted for deposit the two chec ks that contained alleg edly forg ed endorse ments and then

cre dited Waller’s ac count in the amount of those c hecks. ¶ 20 Waller raises conce rns about the fairne ss of construing the indemnity ag ree ment in what he char acte rizes as a “broa d,” “open ended” and “unlimited” manner so as to hold him liable for the bank’s attorney fee s based upon Olson’s criminal acts. We note, howeve r, that parties

ar e fr ee to portion out risk as they see fit. Evans v. Lima Lima Flight Team, Inc.
, 373 I ll. App. 3d 407, 412 (2007); Hartford Fire Insurance Co. v. Architec tural Manage ment, Inc.
, 194 I ll. App. 3d 110, 117 (1990). Fr om a commonsense point of view, it is clea r to this court that no bank would willingly undertake the ri s k o f i n cu rring attorney fee s and costs of t he
mag nitude incurre d here in return for the privileg e of providing a depositor with an I OL TA

acc ount that g ener ates a rela tively small am o u n t of bank fee s. Indemnity agree ments exis t to addre ss circ umstances such as those befor e us. We note that when counsel for the appellee

was asked at oral argument how the indemnity ag ree ment could have been made any clea rer in advanc e to insulate the bank from these expenses, no adequate response was forthcoming

. ¶ 21 I ndemnification ag ree ments are also g ener ally valid and enfor cea ble contra cts. Hader v

. St. Louis Southwestern Ry. Co.
, 207 I ll. App. 3d 1001, 1011 (1991); see also Scott Stainless Steel, Inc. v. NBD Chicago Bank
, 253 I ll. App. 3d 256, 261-62 (1993) (indemnification
ag ree ment betwee n bank and customer was a valid and enfor cea ble contra ct under the UCC). Ba nk of Americ a is not seeking to be indemnified for its own neg lige nce; the trial court expressly found that the bank exercised ordinary car e in its handling of the chec ks. Whil e it

-6-is Olson who is alleg ed to have stolen the settlement funds, Olson is a strang er to the bank.

I t wa s Waller who trig g ere d the bank’s involvement in this case by doing busine s s wi t h Olson; the bank had no control over that decision. Protecting ag ainst re m o t e and unfore seea

ble risks prese nted by a third party such as Olson is one of the primary rea sons that bank s neg otiate indemnity ag ree ments into their contra cts with acc ount holders such as Waller. To impose a limit ation on the indemnification ag ree ment that is n o t found in the plain and unambig uous lang uag e of the cont ra ct would frustrate the purpose of indemnity
ag ree ments and the ability of banks and other parties to fre ely neg otiate them into contra cts. Be cause the lang uag e of the indemnity ag ree ment is clea r and unambig uous, we will enfor ce it as written and we wi ll not rea d limit ations into the contract t o rea ch what Waller deems
to be a more equitable result. See Tatar v. Maxon Construction Co.
, 54 I ll. 2d 64, 67 (1973) (“ ‘[U] nless a contra ct is ambig uous, its meaning must be deter mined from the words used; and courts will not, beca

use a more equitable result might be rea ched there by
, construe into the contra ct p ro v isions that are not contained there in.’ ” (quoting W estinghouse Electric Elevator Co. v. LaSalle Monroe Building Corp. , 395 I ll. 429, 432 (1946))). ¶ 22 Waller also claims that the ba nk has not c ited authority applying what he c hara cter izes

as a “non-ne g otiated” indemnity prov i s i on under the circ umstances presented in this case

. Waller’s char acte rization of the indemnity provision as a sort o f co ntrac t of adhesion is inacc urate

. Waller was free to attempt to neg otiate a differ ent co n t ra ct with the bank or t o open an acc ount at a differ ent banking institution if he was unable to ne g otiate the contra ct he pref err ed with Ba

nk of Americ a. There is no dispute that Wa l l er fre ely and voluntarily
enter ed into the contra ct with the bank and there by ag ree d to the indemnification provision contained there in. And althoug h neither party has prese nted this court with a case involving the s ame facts as those in the present case , our suprem e court has observe d that due to the
vary ing nature of indemnity provisions, eac h case i nvolving their interpre tation must be decide d based upon the l anguag e of the contract. See Tatar , 54 I ll. 2d at 67. The court has specific ally

stated:
“We have examined the authorities cited by the parties and many of those collecte d [i n the American L aw Reports]
, and conclude that the con t ra ct ual provisi ons involved

are so varie d that eac h must stand on its own languag e and littl e is to be g ained by an attempt to analy

ze, distinguish or rec oncile the decisions. The only g uidance aff orded is found in the acce pted rule of interpre tation which re quires that the a g ree ment be g iven

a fair and rea sonable interpre tation based upon a considera tion of all of its languag e and provisions.” Tatar , 54 I ll. 2d at 67. ¶ 23 Ba n k o f Am eric a also contends that it was entitled to attorney fee s and costs under provisions of the UCC. Howeve r, in light of our conclu s i o n t h at the bank is entitled to indemnification under the terms of the indemnity ag ree ment, we need not consider whether the bank would a lso be entitled to those fee s and costs under the UCC. ¶ 24 Fi n al l y , the bank contends that the trial court abused its discretion when it denied its motion in limine to bar the expert testimony of Robert Markof f. At trial, Markof

f essentially testified t hat under the limited power of a ttorney signe d by

Henr y , Waller would have had the authority as Henr

y ’s lawy er to endorse her signa ture on the chec ks and deposit them. Markof f’s testimony g oes to the larg er issue of whether Waller was at fault in neg otiating the

-7-settlement chec ks for deposit. Howeve r, as explained above, Waller’s alleg ed neg lige nce is

not releva nt to the bank’s rig ht to indemnification. I t matters not that Waller, Olson or any other party was at fault or whether Waller would have had authority to endorse Henr y ’s name under the limit ed power of attorney

. The indemnification ag ree ment conce rned only whether Ba nk of Americ a incurre d attorney fee s and costs by virtue of the acc ounts under resolutions Iand I I

. ¶ 25 Be cause the trial court never rea ched the quest i o n o f t he amount of attorney fee s and
costs to which Ba

nk of Americ a is entitled, we rema nd this case to t h e t ri al co u rt for a hear ing on that issue.

¶ 26 CONCL USI ON ¶ 27 Fo r t h e re as o n s s t ated, we reve rse the judgme nt of the circ uit court of Cook Count y denying the bank’s petition for attorney fee s and costs and rema nd the case to the circ uit
court.

¶ 28 Reverse d and re manded.

¶ 29 J USTI CE GARCI A, spec ially concur ring

. ¶ 30 I ag ree with J ustice Palmer. Attorney Waller’s deposit of t wo ch ecks made pay able to “Pamela A. Henr

y an d Ha rvey Waller” into his I OL TA acc ount is the leg al basis of Ms. He nry ’s complaint ag ainst Ba nk of Americ a (the Henr y litigation), which trig g ere d the indemnity provision. Supra ¶ 16. I add a f ew words to e x plain wher e attorney Waller went wrong

. ¶ 31 His fundame ntal mistake was the failure to rec og nize that, in addition to the duty of car e he owed to the Olson firm as the party that reta ined him, under the fac ts of this case he also owed a dut y o f ca re t o Ms. Henr y as the clea

r benef iciary of the collection eff orts he was reta ined to perf

orm. See Pelham v. Griesheime r , 92 I ll. 2d 13, 21 (1982) (a duty of ca re to a third par

ty arises wheneve r the e vidence establishes “that the primary purpose a

nd intent of t he attorney -clie n t re l at ionship itself was to benef it *** the t hird party”). As confirme d by his settlement of Ms. Henr y ’s claim, attorney Waller viol at ed his duty of car e to Ms. Henr y , which arose no later than when he deposited the two settlement chec ks that bore Ms. Henr y ’s name, which in turn brought the Henry litigation t o the door of Bank of Americ a. The brea ch occur

red when he is sued the I OL TA chec k to Olson without protec ting Ms. Henr y as the re al per son in interest in the collec tion effor t. ¶ 32 Although he may be corr ect, as he intimates, that his deposit of the two settlement chec ks totaling $450,000 with the unauthorized signature of Ms. Henr y violated no leg al duty
, there is also no dispute that Ba

nk of Americ a acc epted the deposit of the settlement chec ks under the re solutions gover

ning the I OL TA account. Based on that deposit, Ms. Henry could not have sued Ba

nk of Amer ica without also suing attorney Waller and, betwee n the two, only he bre ache d a duty

to Ms. Henry

. ¶ 33 The circ uit court go t i t wr o n g when it conclude d that Ms. Henr y ’s suit, which had the

-8-starting point of the deposit of the settlement ch ec k s , d i d not trig g er the indemnification

provision beca

use of the “uneve ntful” natu re o f t he deposit as compar ed to Olson’s clea r criminal conduct, as our colleagu e in dissent argues. There is no persua sive authority for excluding the “innoce nt” act of a bank deposit from the protec tion a ffor ded the bank in the indemnity provision; nor is there any authority for placing the risk of a third party eng ag ing in c riminal activity at the end point of bank transac tions on the bank, as the dissent a rgues, rathe r than on the acc ount holder. The “subseque nt conver sion” by Olson did not immuniz e Ba nk of Americ a from being sued by Ms. Henr y ; nor did Olson’s criminal conduct somehow immuniz e attorne y

Waller under the bank’s indemnity provision. ¶ 34 I also question our dissenting colleag ue’s char acte rization of Olson as a third party

. Infra ¶ 37. Olson and Waller wer e client and at t o rn ey ; t o that extent, attorney Waller acte d as Olson’s ag en t

. See In re Marriage of Stephenson
, 2011 I L App (2d) 101214, ¶ 35 (the attorney -c l i en t relationship is one of principal and ag ent). Attorney Waller provided the

means by which Olson was able to abscond with the proce eds of the settlement that belong ed
to Ms. Henr

y by issuing him the I OL TA chec k. I also disag ree with the dissent’s sug g estion that our resolution of t he indemnit y issue should turn on the “meritless lawsuit ag ainst the Ba nk.” Infra ¶ 38. The indemnity provision protec ted the bank reg ardle ss of the merits of the underlying lawsuit. To stop Ba nk of Americ a’s fee s and costs from acc umulating ag ainst him during the Henr

y litigation, attorney Waller should have conclude d that he brea ched his duty to Ms. Henry

sooner r ather

than 11 y ear s later.

¶ 35 J USTI CE L AMPKI N, dissenting. ¶ 36 I dissent from the majority ’s dec ision that W aller w as obl iga ted t o indemnify the bank pursuant to the terms of the parties’ indemnification ag ree ment. A twofo l d s t an d ard of revie w applies to this matter. Wherea s de novo revie w is applied to th e t ri al court’s interpre tation of the parties’ fee -shifting ag ree ment as a m att er of law, the trial court’s application of the terms of that ag ree ment to the fac ts should be revie wed for an abuse of discretion. Peleton v. McG ivern’s, Inc.
, 375 I ll. App. 3d 222, 225-26 (2007). I do not agree with the bank’s char acte rization of the trial court’s interpre tation of the ag ree ment as narr ow; the trial court rec og nized that the broad indemnification provision pr otected the bank from losses that resulted from the bank’s acts under Waller’s I OL TA acc ount resolutions. The trial court, howeve r, deter

mined that the bank’s leg al fee s resulted from the criminal act of a third
person rathe r than from the bank’s acts under the acc ount resolutions. That deter mination by the trial cour

t was not an a

buse of discr etion. ¶ 37 I n ruling ag ainst the bank’s petition for fee s and costs, the trial court found that Waller’s
neg otiation of the s et t l ement chec ks throug h his acc ount and temporar y possession of the settlement funds was “uneve ntful” and did not trig g er the indemnification obligations of his

ac co u n t ag ree ment. Specifica lly
, the court found that Henr y ag ree d to the $450,000 settlement and, pursuant to the terms of the limit ed power of attorney she had signe d, fully authorized Olson and Waller, as Ols o n’s ag ent, to neg otiate the chec ks throug h Waller’s

acc ount. Consequently
, Waller and Olson proper ly and lawfully came into possession of the settlement proce eds for 90 day s. There afte r, howeve r, $225,000 of the settlement funds wer e

-9-conver ted, and the bank’s losses resulted from or g rew out of that subsequent conversion. L ike the trial court, I would hold that the indemnification provision did not insulate the bank from litigation ex penses that r esulted fr om the criminal ac t of a third par ty

. ¶ 38 The bank insists that its fee s and ex p enses resulted direc tly from Henr y ’s lawsuit and Henr y sued the bank mere ly beca use it had handled the settlement fund s

. Doubt less the bank’s role in proper ly clea ring the chec ks throug h Waller’s I OL TA acc ount played a causa l role in the conver sion in the sense that no one could hav e absconded with the settlement funds if the settlement chec ks from Henr y ’s ex-husband we re n ever neg otiated throug h a bank. That is not, howeve r, an acc urate application of th e t er m s of the indemnification
p ro v i s i o n t o the fac ts befor e this court and, thus, not a satisfac tory basis for awa rding the bank its litigation costs. One might as well say that any time the bank is sued by the client of

an attorney that uses an I OL TA acc ount with the bank, the bank wi l l b e entitled to reimburse ment from the attorney for any litigation costs. Whil e such insulation from the risk of meritless laws u i t s would cer tainly be an appea ling arr ang ement for the bank, the indemnificati o n agree ment neg otiated by the parties here does not obligate Waller to compensate the bank for the losses it sustained when Henr y attempted to rec oup her loss by filing a meritless lawsuit ag ainst the bank. 2 ¶ 39 The bank wrote the indemnification provision and must be bound by the clause that limit s its rig ht to indemnification to losses that resulted from or g rew out of or in connec tion with the bank’s acts in neg otiating the settlement chec ks throug h Waller’s acc ount. Moreove r, the

rec ord supports the trial court’s d et er m i n ati on that the bank’s fee s and costs in defe nding
ag ainst the Henr

y litigation resulted from, g rew out of, or wer e con n ec t ed with Olson’s subsequent criminal act of conver ting the settlement funds and not from the uneventf ul and authorized neg otiation of the settlement che cks throug h Waller’s bank a ccount. ¶ 40 S p ecif

ically
, the limit ed power of attorney signe d by Henr y authoriz ed Ol s o n an d 3

Henr y’s vario us al le ga t i ons agains t Ols on, Wa ll er and the ban k evolved over ti m e in 2

m ult ipl e la wsui ts

. I nit ia ll y, she sue d Ols on and his fi rm for bre ach of con tr act

. Lat er , she sue d Wa ll er in cha nce ry cou rt , al le ging tha t Ols on fr audule ntl y tr ans fe rr ed $225 ,000 to Wa ll er and ass er ti ng tha t the tr ans fe r sho uld b e voi ded and Wa ll er sho uld be ord er ed to pay her $225 ,000

. Lat er , Henr y amended her cl ai m agains t Wa ll er to ass er t tha t the end ors ement si gnatur es in her name on the bac k of the ca shi er ’s che cks wer e f orger ie s a nd t o ad d t he b ank as a de fe nda nt.

T hat li m it ed power of at tor ney, whic h Henr y, upon the ad vi c e o f her divor ce at tor ney, 3 si gned in Oct obe r 1 998, pr ovided , in per ti nen t p ar t:

“I
, Pamela Henry (En gel), grant a [ si c ] exc lus ive li m it ed power of at tor ney to Ols on, Ols on a nd Ol son & le gal co uns el to ac t a s my at tor ney- in-fact

. I giv e m y at tor ney- in-fact the exc lus ive and m axi m um power unde r la w to per for m the fol lowi ng act on m

y beh al f: to act ively pro sec ute , pro cee d, negoti at e and re cover on the

m one y j udgm ent cas e # 89 D 9849 in the amount of $5 00,0 00 p lus int er est and cou rt cos t. * * * J udgm ent hol derPamela Henr y (Engel) wil l rec ei ve 50% of the m one ys col le ct ed

on the j udgm ent

. Fund s re cei ved fr om j udgm ent deb tor wil l be dis per sed [ si c ] wit hin nin et y

-10-Waller, as Olson’s ag ent, to endorse the settlement chec ks for neg otiation, neg oti at e the

settlement chec ks throug h Waller’s ac count, and rec eive for temporar y possession the
proce eds from the chec ks. When the banking transac tion ended, the funds wer e proper ly in the hands of Henr

y ’s ag ent. Fur

thermore
, t h e bank acte d consistent with the acc ount resolutions in neg otia

ti n g th e settlement chec ks throug h Waller’s acc ount. The parties ag ree d that Waller would indemnify the bank for attorney fee s and co u rt co sts “it may suffe r resulting from or g rowing out of or in connec tion with any act taken by the Ba nk as a result of” Waller’s g uara

ntee of endorse ments on chec ks and neg otiation of chec ks. Those terms, which are g iven thei r p l ai n an d ordinary meaning
, do not state that the bank will be indemnified from any and all claims involving W aller’ s I OL TA account. R ather
, Waller’s i n demnification obligation would be trigg ere d by damag es from the bank’s acts u n d er t h e

acc ount resolutions. The lang uag e of their contra ct does not indicate any intent by the parties that a remote cause which did not nec es sarily or immediately produce the injury would suffice to trigg er Waller’ s indemnity obligation. ¶ 41 Support for the trial court’s deter mination is found in County of Pierce v. Suburban Bank of Elmhurst
, 815 F. Supp. 1124 (N.D. I ll. 1993). In that case , the county is s u ed a war rant chec k pay able to multipl e payees for a projec t involving road improvements. Id

. at 1125. The bank deposited the chec k in the proper acc ount but technica lly violated the war ranty of g ood title by failing to obtain the endorse ments of all the pay ees on the war rant chec k. Id

. One of the pay ee s s u b s equently misappropriate d the funds in the acc ount and failed to pay the projec t cre ditors. Id

. The county fi l ed s uit ag ainst the bank, but the trial court g rante d
summary judgme nt in favor of the bank, finding that the county failed to show that it actua lly incurre d damag es as a result of the bank’s actions. Id

. at 1126-27. Specifica lly
, the trial court found that, despite the bank’s technica l war ranty violation of fail i n g to verify the endorse ment, the county ’s damag es wer e the result of the misconduct o f a p ay ee after the ch eck was deposited in the appropr iate acc ount. Id

. Simi larly here
, the bank has failed t o show that it incurred da

mag es as a

result of its actions under Waller’s ac count resolutions. ¶ 42 Be cause I ag ree with the trial court’s d et er m i n at i o n that the bank was not entitled to indemnification, I also addre ss the bank’s alternative argument that it is entitled to attorney fee s and costs under Waller’s UCC transfe r war ranties. Specifica lly
, the bank argues the trial
court err ed as a matter of law in finding that Waller did not brea ch the UCC transfe r

war ranties. By transfe rring the t wo s ettlement checks t o the bank, Waller war rante d to the bank that “all signatures [on the chec ks wer e] authentic and authorized.” See 810 I L CS 5/3- 416(a) (2), 4-207(a )(2) (West 2008). The bank contends W al l er brea ched both those

war ranties beca

use (1) the bank and Waller stipulated at trial that Henr y ’s signa tures on the
two chec ks wer e not authentic, and an endorse ment does not have to be a forg ery in order to constitute a brea ch of the transfe r war ranty ; and (2) “ther e was a complete failure of proof” at the trial to establish that the e ndorsements we re a uthorized. ¶ 43 A trial court’s application of the UCC to uncontrove rted fac ts prese nts a question of law

rev i ew ed d

e n ovo

. Her e, however, the trial court applied the UC C to its deter minations of

days of re cei pt of same.”

-11-fac t following a trial on the merits. A trial court’s purely leg al finding s are revie wed de novo ,

but its deter

minations of fac t should be upheld unless they are contra ry to the manifest weig ht of the evidenc e. Salem National Bank v. Chapman
, 64 I ll. App. 3d 625, 628 (1978). The ultimate decision to awa rd or deny attorney fee s under t h e UCC is committed to the discretion of the trial court and is revie wed for an abuse of discretion. Southern Provisions, Inc. v . Harris Trus t & Savings Bank, 96 I ll. App. 3d 745, 748 (1981). ¶ 44 The bank’s argument challeng ing the authenticity of Henr y ’s signatures on the chec ks is unavailing

. When the bank as s er t s o n appea l that Waller has alre ady stipulated that the signatures wer e not authentic, the bank attempts to rea d more into the parties’ stipulated fac ts for the be nch trial than the parties ha d intended. It is clear from t he record that the par ties’ stipulation that Henr

y ’s signa tures on the two cashie r’s chec ks wer e “not authentic” simply
meant that Henr

y herse lf did n o t s i g n her endorse ment on those chec ks; Waller never

conce ded that the signa

tures wer e leg ally inauthentic for purposes of any provisio n of the UCC. ¶ 45 Fur

thermore
, the bank cites no rele vant authority to support the proposition that Henr y ’s signature c ould only

be authentic for purposes of the UCC if Henry herse lf ac tually

signe d the back of the settlement chec ks. Although the UCC does not define the term authentic
, the bank’s sug g ested meaning of t h e t er m i s n o t supported by the statute. I f, as the bank contends, authenti c m ea n s that the signature on the chec k must be the actua l, manuscript signature of the named person or entity
, then the UCC provisions conce rningan ag ent’s or repr ese n t at ive’s authorized endorse ment on behalf of the principal would be rende red meaning less. See, e.g. , 810 I L CS 5/3-401 (West 2010) (a person’ s liability on an instrument when signe d by an ag ent or repr esentative); 810 I L CS 5/3-402 (West 2010) (sig nature by a repr esentative); 810 I L CS 5/3-405 (West 20 1 0 ) (e m ploy er’ s responsibility for fra udulent indorsement by an employ ee)

. The fac t t h at He n ry herse lf did not write her name on the chec ks does not satisfy the bank’s burden to prove a brea ch of the UCC transfe r war ranty due to an inauthentic e ndorsement. ¶ 46 The bank’s argument that Henr y ’s signat u re s o n the chec ks wer e not authorized also lacks merit. On appea l, the bank attempts, without citation to any rele vant authority
, to attack the validity of the limit ed power of attorney by complaining that: He n ry s t at ed in her evidenc e deposition that she never authorized Olson, his firm, or anyone else to endorse the chec ks; no counter

party signe d the limit ed power of attorney form with Henr y ; the form did
not expressly convey authority to endorse the chec ks; and no evidenc e was prese nted at trial
to establish that an authorized ag ent of the Olson firm actua lly signe d the endorse ment in He n ry ’s name on the chec ks. Finally
, the bank asser ts that even if the limit ed p o we r o f
at t orney form constituted an ag ree ment with any attorney -in-fa ct, the attorney -in-fa ct brea ched the ag ree ment and, thus, lost any authority conveyed by

the document. ¶ 47 The bank’s failure to support these propositions by citation to rele vant authority forf eits revie w of these arguments on appea l. Such forf eiture notwithstanding, the parties stipulated that Henr y , upon the advice of her divorce attorney , signe d the limit ed power of attorney in favor of Olso n and his ag ents. Moreove r, Henr y approve d the settlement neg otiated by Waller. Consequently
, Henr y authorized the Olson firm and Walle r to act as her ag ents.

-12-Fur thermore
, the terms of the limit ed power of at t o rn ey wer e broad enoug h to confe r on Olson and Waller the power to sign Henr y ’s name on the back of the settlement chec ks and
neg otiate those chec ks throug h Waller’s I OL TA. Acc ording ly
, the trial court proper ly found

as a matter of f

act and law that Waller did not brea ch the UCC transf er w arr anty

due to an unauthorized endorse ment. ¶ 48 The bank has n o t m et i ts burden to prove that Waller brea ched his transfe r wa rra nties. Howeve r, even assuming, arguendo
, that Waller technica lly brea ched those war ranties, any such brea ch did not cause the bank’s loss. As discussed above, the bank’s loss was the result of Olson’s criminal act afte r Waller had neg otiated the settlement chec ks throug h his acc ount and He nry ’s meritless lawsuit. See County of Pierce , 815 F. Supp. at 1126-27. ¶ 49 Finally
, the bank argues the trial court abused its discretion by allowing Waller’s witness, Robert Markof

f, to te stify as an expert on I llinois collection pra ctices in a case that did not involve any issues of collection law. The bank states that the trial court never made a finding that the limit ed power of attorney was ambiguous and Markof f improp erly offe red parol evidenc e to interpre t that document. See Todd W

. Musburger, Ltd. v. Meie r , 394 I ll. App. 3d 781, 800-01 (2009 ) (c o u rt proper ly barr ed expert testimony that purported to offe r leg al conclusions and interpre t the parties’ ag ree ment). Acc ording to the bank, the trial court relied heavily on Markof

f’s immateria l and irre levant testimony

. ¶ 50 T h e t ri al co u rt i s vested with broad discretion to deter mine the re l ev an ce an d admissibili ty of evidenc e, including expert tes t i m o n y

. Alm v. Loyola University Medic al Center
, 373 I ll. App. 3d 1, 4 (2007). I f the trial court is found to have abused its discretion, relief on appeal i s wa rra

nted only wher e the appellant can demonstrate prejudice

. Gill v. Foster , 157 I ll. 2d 304, 317-18 (1993). ¶ 51 Acc ording t o the rec ord, Markof f opined that the limit ed power of attorney signe d by Henr y g ave the Olson firm and its authorized ag ents, like Waller, the au t hority to sign Henr y ’s name on the back of the settlement chec ks, neg otiate the chec ks throug h the bank, and hold the settlement funds for 90 da y s befor e distributing the pr ocee ds acc ording to the terms of the compensation agr eeme nt betwee n Olson and He nry . Markof f also opined that Waller did not breac h any duty by followingthe limited powe r of attorney and sending the settlement proce eds to Olson instead of He nry

. ¶ 52 M ar k o ff also testified that, under the common prac tice in I ll i n o i s co n ce rn i n g d eb t collection, Waller had authority to sign Henr y ’s name on the back of the chec ks and deposit the chec ks. Markof

f explained the debt collection practice and how collection lawy ers usually wer e eng ag ed in a case

. He stated that collection lawy ers usually worke d throug h an ag ent and had littl e contac t with the judgme nt holder o r client. By neg otiating the chec ks throug h a client trust f

und acc ount, a collection lawyer e nsured that the chec ks had clea red
proper ly for both the j udg ment h o l der and payor. Furthermore
, it was commonly acc epted that a collection lawyer cou l d s ign or endorse chec ks on behalf of the client or judgme nt holder, even if that action was not expli citly stated in any ag ree ment. Markof f explained that a collection lawyer’ s ability to en d orse the chec ks eliminated t he risk of sending endorsed chec ks throug h the m ail. Fur thermore
, a co l l ec t i on lawy er’ s ability to endorse and deposit chec ks immediately

benef itted the payor by preve nting the acc umulation of interest on the

-13-judgme nt. I n addition, chec ks had to be deposited and negotiate d quickly befor e th e funds

disappea red or beca

me aff ecte d by a p ay o r’s bankruptc y

. Under the common prac tice, a collection lawy er remitted the funds to the collection ag ent with the collection lawy er’ s fee portion retaine d. ¶ 53 The rec ord establishes that the trial court did not abuse its discretion by allowingMarkof f
to testify reg arding the debt collection prac tice. The bank prese n t ed the testimony of its assistant g ener al counsel, who opined on the meaning of the contra ct provisions and t h e ultimate issues of whether Waller was in brea ch of transfe r war ranties and whether the bank had incurre d leg al fee s within the scope of the indemnifi ca t i o n clause

. In turn, Waller
prese nted Markof

f’s testimony
, which provided background on the usag e and customs of the debt collection prac tice. Both witnesses provided information on the underly ing commerc ial context of this dispute and there by assisted the fac t deter minations made by the trial judge

. ¶ 54 I t is also clea

r that, in this bench trial, the trial judge understood the proper purpose and limit ation of Markof

f’s expert testimony

. Although Markof f offe red some parol evidenc e to interpre t the limit ed power of attorney ag ree ment, the rec ord establishes that the trial court limit ed its considera

tion of Markof

f’s testimony to the subject of collection law and how a collection attorney in the normal and customary course of collection prac tice would have acted u n d er a limit ed power of attorney

. In a bench t rial, i n the absence of evidenc e to the
contra ry , it is presumed that the court considere d only competent evidenc e and the admission of incompetent evidenc e is harmless. Dowd & Dowd, Ltd. v. Gleason
, 352 I ll. App. 3d 365, 389 (2004). The rec ord her e supports t hat presumption. Specifica lly
, befor e the trial judge questioned Markof

f, the judge stated that he was not interested in any of Markof f’s leg al conclusions but, rathe r, was conce rned about the n at u re of the debt collection prac tice. Moreove r, the trial judge stated i n h i s oral ruling that he was particula rly persua ded by Markof f’s t estimony about the “pra ctices that preva il in the collection industry ” and “the i m p o rtant rea sons why attorney s have to neg otiate” instruments like cashie r’s chec ks in a timely manner

. The trial court proper ly considere d Markof f’s ex pert testim ony only to the extent that it was re levant to the fa ctual issues bef ore the court. ¶ 55 I would aff

irm the judgme n t o f t he circ uit court, which denied the bank’s petition for attorney fe es and costs and considere d only the admissible testimony of Waller’s expert witness.

-14-