Court Opinion

ID: 2968842
Source: CourtListenerOpinion
Date Created: 2015-09-22 08:00:44.772841+00
Date Added: 2024-06-11T11:43:21.848644
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                              No. 10-1802

FIRST AMERICAN TITLE INSURANCE COMPANY,

                 Plaintiff – Appellee,

           v.

WESTERN SURETY COMPANY,

                 Defendant – Appellant,

           and

FIRST ALLIANCE TITLE, INCORPORATED,

                 Defendant.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.   Liam O’Grady, District
Judge. (1:09-cv-00403-LO-IDD)

Argued:   May 12, 2011                      Decided:   August 8, 2012

Before DUNCAN and AGEE, Circuit Judges, and David C. NORTON,
United States District Judge for the District of South Carolina,
sitting by designation.

Affirmed by unpublished per curiam opinion.

ARGUED: Richard Thomas Pledger, WALLACEPLEDGER, PLLC, Richmond,
Virginia, for Appellant. David H. Cox, JACKSON & CAMPBELL, PC,
Washington, D.C., for Appellee.     ON BRIEF: Thomas J. Moran,
Erick F. Seamster, WALLACEPLEDGER, PLLC, Richmond, Virginia, for
Appellant.   Paul  D.   Smolinsky,   JACKSON   &   CAMPBELL,   PC,
Washington, D.C., for Appellee.

Unpublished opinions are not binding precedent in this circuit.

                                2
PER CURIAM:

     The   factual   and   procedural   background   of   this   case   are

discussed in our prior order, First American Title Insurance Co.

v. Western Surety Co., 447 F. App’x 437 (4th Cir. August 2,

2011) (unpublished) (hereinafter “FATIC Cert. Order”). In that

order, we certified to the Supreme Court of Virginia (“SCV”),

pursuant to Rule 5:40 of the Rules of the SCV, the following

three questions:

     1. Does the Virginia Consumer Real Estate Settlement
     Protection Act, Va. Code Ann. § 6.1-2.19 et seq.
     (recodified at Va. Code Ann. § 55-525.16 et. seq.)
     (“CRESPA”) 1 recognize a private cause of action that
     may be asserted against a surety and the surety bond
     issued pursuant to Va. Code Ann. § 6.1-2.21(D)(3)
     (recodified at § 55-525.20(B)(3)) by a party other
     than the State Corporation Commission?

     2. If Question 1 is answered in the negative, does
     Virginia law nonetheless permit a cause of action
     against a surety and the surety bond issued pursuant
     to Va. Code Ann. § 6.1-2.21(D)(3) (recodified at § 55-
     525.20(B)(3)) by the assertion of a common law claim
     such as for breach of contract as in this case?

     3. If Questions 1 or 2 are answered in the
     affirmative, does a title insurance company have
     standing, either in its own right or as a subrogee of
     its insured, to maintain a cause of action against a
     surety and the surety bond issued pursuant to Va. Code
     Ann.    § 6.1-2.21(D)(3)    (recodified    at    § 55-
     525.20(B)(3))?

     1
       At the time of its promulgation in 1997, CRESPA was
codified at Va. Code Ann. § 6.1-2.19 et seq. After the entry of
final judgment below, CRESPA was amended and recodified at Va.
Code Ann. § 5-525.16 et seq. Because the former section numbers
were used by the district court in its rulings and the parties
in their briefs, we also utilize them.

                                   3
See generally id.

      The SCV accepted our certification request and answered all

three questions. See First Am. Title Ins. Co. v. Western Sur.

Co., 722 S.E.2d 637 (Va. 2012). Specifically, the SCV answered

the first question in the negative, concluding that CRESPA does

not itself provide a cause of action against a CRESPA bond. Id.

at 640. In answering the second and third questions, the SCV

first concluded that a common law breach of contract action is

permitted against the surety of a CRESPA bond. Id. at 641-42. It

then held, however, that “FATIC, as SunTrust’s title insurer in

this case, was not one of the parties the CRESPA bond is meant

to protect.” Id. at 642. Thus, FATIC did not “have standing in

its own right to maintain a cause of action against a surety and

the   surety   bond   issued   pursuant   to   [CRESPA].”   Id.   at   642.

Nonetheless, the SCV recognized that “a title insurance company,

such as FATIC in this case, may have standing as a subrogee of

its insured to maintain a cause of action” against a CRESPA

bond. Id. at 643.

      In view of the SCV’s answers to the certified questions, it

is now clear that the district court’s ruling, which was that

FATIC had standing in its own right to maintain a cause of

action against Western Surety, is not correct. The SCV expressly

left open the possibility, however, that FATIC could recover on

                                    4
its alternative theory asserted in Count II, i.e., that it could

recover as a subrogee of its insured, SunTrust.

       While this Court could remand the case for the district

court to determine, in the first instance, whether FATIC can

recover      as   SunTrust’s   subrogee,    we    decline    to   do   so.    The

subrogation issue was briefed by the parties as part of the

cross-motions for summary judgment and was also fully briefed

and argued before this Court. 2 Additionally, the three arguments

that       Western   Surety    presents     in    opposition      to    FATIC’s

subrogation       claim   already   have   been   rejected   by   either     this

court or by the SCV. 3

       2
        See Resp. Br. at 16-18; Reply Br. at 20-24.
       3
       Western Surety argues the following in opposition to
FATIC’s contention that it is entitled to final judgment now on
its subrogation count: (1) that “no private party may maintain a
cause of action against a CRESPA bond”; (2) SunTrust never had
any rights against the CRESPA bond because “its claim was
strictly related to a defect in title,” and thus there is no
right to the CRESPA bond of subrogation for FATIC to acquire as
subrogee; and (3) as a matter of equity, FATIC should not be
entitled to recover as subrogee because First Alliance acted as
an agent of FATIC. See Reply Br. at 20-21.
     The first of these arguments was squarely rejected by the
SCV, the second was rejected by the reasoning of the SCV, see
First Am. Title Ins. Co., 722 S.E.2d at 643 (holding that a
title insurance company “may have standing as a subrogee of its
insured to maintain a cause of action” against a CRESPA bond),
and the third we rejected in our order of certification, just as
the district court did below. See FATIC Cert. Order, 447 F.
App’x at 440 n.4 (noting we would affirm the judgment of the
district court on various issues); J.A. 804-11 (district court’s
opinion explaining reasons why First Alliance was not acting as
FATIC’s agent for purposes of settlement). Thus, we conclude
(Continued)
                                       5
      Accordingly, rather than remand the case, we will decide

the subrogation issue on the complete record before us. Jackson

v. Kimel, 992 F.2d 1318, 1322 (4th Cir. 1993) (“In reviewing the

grant of summary judgment, we can affirm on any legal ground

supported    by    the   record    and   are   not    limited    to   the   grounds

relied on by the district court.”). In this case in particular,

in   which   the     proceedings    have     been    ongoing    now   for   several

years, a remand to the district court for initial consideration

of this issue “would be an unnecessary waste of judicial and

litigant resources.” See O'Reilly v. Bd. of Appeals, 942 F.2d

281, 284 (4th Cir. 1991); see also SEC v. Chenery Corp., 318

U.S. 80, 88 (1943) (“[I]n reviewing the decision of a lower

court, it must be affirmed if the result is correct although the

lower court relied upon a wrong ground or gave a wrong reason.

The reason for this rule is obvious. It would be wasteful to

send a case back to a lower court to reinstate a decision which

it   had   already    made   but   which     the    appellate   court   concluded

should properly be based on another ground within the power of

the appellate court to formulate.”) (internal quotation marks

and citation omitted).

that none of these grounds bar FATIC’s entitlement to recovery
as a subrogee of SunTrust.

                                         6
    Turning to the merits of FATIC’s subrogation claim under

Count II, 4 Virginia law provides that “when any insurer pays an

insured under a contract of insurance which provides that the

insurer becomes subrogated to the rights of the insured against

any other party the insurer may enforce the legal liability of

the other party.” Va. Code Ann. § 38.2-207; see also First Am.

Title   Ins.   Co.,     722   S.E.2d   at    642   (quoting   same).    It    is

undisputed, and indeed the SCV recognized in its opinion in this

case,   that   the    title   insurance     policies     between    FATIC    and

SunTrust    expressly    render   FATIC     subrogated   to   the   rights    of

SunTrust. Id.; see also J.A. 363, 375 (pertinent language in

policies). Additionally, Virginia has long recognized that an

insurer who pays a loss on an insured’s behalf has an equitable

right to be subrogated to that insured. See First Am. Title Ins.

Co., 722 S.E.2d at 642 (collecting authority); see also, e.g.,

Nationwide Mut. Ins. Co. v. Jewel Tea Co., 118 S.E.2d 646, 649-

50 (Va. 1961) (allowing claim by insurer as subrogee to its

insured).

    4
       To be clear, we conclude herein that FATIC is entitled to
recover as a subrogee of SunTrust, as asserted in Count II of
its Complaint. We do not award FATIC relief under Count III of
its Complaint, in which it asserted a claim as assignee of First
Alliance, based on a settlement agreement in a separate action.
The district court dismissed Count III and our holding does not
affect that dismissal.

                                       7
     In    short,        FATIC    has     succeeded         to    SunTrust’s     right     to

recover under the CRESPA bond, as recognized by the SCV in this

case.   See    First        Am.   Title       Ins.    Co.,       722   S.E.2d    at   642-43

(“FATIC, as a subrogee of SunTrust, has succeeded to SunTrust’s

relevant rights . . . [and] may have standing as a subrogee of

its insured to maintain a cause of action against a surety and

the [CRESPA bond].” Id. at 643. Furthermore, as we explained

supra at note 3, we have carefully considered Western Surety’s

arguments      to     the     contrary     and       find    them      to   be   meritless.

Accordingly,        we   affirm    the    award       of    summary     judgment      by   the

district      court      in   favor      of    First       American      Title   Insurance

Company, although for reasons different than those stated by the

district court.

                                                                                   AFFIRMED

                                               8