U.S. Bank v. Diamond Creek Community Association et al

Filing 77

ORDER Denying 48 Motion for Summary Judgment, Denying 55 Motion to Dismiss and Denying 59 Counter Motion for Summary Judgment. FURTHER ORDERED that the following question of law is CERTIFIED to the Nevada Supreme Court pursuant to Rule 5 of the Nevada Rules of Appellate Procedure (See Order). FURTHER ORDERED that the Clerk of the Court shall forward a copy of this Order to the Clerk of the Nevada Supreme Court under the official seal. Signed by Chief Judge Gloria M. Navarro on 6/30/16. (Copies have been distributed pursuant to the NEF and pursuant to Order - JM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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U.S. BANK AS TRUSTEE FOR GSAA
)
HOME EQUITY TRUST 2006-9, ASSET)
BACKED CERTIFICATES, SERIES 2006-9, )
)
Plaintiff,
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vs.
)
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DIAMOND CREEK HOMEOWNERS’
)
ASSOCIATION; UNDERWOOD
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PARTNERS, LLC; NV EAGLES, LLC; DOE )
INDIVIDUALS I-X, inclusive; and ROE
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CORPORATIONS I-X, inclusive,
)
)
)
Defendants
)
)
NV EAGLES, LLC,
)
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Counterclaimant,
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vs.
)
)
U.S. BANK AS TRUSTEE FOR GSAA
)
HOME EQUITY TRUST 2006-9, ASSET)
BACKED CERTIFICATES, SERIES 2006-9, )
)
Counterdefendant
)
)
NV EAGLES, LLC,
)
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Third-Party Plaintiff,
)
vs.
)
)
GARRETT C. PATTIANI,
)
)
Third-Party Defendant. )

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Case No.: 2:15-cv-01177-GMN-VCF
ORDER

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Pending before the Court is the Motion for Summary Judgment (ECF No. 48) filed by

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Defendant NV Eagles, LLC (“NV Eagles”), the Motion to Dismiss (ECF No. 55) filed by

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Defendant Diamond Creek Homeowners’ Association (the “HOA”), and the Motion for

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Summary Judgment (ECF No. 59) filed by Plaintiff U.S. Bank as Trustee for GSAA Home

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Equity Trust 2006-9, Asset-Backed Certificates, Series 2006-9 (“U.S. Bank”). Each of the

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pending motions has been fully briefed. However, because the Court finds that an unsettled

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question of state law is at least partially dispositive in this case, the Court certifies the following

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question to the Nevada Supreme Court:

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Does the rule of SFR Investments Pool I, LLC v. U.S. Bank, N.A.,
334 P.3d 408 (Nev. 2014) that foreclosures under NRS 116.3116
extinguish first security interests apply retroactively to foreclosures
which occurred prior to the date of that decision?

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I.

BACKGROUND
This case arises out of a homeowners’ association foreclosure sale. On February 21,

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2006, Garrett C. Pattiani (“Pattiani”) purchased real property located at 9426 Cormorant Lake

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Way, Las Vegas, Nevada 89178-8231 (the “Property”), giving lender Nationstar Mortgage

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LLC (“Nationstar”) a promissory note for $284,360 (the “Note”), secured by a deed of trust

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(the “DOT”) against the Property. (Compl. ¶¶ 9, 14, ECF No. 1). On October 24, 2014,

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Nationstar assigned the DOT to Plaintiff U.S. Bank via a corporate assignment of deed of trust.

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(Id. ¶ 15). After recording a Notice of Delinquent Assessment Lien (the “NDAL”), a Notice of

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Default and Election to Sell (“the “NOD”), and a Notice of Foreclosure Sale (the “NOS”), the

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HOA, through its agent Alessi & Koenig, LLC (“Alessi & Koenig”), sold the Property at

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auction to Defendant Underwood Partners, LLC (“Underwood”) for $11,000 on April 24, 2013.

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(Id. ¶¶ 21–26, 33–34). U.S. Bank further alleges that none of the pre-sale notices identified the

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super-priority amount and failed to describe the “deficiency in payment” required by Chapter

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Page 2 of 6

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116 of the Nevada Revised Statutes. (Id. ¶¶ 21–32). U.S. Bank also alleges that Underwood

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transferred the Property to NV Eagles on September 18, 2013. (Id. ¶ 35).

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U.S. Bank sued the HOA, Underwood, and NV Eagles in this Court to, inter alia, quiet

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title to the Property, i.e., for a declaration that the DOT still encumbers the Property because

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the HOA sale was not in accordance with Chapter 116, did not provide an opportunity to cure

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the default, was commercially unreasonable, and did not comport with due process. (Id. ¶¶ 36–

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48). Underwood and NV Eagles answered and NV Eagles filed a counterclaim against U.S.

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Bank to quiet title to the Property, i.e., for a declaration that NV Eagles is the title owner of the

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Property, that its deed is valid and enforceable, that the HOA sale extinguished U.S. Bank’s

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DOT, and that NV Eagles’ title is superior to any adverse interest in the Property. (Answer,

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ECF No. 18). NV Eagles also filed a Third-Party Complaint against Pattiani for the same

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declarations. (Id.). Pattiani does not appear to have been served with any pleading.

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II.

LEGAL STANDARD

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Pursuant to Rule 5 of the Nevada Rules of Appellate Procedure (“Rule 5”), a United

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States District Court may certify a question of law to the Nevada Supreme Court “upon the

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court’s own motion.” Nev. R. App. P. 5(a)–(b). Under Rule 5, the Nevada Supreme Court has

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the power to answer such a question that “may be determinative of the cause then pending in

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the certifying court and . . . it appears to the certifying court there is no controlling precedent in

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the decisions of the Supreme Court of this state.” Nev. R. App. P. 5(a).

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Rule 5 also provides that a certification order must specifically address each of six
requirements:
(1) The questions of law to be answered;
(2) A statement of all facts relevant to the questions certified;
(3) The nature of the controversy in which the questions arose;
(4) A designation of the party or parties who will be the appellant(s) and the
party or parties who will be the respondent(s) in the Supreme Court;
(5) The names and addresses of counsel for the appellant and respondent; and

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(6) Any other matters that the certifying court deems relevant to a
determination of the questions certified.

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Nev. R. App. P. 5(c).

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III.

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DISCUSSION
In this case, the Court is sitting in diversity jurisdiction; thus Nevada substantive law

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controls. Because the relevant facts are set forth above, the Court addresses the remaining five

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requirements below.

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First, whether the rule announced in SFR Invs. Pool I, LLC v. U.S. Bank, N.A., 334 P.3d
408 (Nev. 2014) that foreclosures under NRS § 116.3116 extinguish first security interests

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applies retroactively to foreclosures which occurred prior to the date of that decision is a

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question of state law.

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Second, the retroactivity of SFR is at least partially dispositive to the present case. If

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that rule is not retroactive, because the HOA sale in this case occurred prior to the issuance of

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the SFR decision, U.S. Bank would be entitled to a declaration that the DOT still encumbers the

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Property, and NV Eagles could not prevail on its counterclaim for a declaration that the HOA

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sale extinguished the DOT.

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Third, there is no controlling precedent as to the retroactivity of SFR. One court in this

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district has discussed this issue, finding that SFR did not apply retroactively pursuant to the test

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outlined in Breithaupt v. USAA Prop. & Cas. Ins. Co., 867 P.2d 402 (Nev. 1994). See Trust v.

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K & P Homes, 2:15-cv-01534-RCJ-VCF, 2015 WL 6962860, at *5 (D. Nev. Nov. 9, 2015).

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However, shortly after this ruling, the court decided to certify to the Nevada Supreme Court the

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same retroactivity question at issue in the instant order. See Trust v. K & P Homes, 2:15-cv-

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01534-RCJ-VCF, 2016 WL 923091 (D. Nev. Mar. 9, 2016).

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Accordingly, under Rule 5, answering this certified question is within the power of the

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Nevada Supreme Court, and the Court finds that a determination of this question would

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promote judicial efficiency.

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IV.

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CONCLUSION
IT IS HEREBY ORDERED that the Motion for Summary Judgment (ECF No. 48)

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filed by Defendant NV Eagles, LLC, the Motion to Dismiss (ECF No. 55) filed by Defendant

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Diamond Creek Homeowners’ Association, and the Motion for Summary Judgment (ECF No.

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59) filed by Plaintiff U.S. Bank as Trustee for GSAA Home Equity Trust 2006-9, Asset-Backed

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Certificates, Series 2006-9 are all DENIED without prejudice with permission to renew these

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motions within thirty (30) days of the resolution of the Court’s Certified Question to the

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Nevada Supreme Court.

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IT IS FURTHER ORDERED that the following question of law is CERTIFIED to
the Nevada Supreme Court pursuant to Rule 5 of the Nevada Rules of Appellate Procedure:
Whether the rule of SFR Investments Pool I, LLC v. U.S. Bank,
N.A., 334 P.3d 408 (Nev. 2014) that foreclosures under NRS §
116.3116 extinguish first security interests applies retroactively to
foreclosures which occurred prior to the date of that decision.

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See Nev. R. App. P. 5(c)(1). The nature of the controversy and a statement of facts are

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discussed above. See Nev. R. App. P. 5(c)(2)–(3). Plaintiff U.S. Bank is designated as the

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Appellant, and Defendants Diamond Creek Homeowners’ Association, NV Eagles, LLC, and

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Underwood Partners, LLC are designated as the Respondents. See Nev. R. App. P. 5(c)(4). The

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names and addresses of counsel are as follows:

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Counsel for Plaintiff U.S. Bank

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Christine M. Parvan and Allison R. Schmidt
Akerman LLP
1160 Town Center Drive, Suite 330
Las Vegas, NV 89144

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Counsel for Defendant Diamond Creek Homeowners’ Association

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Joseph P Garin
Lipson Neilson Cole Seltzer & Garin, P.C.
9900 Covington Cross Drive, Suite 120
Las Vegas, NV 89144

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Counsel for Defendant NV Eagles, LLC and Underwood Partners, LLC

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John Henry Wright
The Wright Law Group, P.C.
2340 Paseo Del Prado, Suite D-305
Las Vegas, NV 89102

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See Nev. R. App. P. 5(c)(5). Further elaboration upon the certified question is included in this
Order.
IT IS FURTHER ORDERED that the Clerk of the Court shall forward a copy of this

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Order to the Clerk of the Nevada Supreme Court under the official seal of the United States

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District Court for the District of Nevada. See Nev. R. App. P. 5(d).

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DATED this _____ day of June, 2016.

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___________________________________
Gloria M. Navarro, Chief Judge
United States District Judge

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