Bank of America, N.A. v. Sunrise Ridge Master Homeowners Association et al

Filing 67

ORDER granting ECF No. 45 Motion to Stay Case; action temporarily stayed until resolution of the certified question in Nev. S. Ct. Case No. 72931; parties to file a status report within 5 days from such resolution; denying without prejudice ECF No. 47 Motion for Partial Summary Judgment and may be refiled within 30 days from Supreme Court decision. Signed by Judge Miranda M. Du on 1/4/2018. (Copies have been distributed pursuant to the NEF - KW)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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BANK OF AMERICA, N.A.,

Case No. 2:16-cv-00467-MMD-CWH

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Plaintiff,
v.

ORDER
(Def.’s Motion to Stay – ECF No. 45)

SUNRISE RIDGE MASTER
HOMEOWNERS ASSOCIATION;
DAISEY TRUST; and NEVADA
ASSOCIATION SERVICES, INC.,

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Defendants.

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DAISEY TRUST,
Counterclaimant,
v.
BANK OF AMERICA, N.A.,

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Counterdefendant.

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This case arises out of a homeowner association’s (“HOA”) foreclosure and

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involves the notice provisions applicable to foreclosure sales under Nevada Revised

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Statutes (“NRS”) Chapter 116. Before the Court is Defendant Daisey Trust’s Motion to

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Stay. (ECF No. 45.) Plaintiff Bank of America, N.A. (“BANA”) has opposed (ECF No. 48),

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and Daisey Trust has replied (ECF No. 49). The Court requested supplemental briefing

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“to identify whether there is a factual issue concerning notice given by the HOA to Plaintiff

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before the foreclosure sale such that the notice provisions in NRS 107.090 are

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implicated.” (ECF No. 50.) The Court has reviewed the parties’ supplemental briefs. (ECF

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Nos. 53, 58.)

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A district court has discretionary power to stay proceedings in its own court. Landis

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v. N. Am. Co., 299 U.S. 248, 254-55 (1936). “A trial court may, with propriety, find it is

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efficient for its own docket and the fairest course for the parties to enter a stay of an action

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before it, pending resolution of independent proceedings which bear upon the case.”

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Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863 (9th Cir. 1979). In deciding

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whether to grant a stay, courts should consider “the possible damage which may result

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from the granting of a stay, the hardship or inequity which a party may suffer in being

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required to go forward, and the orderly course of justice measured in terms of the

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simplifying or complicating of issues, proof, and questions of law which could be expected

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to result from a stay.” Lockyer v. Mirant Corp., 398 F.3d 1098, 1110 (9th Cir. 2005)

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(quoting Landis, 299 U.S. at 268). Courts should also consider “the judicial resources that

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would be saved by avoiding duplicative litigation.” Pate v. DePuy Orthopaedics, Inc., No.

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2:12-cv-01168-MMD-CWH, 2012 WL 3532780, at *2 (D. Nev. Aug. 14, 2012) (quoting

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Rivers v. Walt Disney Co., 980 F. Supp. 1358, 1360 (C.D. Cal. 1997)).

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The Court finds that significant judicial resources will be saved if the Court refrains

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from issuing a decision in this case until the Nevada Supreme Court determines whether

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NRS § 116.31168 incorporates the notice provisions of NRS § 107.090. (ECF No. 45 at

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2 (citing Nev. S. Ct. Case No. 72931).) NRS §§ 116.31168 and 107.090 prescribe two

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fundamentally different notice mechanisms. The first requires lenders to affirmatively

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request notice of foreclosure sales from HOAs. The second requires HOAs to notify

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lenders as a matter of course, regardless of whether a request was made.

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The Ninth Circuit recently held the first mechanism facially unconstitutional

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because it impermissibly shifts the burden to lenders in violation of their procedural due

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process rights. Bourne Valley Court Tr. v. Wells Fargo Bank, N.A., 832 F.3d 1154, 1156

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(9th Cir. 2016), cert. denied, 137 S. Ct. 2296 (2017). NRS § 107.090 seems to ameliorate

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this burden-shifting problem by requiring the HOAs to provide notice to lenders absent

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any request from lenders for notice; however, the Ninth Circuit has held that NRS §

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107.090 is not incorporated in NRS § 116.31168. Id. at 1159. If it were, the Ninth Circuit

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reasoned, the opt-in notice scheme would be superfluous. Id.

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The question of whether NRS § 116.31168 incorporates NRS § 107.090 is now

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pending before the Nevada Supreme Court in Case No. 72931. Moreover, that court has

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hinted it will answer the question in the affirmative. See Nationstar Mortg., LLC v. Saticoy

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Bay LLC Series 227 Shadow Canyon, 405 P.3d 641, 648 n.11 (Nev. 2017). If the Nevada

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Supreme Court holds that NRS § 107.090 is incorporated, then a factual question would

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arise in this case: did the HOA provide notice to the lender consistent with NRS §

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107.090? As the law stands currently, it is irrelevant whether the HOA provided notice to

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the lender—foreclosure sales conducted pursuant to Chapter 116 could not have satisfied

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the lenders’ constitutional due process rights. See, e.g., U.S. Bank, N.A. v. Emerald Ridge

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Landscape Maint. Ass’n, No. 2:15-cv-00117-MMD-PAL, 2017 WL 4386967, at *3 (D. Nev.

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Sept. 29, 2017). But if NRS § 116.31168 incorporated NRS § 107.090, then some

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foreclosure sales may have satisfied constitutional due process requirements (i.e., those

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in which HOAs gave lenders notice consistent with NRS § 107.090). Daisey Trust

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contends that the HOA provided such notice in this case. (See ECF No. 58 at 1-2.)

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BANA contends that the Nevada Supreme Court’s decision is immaterial because

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even if NRS § 107.090 were incorporated, it is constitutionally deficient. (ECF No. 48 at

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4.) BANA argues that NRS § 107.090 does not require HOAs to identify the amount of

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the superpriority lien, rendering the notice of little value to lenders seeking to tender. (Id.

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at 5.) While the constitutionality of NRS § 107.090 is a serious issue that the parties will

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no doubt dispute if the Nevada Supreme Court holds that NRS § 107.090 is incorporated,

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that issue is not presently before this Court. See Clinton v. Jones, 520 U.S. 681, 690

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(1997) (“[W]e have often stressed the importance of avoiding the premature adjudication

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of constitutional questions.”).

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In addition, BANA insists that a stay will be prejudicial because it is damaged as

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long as Daisey Trust claims to hold clear title: “BANA cannot proceed with foreclosure

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until this litigation is resolved. While Daisey Trust continues to collect rent, BANA is
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required to pay taxes and insurance charges on its defaulting borrower’s behalf.” (ECF

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No. 48 at 6.) However, any damage to Plaintiff from a stay will be outweighed by the fees

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that all parties will surely incur from continued litigation—a decision in the proceedings

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before the Nevada Supreme Court could moot a decision by this Court. Until there is

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finality on the issue of whether NRS § 116.31168 incorporates NRS § 107.090, a stay will

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benefit the parties and conserve judicial resources.

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It is therefore ordered that Daisey Trust’s Motion to Stay (ECF No. 45) is granted.

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This action is temporarily stayed until resolution of the certified question in Nev. S. Ct.

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Case No. 72931. The stay will be lifted upon such resolution. The parties must file a status

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report within five days from such resolution. BANA’s pending motion for partial summary

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judgment (ECF No. 47) is denied without prejudice and may be refiled within thirty (30)

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days from the Nevada Supreme Court’s decision on the certified question.

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DATED THIS 4th day of January 2018.

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MIRANDA M. DU
UNITED STATES DISTRICT JUDGE

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