Branch Banking and Trust Company v. 27th & Southern Holding, LLC et al

Filing 10

ORDER Granting 7 Defendants' Motion to Stay Proceedings and Denying 8 Defendants' Motion for Shortening Time for Defendants' Motion to Stay Proceedings as Moot. This action is hereby STAYED pending the resolution of proceedings in state court. Defendants shall file a notice to the Court of the Nevada Supreme Courts decision and a motion to lift the stay within 10 days of the Nevada Supreme Courts decision. Signed by Judge Larry R. Hicks on 12/13/2012. (Copies have been distributed pursuant to the NEF - AC)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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This is a foreclosure case. Before the court is defendants 27th & Southern Holding, LLC,

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BRANCH BANKING AND TRUST
COMPANY, a North Carolina corporation,

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Plaintiff,
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v.
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27TH & SOUTHERN HOLDING, LLC, a
Nevada limited liability corporation, YOEL
INY; NOAM SCHWARTZ; YOEL INY,
Trustee of the Y&T INY FAMILY TRUST
dated June 8, 1994; NOAM SCHWARTZ,
Trustee of the NOAM SCHWARTZ TRUST
dated August 19, 1999; D.M.S.I., LLC, a
Nevada limited liability company; and DOES
1 through 10, inclusive,

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Defendants.

2:12-CV-01781-LRH-PAL
ORDER

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Yoel Iny (individually and as trustee of the Y&T Iny Family Trust), Noam Schwartz (individually

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and as trustee of the Noam Schwartz Trust), and D.M.S.I., LLC’s (“Defendants’”) motion to stay

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proceedings (#71 ). Defendants have also filed a motion to shorten time with respect to the motion to

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stay (#8).

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Refers to court’s docket entry number.

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Plaintiff Branch Banking and Trust Company (“BB&T”) bought Defendants’ mortgage

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from the Federal Deposit Insurance Corporation in August 2009. After foreclosing on Defendants’

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property, BB&T initiated this action for a deficiency judgment in October 2012.

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In 2011, the Nevada legislature passed AB 273, a bill limiting the amount of deficiency

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judgments (among other things). Nevada state courts have issued conflicting rulings on whether AB

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273 applies retroactively. Compare BB&T v. Nielsen, A-09-602382-C (Dist. Ct. Nev. Feb. 12,

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2012) with CML-NV Sandpointe, LLC v. Sandpointe Apartments, LLC, A-11-644055-B (Dist. Ct.

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Nev. Oct. 24, 2011). In particular, these courts have disagreed as to whether the limitation on

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deficiency judgments applies to contracts entered before June 10, 2011. See Sandpointe, A-11-

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644055-B at *p. 7. The Nevada state cases are currently on appeal to the Nevada Supreme Court.

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See BB&T v. Nielsen, 60256 (Nev. 2012); Sandpointe Apartments, LLC v. District Court, 59507

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(Nev. 2012). And the Nevada Supreme Court has stayed similar cases pending the resolution of

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these appeals. See, e.g., BH Family Partners Sunset Pad v. Dist. Ct., 61123 (Nev. Aug, 7, 2012).

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In part based on these stays, Defendants now move for a stay in the instant case. Defendants

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also base their request for a stay on the similarity of legal issues here and in the pending Nevada

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appeals, as well as on the lack of prejudice to BB&T.

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A district court’s discretion to control its own docket–including through the issuance of

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stays–is broad, but not unlimited. See Landis v. North American Co., 299 U.S. 248, 254 (1936). A

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court must balance the competing interests affected by a stay, including the “hardship or inequity

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which a party may suffer in being required to go forward.” Lockyer v. State of California, 398 F.3d

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1098, 1110 (9th Cir. 2005). Moreover, a court should not grant a stay pending the resolution of

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other proceedings “unless it appears likely the other proceedings will be concluded within a

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reasonable time in relation to the urgency of the claims presented to the court.” Id. at 1111. Nor

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should a court grant a stay absent a showing of hardship if “there is even a fair possibility that the

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stay . . . will work damage to someone else.” Dependable Highway Express, Inc. v. Navigators

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Insurance Co., 498 F.3d 1059, 1066 (9th Cir. 2007).
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Here, a stay is warranted. First, the legal issues in both the state appeals and the present case

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are similar. The resolution of the state appeals will set the law this court, sitting in diversity

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jurisdiction, is bound to apply. See Erie Railroad Co. v. Tompkins, 304 U.S. 64, 78 (1938). A stay

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therefore avoids the possibility of piecemeal litigation and inconsistent outcomes. See Colorado

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River Water Conservation District v. United States, 424 U.S. 800 (1976) (noting that “on

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considerations of wise judicial administration, giving regard to conservation of judicial resources

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and comprehensive disposition of litigation,” a federal court may stay proceedings in front of it

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pending resolution of a state case). And “[a] trial court may, with propriety, find it is efficient for

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its own docket and the fairest course for the parties to enter a stay of an action before it, pending

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resolution of independent proceedings which bear upon the case.” Pate v. DePuy Orthopaedics,

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Inc., 2012 WL 3532780 at *2 (D. Nev. Aug. 14, 2012) (quoting Leyva v. Certified Grocers of

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California, Ltd., 593 F.2d 857, 863 (9th Cir.1979)).

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Second, Defendants have adequately demonstrated that BB&T will not suffer “hardship or

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inequity” as a result of a stay. BB&T owns “hundreds of Nevada-based mortgage-backed

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commercial loans” and is engaged in more than a dozen different Nevada foreclosure cases.

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(Defendants’ Mot. for Stay #7, Ex. C at p. 4:17-18.) Indeed, BB&T is a party to one of the Nevada

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state appeals, and it has filed an amicus brief in another. (See id. at Ex. C, pp. 3-5.) BB&T’s

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evident interest in a settled and consistent interpretation of AB 273's meaning weighs in favor of a

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stay pending such an interpretation.

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Third, the Nevada state appeals are likely to be “concluded within a reasonable time.” See

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Lockyer, 398 F.3d at 1111. The Nevada Supreme Court has already heard oral argument in these

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cases. See Nevada Supreme Court, Oral Argument Synopsis (Oct. 1, 2012), online at

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http://www.nevadajudiciary.us/index.php/oralarguments/1654-monday-october-1-2012-las-vegas-

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full-court. And the Nevada Supreme Court’s willingness to issue stays in similar cases suggests that

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the Court expects to resolve these appeals soon. A stay is therefore warranted.

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IT IS THEREFORE ORDERED that Defendants’ Motion to Stay Proceedings (#7) is

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GRANTED. This action is hereby STAYED pending the resolution of proceedings in state court.

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Defendants shall file a notice to the court of the Nevada Supreme Court’s decision and a motion to

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lift the stay within ten (10) days of the Nevada Supreme Court’s decision.

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IT IS FURTHER ORDERED that Defendants’ Application for Order Shortening Time for
Defendants’ Motion to Stay Proceedings (#8) is DENIED as moot.

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IT IS SO ORDERED.

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DATED this 13th day of December, 2012.

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_______________________________________
LARRY R. HICKS
UNITED STATES DISTRICT JUDGE

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