Deutsche Bank National Trust Company v. REO Investments Advisors V, LLC et al

Filing 10

ORDER STAYING CASE. 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 the pending motion to dismiss 9 is DENIED without prejudice to its refiling within 20 days of the order lifting the stay. Signed by Judge Jennifer A. Dorsey on 4/18/2017. (Copies have been distributed pursuant to the NEF - DC)

1

UNITED STATES DISTRICT COURT

2

DISTRICT OF NEVADA

3
4

Deutsche Bank National Trust Company,

5

2:17-cv-00253-JAD-VCF

Plaintiff
Order Staying Case and Denying Motion
Without Prejudice

6

v.

7

REO Investments Advisors V, LLC, et al.,

8

[ECF No. 9]

Defendants

9
10

As I noted in Freedom Mortgage v. Las Vegas Development Group,1 in the years

11

following Las Vegas’s real estate crash, lenders and investors were at odds over the legal effect

12

of a homeowners association’s (HOA’s) nonjudicial foreclosure of a superpriority lien on a

13

lender’s first trust deed. The Nevada Supreme Court settled the debate in SFR Investments Pool

14

1, LLC v. U.S. Bank,2 making winners out of the investors who purchased foreclosure properties

15

in HOA sales and losers of the lenders who gambled on the opposite result, elected not to satisfy

16

the HOA liens to prevent foreclosure, and thus saw their interests wiped out by sales that often

17

yielded a small fraction of the loan balance.
The Nevada Supreme Court recently reaffirmed the SFR principles in Saticoy Bay v.

18
19

Wells Fargo and expressly held that “the Due Process Clauses of the United States and Nevada

20

Constitutions are not implicated in an HOA’s nonjudicial foreclosure of a superpriority lien.”3

21

But when a Ninth Circuit panel considered the same issues in Bourne Valley Court Trust v. Wells

22

Fargo Bank, it held that Chapter 116’s nonjudicial foreclosure scheme “facially violated

23
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 The losing

2

party in Bourne Valley has filed—and the losing party in Saticoy Bay has indicated the intent to

3

file—a petition for certiorari in the United States Supreme Court,5 so the constitutionality of

4

Nevada’s non-judicial foreclosure scheme may ultimately be decided by the United States

5

Supreme Court.6

6

This case concerns one of those non-judicial foreclosure sales, and Deutsche Bank

7

challenges that foreclosure sale as a violation of its right to due process, among other things,

8

citing Bourne Valley.7 Defendant Viscaya Homeowners Association has now moved to dismiss

9

Deutsche Bank’s claims, relying in part on SFR and Saticoy Bay.8 To save the parties from the

10

need or inclination to invest resources further briefing the effect of the Bourne Valley and Saticoy

11

Bay opinions before the United States Supreme Court has ruled on the petitions for certiorari

12

review in these cases, I deny the pending motion without prejudice, and I sua sponte stay all

13

proceedings in this case.

14

Discussion

15

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

16

efficient use of judicial resources.9 When determining whether a stay is appropriate pending the

17
18
19
20
21
22
23
24

4

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 Bourne Valley cert petition was filed on April 3, 2017. Case No. 16-1208.
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 ¶ 87.

26

8

ECF No. 9 at 10.

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

resolution of another case—often called a “Landis stay”—the district court must weigh: (1) the

2

possible damage that may result from a stay, (2) any “hardship or inequity” that a party may

3

suffer if required to go forward, (3) “and the orderly course of justice measured in terms of the

4

simplifying or complicating of issues, proof, and questions of law” that a stay will engender.10

5

After weighing these considerations, I find that a Landis stay is appropriate here. I address these

6

considerations in reverse order.

7

A.

8
9

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

competing arguments that the foreclosure sale either extinguished the bank’s security interest or

10

had no legal effect because the statutory scheme violates due process. The United States

11

Supreme Court’s consideration of petitions for certiorari in Bourne Valley and Saticoy Bay has

12

the potential to be dispositive of this case or at least of discrete issues that it presents. As the

13

jurisprudence in this area of unique Nevada law continues to evolve, the parties in the scores of

14

foreclosure-challenge actions pending in this courthouse file new motions or move to supplement

15

the ones that they already have pending, often resulting in docket-clogging entries and an

16

impossible-to-follow chain of briefs in which arguments are abandoned and replaced. Staying

17

this case pending the Supreme Court’s disposition of the petitions for certiorari in Bourne Valley

18

and Saticoy Bay will permit the parties to evaluate—and me to consider—the viability of the

19

claims under the most complete precedent. This will simplify and streamline the proceedings

20

and promote the efficient use of the parties’ and the court’s resources.

21

B.

22

Hardship and inequity
Both parties face the prospect of hardship if I resolve the claims or issues in this case

23

before the petitions for certiorari have been decided. A stay will prevent unnecessary briefing

24

and the expenditures of time, attorney’s fees, and resources that could be wasted—or at least

25

prematurely spent—should the Supreme Court take up these cases.

26
27
28

10

Lockyer v. Mirant Corp., 398 F.3d 1098, 1110 (9th Cir. 2005).
3

1

C.

2

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

3

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

4

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

5

necessitated if the Supreme Court grants certiorari and resolves this circuit-state split. So it is not

6

clear to me that a stay pending the Supreme Court’s disposition of the petitions for certiorari will

7

ultimately lengthen the life of this case. I thus find that any possible damage that the extension

8

of this stay may cause the parties is minimal.

9

D.

10

The length of the stay is reasonable.
Finally, I note that a stay of this case pending the disposition of the petitions for certiorari

11

in Bourne Valley and Saticoy Bay is expected to be reasonably short. The response to the

12

petition in Bourne Valley is due May 8, 2017, and the petition in Saticoy Bay is due April 25,

13

2017. Because the length of this stay is directly tied to the petition proceedings in those cases, it

14

is reasonably brief, and it is not indefinite.

15
16

Conclusion
IT IS THEREFORE ORDERED that this case is STAYED. Once the United States

17

Supreme Court proceedings in Bourne Valley and Saticoy Bay have concluded, any party

18

may move to lift this stay.

19
20
21

IT IS FURTHER ORDERED that the pending motion to dismiss [ECF No. 9] is
DENIED without prejudice to its refiling within 20 days of the order lifting the stay.
DATED: April 18, 2017

22

_______________________________
Jennifer A. Dorsey
United States District Judge

23
24
25
26
27
28
4