The Fourth Circuit issued an unpublished order in First American Title Insurance Co. v. Western Surety Co. certifying three questions to the Supreme Court of Virginia. Judge Agee (formerly of the Supreme Court of Virginia) directed entry of the order, with the concurrences of Judge Duncan and Judge Norton (D.S.C., sitting by designation).
The certified questions arise out of “a real estate transaction gone awry.” For more details about the facts, read the order. The certified questions: (1) is there a private cause of action under the Virginia Consumer Real Estate Settlement Protection Act (“CRESPA”) against a surety and surety bond, by a party other than the State Corporation Commission? (2) If not, is there a cause of action to assert a common law claim, such as breach of contract, in lieu of a private cause of action under CRESPA? (3) If either of the causes of action mentioned in the first two questions is available, “does a 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 . . .?”
See below the jump for some case background and the the text of Supreme Court of Virginia Rule 5:40(a), which sets forth the circumstances under which the Court is empowered to answer certified questions.
Judge Agee’s order explains that several circuit courts in Virginia have held that there is no private cause of action created by CRESPA, but one circuit court has permitted an action to proceed “although it was unclear whether the basis was a CRESPA statutory right of action, a claim of common law breach of contract, or both.” The Supreme Court of Virginia has not, to date, “considered the issue of whether a private cause of action is authorized by CRESPA.”
The plaintiff pleaded the claim not as a private cause of action under CRESPA, but rather as a common-law contract claim premised on the CRESPA bond. The district court allowed the plaintiff to advance this claim, accepting the plaintiff’s argument that (a) CRESPA does not explicitly abrogate common law rights, and (b) common law rights cannot be impliedly abrogate. But Judge Agee’s order explains that the issue “does not appear axiomatically resolved.” The sticking point, according to Judge Agree, is that the claim is “that the CRESPA Bond is an enforceable contract, but that contract is created only as a result of the CRESPA statute. And Virginia follows the general rule that terms and conditions in a statutory bond that either expand liability from the statute or conflict with the statute are void.”
By statute, the Virginia Supreme Court has discretion to accept or reject the Fourth Circuit’s certified questions. The governing rule is Supreme Court of Virginia Rule 5:40(a):
(a) Power to Answer. This Court may in its discretion answer questions of law certified to it by the Supreme Court of the United States, a United States court of appeals for any circuit, a United States district court, or the highest appellate court of any state,territory, or the District of Columbia. Such answer may be furnished, when requested by the certifying court, if a question of Virginia law is determinative in any proceeding pending before the certifying court and it appears there is no controlling precedent on point in the decisions of this Court or the Court of Appeals of Virginia.
Va. S. Ct. R. 5:40(a)
With such fascinating questions in this order, what court would exercise its discretion to decline?