Wilmington Trust, N.A. v. Premier One Holdings Inc et al

Filing 19

ORDER. IT IS ORDERED that this case is STAYED. Once the United States Supreme Court proceedings in Bourne Valley and Saticoy Bay have concluded, any party may move to lift this stay. IT IS FURTHER ORDERED that 16 the pending motion to dismiss is DENIED without prejudice to its refiling within 20 days of the order lifting the stay. Signed by Judge Jennifer A. Dorsey on 3/1/17. (Copies have been distributed pursuant to the NEF - ADR)

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1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 4 Wilmington Trust, 5 2:16-cv-02733-JAD-NJK Plaintiff Order Staying Case and Denying Motion Without Prejudice 6 v. 7 Premier One Holdings, Inc., et al., 8 [ECF No. 16] Defendants 9 10 11 As I noted in Freedom Mortgage v. Las Vegas Development Group,1 in the years 12 following Las Vegas’s real estate crash, lenders and investors were at odds over the legal effect 13 of a homeowners association’s (HOA’s) nonjudicial foreclosure of a superpriority lien on a 14 lender’s first trust deed. The Nevada Supreme Court settled the debate in SFR Investments Pool 15 1, LLC v. U.S. Bank,”2 making winners out of the investors who purchased foreclosure properties 16 in HOA sales and losers of the lenders who gambled on the opposite result, elected not to satisfy 17 the HOA liens to prevent foreclosure, and thus saw their interests wiped out by sales that often 18 yielded a small fraction of the loan balance. The Nevada Supreme Court recently reaffirmed the SFR principles in Saticoy Bay v. 19 20 Wells Fargo and expressly held that “the Due Process Clauses of the United States and Nevada 21 Constitutions are not implicated in an HOA’s nonjudicial foreclosure of a superpriority lien.”3 22 But when a Ninth Circuit panel considered the same issue in Bourne Valley Court Trust v. Wells 23 Fargo Bank, it held that Chapter 116’s nonjudicial foreclosure scheme “facially violated 24 25 26 27 28 1 Freedom Mortgage Corp. v. Las Vegas Dev. Grp., LLC, 106 F. Supp. 3d 1174, 1180 (D. Nev. 2015). 2 SFR Inv. Pool 1 v. U.S. Bank, 334 P.3d 408, 419 (Nev. 2014). 3 Saticoy Bay v. Wells Fargo, 133 Nev. Adv. Op. 5 (Jan. 26, 2017). 1 mortgage lenders’ constitutional due process rights” before it was amended in 2015.4 Parties in 2 both Bourne Valley and Saticoy Bay have indicated their intent to file petitions for certiorari in 3 the United States Supreme Court,5 so the constitutionality of portions of Nevada’s non-judicial 4 foreclosure statute may ultimately be decided by the United States Supreme Court.6 5 This case concerns a non-judicial foreclosure sale. Wilmington Trust challenges that sale 6 as a violation of its right to due process, among other things.7 A dismissal motion that implicates 7 Bourne Valley and Saticoy Bay is pending.8 To save the parties from the need or inclination to 8 invest resources further briefing the effect of these decisions before the United States Supreme 9 Court has ruled on the petitions for certiorari review, I sua sponte stay all proceedings in this 10 case and deny the pending motion to dismiss without prejudice. 11 Discussion 12 A district court has the inherent power to stay cases to control its docket and promote the 13 efficient use of judicial resources.9 When determining whether a stay is appropriate pending the 14 resolution of another case—often called a “Landis stay”—the district court must weigh: (1) the 15 possible damage that may result from a stay, (2) any “hardship or inequity” that a party may 16 17 4 18 19 20 21 22 23 24 Bourne Valley Ct. Trust v. Wells Fargo Bank, 2016 WL 4254983, at *5 (9th Cir. Aug. 12, 2016). 5 The Nevada Supreme Court has stayed issuance of the remittitur until June 21, 2017, to allow time to seek certiorari. Saticoy Bay, Nev. S. Ct. Case No. 68630, Doc. 17-04543 (Feb. 8, 2017). The United States Supreme Court has extended the deadline for the Bourne Valley cert petition to April 3, 2017. Case No. 16A753 (Feb 24, 2017). 6 See S.C.R. 10(a) (suggesting that a conflict between a circuit court and “a state court of last resort” on “an important federal question” can be a basis for granting review on a writ of certiorari). 25 7 ECF No. 1 at ¶¶ 39–40, 42. 26 8 ECF No. 16. 27 9 28 Landis v. North American Co., 299 U.S. 248, 254–55 (1936); Dependable Highway Exp., Inc. v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 2007). 2 1 suffer if required to go forward, (3) “and the orderly course of justice measured in terms of the 2 simplifying or complicating of issues, proof, and questions of law” that a stay will engender.10 3 After weighing these considerations, I find that a Landis stay is appropriate here. I address these 4 considerations in reverse order. 5 A. 6 A stay will promote the orderly course of justice. At the center of this case is an HOA-foreclosure sale under NRS Chapter 116 and the 7 competing arguments that the foreclosure sale either extinguished the mortgagor’s security 8 interest or had no legal effect because the statutory scheme violates due process. The United 9 States Supreme Court’s consideration of petitions for certiorari in Bourne Valley and Saticoy Bay 10 has the potential to be dispositive of this case or at least of discrete issues that it presents. As the 11 jurisprudence in this area of unique Nevada law continues to evolve, the parties in the scores of 12 foreclosure-challenge actions pending in this courthouse file new motions or move to supplement 13 the ones that they already have pending, often resulting in docket-clogging entries and an 14 impossible-to-follow chain of briefs in which arguments are abandoned and replaced. Staying 15 this case pending the Supreme Court’s disposition of the petitions for certiorari in Bourne Valley 16 and Saticoy Bay will permit the parties to evaluate—and me to consider—the viability of the 17 claims under the most complete precedent. This will simplify and streamline the proceedings 18 and promote the efficient use of the parties’ and the court’s resources. 19 B. 20 Hardship and inequity All parties in this action face the prospect of hardship if I resolve the claims or issues in 21 this case before the petitions for certiorari have been decided. A stay will prevent further 22 unnecessary briefing and the expenditures of time, attorney’s fees, and resources that could be 23 wasted—or at least prematurely spent—should the Supreme Court take up these cases. 24 C. 25 26 Damage from a stay The only potential damage that may result from a stay is that the parties will have to wait longer for resolution of this case and any motions that they have filed or intend to file in the 27 28 10 Lockyer v. Mirant Corp., 398 F.3d 1098, 1110 (9th Cir. 2005). 3 1 future. But a delay would also result from any rebriefing or supplemental briefing that may be 2 necessitated if the Supreme Court grants certiorari and resolves this circuit-state split. So it is not 3 clear to me that a stay pending the Supreme Court’s disposition of the petitions for certiorari will 4 ultimately lengthen the life of this case. I thus find that any possible damage that the extension 5 of this stay may cause the parties is minimal. 6 D. 7 The length of the stay is reasonable. Finally, I note that a stay of this case pending the disposition of the petitions for certiorari 8 in Bourne Valley and Saticoy Bay is expected to be reasonably short. The petition in Bourne 9 Valley is due April 3, 2017, and the petition in Saticoy Bay is due April 25, 2017. Because the 10 length of this stay is directly tied to the petition proceedings in those cases, it is reasonably brief, 11 and it is not indefinite. 12 13 Conclusion IT IS THEREFORE ORDERED that this case is STAYED. Once the United States 14 Supreme Court proceedings in Bourne Valley and Saticoy Bay have concluded, any party 15 may move to lift this stay. 16 17 18 IT IS FURTHER ORDERED that the pending motion to dismiss [ECF No. 16] is DENIED without prejudice to its refiling within 20 days of the order lifting the stay. DATED: March 1, 2017 19 _______________________________ ___________ ________ _ _____ ____ _ _ Jennifer A. Dorsey r A. Dorsey s United States District Judge States District Judge e D ud d 20 21 22 23 24 25 26 27 28 4

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