722 S.E.2d 637
Va.2012Background
- CRESPA governs licensing authorities and settlement protections for Virginia real estate transactions.
- CRESPA provides penalties to licensing authorities, not direct private actions against bonds.
- First Alliance closed refinance; CRESPA bond issued by Western; employee diverted funds, mortgage priorities disrupted.
- SunTrust’s loss of $734,296; FATIC paid SunTrust’s claim under its title policy and demanded the CRESPA bond amount.
- District Court found CRESPA private action barred but common-law breach claims against the CRESPA bond could proceed; FATIC prevailed on Counts I and II in district court; Fourth Circuit certified three questions.
- Virginia Supreme Court accepted and answered the certified questions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CRESPA recognizes a private action against a surety bond | FATIC contends CRESPA permits private action | Western contends CRESPA provides no private action | Negative; CRESPA does not provide a private action against the bond |
| Whether common-law breach of contract may be pursued against the CRESPA bond | FATIC argues common law claims are allowed | Western argues no common-law action | Affirmative; common-law breach action may proceed against the CRESPA bond |
| Whether a title insurer may sue as subrogee against the CRESPA bond | FATIC argues standing as subrogee of SunTrust | Western argues no direct standing for title insurer | Affirmative; title insurer may sue as subrogee |
| Standing of FATIC as subrogee under CRESPA bond for SunTrust rights | FATIC is subrogee and can pursue SunTrust rights | Western disputes subrogee standing | Affirmative; FATIC may enforce SunTrust rights as subrogee |
Key Cases Cited
- Vansant & Gusler, Inc. v. Washington, 245 Va. 356 (1993) (exclusive remedy when statute provides one; when not, common-law actions may apply)
- Stinson v. Board of Supervisors, 153 Va. 362 (1929) (bond as common-law obligation where not conforming to statute)
- Kiser v. Hensley, 123 Va. 536 (1918) (statutory bonds may be valid as common-law bonds)
- Foster v. Wilson, 139 Va. 82 (1924) (valid as common-law bond when not strictly statutory)
- State v. Purcell, 31 W.Va. 44 (1888) (statutory bond grounded in law; differences with common-law bonds)
- Allstate Ins. Co. v. Hechinger Co., 982 F. Supp. 1169 (E.D. Va. 1997) (subrogation rights and standing principles)
- Stith v. Thorne, 247 F.R.D. 89 (E.D. Va. 2007) (precedent on CRESPA private actions)
- Aetna Cas. & Sur. Co. v. Earle-Lansdell Co., 142 Va. 435 (1925) (bond obligations consistent with statutory framework)
- Yellow Freight Sys., Inc. v. Courtaulds Performance Films, Inc., 266 Va. 57 (2003) (subrogation and rights transfer)