JPMorgan Chase Bank, N.A. v. SFR Investment Pool1, LLC et al

Filing 58

ORDER granting 41 Motion to Stay All Proceedings.; Case stayed. All pending motions are DENIED without prejudice. Signed by Judge Kent J. Dawson on 10/5/2017. (Copies have been distributed pursuant to the NEF - JM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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JPMORGAN CHASE BANK, N.A.,
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Plaintiff,

Case No. 2:16-cv-02797-KJD-CWH

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v.

ORDER

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SFR INVESTMENT POOL1, LLC et al,
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Defendants.
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Presently before the Court is SFR Investment Pool1, LLC (“SFR”)’s Counter-Motion to Stay

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All Proceedings (#41). JPMorgan Chase Bank, N.A. (“Bank”), filed a response (#46) to which SFR

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replied (#51).

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I. Background

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On December 5, 2016, the Bank filed a complaint seeking declaratory relief and quiet title.

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The Bank argues that in light of the Ninth Circuit’s decision in Bourne Valley and under the return

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doctrine, NRS Chapter 116’s notice scheme should return to its 1991 version. The Bank alleges that

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the HOA foreclosure sale at issue did not extinguish the Bank’s deed of trust because NRS 116.3116,

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as it existed prior to the amendments that took effect on October 1, 2015, facially violated mortgage

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lenders’ constitutional due process rights. As such, the Bank claims that any notice they did receive

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was inadequate and insufficient.

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II. Analysis

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A. Certified Question

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On April 21, 2017, this Court certified the following question to the Nevada Supreme Court:

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“Whether NRS § 116.31168(1)’s incorporation of NRS § 107.090 requires homeowners[’]

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associations to provide notices of default to banks even when a bank does not request notice?” Bank

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of New York Mellon v. Star Hill Homeowners Assoc., 2017 WL 1439671, at *5 (D. Nev. April 21,

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2017). In granting certification, the Court reasoned the following: In Bourne Valley, the Ninth

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Circuit definitively stated the statute’s “opt-in” framework is unconstitutional. Bourne Valley Court

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

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the unresolved question of what notice must be provided. The Ninth Circuit has stated “[i]t is solely

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within the province of the state courts to authoritatively construe state legislation.” Cal. Teachers

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

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

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Dwyer, 322 U.S. 232, 237 (1944).

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B. Stay of the Case

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SFR argues the best course of action for this Court to take in the present case is to institute a

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stay until the pending certified question in Bank of New York Mellon is resolved by the Nevada

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Supreme Court. A district court has the inherent power to stay cases to control its docket and

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promote the efficient use of judicial resources. Landis v. North Am. Co., 299 U.S. 248, 254-55

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(1936); Dependable Highway Exp., Inc., v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 2007).

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

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called a “Landis stay” — the district court must weigh: (1) the possible damage that may result from

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a stay; (2) any “hardship or inequity” that a party may suffer if required to go forward; and (3) “the

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

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

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2005). 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 may 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.

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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. Further, in the interim both parties stand to

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

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

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3. Orderly course of justice

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The question of what notice is now required under NRS Chapter 116 in light of the

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Ninth Circuit decision Bourne Valley is a focal point of this case. 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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4. Summary

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An answer to the certified question will provide much needed clarity, and may be

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dispositive of many of the issues currently before the Court in this case. In Bank of New York

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Mellon, the Court did not and could not rely upon any controlling state law as to the requirements of

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notice, just as this Court cannot do so here. Allowing the Nevada Supreme Court to answer this

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question before considering any other motions will provide this Court the necessary guidance as to

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how to handle the issue of notice and actual notice in light of Bourne Valley. Therefore, the Court

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orders this action stayed. Once the Nevada Supreme Court has resolved the question certified in

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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 SFR Investment Pool1, LLC’s Motion to Stay
All Proceedings (#41) is GRANTED.

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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 5th day of October, 2017.

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_____________________________
Kent J. Dawson
United States District Judge

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