Ferrell Street Trust et al v. Federal Home Loan Mortgage Corporation et al

Filing 51

ORDER Denying without prejudice 38 Defendant's Motion for Summary Judgment and Denying without prejudice 36 Plaintiff's Motion for Summary Judgment. IT IS FURTHER ORDERED that the parties shall have 30 days from the entry of a ruling of the Nevada Supreme Court on the question identified above to renew their motions for summary judgment. Signed by Judge James C. Mahan on 06/27/2014. (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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FERRELL STREET TRUST, et al.,

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2:12-CV-2028 JCM (VCF)

Plaintiff(s),
v.
FEDERAL HOME LOAN
MORTGAGE CORPORATION, et al.,

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Defendant(s).

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ORDER

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Presently before the court is a motion for summary judgment filed by defendant Federal

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Home Loan Mortgage Corporation (“FHLMC”). (Doc. # 38). Plaintiff Ferrell Street Trust filed a

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response in opposition, (doc. # 46), and FHLMC filed a reply, (doc. # 49).

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Also before the court is Ferrell Street Trust’s motion for summary judgment. (Doc. # 36).

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FHLMC filed a response in opposition, (doc. # 41), and Ferrell Street Trust filed a reply, (doc. # 45).

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This case involves a dispute over a property that was subject to an HOA “super priority” lien.

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Plaintiff claims that it purchased the property commonly known as 2794 Murray Hill Lane in Las

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Vegas, Nevada for the nominal amount of $7,050.00 and thereby extinguished FHLMC’s $111,000

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deed of trust.

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Over the last several months, the court has become all too familiar with Nev. Rev. Stat. §

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116.3116, which grants priority to portions of liens arising from delinquent HOA assessments.

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Countless cases have been filed in Nevada posing the question as to whether a foreclosure of an

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James C. Mahan
U.S. District Judge

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HOA’s “super priority” interest extinguishes deeds of trust that predate the HOA lien.

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Courts at both the state and federal levels disagree as to the correct interpretation of this

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provision. See, e.g., 7912 Limbwood Court Trust v. Wells Fargo Bank, N.A., 2013 WL 5780793 (D.

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Nev. 2013) (holding that foreclosure of an HOA super priority lien extinguishes a deed of trust);

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LVDG Series 125 v. Welles, 2013 WL 6175813 (D. Nev. 2013) (holding that a deed of trust is not

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extinguished following the foreclosure of an HOA super priority lien).

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Despite the numerous cases presenting this precise question that have been filed in state

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courts, the Nevada Supreme Court has yet to weigh in on the issue. At present, “there are over fifty

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cases pending before the Nevada Supreme Court that turn upon this very question.” Saticoy Bay LLC

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v. Flagstar Bank, FSB, No. 2:13-cv-1589-JCM-VCF (D. Nev. Feb. 28, 2014) (order granting motion

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to stay). Though federal district courts can generally rule upon questions of state law, this power

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becomes rather murky when there is no precedent from a state’s highest court to assist in interpreting

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novel statutes. See Ryman v. Sears, Roebuck & Co., 505 F.3d 993, 994 (9th Cir. 2007). This

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difficulty is compounded further by the fact that Nevada has no intermediate appellate courts to

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provide guidance before these questions reach the Nevada Supreme Court.

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It is quite apparent that there is disagreement among state and federal courts regarding the

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interpretation of Nev. Rev. Stat. § 116.3116. Therefore, out of respect for Nevada’s sovereignty and

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interest in having its statutes interpreted by its own judges, the court finds it appropriate to deny the

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instant motions without prejudice. The parties are free to re-file the instant motions upon a ruling

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by the Nevada Supreme Court as to whether a foreclosure of an HOA “super priority” lien pursuant

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to Nev. Rev. Stat. § 116.3116 extinguishes an earlier deed of trust.

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Accordingly,

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IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that defendant FHLMC’s

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motion for summary judgment, (doc. # 38), be, and the same hereby is, DENIED without prejudice.

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IT IS FURTHER ORDERED that plaintiff Ferrell Street Trust’s motion for summary

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judgment, (doc. # 36), is DENIED without prejudice.

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...

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James C. Mahan
U.S. District Judge

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IT IS FURTHER ORDERED that the parties shall have thirty (30) days from the entry of a

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ruling of the Nevada Supreme Court on the question identified above to renew their motions for

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summary judgment.

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DATED June 27, 2014.

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UNITED STATES DISTRICT JUDGE
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James C. Mahan
U.S. District Judge

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