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

Filing 15

ORDER Denying 12 BB&T's Motion to Reconsider Order Stay. Signed by Judge Larry R. Hicks on 8/22/13. (Copies have been distributed pursuant to the NEF - EDS)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***
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BRANCH BANKING AND TRUST
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COMPANY, a North Carolina corporation,
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Plaintiff,
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v.
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27TH & SOUTHERN HOLDING, LLC, a
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Nevada limited liability corporation, YOEL )
INY; NOAM SCHWARTZ; YOEL INY,
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Trustee of the Y&T INY FAMILY TRUST
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dated June 8, 1994; NOAM SCHWARTZ,
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Trustee of the NOAM SCHWARTZ TRUST )
dated August 19, 1999; D.M.S.I., LLC, a
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Nevada limited liability company; and DOES )
1 through 10, inclusive,
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Defendants.
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2:12-CV-01781-LRH-PAL
ORDER

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This is a foreclosure case. Before the court is plaintiff Branch Banking and Trust

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Company’s (“BB&T”) Motion to Reconsider Order to Stay (#121). Defendants 27th & Southern

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

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(individually and as trustee of the Noam Schwartz Trust), and D.M.S.I., LLC (“Defendants”) have

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responded (#13), and BB&T has replied (#14).2

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Refers to the court’s docket entry number.

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This action is substantially similar to another action pending before the court, BB&T v. Eloy
(continued...)

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I.

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Facts and Procedural History
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). Oral argument in these cases took place on October 1, 2012. See Nevada Supreme

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Court, Oral Argument Synopsis (Oct. 1, 2012), online at http://www.nevadajudiciary.us/index.php

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/oralarguments/1654-monday-october-1-2012-las-vegas-full-court.

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On December 13, 2012, the court granted Defendants’ motion to stay proceedings in this

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action based on the pending Nevada Supreme Court decision. The court determined that the

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Nevada Supreme Court’s decision would bear on the law that this court, sitting in diversity, is

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bound to apply; that BB&T would not suffer hardship or inequity as a result of the stay; and that the

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Nevada Supreme Court’s decision was likely to appear “within a reasonable time.” (Order #10, p.

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3.) On January 1, 2013, BB&T moved the court to reconsider its order granting the stay.

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(...continued)
Business Park, LLC et al., 2:12-CV-01679-LRH-PAL. Indeed, both BB&T and Defendants filed nearly
identical papers in both cases. Thus, the court issues the same order (with some minor modifications)
in each action.
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II.

Legal Standard

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Contrary to the parties’ assertions, a motion for relief from an interlocutory order does not

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fall under Federal Rule of Civil Procedure 60. Fed. R. Civ. P. 60 advisory committee notes (“The

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addition of the qualifying word ‘final’ emphasizes the character of the judgments, orders or

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proceedings from which Rule 60(b) affords relief; and hence interlocutory judgments are not

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brought within the restrictions of the rule.”) Rather, such a motion is addressed to the court’s

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inherent power to reconsider and modify such orders. Smith v. Massachusetts, 543 U.S. 462, 475

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(2005) (Ginsburg, J., dissenting). Motions for reconsideration are an “extraordinary remedy, to be

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used sparingly,” and they will not usually be granted “unless the district court is presented with

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newly discovered evidence, committed clear error, or if there is an intervening change in the

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controlling law.” Kona Enterprises, Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000).

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III.

Discussion

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Here, none of the Kona Enterprise factors warrant reconsideration of the court’s stay.

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BB&T argues that the legal issues before this court and those before the Nevada Supreme Court are

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dissimilar, that BB&T will suffer hardship in the form of delayed monetary judgment, and that the

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Nevada Supreme Court may delay its decision unreasonably. Even assuming these arguments all

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assign “clear error” to the court’s prior order (they certainly do not present newly discovered

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evidence or an intervening change in controlling law), BB&T’s arguments fail.

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First, BB&T assumes that the presence here of legal issues not before the Nevada Supreme

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Court renders the stay inappropriate. BB&T then marshals a parade of legal horribles contingent on

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the Nevada Supreme Court’s decision: whether the retroactive application of AB 273 violates the

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Contracts Clause of the Constitution; whether such application violates the Supremacy Clause;

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whether AB 273 applies to the FDIC. Yet these questions read as a brief in favor of the stay: why

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should this court risk an erroneous prediction of Nevada law—after the Nevada Supreme Court has

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already considered arguments on the very issue the court is tasked with predicting—upon which so

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many thorny legal issues depend? BB&T’s failure to answer this question satisfactorily is fatal to
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its motion. Furthermore, the legal issues in the two proceedings need not be identical. “True, a

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decision in the cause [now] pending in [the Nevada Supreme Court] may not settle every question

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of fact and law in [this suit], but in all likelihood it will settle many and simplify them all.” Landis

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v. N. Am. Co., 299 U.S. 248, 256 (1936).

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Second, BB&T claims hardship as a result of delayed monetary judgment. However, “a

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delay in monetary recovery” is not the type of hardship that defeats an otherwise appropriate stay.

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See Lockyer v. Mirant Corp., 398 F.3d 1098, 1110 (9th Cir. 2005) (discussing CMAX, Inc. v. Hall,

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300 F.2d 265 (9th Cir. 1962)). BB&T bemoans the fact that Defendants’ debt has been due and

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owning to BB&T since 2009, but BB&T only filed suit in October 2012. BB&T laments that

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Defendants’ other creditors may get to Defendants’ assets first, but this risk is common to any

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“delay in monetary recovery.” In short, BB&T has failed to demonstrate hardship apart from that

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incident to delayed monetary judgment, and that sort of hardship is not enough to warrant

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reconsideration.

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Finally, BB&T argues that the court erred in concluding that it was likely that the Nevada

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Supreme Court “expects to resolve [the AB 273] appeals soon.” The court made this prediction in

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December 2012; it is now August 2013, and the Nevada Supreme Court has not resolved these

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appeals. The court is not, evidently, Miss Cleo.3 However, even a year-long stay is reasonable when

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courts must sort complex issues and when money alone is at stake. See Landis, 299 U.S. at 256.

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And stays are especially warranted “in cases of extraordinary public moment . . . if the public

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welfare or convenience will thereby be promoted.” Id. Here, the AB 273 appeals concern

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potentially extraordinary relief to homeowners in one of the states hit hardest by 2008’s housing

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crisis. As in Landis, numerous cases involving the issues raised by AB 273 (and relevant to this

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action) have been filed in multiple jurisdictions. Unlike Landis, these cases involve issues of state

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law, and “[n]eedless decisions of state law should be avoided both as a matter of comity and to

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Perhaps further reason the court ought to abstain from predicting Nevada law in this instance.
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promote justice between the parties, by procuring for them a surer-footed reading of applicable

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law.” United Mine Workers of America v. Gibbs, 383 U.S. 715, 726 (1966). Thus, at least until the

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stay’s duration reaches one year, the delay to BB&T is “not immoderate.” Landis, 299 U.S. at 256.

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IT IS THEREFORE ORDERED that BB&T’s Motion to Reconsider Order to Stay (#12) is

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DENIED.

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IT IS SO ORDERED.

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DATED this 22nd day of August, 2013.

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_______________________________________
LARRY R. HICKS
UNITED STATES DISTRICT JUDGE

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