Opinion ID: 222386
Heading Depth: 3
Heading Rank: 2

Heading: Standing of Title Insurer

Text: The third certified question arises from Western’s argument that, even if there were an implied private cause of action under CRESPA, or a common law action against the CRESPA Bond, FATIC nonetheless lacks standing because it is not an “aggrieved person.” CRESPA, by its terms, “applies only to transactions involving the purchase of or lending on the security of real estate . . . .” Va. Code Ann. § 6.1-2.19(C). Based on this language, Western contends that FATIC is not aggrieved under CRESPA because the underlying transaction to which it was a party was for the procurement of title insurance. Western also makes several policy arguments against allowing title insurance companies, like FATIC, to recover on 15 CRESPA bonds, including that: (1) the statute was not designed to protect title insurers, but only “lender[s], seller[s], purchaser[s] or borrower[s]” (Br. of Appellant at 30-31 (citing Va. Code Ann. § 6.1-2.20)); and (2) that allowing FATIC and other title insurers to recover against CRESPA bonds would provide entities whose very business is to evaluate risk, after recovering from various insurance policies and applicable contracts, to have yet another source of recovery, “leaving those parties for whose protection CRESPA was enacted to scramble for an ever-dwindling remedial source.” (Br. of Appellant at 33.) In effect, Western argues that if FATIC has standing, it would make statutory sureties reinsurers and not sureties. In response, FATIC posits that, under the plain and unambiguous language of the CRESPA Bond, FATIC was an “aggrieved person” entitled to bring a direct claim under the bond. FATIC contends that permitting an “aggrieved person” to recover under the CRESPA bond is consistent with the statute which requires a settlement agent to maintain such a bond as a condition of licensure in order to compensate persons injured by the settlement agent’s negligence or misconduct. It contends that the form of the bond is consistent with the purposes of CRESPA, as is allowing recovery against a CRESPA Bond by a title insurer who has paid a claim as a result of a violation of CRESPA. 16 Again, we find no controlling Virginia authority that answers the question of a title insurer’s standing to bring a cause of action under CRESPA, or a claim against a CRESPA Bond, if either of those actions are permitted under Virginia law. We therefore respectfully request that, if either of the first two certified questions are answered in the affirmative, that the third certified question also be answered. IV. Certified Questions Determine This Proceeding As required by Va. Supreme Court Rule 5:40, the questions we have certified are determinative of the proceeding here. If either of the first two certified questions, and the third certified question, are answered in the affirmative, then the district court’s decision below was correct, and the judgment in favor of FATIC will be affirmed. 11 If, however, the certified questions are answered in the negative, then FATIC is not 11 As indicated supra at note 4, we conclude that the district court’s resolution of the remaining issues before us was correct. That is, we agree with the district court that First Alliance was not FATIC’s agent for purposes of the settlement and closing, and further agree with the district court that Western was not discharged as a result of FATIC’s settlement with either First Alliance or Steadfast Insurance. Accordingly, the case will turn on whether or not FATIC may assert a direct claim under CRESPA or a breach of contract claim against the CRESPA Bond and, if so, whether it has standing to do so. 17 entitled to summary judgment, and the judgment of the district court will be reversed.