Bank of America, N.A. v. Diamond Point Homeowners Association et al

Filing 92

ORDER. IT IS HEREBY ORDERED that 43 Defendant SFR's Motion to Certify a Question of Law to Nevada's Supreme Court is DENIED as moot; IT IS FURTHER ORDERED that all pending motions ( 44 , 56 , 70 , 71 , 72 , 85 ) are DENIED without prejudice; IT IS FURTHER ORDERED that this action is STAYED. Signed by Judge Kent J. Dawson on 9/20/17. (Copies have been distributed pursuant to the NEF - MR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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BANK OF AMERICA, N.A.,

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Plaintiff,

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v.

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Case No. 2:16-cv-00405-KJD-PAL

DIAMOND POINT HOMEOWNERS
ASSOCIATION; SFR INVESTMENTS
POOL 1, LLC; NEVADA ASSOCIATION
SERVICES, INC.,

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ORDER

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Defendants.
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Presently before the Court is Defendant SFR Investments Pool 1, LLC (“SFR”)’s Motion to

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Certify a Question of Law to Nevada’s Supreme Court (#43). Plaintiff filed a response (#47) to

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which SFR replied (#50).

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I. Background

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On or about October 1, 2008, Deborah Callaway and Michael Ortiz (“the borrowers”)

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purchased real property located at 1204 E. Hammer Lane, North Las Vegas, Nevada 89081 (“the

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property”). The borrowers financed the purchase through a $264,499.00 loan, recorded on October

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16, 2008, and secured by a deed of trust held by BAC Home Loans Servicing, LP (“BAC”). The loan

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and deed of trust are insured by the Federal Housing Administration.

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On June 2, 2011, Nevada Association Services, Inc. (“NAS”), on behalf of Diamond Point

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Homeowners Association (“Diamond Point”), recorded a notice of a delinquent assessment lien for

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$957.15. On July 1, 2011 BAC merged with BANA. Diamond Point, through its agent NAS,

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recorded notice of default and election to sell to satisfy the delinquent assessment lien for $1,999.28.

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Within ten days of recording a notice of default, NAS mailed a copy to multiple parties, including

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BAC.

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On August 8, 2011, Bank of America, N.A. (“BANA”) requested a ledger from Diamond

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Point delineating the super-priority amount due to Diamond Point. Diamond Point, through its agent

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NAS, did not identify the super-priority amount but instead provided BANA with a ledger

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identifying the total amount allegedly owed. On September 22, 2011, BANA delivered a check to

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Diamond Point for what it calculated to be the super-priority amount due ($279: nine months of fees

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at $31 per month). Diamond Point rejected BANA’s payment.

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On March 20, 2012, NAS, on behalf of Diamond Point, recorded a notice of foreclosure sale

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of the property, stating $3,243.40 was the amount due. The sale was scheduled for April 20, 2012,

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and on July 27, 2012, SFR placed the winning bid: $8,000. On February 26, 2016, BANA filed its

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complaint against Diamond Point, SFR, and NAS. On November 17, 2016, SFR filed the present

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Motion to Certify a Question for Nevada’s Supreme Court.

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II. Analysis

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A. Certifying a Question for Nevada’s Supreme Court

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In light of the Ninth Circuit’s ruling in Bourne Valley v. Wells Fargo, SFR asks this Court to

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certify the following question: “Whether NRS § 116.31168(1)’s incorporation of NRS § 107.090

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requires homeowners’ associations to provide notices of default to banks even when a bank does not

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request notice?”

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However, on April 21, 2017, in Bank of New York Mellon v. Star Hill Homeowners

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Association, this Court certified this exact question to the Nevada Supreme Court: “Whether NRS §

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116.31168(1)’s incorporation of NRS § 107.090 requires homeowners[’] associations to provide
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notices of default to banks even when a bank does not request notice?” Bank of New York Mellon v.

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Star Hill Homeowners Assoc., 2017 WL 1439671, at *5 (D. Nev. April 21, 2017).

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In granting certification, the Court reasoned the following: In Bourne Valley, the Ninth

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Circuit definitively answered the question that the statute’s “opt-in” framework was unconstitutional.

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Bourne Valley Court Trust v. Wells Fargo Bank, NA, 832 F.3d 1154, 1160 (2016). However, that

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leaves this Court with the unresolved question of what notice must be provided. “It is solely within

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the province of the state courts to authoritatively construe state legislation.” Cal. Teachers Ass’n v.

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State Bd. of Educ., 271 F.3d 1141, 1146 (9th Cir. 2001). As such, state law questions of first

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impression like this one should be resolved by the state’s highest court. See Huddleston v. Dwyer,

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322 U.S. 232, 237 (1944). Allowing the Nevada Supreme Court to answer this question before

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considering any other motions will provide this Court the necessary guidance as to how to handle the

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issue of notice and actual notice in light of Bourne Valley.

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In Bank of New York Mellon, the Court did not and could not rely upon any controlling state

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law as to the requirements of notice, just as this Court cannot do so here. An answer to the above

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already certified question will provide much needed clarity, and may be dispositive of many of the

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issues currently before the Court in this case.

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B. Sua Sponte Stay of the Case

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The pending motions for summary judgment in this case implicate the previously certified

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question regarding what notice state law requires. To save the parties from the need to invest

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resources in discovery surrounding the notice requirement, the Court sua sponte stays all proceedings

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in this case and denies all pending motions without prejudice.

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A district court has the inherent power to stay cases to control its docket and promote the

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efficient use of judicial resources. Landis v. North Am. Co., 299 U.S. 248, 254-55 (1936);

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Dependable Highway Exp., Inc., v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 2007). When

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determining whether a stay is appropriate pending the resolution of another case — often called a

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“Landis stay” — the district court must weigh: (1) the possible damage that may result from a stay;
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(2) any “hardship or inequity” that a party may suffer if required to go forward; and (3) “the orderly

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course of justice measured in terms of the simplifying or complicating of issues, proof, and questions

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of law” that a stay will engender. Lockyer v. Mirant Corp., 398 F.3d 1098, 1110 (9th Cir. 2005).

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Weighing these considerations, the Court finds that a Landis stay is appropriate.

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1. Damage from a stay

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The only potential damage that may result from a stay is that the parties will have to

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wait longer for resolution of this case and any motions that they have filed or intend to file in the

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future. But a delay would also result from any rebriefing or supplemental briefing that may be

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necessitated pending the Nevada Supreme Court’s answer to the certified question. It is not clear that

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a stay will ultimately lengthen the life of this case.
Additionally, a stay of this case pending resolution of the certified question is

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expected to be reasonably short. This Court certified the question approximately five months ago,

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and briefing on the pending petition in Nevada’s Supreme Court is nearing completion. Because the

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length of this stay is directly tied to the petition proceedings in that case, it is reasonably brief, and

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not indefinite. Thus, the Court finds only minimal possible damage that this stay may cause.

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2. Hardship and inequity

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Both parties equally face hardship or inequity if the Court resolves the claims or

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issues before the certified question has been resolved. And in the interim both parties stand to benefit

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from a stay, regardless of the outcome of the certified question. A stay will prevent unnecessary

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briefing and premature expenditures of time, attorney’s fees, and resources.

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3. Orderly course of justice

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At the center of this case is the question of what notice is now required under NRS

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Chapter 116 in light of the Ninth Circuit decision Bourne Valley. The jurisprudence in this area of

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unique Nevada law continues to evolve, causing parties in the scores of foreclosure-challenge actions

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to file new motions or supplement the ones that they already have pending, resulting in

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“docket-clogging entries and an impossible-to-follow chain of briefs in which arguments are
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abandoned and replaced.” Nationstar Mortg., LLC v. Springs at Spanish Trail Assoc., 2017 WL

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752775, at *2 (D. Nev. Feb. 27, 2017). Staying this case pending the Nevada Supreme Court’s

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disposition of the certified question in Bank of New York Mellon will permit the parties to evaluate,

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and the Court to consider, viability of the claims under the most complete precedent. This will

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simplify and streamline the proceedings and promote the efficient use of the parties’ and the Court’s

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resources.

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Therefore, the Court orders this action stayed. Once the Nevada Supreme Court has

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resolved the question certified in Bank of New York Mellon, either party may move to lift the stay.

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III. Conclusion

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Accordingly, IT IS HEREBY ORDERED that Defendant SFR’s Motion to Certify a Question
of Law to Nevada’s Supreme Court (#43) is DENIED as moot;

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IT IS FURTHER ORDERED that all pending motions are DENIED without prejudice;

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IT IS FURTHER ORDERED that this action is STAYED.

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DATED this 20th day of September, 2017.

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_____________________________
Kent J. Dawson
United States District Judge

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