Abet Justice L.L.C. et al v. First America Trustee Servicing Solutions, L.L.C. et al

Filing 23

ORDER denying without prejudice 5 Motion to Dismiss and denying without prejudice 10 Motion to Expunge Lis Pendens. IT IS FURTHER ORDERED that defendants shall have thirty (30) days from the entry of a ruling of the Nevada Supreme Court on the question identified above to renew their motions. Signed by Judge James C. Mahan on 8/26/2014. (Copies have been distributed pursuant to the NEF - DKJ)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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ABET JUSTICE LLC and GUETATCHEW
FIKROU,

ORDER
Plaintiff(s),

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Case No. 2:14-CV-908 JCM (GWF)

v.
FIRST AMERICA TRUSTEE SERVICING
SOLUTIONS, LLC, et al.,
Defendant(s).

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Presently before the court is a motion to dismiss plaintiffs’ complaint with prejudice,

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filed by defendants First America Trustee Servicing Solutions, LLC, Residential Credit

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Solutions, Inc., and the Bank of New York Mellon f/k/a the Bank of New York as trustee

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(hereinafter “defendants”). (Doc. # 5). Plaintiffs Abet Justice LLC and Guetatchew Fikrou

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(hereinafter “plaintiffs”) filed a response, (doc. # 9), to which defendants replied, (doc. # 11).

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Also before the court is defendants’ motion to expunge lis pendens.

(Doc. # 10).

Plaintiffs filed a response, (doc. # 17), to which defendants replied, (doc. # 20).

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This case involves a dispute over real property that was subject to an HOA “super

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priority” lien. Plaintiffs claim that they purchased the property commonly known as 2138

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Montana Pine Drive, Henderson, Nevada 89052 for the amount of $42,100 and thereby

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extinguished defendants’ $556,000 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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HOA’s “super priority” interest extinguishes deeds of trust that predate the HOA lien.

James C. Mahan
U.S. District Judge

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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

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

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trust); LVDG Series 125 v. Welles, 2013 WL 6175813 (D. Nev. 2013) (holding that a deed of

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trust is not 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

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

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

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granting motion to stay). Though federal district courts can generally rule upon questions of state

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law, this power becomes rather murky when there is no precedent from a state’s highest court to

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assist in interpreting novel statutes. See Ryman v. Sears, Roebuck & Co., 505 F.3d 993, 994 (9th

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Cir. 2007). This difficulty is compounded further by the fact that Nevada has no intermediate

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appellate courts to 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, and many of those cases are pending before the

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Nevada Supreme Court.

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anticipates a decision that will resolve those cases and provide guidance for this litigation.

Once the supreme court returns from summer recess, this court

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Therefore, the court finds it appropriate to deny the instant motions without prejudice.

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The parties are free to refile the instant motions upon a ruling by the Nevada Supreme Court as

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to whether a foreclosure of an HOA “super priority” lien pursuant to Nev. Rev. Stat. § 116.3116

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extinguishes an earlier deed of trust.

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I.

Conclusion

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Accordingly,

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

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James C. Mahan
U.S. District Judge

dismiss, (doc. # 5), be, and the same hereby is, DENIED without prejudice.
IT IS FURTHER ORDERED that defendant’s motion to expunge lis pendens, (doc. #
10), be, and the same hereby is, DENIED without prejudice.

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IT IS FURTHER ORDERED that defendants shall have thirty (30) days from the entry of
a ruling of the Nevada Supreme Court on the question identified above to renew their motions.
DATED August 26, 2014.
__________________________________________
UNITED STATES DISTRICT JUDGE

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James C. Mahan
U.S. District Judge

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