Court Opinion

ID: 2997632
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:37:54.436075+00
Date Added: 2024-06-11T15:03:02.093659
License: Public Domain

In the
 United States Court of Appeals
              For the Seventh Circuit
                        ____________

Nos. 03-2470 & 03-2607
DR. LINDA A. RODRIGUE,
                         Plaintiff-Appellee, Cross-Appellant,
                               v.

OLIN EMPLOYEES CREDIT UNION,
                       Defendant-Appellant, Cross-Appellee.

                        ____________
          Appeals from the United States District Court
               for the Southern District of Illinois.
           No. 00 C 869—David R. Herndon, Judge.
                        ____________
   ARGUED SEPTEMBER 21, 2004—DECIDED APRIL 19, 2005
                    ____________

  Before MANION, ROVNER, and WOOD, Circuit Judges.
  ROVNER, Circuit Judge. Beginning in 1992, an employee
of Linda A. Rodrigue, M.D., stole some 269 reimbursement
checks issued to the doctor by her patients’ insurers, frau-
dulently endorsed the checks over to herself, and presented
them to her credit union, Olin Employees Credit Union
(“Olin”). Olin accepted the checks. Rodrigue finally discov-
ered the embezzlement in 1999 and filed a diversity suit
against Olin for conversion the following year. Following a
bench trial, the district court concluded that the conversion
2                                   Nos. 03-2470 & 03-2607

of all 269 checks amounted to a single or continuous injury
under Illinois law that did not terminate until the last of
the checks was negotiated in 1999; consequently, the three-
year statute of limitations on Rodrigue’s cause of action for
conversion did not begin to run until that time, and
Rodrigue’s suit against Olin was timely as to all of the
stolen checks. The court further concluded that Olin had
failed to observe ordinary commercial standards in accept-
ing the fraudulently endorsed checks and that the credit
union was therefore liable for the conversion of the checks.
Upon considering the relative fault of Rodrigue and Olin for
the conversion, the court assigned 10 percent of the respon-
sibility to Rodrigue and 90 percent to Olin. After adjusting
the total damages to reflect Rodrigue’s share of responsibil-
ity for the loss, the court entered judgment in the amount
of $334,864.96 in favor of Rodrigue. Olin has appealed,
contending that a cause of action for conversion accrued,
and the statute of limitations began to run, each time a
stolen check was negotiated, so that Rodrigue was barred
from suing on any check cashed or deposited more than
three years before she filed suit in 2000. Olin also contends
that the district court clearly erred in assigning it 90
percent of the responsibility for the loss. Rodrigue cross-
appeals, challenging the district court’s decision to appor-
tion 10 percent of the blame for the loss to her. We agree
with Olin that the conversion of the checks did not amount
to a single or continuous injury under Illinois law and that
the statute of limitations for conversion began to run with
the negotiation of each check; Rodrigue’s suit was therefore
untimely as to any check negotiated more than three years
before she filed suit. We conclude that the district court
committed no clear error in its allocation of comparative
fault as between Olin and Rodrigue, however.

                             I.
  Dr. Rodrigue is an obstetrician-gynecologist who has op-
erated a private practice under the name of North County
Nos. 03-2470 & 03-2607                                      3

Women’s Health Care Services, P.C., in Florissant, Missouri
since August 1989. The Christian Hospital System spon-
sored Dr. Rodrigue when she went into private practice,
providing her with start-up and relocation assistance and
a practice consultant who helped draft and publish an em-
ployee manual. In November 1990, after Rodrigue missed
an event to which she had been invited due to an employee’s
mishandling of the office mail, she revised the employee
manual to prohibit anyone in the office from opening the
mail other than the doctor herself.
  Rodrigue hired Carol Wiltshire on May 1990. Although
initially hired to work as a medical receptionist and secre-
tary, over the nine years Wiltshire worked for Dr. Rodrigue,
she held a variety of positions of increasing responsibility
and authority within the office. By 1993, Wiltshire was a
billing specialist and later an office supervisor. At the time
of Wiltshire’s termination in December 1999, she was
working as office manager.
  In her position as billing specialist, Wiltshire was re-
sponsible for understanding insurance requirements and
was the only person in the office trained in the Doctor’s
Office Management System (“DOMS”) when Rodrigue
converted to the computerized billing system in 1992. Even
Rodrigue did not seek training in the DOMS software,
which was used to manage accounts by tracking charges,
payments, and adjustments. Adjustments entered in the
DOMS system, interchangeably referred to as “write-offs”
in the record, were supposed to reflect the portions of
Rodrigue’s charges that insurance providers disallowed and
thus would not pay. From 1992 until her termination in
1999, Wiltshire was solely responsible for entering charges,
adjustments, payments and closing out monthly statements
for patient charges using the DOMS software. After learn-
ing how to use the software, Wiltshire began stealing
checks from various insurance providers payable to
Rodrigue from the doctor’s mail.
4                                    Nos. 03-2470 & 03-2607

  The DOMS software was designed to help doctors detect
employee theft by keeping track of all deleted charges and
preventing all approved payments and adjustments from
being removed or deleted. These features would prevent
someone from posting a payment to an account, then delet-
ing the payment from the system and keeping the money.
Nonetheless, Wiltshire used her knowledge of the DOMS
software to “zero out” patients’ accounts to indicate that the
accounts had been settled when, in fact, Wiltshire had stolen
the insurance reimbursement checks sent to Rodrigue’s
office. To bypass the security features of the DOMS soft-
ware, Wiltshire would enter a negative adjustment to the
system equal to the charge, thus making the account balance
zero. Because Rodrigue only reviewed DOMS-generated
reports reflecting her accounts receivable, she did not notice
the large number of adjustments that Wiltshire was
entering into the system to cover her embezzlement.
  During the course of her employment at Dr. Rodrigue’s
office, Wiltshire stole 269 checks, totaling $372,572.18, writ-
ten by insurance providers to Dr. Rodrigue. After manipu-
lating the DOMS billing system to make it appear
as though no funds were stolen, Wiltshire would forge
Dr. Rodrigue’s endorsement on the insurance checks, direct
that they be paid to herself, and deposit or cash them at
Olin’s Godfrey, Illinois branch, where Rodrigue and her
husband maintained a joint account.
  Olin’s tellers testified at trial that presentment of checks
made payable to a third party was not unusual; however, as
a matter of unwritten policy, Olin required tellers to obtain
a supervisor’s approval before accepting third-party checks.
When Wiltshire first attempted to deposit a third-party
check at Olin in 1992, the teller sought approval from Sarah
Woodman, a supervisor who had been working for Olin
since 1987. Woodman asked Wiltshire about the check, and
Wiltshire told her that she worked as a midwife for
Rodrigue and that the doctor compensated her for her
Nos. 03-2470 & 03-2607                                      5

services by signing over to her insurance reimbursement
checks. Woodman refused to take the check without some
form of authorization from Rodrigue. Wiltshire later pro-
vided Woodman with a forged letter of authorization pur-
porting to be from Rodrigue, and Woodman accepted the
third-party check. Although this was the first time that
Woodman had seen payments for services made through a
third-party check, she did not think it was suspicious but
“curious.” Woodman sent the original forged authorization
letter to Olin’s main office but did not keep a copy of the
letter on file at the local branch. At the time of trial, Olin
could not locate the letter.
  In early 1993, Wiltshire presented one of the checks to
Olin teller Karrie Stahl, who again sought approval from
Woodman. Woodman told Stahl that there was an authori-
zation note from Rodrigue on file and instructed Stahl to
accept the check but to ask for a notarized letter of authori-
zation from Rodrigue for future checks. Stahl testified that
Wiltshire later produced a notarized letter on Rodrigue’s
letterhead and that she compared the signature on the
letterhead with that on the third-party check. Yet again, the
letter was a forgery; Rodrigue never authorized Wiltshire to
cash or deposit checks made payable to her. Although Stahl
found it “odd” that Wiltshire was paid in this manner, the
notarized letter and the details Wiltshire provided about
the births in which she (purportedly) had assisted sup-
ported her story. The original notarized letter was sent to
Olin’s main office, and a copy was kept in a folder by
Woodman’s desk; however, Olin was unable to produce either
the notarized letter or the copy at the time of trial.
  At some point, Woodman tried to telephone Rodrigue in
order to verify that Wiltshire had the doctor’s permission to
cash or deposit the third-party checks. Woodman was
unable to reach Rodrigue and did not attempt to call her
again, satisfied that Olin had received “the correct written
documentation.”
6                                    Nos. 03-2470 & 03-2607

  Rodrigue’s practice began suffering from financial diffi-
culties around 1994 or 1995, and Rodrigue had to borrow
money and moonlight at the hospital in order to make ends
meet. In 1992 and 1993, insurance companies had reim-
bursed Rodrigue for approximately 80 to 90 percent of what
she billed, but in the following years reimbursement rates
dropped steadily—or so it appeared. Between 1991 and
1999, Rodrigue used three different accounting firms, which
prepared monthly and later quarterly summaries of
Rodrigue’s business activities based on bank statements,
payroll deposits, and other information that Rodrigue
provided. When Rodrigue began to believe that no matter
how hard she worked she could not pay her bills, she
consulted her accountants to see how she could make her
practice profitable. Rodrigue’s accountants focused on her
accounts receivable and suggested that she find insurance
providers who had higher reimbursement rates and stream-
line her office operations to cut costs. Rodrigue’s accountants
did not suggest an audit of her practice, nor did Rodrigue
request an audit. Rodrigue testified that, according to her
accountants, many other medical practices were suffering
from losses as a result of poor insurance providers and that
the drop in income that her practice was suffering was not
atypical.
  Rodrigue finally discovered Wiltshire’s embezzlement at
the end of November 1999, after her sister-in-law, Denise
Rodrigue (“Denise”), told her that she believed Wiltshire
had been taking mail into her office, opening it, and steal-
ing insurance checks. Rodrigue had hired Denise to work as
a receptionist in the office in 1997. Around Thanksgiving
1999, Denise noticed Wiltshire take the mail into her office
and close the door; Denise then heard envelopes being
opened. Shortly thereafter, Denise entered Wiltshire’s office
and saw insurance checks in Wiltshire’s open purse. A few
days later, Denise looked through the mail before Wiltshire
took it into her office and wrote down the number of enve-
Nos. 03-2470 & 03-2607                                     7

lopes that appeared to contain insurance reimbursement
checks, along with the names of the insurers. Denise then
told Rodrigue that she believed Wiltshire was stealing
checks, and gave her the list of checks that were in the mail
that day. When Rodrigue looked through the mail, she
found that many of the checks were missing. Rodrigue
subsequently telephoned her insurance providers and was
sent copies of the reimbursement checks they had previously
sent to her, more than half of which had been fraudulently
endorsed by Wiltshire. After receiving over twenty fraudu-
lently endorsed checks, Rodrigue gave a statement to the
Florissant Police Department and then filed an Affidavit of
Forgery with Olin; she also terminated Wiltshire. The
Florissant Police arrested Wiltshire, who was charged and
convicted of bank fraud and sentenced to eighteen months’
imprisonment. Wiltshire was also ordered to pay Rodrigue
almost $161,000 in restitution. Rodrigue testified at trial
that the restitution order included only those checks that
were known to have been stolen at the time of Wiltshire’s
sentencing (a total of 115 checks), and that she had thus far
only received about $450 in restitution from Wiltshire.
  Rodrigue filed a complaint for conversion against Olin on
November 1, 2000. After a three-day bench trial, the court
found for Rodrigue and against Olin on her claim for the
conversion of negotiable instruments.
  The court found Olin liable pursuant to section 3-420(a)
of the Illinois Uniform Commercial Code (“UCC” or the
“Code”), which in relevant part provides that “[t]he law
applicable to conversion of personal property applies to
instruments” and that “[a]n instrument is . . . converted if
it is taken by transfer, other than negotiation, from a
person not entitled to enforce the instrument or a bank
makes or obtains payment with respect to the instrument
for a person not entitled to enforce the instrument or
receive payment.” 815 ILCS 5/3-420(a). To establish that a
financial institution is liable for conversion under Illinois
8                                   Nos. 03-2470 & 03-2607

law, the plaintiff must establish (1) that she owned, held an
interest in, or had the right to possess a negotiable instru-
ment; (2) that someone forged or without authority placed
the plaintiff’s endorsement on the instrument; and (3) that
the defendant financial institution negotiated the check
without her authorization. R. 114 at 8 ¶ 13, citing Conti-
nental Cas. Co. v. American Nat’l Bank & Trust Co. of
Chicago, 768 N.E.2d 352, 361 (Ill. App. Ct. 2002), and Burks
Drywall, Inc. v. Washington Bank & Trust Co., 442 N.E.2d
648, 652 (Ill. App. Ct. 1982). The Court found that Rodrigue
had proven each of these elements: she had the requisite
interest in the reimbursement checks that her patients’
insurers had mailed to her, Wiltshire had forged her
endorsement on the checks, and Olin had permitted
Wiltshire to cash or deposit the checks without Rodrigue’s
authorization. R. 114 at 8-13 ¶¶ 14-22. The court went on to
reject each of the three defenses that Olin asserted to
liability for conversion of the checks.
   First, the court rejected Olin’s contention that the three-
year limitations period specified by the Illinois UCC, 810
ILCS 5/3-118(g), barred Rodrigue’s cause of action for
conversion as to many of the stolen checks because those
checks were negotiated more than three years before she
filed suit in 2000. Rather than view the negotiation of each
check as a discrete wrong, the court deemed the entire
series of 269 checks, negotiated over an 85-month period, to
be a continuing violation that did not terminate, and did
not trigger the statute of limitations, until the last check
was negotiated in 1999. R. 114 at 13-15 ¶¶ 24-26, citing,
inter alia, Field v. First Nat’l Bank of Harrisburg, 619
N.E.2d 1296, 1298-99 (Ill. App. Ct. 1993), and Haddad’s of
Illinois, Inc. v. Credit Union 1 Credit Union, 678 N.E.2d 322,
324 (Ill. App. Ct. 1997).
  Second, the court found that the “faithless employee” pro-
vision of the Code, 810 ILCS 5/3-405(b), did not shield Olin
from liability. That provision of the Code specifies that when
Nos. 03-2470 & 03-2607                                      9

an employee whom the employer has given responsibility to
handle a negotiable instrument forges her employer’s en-
dorsement on an instrument payable to the employer, and
a person (here Olin) in good faith pays the instrument or
takes it for value or collection, the forged endorsement is
considered effective as the employer’s endorsement. Id. The
court agreed that Rodrigue had entrusted Wiltshire with
responsibility for posting the insurance payments in the
DOMS software and so Wiltshire qualified as a responsible
employee for the purposes of this provision. R. 114 at 16-17
¶¶ 28-29; see § 5/3-405(a)(3), UCC Comment 3, Case 3. But
the faithless employee defense is not absolute; rather, if the
person paying or accepting the fraudulently endorsed
instrument failed to exercise ordinary care in doing so and
that failure substantially contributed to the resulting loss,
then that person may be liable to the extent his or her
negligence contributed to the loss. § 5/3-405(b) & UCC
Comments 1 & 2. In the district court’s view, Olin had not
exercised ordinary care in accepting the checks that
Wiltshire had fraudulently endorsed, and its omission had
substantially contributed to Rodrigue’s loss: although Olin’s
personnel had found it “odd,” “curious,” and “strange” that
Wiltshire would be paid for her services by way of third-
party checks from insurers, it had nonetheless accepted the
checks without seeking direct confirmation from Rodrigue
that she had actually endorsed the checks over to Wiltshire.
R. 114 at 17-20 ¶¶ 30-36.
  Third, the court rejected the notion that Rodrigue’s own
failure to exercise ordinary care had substantially contrib-
uted to the fraudulent endorsement of the checks and that,
consequently, she could not recover from Olin pursuant to
810 ILCS 5/3-406(a). The court found that Rodrigue had
exercised ordinary care in hiring Wiltshire notwithstanding
the doctor’s failure to discover that Wiltshire had previously
been convicted of embezzlement: Wiltshire came to her with
apparently excellent credentials, Rodrigue had checked
10                                  Nos. 03-2470 & 03-2607

Wiltshire’s references in the relevant field, and Wiltshire
was given high recommendations. R. 114 at 21 ¶ 38. The
court also found no fault with the way in which Rodrigue
ran her office: the doctor had established office procedure
which directed that only she was to open the mail, and she
had relied on accountants to provide her with advice as to
her finances. R. 114 at 21-22 ¶¶ 39-40.
  Olin was therefore liable for the conversion of the checks
to the extent its failure to exercise ordinary care had
contributed to Rodrigue’s loss. Assessing Olin’s fault as
compared to Rodrigue’s, the court determined that Olin’s
negligence was responsible for 90 percent of the loss, while
Rodrigue’s negligence was responsible for the remaining 10
percent. R. 114 at 20 ¶ 36.
  Based on the collective face value of the 269 checks that
Wiltshire had stolen and Olin had accepted, the court found
that Rodrigue’s total damages were $372,572.18. The court
reduced that amount by 10 per cent to reflect Rodrigue’s
comparative negligence and deducted the $450 Wiltshire
thus far had paid to Rodrigue in restitution. Accordingly,
the court entered judgment in favor of Rodrigue and against
Olin in the amount of $334,864.96.

                             II.
A. Statute of Limitations
  Treating the conversion of all 269 checks that Wiltshire
embezzled from Rodrigue as a single, continuing wrong, the
district court held that Rodrigue’s suit was timely as to all
of the checks, notwithstanding the fact that many of them
were negotiated more than three years before Rodrigue filed
suit in November 2000. As the pertinent facts are undis-
puted, this was a legal determination that we review de
novo. E.g., United States v. Greene-Thapedi, 398 F.3d 635,
637 (7th Cir. 2005).
Nos. 03-2470 & 03-2607                                     11

   Under the Illinois UCC, a cause of action for the conver-
sion of a negotiable instrument is subject to the limitations
period set forth in section 3-118(g): “[A]n action (i) for
conversion of an instrument, for money had and received, or
like action based on conversion . . . must be commenced
within 3 years after the cause of action accrues.” 810 ILCS
5/3-118(g). Courts in Illinois have held that a limitations
period generally begins to run “when facts exist which au-
thorize one party to maintain an action against another.”
Sundance Homes, Inc. v. County of Du Page, 746 N.E.2d
254, 266 (Ill. 2001) (quoting Davis v. Munie, 85 N.E. 943,
944 (Ill. 1908)). With respect to the conversion of a negotia-
ble instrument, section 3-420(a) of the Code provides that
“[a]n instrument is . . . converted if . . . a bank makes or
obtains payment with respect to the instrument for a
person not entitled to enforce the instrument or receive
payment.” 810 ILCS 5/3-420(a). Thus, Illinois courts have
held that a cause of action for conversion of negotiable
instruments accrues at the time the check is negotiated. See,
e.g., Nelson v. Sotheby’s Inc., 115 F. Supp. 2d 925, 929 (N.D.
Ill. 2000) (applying Illinois law); Haddad’s of Illinois, Inc.
v. Credit Union 1 Credit Union, supra, 678 N.E.2d at 326.
Thus, applying the statute of limitations in a straightfor-
ward, mechanical manner, the limitations period with
respect to each of the checks that Wiltshire stole began to
run at the time Wiltshire negotiated the check.
   In deciding not to apply the statute of limitations in this
manner, the district court looked to two opinions from the
Illinois Appellate Court applying what we will call the “con-
tinuing violation” rule. Consistent with the rationale of
those cases, the court reasoned that where a series of
fraudulently endorsed checks is cashed “as part of an ‘on-
going scheme, plan, conspiracy, or the like,’ ” the negotiation
of each check is considered part of a single, continuing
wrong and the statute of limitations does not begin to run
until the last check is negotiated. R. 114 at 14 ¶ 24, citing
12                                      Nos. 03-2470 & 03-2607

Field v. First Nat’l Bank of Harrisburg, supra, 619 N.E.2d
at 1298-99, and Haddad’s of Illinois, 678 N.E.2d at 324.
Thus, although Olin accepted the first of the embezzled
checks from Wiltshire in 1992, more than eight years before
Rodrigue filed suit, the statute of limitations did not begin
to run as to any of the checks until 1999, when the embez-
zlement was finally discovered. R. 114 at 14-15 ¶¶ 25-26.
Olin contends that the district court erred when it invoked
the continuing violation rule.
  The Illinois Supreme Court has not yet considered whether
the continuing violation rule should apply to a cause of
action for the serial conversion of multiple negotiable in-
struments.1 Therefore, our task is to apply the law as we
predict the Illinois Supreme Court would if it were deciding
this case. E.g., Mutual Serv. Cas. Ins. Co. v. Elizabeth State
Bank, 265 F.3d 601, 612 (7th Cir. 2001).
  In concluding that the conversion of all 269 checks should
be treated as a single, continuing wrong, the district court
relied principally on the Illinois Appellate Court’s opinion
in Field v. First Nat’l Bank of Harrisburg, 619 N.E.2d 1296.
In Field, the administrator of Raymond E. Field’s estate
brought an action for conversion against Field’s daughter
and the First National Bank of Harrisburg after discovering
that over the course of four years, Field’s daughter had
deposited pension checks endorsed by Field and bearing the
restriction “for deposit only” into her own bank account at
the defendant bank. The Field court held that the defen-
dants’ course of conduct constituted “one continuous

1
   In Feltmeier v. Feltmeier, 798 N.E.2d 75, 86 (Ill. 2003), the
Illinois Supreme Court did cite the appellate court’s opinion in
Field as an example of a case in which the continuing violation
rule had been applied. However, as we discuss below, we do not
construe the Court’s citation of Field as an actual holding that the
rule should apply to a cause of action for the conversion of
negotiable instruments.
Nos. 03-2470 & 03-2607                                      13

transaction or scheme for the purposes of the commence-
ment of the statute of limitations.” Id. at 1298. The court
was admittedly “unable to find any cases in which a series of
checks cashed is said to constitute a single transaction for
purposes of the running of the statute of limitations.” Id. at
1299. However, the court found the law to be “clear that
where a tort involves a continued repeated injury, the
limitation period does not begin until the date of the last
injury or when the tortious act ceased.” Id. (collecting
cases). The court also found the conversion of a series of
checks to be somewhat analogous to a fraudulent scheme
based on a series of misrepresentations, or an antitrust
conspiracy involving a series of overt acts; in both scenarios,
courts had concluded that the statute of limitations did not
begin to run until the last misrepresentation or overt act
occurred. Id. Drawing guidance from these precedents, the
court reasoned that the plaintiff had alleged facts sufficient
to permit the inference that there was an ongoing “ ‘scheme,
plan conspiracy or the like’ which would transform the de-
posits [of the converted checks] into what could be consid-
ered a single transaction.” Id. The statute of limitations
thus did not begin to run until the last of the checks was
deposited. Id.; see also Haddad’s of Illinois, 678 N.E.2d at
324 (following Field).
  Field plainly supports the district court’s conclusion as to
the statute of limitations; but looking to the Illinois Su-
preme Court’s own cases concerning the continuing vio-
lation rule, we are convinced that the Court would not
apply that rule to a cause of action for the conversion of
negotiable instruments. The Illinois Supreme Court has not
adopted “a continuing violation rule of general applicability
in all tort cases, or . . . cases involving a statutory cause of
action.” Belleville Toyota, Inc. v. Toyota Motor Sales, U.S.A.,
Inc., 770 N.E.2d 177, 191 (Ill. 2002). Instead, the Court has
carefully assessed the nature of a particular cause of action
in order to determine whether the continuing violation rule
should apply.
14                                   Nos. 03-2470 & 03-2607

  Where a cause of action arises not from individually
identifiable wrongs but rather from a series of acts consid-
ered collectively, the Illinois Supreme Court has deemed ap-
plication of the continuing violation rule appropriate. For
example, in Cunningham v. Huffman, 609 N.E.2d 321 (Ill.
1993), the Court held that the continuing violation rule
tolled a statute of repose governing medical malpractice
claims, where the plaintiff’s claim of malpractice arose from
a continuous, related, unbroken course of negligent treat-
ment. “When the cumulative result[ ] of continued negligence
is the cause of injury,” the Court observed, “the statute of
repose cannot start to run until the last date of negligent
treatment.” Id. at 325 (emphasis ours). Otherwise, the Court
added, patients who suffered severe harm as the result of
improper medical treatment administered over a period of
years might find themselves with little or no remedy by the
time they learned of their injury. Id. “Surely, the law could
not contemplate such an unjust result.” Id. Likewise, in
Feltmeier v. Feltmeier, 798 N.E.2d 75 (Ill. 2003), the Court
concluded that the continuing violation rule applied to an
abused wife’s cause of action for intentional infliction of
emotional distress by her husband, where the cause of
action was based on a pattern of abuse that took place over
the course of more than 11 years. “While it is true that the
conduct set forth in [the] complaint could be considered
separate acts constituting separate offenses of, inter alia,
assault, defamation and battery, [plaintiff] has alleged, and
we have found, that [defendant’s] conduct as a whole states
a cause of action for intentional infliction of emotional dis-
tress.” Id. at 86-87 (emphasis in original).
  By contrast, as the Court’s opinion in Belleville Toyota re-
veals, the continuing violation rule does not apply to a series
of discrete acts, each of which is independently actionable,
even if those acts form an overall pattern of wrongdoing. In
Belleville Toyota, an automobile dealership sued its whole-
sale distributor and importer, alleging breach of dealer
Nos. 03-2470 & 03-2607                                     15

agreements and numerous violations of the Motor Vehicle
Franchise Act (“MVFA”) in the defendants’ allocation of
automobiles to plaintiff over the course of almost 10 years.
A four-year statute of limitations applied to claims under
the MVFA, but the lower courts, reasoning that the alleged
MVFA violations constituted a single, ongoing wrong, had
invoked the continuing violation rule to toll the statute of
limitations. The Illinois Supreme Court reversed, concluding
that the continuing violation rule was inapplicable. The
Court could not accept the notion that the defendants’ auto-
mobile allocations, each of which was “the result of discrete
decisions by defendants regarding the numerous adjustable
parameters that drove the computerized allocation system . . .
constituted one, continuing, unbroken, decade-long violation
of the [MVFA].” Id. at 192. “Rather, each allocation consti-
tuted a separate violation of section 4 of the [MVFA], each
violation supporting a separate cause of action.” Id. Thus,
the nature of the alleged wrong did not justify the applica-
tion of the continuing violation rule. Id. The Court added
that, in contrast to Cunningham, there were no apparent
“unjust results” that would militate against application of
the usual rule that the limitations period begins to run with
the accrual of a cause of action. Id. at 191.
  Belleville Toyota leads us to believe that the continuing
violation rule should not apply here, either. Unlike a cause
of action for medical malpractice based on a course of negli-
gent treatment with cumulative effects, or a cause of action
for the intentional infliction of emotional distress arising
from a course of tortious acts considered as a whole,
Rodrigue’s claim for conversion does not depend on the cu-
mulative nature of either Wiltshire’s or Olin’s acts. Rather,
a cause of action for conversion arose each time Wiltshire
cashed or deposited one of the checks she had embezzled.
The fact that Wiltshire managed to negotiate hundreds of
checks over an 85-month period is irrelevant insofar as
Rodrigue’s right or ability to sue for conversion. Whether
16                                   Nos. 03-2470 & 03-2607

Wiltshire had negotiated one check or 1000, Rodrigue had
a valid cause of action for conversion; nothing about the
repeated or ongoing nature of Wiltshire’s conduct affected
the nature or validity of Rodrigue’s suit, beyond increasing
her damages. Moreover, in contrast to a claim that arises
from a cumulation of wrongful acts, a claim for conversion
does not pose undue difficulty for the victim in identifying
the nature, origin, and extent of her injury. Cf. Feltmeier,
798 N.E.2d at 87 (quoting Pavlik v. Kornhaber, 761 N.E.2d
175, 187-88 (Ill. App. Ct. 2001)); Cunningham, 609 N.E.2d
at 325. There is, for example, no question as to whether,
when, and to what degree Rodrigue was harmed—the dates
on which Olin improperly accepted the checks, and the
amounts of those checks, make such determinations straight-
forward. Thus, as in Belleville Toyota, there are no poten-
tially unjust results militating against application of the
ordinary rule that the statute of limitations begins to run
when the cause of action accrues. Only Rodrigue’s failure to
discover Wiltshire’s wrongdoing sooner than she did makes
application of the ordinary rule seem harsh. But, in contrast
to cases involving claims that are dependent on the cumula-
tive nature of a defendant’s wrongful acts, making it difficult
to determine when those claims accrue, Rodrigue’s belated
discovery of her injury has little or nothing to do with the
nature of the claim for conversion.
  We recognize that the Supreme Court in Feltmeier cited
Field as an example of a case that treated a series of re-
peated or ongoing acts as “a continuing whole for prescrip-
tive purposes.” 798 N.E.2d at 86, citing, inter alia, Field,
619 N.E.2d at 1299. But the Court did so for illustrative
purposes only. Nothing in Feltmeier signals that the Court
undertook to examine the validity of Field’s rationale for
invoking the continuing violation rule or to reconcile Field
with the Supreme Court’s own precedents—including
Belleville Toyota—as to when invocation of the rule is
proper. Therefore, we do not construe the mere citation of
Field as an unqualified endorsement of Field’s holding or a
Nos. 03-2470 & 03-2607                                          17

persuasive indication of how the Illinois Supreme Court
would decide the question with which we are faced today. In
our view, the Court’s decision in Belleville Toyota, which
dealt with facts comparable to the ones in this case, is a
much better indicator of how the Court would decide this
case; and Belleville Toyota suggests that it would be im-
proper to apply the continuing violation rule here.
   Notably, Rodrigue does not argue, in the alternative, that
the discovery rule should apply to toll the statue of limi-
tations in this case. As Rodrigue herself acknowledges,
Illinois courts have refused to apply the discovery rule to
claims for the conversion of negotiable instruments. Rodrigue
Br. at 43; see, e.g., Haddad’s of Illinois, 678 N.E.2d at 324-
26. Like the continuing violation rule, the discovery rule is
an equitable exception to the ordinary rule that the statute
of limitations begins to run with the accrual of the cause of
action. These exceptions operate in different ways: the
discovery rule tolls the statute of limitations until such time
as the plaintiff knew or reasonably should have known that
she has a cause of action for her injury, while the continu-
ing violation rule effectively postpones the running of the
statute of limitations until the tortious conduct has ceased.2
However, the two rules are “allied” in their underlying ra-
tionales. Beard v. Edmondson & Gallagher, 790 A.2d 541,
548 (D.C. 2002). The discovery rule typically applies in
cases where “ ‘the relationship between the fact of injury
and the alleged tortious conduct [is] obscure.’ ” Id. at 546
(quoting Colbert v. Georgetown Univ., 641 A.2d 469, 472
(D.C. 1994)). Thus, the statute of limitations is tolled until

2
   Because the continuing violation rule can serve to toll the stat-
ute of limitations even beyond the point at which the plaintiff
knows or reasonably should know that she has suffered an ac-
tionable harm, there is, as the Illinois Supreme Court has pointed
out, some tension between that rule and the discovery rule.
Belleville Toyota, 770 N.E.2d at 192. The Court has not under-
taken to resolve that tension, however. Id.
18                                    Nos. 03-2470 & 03-2607

such time as the plaintiff knew, or in the exercise of rea-
sonable diligence should have known, that she was injured,
the cause of her injury, and that there was some indication
of wrongdoing. Id.; see also Belleville Toyota, 770 N.E.2d at
192; Golla v. General Motors Corp., 657 N.E.2d 894, 898 (Ill.
1995). Similarly, the continuing violation rule is premised, at
least in part, on the idea that where a cause of action arises
from the cumulative nature or impact of a series of acts that
occur over time, it can be difficult for the plaintiff to discern
at any particular point during that time the wrongful and
injurious nature of the defendant’s conduct. See Beard, 790
A.2d at 547-48; Feltmeier, 798 N.E.2d at 87 (quoting Pavlik
v. Kornhaber, supra, 761 N.E.2d at 187-88); see also Bodner
v. Banque Paribas, 114 F. Supp. 2d 117, 134-35 (E.D.N.Y.
2000). Accordingly, the cause of action is deemed not to
accrue, and the statute of limitations not to run, until the
injurious conduct ceases or the last injury occurred. E.g.,
Feltmeier, 798 N.E.2d at 89. Given the similarities between
the two rules, it is instructive to consider whether courts
have been willing to apply the discovery rule to a cause of
action for the conversion of negotiable instruments and if
not, why not.
  Although a small number of jurisdictions have applied the
discovery doctrine to toll the statute of limitations in
actions for conversion of negotiable instruments,3 the

3
  See, e.g., DeHart v. First Fidelity Bank, N.A./South Jersey, 67
B.R. 740, 745 (D.N.J. 1986); Gallagher v. Santa Fe Federal
Employees Federal Credit Union, 52 P.3d 412, 416-17 (N.M. Ct.
App. 2002); UNR-Rohn, Inc. v. Summit Bank of Clinton County,
687 N.E.2d 235, 240-41 (Ind. Ct. App. 1997); Stjernholm v. Life
Ins. Co. of N.A., 782 P.2d 810, 811-12 (Colo. Ct. App. 1989);
Branford State Bank v. Hackney Tractor Co., 455 So. 2d 541, 542
(Fla. Dist. Ct. App. 1984) (per curiam).
  Courts have articulated a variety of reasons for applying the
discovery rule to claims involving the conversion of negotiable
                                                  (continued...)
Nos. 03-2470 & 03-2607                                             19

Illinois Appellate Court, along with a decided majority of
other jurisdictions, have refused to apply the discovery doc-
trine in that setting, except where the defendant invoking
the statute of limitations engaged in fraudulent conceal-
ment.4

3
  (...continued)
instruments. In Gallagher, the New Mexico appellate court found
application of the rule to be dictated by statute, 52 P.3d at 416-17,
while in UNR-Rohn, the Indiana appellate court found it dictated
by Indiana Supreme Court precedent extending the rule to all tort
actions, 687 N.E.2d at 240-41. Otherwise, as the Illinois Appellate
Court noted in Haddad’s of Illinois, courts have typically articulated
two grounds for applying the rule: that state policy favors the
right of the individual to obtain recovery for his injury over the
free flow of commerce, or that the rule is necessary in order to
temper the sometimes harsh results that would otherwise flow
from the mechanical application of the statute of limitations. 678
N.E.2d at 325; see also Stjernholm, 782 P.2d at 811-12.
4
   See Haddad’s of Illinois, 678 N.E.2d at 325-26; Ohio Cas. Ins.
Co. v. Bank One, No. 95 C 6613, 1996 WL 507292, at *7 (N.D. Ill.
Sept. 5, 1996) (applying Illinois law); see also, e.g., John Hancock
Fin. Servs., Inc. v. Old Kent Bank, 346 F.3d 727, 733-34 (6th Cir.
2003); Menichini v. Grant, 995 F.2d 1224, 1229-32 (3d. Cir. 1993);
Kuwait Airways Corp. v. American Sec. Bank, N.A., 890 F.2d 456,
460-63, 466 (D.C. Cir. 1989); First Investors Corp. v. Citizens Bank,
Inc., 757 F. Supp. 687, 690-92 (W.D.N.C. 1991), aff’d mem., 956
F.2d 263 (4th Cir. 1992); New Jersey Lawyers’ Fund for Client
Protection v. Pace, 863 A.2d 402, 406-08 (N.J. Super. Ct. App. Div.
2005); Hollywood v. First Nat’l Bank of Palmerton, 859 A.2d 472,
478-82 (Pa. Super. Ct. 2004); Pero’s Steak & Spaghetti House v.
Lee, 90 S.W.3d 614, 620-24 (Tenn. 2002); Palmer Mfg. & Supply,
Inc. v. BancOhio Nat’l Bank, 637 N.E.2d 386, 389-91 (Ohio
App. Ct. 1994); Lyco Acquisition 1984 Ltd. Partnership v. First
Nat’l Bank of Amarillo, 860 S.W.2d 117, 119 (Tex. App. 1993);
Husker News Co. v. Mahaska State Bank, 460 N.W.2d 476, 477-79
(Iowa 1990); Wang v. Farmers State Bank of Winner, 447 N.W.2d
                                                         (continued...)
20                                      Nos. 03-2470 & 03-2607

   The rationale most often cited in support of the majority
perspective is that application of the discovery rule would
be inimical to the underlying purposes of the UCC, includ-
ing the goals of certainty of liability, finality, predictability,
uniformity, and efficiency in commercial transactions. In
keeping with those goals, negotiable instruments are in-
tended to function efficiently, and liability on those instru-
ments is not meant to be open-ended. Haddad’s of Illinois,
678 N.E.2d at 326. As the Illinois Appellate Court wrote in
Haddad’s of Illinois, “[t]he use of negotiable instruments
was intended to facilitate the rapid flow of commerce.” Id.
Application of the discovery doctrine to a claim involving a
negotiable instrument, by tolling the statute of limitations
and giving the plaintiff a longer period of time in which to
sue than the legislature provided, undermines the finality
of transactions involving negotiable instruments and renders
the negotiable instrument a less efficient vehicle of com-
merce.
       [T]he utility of negotiable instruments lies in their
     ability to be readily accepted by creditors as payment
     for indebtedness. Checks must be transferable. Conse-
     quently, ‘in structuring the law of checks we . . . seek to
     enhance the negotiability of commercial paper so that
     it may play its role as a money substitute.’ Robert
     Hillman, et al., Common Law and Equity Under the
     Uniform Commercial Code, ¶ 14.01[1] (1985). Negotia-
     bility requires predictable and rapid collection through
     payment channels.
       Closely related to negotiability are commercial finality
     and certainty. “The finality of transactions promoted by

4
  (...continued)
516, 518 (S.D. 1989); Fuscellaro v. Industrial Nat’l Corp., 368 A.2d
1227, 1231 (R.I. 1977); Gerber v. Manufacturers Hanover Trust
Co., 315 N.Y.S.2d 601, 603 (N.Y. City Civ. Ct. 1970).
Nos. 03-2470 & 03-2607                                        21

    an ascertainable definite period of liability is essential
    to the free negotiability of instruments on which
    commercial welfare so heavily depends.” Fuscellaro v.
    Industrial Nat’l Corp., 117 R.I. 558, 563, 368 A.2d 1227,
    1231 (1977); [citation].
                              ***
      The Code drafters sought quick and inexpensive
    resolution of commercial disputes. This overarching
    goal is particularly important with negotiable instru-
    ments where the exigencies of commerce require inex-
    pensive, quick, and reliable transfer of funds. . . .
Haddad’s of Illinois, 678 N.E.2d at 326 (quoting Menichini
v. Grant, 995 F.2d 1224, 1230-31 (3d. Cir. 1993) (footnotes
omitted)); see Continental Cas. Co. v. American Nat’l Bank
& Trust Co. v. Chicago, supra, 768 N.E.2d at 363; see also,
e.g., Menichini, 995 F.2d at 1231 (“[v]igorous application of
the statue of limitations is a reasonable means of achieving
certainty in commercial transactions”); Ohio Cas. Ins. Co.
v. Bank One, No. 95 C 6613, 1996 WL 507292, at *7 (N.D.
Ill. Sept. 5, 1996) (agreeing that “ ‘a definite period of
liability is essential’ to negotiability”) (quoting Menichini, 995
F.2d at 1231); Husker News Co. v. Mahaska State Bank, 460
N.W.2d 476, 478 (Iowa 1990) (observing that “considerations
of finality and predictability . . . are substantial and out-
weigh the countervailing equities,” and “[t]he strength of
our system of commerce depends on a negotiable instru-
ment law that is mechanical in application”); Hollywood v.
First Nat’l Bank of Palmerton, 859 A.2d 472, 482 (Pa. Super.
2004) (“Our sister states have recognized that the need for
expedition in commercial transactions is best achieved by
safeguarding negotiability and finality of negotiable
instruments and assuring uniformity of applicable law
across state boundary lines. We too recognize the primacy
of these considerations.”).
22                                    Nos. 03-2470 & 03-2607

  Courts adhering to the majority rule have also pointed out
that the UCC objective of promoting careful bookkeeping
would be undercut by applying the discovery doctrine in
check conversion cases. These courts reason that “the victim
of the conversion is in the best position to easily and quickly
detect the loss and take appropriate action”; thus the
statute of limitations should further promote the incentive to
carefully examine one’s books. Haddad’s of Illinois, 678
N.E.2d at 326 (citing Husker News, 460 N.W.2d at 479); see
also Euro Motors, Inc. v. S.W. Fin. Bank & Trust Co., 696
N.E.2d 711, 715 (Ill. App. Ct. 1998).
  The mechanical application of the statute of limitations
embraced by the majority view means that in cases where
the malefactor’s fraud goes undetected for the duration of
the limitations period (not due to any fraudulent conceal-
ment by the defendant), the victim may be left uncompen-
sated. And in cases where the facts make that result seem
harsh, courts may be inclined to invoke an equitable doc-
trine like the discovery rule in order to permit recovery.
Yet, as other courts have aptly noted:
     As tempting a choice as that may be in an individual
     case [i.e. favoring “the rights of unsuspecting victims of
     forgery over the broader interest of the commercial
     world”], we think the public would be poorly served by
     a rule that effectively shifts the responsibility for care-
     ful bookkeeping away from those in the best position to
     monitor accounts and employees. Strict application of
     the limitation period, while predictably harsh in some
     cases, best serves the twin goals of swift resolution of
     controversies and “certainty of liability” advanced by the
     U.C.C.
Menichini, 995 F.2d at 1230 (quoting Husker News Co., 460
N.W.2d at 479).
  For the same reasons that the Illinois Appellate Court
and most other jurisdictions have rejected application of the
Nos. 03-2470 & 03-2607                                     23

discovery rule to claims of check conversion, we believe that
the Illinois Supreme Court would reject application of the
continuing violation rule. Each instance of conversion is a
discrete and actionable wrong, as Rodrigue’s counsel
(properly) conceded at oral argument. Invoking the con-
tinuing violation rule as to a series of converted checks thus
would lack the typical justification that the wrong at issue
is cumulative in nature and would serve only to delay the
running of the statute of limitations so that the plaintiff
may recover for acts of conversion that indubitably took
place outside the limitations period. In a sense, the delay
would seem justified here because Wiltshire was adept at
her embezzlement and succeeded in hiding it from Rodrigue
for more than seven years. But lengthening (here, more than
doubling) the amount of time during which the parties to
transactions involving negotiable instruments— including
Olin, which played no role in the concealment of the
fraud—may be haled into court would be inimical to the
goals of efficiency, certainty, finality, and uniformity
underlying the UCC. And it would weaken the incentive for
the employer, who is in the best position to detect the fraud,
to be vigilant in detecting conversion and safeguarding
against it. See 810 ILCS 5/3-405, UCC Comment 1.
   In sum, we conclude that application of the continuing
violation rule was erroneous, and that the statute of lim-
itations barred Rodrigue from recovering on any of the con-
verted checks negotiated more than three years before she
filed suit in 2000. Olin’s brief represents that of the total
worth of the 269 checks that Wiltshire stole from 1992 to
1999, “[a]bout” $235,900 corresponded to checks cashed or
deposited more than three years before Rodrigue filed suit.
Olin Br. at 2-3. As the parties have not undertaken to
ascertain precisely which checks were negotiated within or
without the limitations period, we will vacate the judgment
and remand the case to the district court so that it may
make an accurate determination on that point and modify
the judgment accordingly.
24                                   Nos. 03-2470 & 03-2607

B. Comparative Fault
  As we noted previously in summarizing the district court’s
findings, the court rejected the notion that the “faithless
employee” defense embodied in 810 ILCS 5/3-405(b)
shielded Olin from liability altogether, and it likewise
rejected Olin’s contention that Rodrigue’s own negligence
barred her from recovering from Olin pursuant to 810 ILCS
5/3-406(a). The court therefore undertook to apportion
liability for the loss of the converted checks according to the
relative fault of Olin and Rodrigue. Although the court, in
holding Rodrigue to account for 10 percent of the loss,
implicitly recognized that Rodrigue bore some responsibility
for not preventing Wiltshire’s embezzlement, the court
found Olin to blame to a much greater degree:
     On the one hand, Dr. Rodrigue did the best she could in
     running her solo medical practice, and relied on her
     accountants to provide sound business advice. She did
     what she was trained to do, and turned to outside ad-
     visers for matters beyond her expertise. On the other
     hand, Olin processed third-party insurance reimburse-
     ment checks as “paychecks” for one of its members for
     a period of almost eight years. They accepted two let-
     ters from a thief purportedly authorizing activity they
     themselves found “odd,” “curious” and “strange.” Though
     they sensed something suspicious was afoot, the Olin
     personnel failed by standards of reasonableness to pro-
     tect all their members, concentrating instead on accom-
     modating only one—Carol Wiltshire. Rather than
     properly verify that Dr. Rodrigue truly wished to pay
     her employee by the highly unorthodox method of third-
     party insurance reimbursement checks, Olin allowed
     the scam to run for almost eight years, at the cost to Dr.
     Rodrigue of nearly four hundred thousand dollars.
     Applying principles of comparative negligence . . ., the
     Court concludes that Olin’s substantial negligence far
     outweighs Dr. Rodrigue’s negligence in causing the loss.
Nos. 03-2470 & 03-2607                                       25

    The Court apportions comparative fault as follows:
    Plaintiff’s negligence is responsible for ten percent of
    her loss; Defendant’s negligence is responsible for the
    remaining ninety percent of the loss.
R. 114 at 19-20 ¶ 36.
   Olin contends that the district court’s comparative fault
determination was erroneous. In Olin’s view, the record
does not support the court’s finding that it violated rea-
sonable commercial standards in allowing Wiltshire to cash
the insurance reimbursement checks. It points out that in
making that finding, the court relied heavily on the plaintiff ’s
expert, Ronald Wallace. Wallace had extensive experience
with banks but not credit unions, Olin emphasizes, and
many of the criticisms that he leveled against Olin and its
practices vis-à-vis third-party checks were unrelated to the
loss that Rodrigue suffered. The mere fact that Olin failed
to detect that the endorsements on the checks were forged
is not sufficient in and of itself to establish negligence, Olin
stresses, given the large volume of checks that a credit
union handles and its obligation to clear checks that comply
with federal requirements. At the same time, Olin empha-
sizes that Rodrigue was far more to blame for the loss than
the district court’s 10-percent allocation suggests. Olin
argues that Rodrigue was disinterested in the DOMS
software that her office used to track billing and reimburse-
ment: she did not seek training in how to use the software,
nor did she ask for and review the types of DOMS reports
that would have alerted her to the fact that Wiltshire was
stealing insurance reimbursement checks. Rodrigue
realized that she should be making more money than she
was from her practice, but she did not take additional
steps—e.g., having an audit conducted, or having additional
staff members trained to use the DOMS software—that
might have enabled her to identify the explanation for her
stagnating earnings. Finally, although Rodrigue had
amended her office procedures to provide that only she
26                                   Nos. 03-2470 & 03-2607

would open her mail, she did not take adequate steps to
communicate that policy to her staff or to enforce it.
  The allocation of fault between two or more potentially
responsible parties is a fact-based assessment that we re-
view for clear error. E.g., Wolkenhauer v. Smith, 822 F.2d
711, 717 (7th Cir. 1987). A finding is clearly erroneous
when, on review of the record, this court “is left with a defi-
nite and firm conviction that a mistake has been made.”
Cohen Dev. Co. v. JMJ Props., Inc., 317 F.3d 729, 735 (7th
Cir. 2003) (quoting Bowles v. Quantum Chem. Co., 266 F.3d
622, 630 (7th Cir. 2001)).
  Two provisions of the Illinois UCC are relevant to
whether, and to what degree, Olin may be held responsible
for Rodrigue’s loss. Section 3-405(b), which incorporates
what is known as the “faithless employee” defense, pro-
vides, in relevant part:
     For the purpose of determining the rights and liabilities
     of a person who, in good faith, pays an instrument or
     takes it for value or collection, . . . if an employer
     entrusted an employee with responsibility with respect
     to the instrument and the employee . . . makes a frau-
     dulent indorsement of the instrument, the indorsement
     is effective as the indorsement of the person to whom
     the instrument is payable if it is made in the name of
     that person. If the person paying the instrument or
     taking it for value or for collection fails to exercise
     ordinary care in paying or taking the instrument and
     that failure substantially contributes to the loss result-
     ing from the fraud, the person bearing the loss may
     recover from the person failing to exercise ordinary care
     to the extent the failure to exercise ordinary care
     contributed to the loss.
810 ILCS 5/3-405(b). This provision “adopts the principle
that the risk of loss for fraudulent indorsements by em-
ployees who are entrusted with responsibility with respect
Nos. 03-2470 & 03-2607                                     27

to checks should fall on the employer rather than the bank
that takes the check or pays it, if the bank was not negli-
gent in the transaction.” Id., UCC Comment 1. That
principle, in turn, recognizes that “the employer is in a far
better position to avoid the loss by using ordinary care in
choosing employees, in supervising them, and in adopting
other measures to prevent forged indorsements on instru-
ments payable to the employer . . . .” Id. A second provision,
section 5/3-406, reflects a similar proposition stated in more
general terms (not limited to employers) and, in addition,
provides explicitly for the allocation of comparative fault
when both parties failed to exercise ordinary care with
respect to forged signatures on checks:
    (a) A person whose failure to exercise ordinary care
    substantially contributes . . . to the making of a forged
    signature on an instrument is precluded from asserting
    the alteration or forgery against a person who, in good
    faith, pays the instrument or takes it for value or for
    collection.
    (b) Under subsection (a), if the person asserting the
    preclusion fails to exercise ordinary care in paying or
    taking the instrument and that failure substantially
    contributes to loss, the loss is allocated between the
    person precluded and the person asserting the preclu-
    sion according to the extent to which the failure of each
    to exercise ordinary care contributed to the loss.
810 ILCS 5/3-406. “Ordinary care” is defined, for purposes
of these provisions, as follows:
    “Ordinary care” in the case of a person engaged in
    business means observance of reasonable commercial
    standards, prevailing in the area in which the person is
    located with respect to the business in which the person
    is engaged . . . .
810 ILCS 5/3-103(a)(7); see also id. UCC Comment 5
(definition of “ordinary care” applies to both banks and to
28                                   Nos. 03-2470 & 03-2607

persons engaged in business other than banking). As these
provisions collectively make clear, Olin may be held liable
for the loss that Rodrigue suffered if it failed to observe
reasonable commercial standards in accepting the third-
party checks that Wiltshire presented and to the extent
that its negligence contributed to Rodrigue’s loss.
  We find no clear error in the district court’s finding that
Olin violated reasonable commercial standards in allowing
Wiltshire to cash Rodrigue’s reimbursement checks and
that its failure substantially contributed to Rodrigue’s loss.
Olin’s fault lay not in its simple failure to detect Wiltshire’s
forgeries, but in its failure to inquire more closely into
Wiltshire’s authority to cash the checks notwithstanding
the suspicions that those checks raised with Olin’s person-
nel. Olin’s own employees found it “odd,” “strange,” and
“curious” that Wiltshire would be paid for her services to
Rodrigue by way of third-party insurance reimbursement
checks. It was their appreciation of the risk of fraud that
prompted Olin to seek verification that Rodrigue had, in
fact, endorsed the checks over to her. Yet, the credit union
failed to proceed in a manner that was reasonably likely to
rule out the possibility of fraud. But for one unsuccessful
attempt to reach Rodrigue by phone, Olin made no effort to
contact Rodrigue directly in order to confirm Wiltshire’s
authority to cash the checks. Instead, accepting Olin’s ac-
count of events as true, the credit union relied entirely on
two authorization letters (the second of which was notarized)
that Wiltshire herself produced to the bank, both of which
turned out to be phony themselves. Other than the letters
and the unsuccessful telephone call, Olin made no effort
whatsoever to confirm Wiltshire’s bona fides. The letters
themselves were not preserved, precluding any assessment
at trial as to their apparent authenticity. The district court
reasonably drew a negative inference from the disappear-
ance of the letters—in other words, that the letters on their
face might have hinted of a fraud and precluded Olin from
reasonably relying on the letters.
Nos. 03-2470 & 03-2607                                      29

  Wallace, Rodrigue’s banking expert, credibly testified that
Olin failed to follow appropriate commercial procedures in
accepting the third-party checks. Although Olin seizes upon
Wallace’s lack of experience and familiarity with credit
unions as a reason to disregard his testimony, the issue on
which Wallace testified was reasonable commercial stand-
ards as to third-party checks, and Olin made no showing
that these checks are handled differently depending on
whether they are presented to a bank or a credit union.
More saliently, Olin points out that a number of the steps
that Wallace faulted Olin for failing to take before accepting
the insurance reimbursement checks from Wiltshire (for
example, verifying the balance in Wiltshire’s account at the
credit union, or putting a hold on the proceeds of the checks
for a period of time) were measures that would have pro-
tected Olin rather than Rodrigue. Arguably, however, Olin’s
failure to take such steps bespeaks an overall lack of due
care with respect to those checks. In any case, in addition
to steps that would have protected Olin, Wallace did single
out an omission that would have protected Rodrigue, and
that was the credit union’s failure to seek direct verification
from Rodrigue that Wiltshire had the authority to cash the
checks and to periodically confirm that authority. In
retrospect, it seems a matter of common sense that Olin
should have made such an effort. Given Wallace’s substan-
tial background in banking in Southern Illinois, the district
court was entitled to rely on his testimony in concluding
that Olin failed to exercise ordinary care in its handling of
the third-party checks.
  As a result of the credit union’s complaisance, Wiltshire
was able to cash or deposit 269 checks worth $372,572.18
over a period of more than seven years. The district court
certainly committed no clear error in concluding that Olin
failed to exercise due care and that its failure substantially
contributed to Rodrigue’s loss. Olin therefore could not
claim to be shielded from liability under sections 5/3-405(b)
30                                   Nos. 03-2470 & 03-2607

or 5/3-406(a). The remaining question is the extent to which
Olin’s negligence contributed to the loss.
  Certainly it is true that Rodrigue herself bore some re-
sponsibility for the loss. Although the district court declined
to find Rodrigue negligent either in her decision to hire
Wiltshire or in the management of her practice, in allocat-
ing 10 percent of the fault to her, the court necessarily found
that she had failed to exercise due care in some respect. See
§ 5/3-406(b). As the head of her own practice, Rodrigue
could be expected to take the reasonable steps that any
small business owner would take to prevent embezzlement
by an employee. Rodrigue hired Wiltshire, who it turns out
had been convicted of embezzlement in 1987, and placed her
in positions of increasing responsibility within the office.
She gave Wiltshire total responsibility for entering billing
and reimbursement data into the DOMS software without
seeking training for herself or another staff member to
serve as a check on Wiltshire. Although the record is silent
as to what Rodrigue might have been told about how the
DOMS software operated and what DOMS-generated
reports she should review, the record does reveal that
Rodrigue did not seek to familiarize herself with the system
or to have the range of reports prepared that would have
alerted her to the adjustments that Wiltshire was making
in order to cover her embezzlement. Instead, she relied
exclusively on accounts receivable reports, which lacked the
clues that other reports would have given her to Wiltshire’s
fraud. Rodrigue herself realized that her income was not
keeping pace either with her expectations or the growth in
her patient load and hours. She can be faulted for entrusting
a single staff member with the responsibility of handling
her billing and reimbursement data and for failing to take
more initiative in understanding and reviewing the DOMS
reports that were available to her.
  For these reasons, we reject the premise of Rodrigue’s
cross-appeal, which is that it was unreasonable for the dis-
Nos. 03-2470 & 03-2607                                      31

trict court to assign her any responsibility for Wiltshire’s
embezzlement. Rodrigue emphasizes that she was neither
an accountant nor a computer expert but a physician, and
as such she lacked the knowledge that might have enabled
her to detect Wiltshire’s wrongdoing more readily. She reg-
ularly reviewed DOMS-generated reports on her accounts
receivable, and those reports did not supply clues as to
Wiltshire’s embezzlement. For additional information and
advice on the financial state of her practice, she relied on
her accountants, who themselves did not suspect embezzle-
ment or encourage her to have an audit conducted. In terms
of her office mail, from which Wiltshire stole the checks, she
had instituted a policy forbidding anyone but herself from
opening the mail. And when she noticed that she was not
receiving expected reimbursements from insurers, she
contacted the insurers and, rather than being told the
checks had been sent, was told that the payments were
delayed due to difficulties with billing and processing. The
district court itself considered all of these points and agreed
that they absolved Rodrigue of most of the responsibility for
the loss. But the court reasonably concluded that Rodrigue
could not be absolved of all responsibility. She not only
hired Wiltshire but placed her in a position of unchecked
control over the DOMS entries. Moreover, although Rodrigue
had amended her office manual to provide that only she
would open the mail, the record tends to confirm Olin’s
argument that this policy was not adequately communi-
cated to her staff. Denise Rodrigue, for example—the very
individual who caught Wiltshire’s embezzlement—was
unaware of that policy. That may help to explain why
Wiltshire was able to lift checks from the mail as freely as
she did for more than seven years.
  It is noteworthy, however, that Rodrigue consulted with
three different accounting firms during the nearly seven-
year period in which Wiltshire was embezzling, and none of
them explored the possibility of fraud either. When
32                                   Nos. 03-2470 & 03-2607

Rodrigue raised with the accountants her frustration with
her stagnating income, they suggested that the problem
was with the rates at which insurers were willing to reim-
burse her for the services she provided to her patients. They
urged her to focus on weeding out poor insurance plans.
  On these facts, the district court reasonably concluded
that Olin bore more responsibility for Rodrigue’s loss than
the doctor herself did. Wiltshire’s embezzlement scheme
could not have succeeded without a bank or credit union’s
willingness to accept the third-party checks she fraudulently
endorsed. In contrast to Rodrigue, who never realized that
her office had received the checks that Rodrigue stole, Olin
was presented with each of the stolen checks and from the
beginning appreciated that something with the checks might
be amiss. Nonetheless, after soliciting and obtaining from
Wiltshire herself proof of her authority to cash the checks,
Olin was content to allow her to cash or deposit hundreds
of checks worth several hundred thousand dollars. Olin had
the opportunity upon presentation of each check to inquire
further into a scenario that its own employees felt was
unusual; but in the seven years that Wiltshire perpetrated
her scheme, the credit union did not pursue those opportu-
nities.
   Although a different factfinder might have allocated the
fault as between Rodrigue and Olin differently, we have no
conviction, let alone a definite and firm one, that the district
court was mistaken in holding Olin responsible for 90 per-
cent of the loss. Olin was on notice of and recognized the
suspicious nature of Wiltshire’s negotiation of the checks
and appreciated the need to confirm that Rodrigue had
actually endorsed the checks over to Wiltshire. Yet, it ac-
cepted as sufficient proof of Wiltshire’s authority to cash the
checks evidence that was as readily forged as Rodrigue’s
endorsement. And it continued to accept that proof as suf-
ficient despite the large number of checks, adding up to an
extremely large total, over a period of many years.
Nos. 03-2470 & 03-2607                                   33

                            III.
  Wiltshire’s embezzlement of multiple checks from her em-
ployer did not amount to a single transaction or continuing
violation under Illinois law. Accordingly, a cause of action
for conversion accrued, and the three-year statute of
limitations began to run, at the time each check was cashed
or deposited. The limitations period thus had expired on
any conversion claims based on checks cashed more than
three years before Rodrigue filed suit. We therefore VACATE
the judgment and REMAND the case to the district court so
that it may modify the judgment to include only those checks
cashed within three years of Rodrigue’s suit. We AFFIRM the
district court’s allocation of comparative fault as between
Rodrigue and Olin. The parties shall bear their own costs of
appeal.
34                             Nos. 03-2470 & 03-2607

A true Copy:
      Teste:

                    ________________________________
                    Clerk of the United States Court of
                      Appeals for the Seventh Circuit

               USCA-02-C-0072—4-19-05