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

Filing 33

ORDER. IT IS ORDERED that this case is administratively STAYED pending exhaustion of all appeals of Bourne Valley Court Trust v. Wells Fargo Bank, No. 15-15233 (9th Cir. Aug. 12, 2016). IT IS FURTHER ORDERED that all pending motions are DE NIED without prejudice with leave to refile within twenty-one days after the stay is lifted. IT IS FURTHER ORDERED that, beginning on 9/20/17, the parties must file a joint status report updating the Court on the status of this case every one-hundred and eighty days. Signed by Chief Judge Gloria M. Navarro on 3/23/17. (Copies have been distributed pursuant to the NEF - ADR)

UNITED STATES DISTRICT COURT
1

DISTRICT OF NEVADA
2
3
4
5

BANK OF AMERICA, N.A., SUCCESSOR
BY MERGER TO BAC HOME LOANS
SERVICING, LP FKA COUNTRYWIDE
HOME LOANS SERVICING, LP,

6
7
8
9
10
11

Plaintiff
vs.
TWILIGHT HOMEOWNERS
ASSOCIATION; RBBE REAL ESTATE
INVESTMENTS, LLC; DALY PROPERTY
MANAGEMENT CORPORATION a/k/a
DALY MANAGEMENT CORPORATION;
and HOMEOWNER ASSOCIATION
SERVICES, INC.,

12

Defendants.
13

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

Case No.: 2:16-cv-2208-GMN-VCF
ORDER

14
15

Lenders and investors have been at odds over the legal effect of a homeowners’

16

association’s (“HOA”) nonjudicial foreclosure of a superpriority lien on a lender’s first trust

17

deed pursuant to Nevada Revised Statutes § 116.3116. See Freedom Mortg. Corp. v. Las Vegas

18

Dev. Grp., LLC, 106 F. Supp. 3d 1174, 1180 (D. Nev. 2015). The Nevada Supreme Court

19

seemed to have settled the debate in SFR Invs. Pool 1, LLC v. U.S. Bank, 334 P.3d 408, 419

20

(Nev. 2014), holding that “NRS 116.3116(2) gives an HOA a true superpriority lien, proper

21

foreclosure of which will extinguish a first deed of trust.” SFR, 334 P.3d at 419.

22

However, on August 12, 2016, two members of a Ninth Circuit panel held in Bourne

23

Valley Court Trust v. Wells Fargo Bank that Chapter 116’s nonjudicial foreclosure scheme

24

“facially violated mortgage lenders’ constitutional due process rights” before it was amended in

25

2015. Bourne Valley Ct. Trust v. Wells Fargo Bank, 2016 WL 4254983, at *5 (9th Cir. Aug. 12,

Page 1 of 4

1

2016). As a result, Bourne Valley is likely dispositive of this and the hundreds of other

2

foreclosure cases pending in both state and federal court. To save the parties from the need to

3

invest resources briefing the effect of the Bourne Valley opinion before the finality of that

4

opinion has been determined, the Court STAYS all proceedings in this case pending exhaustion

5

of all appeals of Bourne Valley.

6

I.

LEGAL STANDARD
“[T]he power to stay proceedings is incidental to the power inherent in every court to

7
8

control the disposition of the causes of action on its docket with economy of time and effort for

9

itself, for counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). “A trial

10

court may, with propriety, find it is efficient for its own docket and the fairest course for the

11

parties to enter a stay of an action before it, pending resolution of independent proceedings

12

which bear upon the case.” Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863 (9th Cir.

13

1979). In deciding whether to grant a stay, a court may weigh the following: (1) the possible

14

damage which may result from the granting of a stay; (2) the hardship or inequity which a party

15

may suffer in being required to go forward; (3) the orderly course of justice measured in terms

16

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

17

expected to result from a stay. CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962).

18

However, “[o]nly in rare circumstances will a litigant in one case be compelled to stand aside

19

while a litigant in another settles the rule of law that will define the rights of both.” Landis, 299

20

U.S. at 255. A district court’s decision to grant or deny a Landis stay is a matter of discretion.

21

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

22

2007).

23
24
25

II.

DISCUSSION
At the center of this case are the HOA-foreclosure sale conducted pursuant to Nevada

Revised Statutes § 116.3116 and the competing arguments that the foreclosure sale either

Page 2 of 4

1

extinguished the bank’s security interest under the SFR holding or had no legal effect because

2

the statutory scheme violates due process. Because the Ninth Circuit in Bourne Valley held that

3

the scheme was facially unconstitutional, see Bourne Valley, 2016 WL 4254983, at *5, the

4

Bourne Valley opinion and any modification of that opinion have the potential to be dispositive

5

of this case. Under this circumstance, the Landis factors weigh strongly in favor of staying this

6

action pending final resolution of the Bourne Valley decision. Indeed, the possible prejudice to

7

the parties is minimal as the only potential harm is that the parties may wait longer for

8

resolution of this case if it is stayed. However, if this case is not stayed, a delay would also

9

result from any motions for reconsideration that may be necessitated if the current decision in

10

the Bourne Valley case does not stand. Accordingly, a stay is not likely to appreciably lengthen

11

the life of this case. Further, in the absence of a stay, judicial resources may be unnecessarily

12

expended to resolve issues which may ultimately be decided by higher courts to which this

13

Court is bound to adhere. Because the Bourne Valley decision is squarely on point, the orderly

14

course of justice likewise weighs in favor of a stay. Accordingly, the Court finds that staying

15

this action pending final resolution of Bourne Valley would be efficient for the Court’s own

16

docket and the fairest course for the parties. See Leyva, 593 F.2d at 863.

17

III.

18

CONCLUSION
IT IS THEREFORE ORDERED that this case is administratively STAYED pending

19

exhaustion of all appeals of Bourne Valley Court Trust v. Wells Fargo Bank, No. 15-15233 (9th

20

Cir. Aug. 12, 2016). Once exhaustion occurs, any party may move to lift the stay. Until that

21

time, all proceedings in this action are stayed.

22
23
24
25

IT IS FURTHER ORDERED that all pending motions are DENIED without prejudice
with leave to refile within twenty-one days after the stay is lifted.
IT IS FURTHER ORDERED that Daly Property Management Corporation a/k/a Daly
Management Corporation (“Daly”) shall care for, preserve, and maintain the Property.

Page 3 of 4

1

IT IS FURTHER ORDERED that, beginning on September 20, 2017, the parties must

2

file a joint status report updating the Court on the status of this case every one-hundred and

3

eighty days. Along with the joint status report, Daly shall submit a statement affirming that all

4

expenses necessary to maintain the property, including but not limited to, timely and full

5

payment of all homeowners association assessments, property taxes, and property insurance

6

premiums due and owing or past due at any time during the effective period of this Stay are

7

current and up to date.

8
9

23
DATED this _____ day of March, 2017.

10
11
12

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

13
14
15
16
17
18
19
20
21
22
23
24
25

Page 4 of 4