          IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA

                                   September 2014 Term
                                    _______________                         FILED
                                                                       October 2, 2014
                                                                         released at 3:00 p.m.
                                      No. 13-1179                      RORY L. PERRY II, CLERK
                                                                     SUPREME COURT OF APPEALS
                                    _______________                       OF WEST VIRGINIA




                        FIDELITY AND DEPOSIT COMPANY
                                 OF MARYLAND,
                             Defendant Below, Petitioner

                                            v.

                               FRANKLIN W. JAMES, JR.,
                                Plaintiff Below, Respondent

       ____________________________________________________________

             Certified Question from the Circuit Court of Berkeley County
                      The Honorable Christopher C. Wilkes, Judge
                               Civil Action No. 13-C-4

                     CERTIFIED QUESTION ANSWERED
       ____________________________________________________________

                               Submitted: September 10, 2014
                                  Filed: October 2, 2014

William W. Booker, Esq.                          Andrew C. Skinner, Esq.
Thomas H. Ewing, Esq.                            Skinner Law Firm
Erin J. Webb, Esq.                               Charles Town, West Virginia
Kay Casto & Chaney PLLC                          and
Charleston, West Virginia                        Daniel F. Hedges, Esq.
Attorneys for the Petitioner                     Daniel T. Lattanzi, Esq.
                                                 Mountain State Justice, Inc.
                                                 Charleston, West Virginia
                                                 Attorneys for the Respondent

                                                 Archibald Wallace, III, Esq.
                                                 Thomas J. Moran, Esq.
                                                 WallacePledger, PLLC
                                          Richmond, Virginia
                                          Attorneys for Amicus Curiae
                                          The Surety & Fidelity Association of
                                          America



JUSTICE BENJAMIN delivered the Opinion of the Court.
                              SYLLABUS BY THE COURT


              1.     “The appellate standard of review of questions of law answered and

certified by a circuit court is de novo.” Syl. pt. 1, Gallapoo v. Wal-Mart Stores, Inc., 197

W. Va. 172, 475 S.E.2d 172 (1996).



              2.     “The surety on a judgment bond is conclusively bound by a default

judgment entered against its principal, even when the surety did not have notice of the

prior suit against the principal, so long as the judgment is the type of judgment

contemplated by the bond and the surety cannot establish collusion or fraud.” Syl. pt. 2,

Hartford Fire Ins. Co. v. Curtis, 231 W. Va. 596, 748 S.E.2d 662 (2013).



              3.     “It is not the right or province of a court to alter, pervert or destroy

the clear meaning and intent of the parties as expressed in unambiguous language in their

written contract or to make a new or different contract for them.” Syl. pt. 3, Cotiga Dev.

Co. v. United Fuel Gas Co., 147 W. Va. 484, 128 S.E.2d 626 (1962).



              4.     An aggrieved party may not maintain an action solely against a

surety on a judgment bond made pursuant to W. Va. Code § 31-17-4(e)(3) (2010) absent

a judgment against the bond principal unless the specific bond language provides that a

judgment against the principal shall not be required to maintain an action on the bond if

the principal is no longer in operation or has filed for bankruptcy.


                                              i
 
Benjamin, Justice:



              In this case, this Court answers the following question certified by the

Circuit Court of Berkeley County1:

                     May a plaintiff maintain an action solely against the
              surety on a judgment bond made pursuant to W. Va. Code §
              31-17-4 without a judgment against the principal on the bond,
              when the principle has filed bankruptcy, and a judgment
              against the principal is precluded due to a Chapter 11 Plan
              confirmation?

The circuit court answered the certified question as follows:

                     YES, the statutory purpose of the bond is to protect
              consumers against insolvent lenders, see, W. Va. Code § 31-
              17-4, and the public policy of this State should not allow the
              bankruptcy of insolvent lender to shield a surety on these
              bonds from liability for the principal’s actions.

For the reasons that follow, we determine that the circuit court’s answer is incorrect, and

this Court answers the certified question in the negative.2



                                       I.     FACTS




       1
        In its petition, the petitioner invites this Court to amend the certification order “to
more accurately reflect the facts of this case.” We decline this invitation and find that the
question as certified fully addresses the law at issue.
       2
          This Court acknowledges the appearance of Amicus Curiae, The Surety &
Fidelity Association of America, which describes itself as a trade association of
companies licensed to write fidelity and surety bonds. We express our appreciation for
the participation of Amicus Curiae, and we have considered its position in our decision in
this case.
                                              1
 
             In 2008, Respondent Franklin W. James, Jr. obtained a home mortgage loan

from Taylor, Bean & Whitaker Mortgage Corporation (“TBW”) in order to purchase real

estate. As a mortgage lender, TBW was required to obtain a mortgage lender bond

pursuant to the West Virginia Residential Mortgage Lender, Broker and Servicer Act, W.

Va. Code §§ 31-17-1, et seq. TBW obtained a bond from defendant below and petitioner

herein Fidelity and Deposit Company of Maryland (“Fidelity”).



             TBW filed for bankruptcy under Chapter 11 of the United States Code in

2009. In 2011, the Chapter 11 plan, which discharges TBW’s liability for all claims

arising before the confirmation date, was confirmed.



             In January 2013, Respondent James filed a complaint naming Petitioner

Fidelity as a defendant solely as surety for TBW.3 By the time the respondent filed his

suit, TBW was bankrupt and judgment proof based on the Chapter 11 confirmation

order.4 The complaint states several claims for relief including: (1) Breach of Fiduciary

Duty, (2) Unconscionable Inducement, (3) Illegal Loan, and (4) Forced-Placed Insurance.

The petitioner filed a motion to dismiss in which it argued that the bond conditions have


      3
        The respondent also named as defendants in his complaint the broker, servicer,
and current holder of the loan. These parties are not before this Court on this certified
question.
      4
       There was a general notice of publication of TBW’s bankruptcy filing which was
reasonably calculated to reach all unknown creditors. The parties disagree whether the
respondent actually discovered the factual basis for his claim before the confirmation of
the bankruptcy plan.
                                           2
 
not been satisfied because the respondent had not obtained a judgment against the bond

principal, TBW. The circuit court found that this matter is appropriate for a certified

question to this Court.



                             III.       STANDARD OF REVIEW

                The instant issue is before this Court on a certified question from the circuit

court. Our law is settled that “[t]he appellate standard of review of questions of law

answered and certified by a circuit court is de novo.” Syl. pt. 1, Gallapoo v. Wal-Mart

Stores, Inc., 197 W. Va. 172, 475 S.E.2d 172 (1996).



                                    III.    DISCUSSION

                The bond at issue is a mandatory bond under the West Virginia Residential

Mortgage Lender, Broker and Servicer Act, W. Va. Code §§ 31-17-1 et seq.5 The bond is


       5
           Specifically, W. Va. Code § 31-17-4(e)(3) (2010) provides in relevant part:

                (e) At the time of making application for a lender’s license,
                the applicant therefor shall . . . (3) File with the commissioner
                a bond in favor of the state for the benefit of consumers or for
                a claim by the commissioner for an unpaid civil
                administrative penalty or an unpaid examination invoice in
                the amount of $100,000 for licensees with West Virginia
                annual loan originations of $0 to $3 million, $150,000 for
                West Virginia annual loan originations greater than $3
                million and up to $10 million, and $250,000 for West
                Virginia annual loan originations over $10 million in a form
                and with conditions as the commissioner may prescribe and
                executed by a surety company authorized to do business in
                this state: Provided, That lender licensees who service West
                Virginia mortgage loans shall file with the commissioner a
                                               3
 
in the form prescribed by the West Virginia Commissioner of Banking pursuant to W.

Va. Code § 31-17-4(e)(3) (stating that the bond shall be “in a form and with conditions as

the commissioner may prescribe”). The relevant language of the bond provides:

                    That we, TAYLOR, BEAN & WHITAKER
             MORTGAGE CORP., as principal, and FIDELITY AND
             DEPOSIT COMPANY OF MARYLAND, a corporation, as
             surety, are held and firmly bound unto The State of West
             Virginia, in the just and full sum of One Hundred Thousand
             Dollars ($100,000), to the payment whereof, well and truly to
             be made, we bind ourselves, our personal representatives,
             successors and assigns, jointly and severally, firmly by these
             presents.

                    THE CONDITION OF THE ABOVE OBLIGATION
             IS SUCH THAT, WHEREAS, the above bound principal, in
             pursuance of the provisions of Article 17, Chapter 31, of the
             Code of West Virginia, as amended, (hereinafter the “Act”)
             has obtained, or is about to obtain, from the Commissioner of
             Banking of the State of West Virginia, a license to conduct a
             Mortgage Lender business.

                    NOW, THEREFORE, if the said principal TAYLOR,
             BEAN & WHITAKER CORP. shall conform to and abide by
             the provisions of said Act and of all rules and orders lawfully
             made or issued by the Commissioner of Banking thereunder,
             and shall pay to the State and shall pay to any such person or
             persons properly designated by the State any and all moneys
             that may become due or owing to the State or to such person
             or persons from said obligor in a suit brought by the
             Commissioner on their behalf under and by virtue of the
             provisions of said Act, then this obligation shall be void,
             otherwise it shall remain in full force and effect. If any person
             shall be aggrieved by the misconduct of the principal, he may
             upon recovering judgment against such principal issue
             execution of such judgment and maintain an action upon the
             bond of the principal in any court having jurisdiction of the

             bond under the same conditions listed above in the amount of
             $200,000[.]

                                            4
 
              amount claimed, provided the Commissioner of Banking
              assents thereto.6

(Emphasis and footnote added). The issue before us is whether the respondent can

maintain an action against the petitioner as surety on the bond despite the fact that the

respondent did not obtain a judgment against the principal. This Court finds that our

recent opinion in Hartford Fire Ins. Co. v. Curtis, 231 W. Va. 596, 748 S.E.2d 662

(2013), is the controlling authority on this issue.



              Curtis involved mortgagors who added the mortgagee’s surety as a party

defendant in order to require the surety to pay a default judgment that the mortgagors had

obtained against the mortgagee. The primary issue in Curtis was whether the surety on

the bonds in that case were required to pay default judgments rendered against its

principals when the surety was not provided notice of the claims against the principals

until after the default judgments were rendered.



              The bonds at issue in Curtis were in the exact same form and contained

identical language to the bond at issue in the instant case. This Court determined that the

bonds in Curtis were judgment bonds. Significantly, we defined a judgment bond as “a


       6
         According to the parties, the Commissioner of Banking amended the language of
the bond form in 2012 by adding an exception to the requirement that an aggrieved party
obtain a judgment against the principal before maintaining an action on the bond. The
amended language provides that “a judgment against the principal shall not be required to
maintain an action on this bond if the principal is no longer in operation or has filed for
bankruptcy.” This amended language is not included in the bond at issue and is not
relevant to our decision herein.
                                              5
 
bond in which the surety agrees to be liable for a judgment based on a specific statutory

violation covered by the bond.” Curtis, 231 W. Va. at 603, 748 S.E.2d at 669 (citation

and internal quotations omitted). Our determination in Curtis that the bonds at issue were

judgment bonds was based on the specific language of the bonds and the principle that

“[t]he liability of the surety is measured by the terms of his contract.” Id. at 602, 748

S.E.2d at 668, quoting State ex rel. Duckett v. Pettee, 273 S.E.2d 317, 319 (N.C. Ct. App.

1980). We then noted that the bonds specifically provided that an aggrieved person “may

upon recovering judgement [sic] against such principal issue execution of such

judgement [sic] and maintain an action upon the bond of the principal[.]” Id. at 604, 748

S.E.2d at 670, quoting the bond language in that case (italics in original). We further

explained:

              the language of the [surety] bonds grants an aggrieved person
              who has obtained a judgment against the principal the right to
              execute said judgment through an action upon the bond.
              Reading this plain language in light of the definition of a
              judgment bond quoted above, it is clear that the [surety]
              bonds are judgment bonds. The foregoing bond language
              plainly demonstrates that [the surety] has agree[d] to be liable
              for a judgment based on a specific statutory violation covered
              by the bond, i.e., a violation of the West Virginia Mortgage
              Lender, Broker[] and Servicer Act.

Id. (citation and internal quotations omitted). Having determined in Curtis that the surety

bonds were judgment bonds, and because the mortgagors in that case had obtained

default judgments against the principals, we determined that the surety on the bonds was

required to pay the default judgments rendered against the principals. Therefore, we held

in syllabus point 2 of Curtis that


                                             6
 
                     [t]he surety on a judgment bond is conclusively bound
              by a default judgment entered against its principal, even when
              the surety did not have notice of the prior suit against the
              principal, so long as the judgment is the type of judgment
              contemplated by the bond and the surety cannot establish
              collusion or fraud.



              The bonds in Curtis were in the same form and contained the same

language as the bond in the instant case. We found in Curtis that the bond language

requires a judgment against the principal before an action can be brought on the bond

against the surety. Our application of this finding to the instant facts compels us to

conclude that the bond in the instant case requires the respondent to obtain a judgment

against TBW as a condition to maintaining an action on the bond against the petitioner.

Because the respondent has not done so, he is foreclosed from bringing an action on the

bond solely against the petitioner as surety.



              The respondent asserts that a judgment should not be required against the

principal in the instant case as a condition precedent to maintaining an action on the bond

due to the fact that the principal is judgment proof as the result of bankruptcy. We

disagree. Pursuant to W. Va. Code § 31-17-4(e)(3) (2010), the Commissioner of Banking

has discretion to prescribe the form and conditions of the judgment bond. In the bond at

issue, the Commissioner indicated that a judgment against the bond principal is a

requirement to maintaining an action upon the bond, and the Commissioner did not




                                                7
 
provide any exceptions to this requirement for instances where the principal is bankrupt.7

As this Court noted in Curtis, the liability of a surety is measured by the terms of its

contract. Also, under our law “[i]t is not the right or province of a court to alter, pervert

or destroy the clear meaning and intent of the parties as expressed in unambiguous

language in their written contract or to make a new or different contract for them.” Syl.

pt. 3, Cotiga Dev. Co. v. United Fuel Gas Co., 147 W. Va. 484, 128 S.E.2d 626 (1962).

The language of the bond at issue is clear and unambiguous, and this Court will not alter

the language by adding an exception to the requirement of a judgment against the

principal before maintaining an action on the bond.



                 Accordingly, this Court now holds that an aggrieved party may not

maintain an action solely against a surety on a judgment bond made pursuant to W. Va.

Code § 31-17-4(e)(3) (2010) absent a judgment against the bond principal unless the

specific bond language provides that a judgment against the principal shall not be

required to maintain an action on the bond if the principal is no longer in operation or has

filed for bankruptcy. Here, the bond language in the bond at issue expressly requires a

judgment as a prerequisite to the maintenance of an action solely against the surety.

Absent such a judgment, the respondent’s action may not proceed.




       7
           Supra n. 6.
                                             8
 
                                 IV.    CONCLUSION

             In sum, this Court finds, based on our decision in Curtis, that the bond at

issue is a judgment bond and that the unambiguous bond language requires an aggrieved

party to obtain a judgment against the principal before maintaining an action against the

surety on the bond. Therefore, we answer the certified question as follows:

                    May a plaintiff maintain an action solely against the
             surety on a judgment bond made pursuant to W. Va. Code §
             31-17-4 without a judgment against the principal on the bond,
             when the principal has filed bankruptcy, and a judgment
             against the principal is precluded due to a Chapter 11 Plan
             confirmation?

Answer:      No.
                                                            Certified question answered.




                                            9
 
