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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1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 *** 7 8 ABET JUSTICE LLC and GUETATCHEW FIKROU, ORDER Plaintiff(s), 9 10 11 12 Case No. 2:14-CV-908 JCM (GWF) v. FIRST AMERICA TRUSTEE SERVICING SOLUTIONS, LLC, et al., Defendant(s). 13 14 Presently before the court is a motion to dismiss plaintiffs’ complaint with prejudice, 15 filed by defendants First America Trustee Servicing Solutions, LLC, Residential Credit 16 Solutions, Inc., and the Bank of New York Mellon f/k/a the Bank of New York as trustee 17 (hereinafter “defendants”). (Doc. # 5). Plaintiffs Abet Justice LLC and Guetatchew Fikrou 18 (hereinafter “plaintiffs”) filed a response, (doc. # 9), to which defendants replied, (doc. # 11). 19 20 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). 21 This case involves a dispute over real property that was subject to an HOA “super 22 priority” lien. Plaintiffs claim that they purchased the property commonly known as 2138 23 Montana Pine Drive, Henderson, Nevada 89052 for the amount of $42,100 and thereby 24 extinguished defendants’ $556,000 deed of trust. 25 Over the last several months, the court has become all too familiar with Nev. Rev. Stat. § 26 116.3116, which grants priority to portions of liens arising from delinquent HOA assessments. 27 Countless cases have been filed in Nevada posing the question as to whether a foreclosure of an 28 HOA’s “super priority” interest extinguishes deeds of trust that predate the HOA lien. James C. Mahan U.S. District Judge 1 Courts at both the state and federal levels disagree as to the correct interpretation of this 2 provision. See, e.g., 7912 Limbwood Court Trust v. Wells Fargo Bank, N.A., 2013 WL 5780793 3 (D. Nev. 2013) (holding that foreclosure of an HOA super priority lien extinguishes a deed of 4 trust); LVDG Series 125 v. Welles, 2013 WL 6175813 (D. Nev. 2013) (holding that a deed of 5 trust is not extinguished following the foreclosure of an HOA super priority lien). 6 Despite the numerous cases presenting this precise question that have been filed in state 7 courts, the Nevada Supreme Court has yet to weigh in on the issue. At present, “there are over 8 fifty cases pending before the Nevada Supreme Court that turn upon this very question.” Saticoy 9 Bay LLC v. Flagstar Bank, FSB, No. 2:13-cv-1589-JCM-VCF (D. Nev. Feb. 28, 2014) (order 10 granting motion to stay). Though federal district courts can generally rule upon questions of state 11 law, this power becomes rather murky when there is no precedent from a state’s highest court to 12 assist in interpreting novel statutes. See Ryman v. Sears, Roebuck & Co., 505 F.3d 993, 994 (9th 13 Cir. 2007). This difficulty is compounded further by the fact that Nevada has no intermediate 14 appellate courts to provide guidance before these questions reach the Nevada Supreme Court. 15 It is quite apparent that there is disagreement among state and federal courts regarding the 16 interpretation of Nev. Rev. Stat. § 116.3116, and many of those cases are pending before the 17 Nevada Supreme Court. 18 anticipates a decision that will resolve those cases and provide guidance for this litigation. Once the supreme court returns from summer recess, this court 19 Therefore, the court finds it appropriate to deny the instant motions without prejudice. 20 The parties are free to refile the instant motions upon a ruling by the Nevada Supreme Court as 21 to whether a foreclosure of an HOA “super priority” lien pursuant to Nev. Rev. Stat. § 116.3116 22 extinguishes an earlier deed of trust. 23 I. Conclusion 24 Accordingly, 25 IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that defendant’s motion to 26 27 28 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. -2- 1 2 3 4 5 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 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 James C. Mahan U.S. District Judge -3-

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