Deutsche Bank National Trust Company v. SFR Investments Pool 1, LLC et al

Filing 58

ORDER denying 42 Motion for Summary Judgment; ORDER denying 43 Motion for Summary Judgment; ORDER denying 44 Motion for Summary Judgment; Signed by Judge Kent J. Dawson on 7/25/2018.; Case stayed. (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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DEUTSCHE BANK NATIONAL TRUST
COMPANY,

ORDER
Plaintiff,

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Case No. 2:17-cv-00457-KJD-GWF

v.
SFR INVESTMENTS POOL 1, LLC, et al.,
Defendants.

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Presently before the Court is Plaintiff’s Motion for Summary Judgment (#42). Defendants

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filed responses (##45, 51) to which Plaintiff replied (##54, 55). Also before the Court is Defendant

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Northbrook Homeowners Association Inc.’s Motion for Summary Judgment (#43). Plaintiff and

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Defendant SFR Investments Pool 1 filed responses (##50, 52) to which Defendant Northbrook

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Homeowners Association Inc. replied (##56, 57). Also before the Court is Defendant SFR

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Investments Pool 1, LLC’s Motion for Summary Judgment (#44). Plaintiff filed a response (#49)

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to which SFR Investments Pool 1, LLC replied (#53).

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I. Background

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This case emerges from the non-judicial foreclosure sale on or about August 7, 2014 of

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the property located at 4401 Sparkle Crest Avenue, Las Vegas, Nevada 89031 (“Property”). This

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case shares a similar fact pattern with many cases currently pending before this Court, all having

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to do with HOA foreclosure sales. The several motions presently pending before the Court center

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in whole or in part around the question of what notice of default the foreclosing party was

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required to provide Plaintiff prior to its foreclosure sale on the Property. After the Nevada

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Supreme Court’s decision in SFR Investments Pool 1 LLC v. U.S. Bank, the Ninth Circuit

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decided Bourne Valley Court Trust v. Wells Fargo Bank, NA, 832 F.3d 1154, 1160 (9th Cir.

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2016), holding NRS 115.3116(2)’s statutory notice scheme was facially unconstitutional. In light

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of Bourne Valley, what notice an HOA must provide prior to foreclosing on a superpriority lien

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remains uncertain.

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II. Analysis

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A. Certified Question

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On April 21, 2017, in Bank of New York Mellon v. Star Hills Homeowners Association,

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this Court certified the following question to the Nevada Supreme Court: “Whether NRS §

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116.31168(1)’s incorporation of NRS § 107.090 requires homeowners associations to provide

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

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Mellon v. Star Hill Homeowners Assoc., 2017 WL 1439671, at *5 (D. Nev. April 21, 2017).
In granting certification, the Court reasoned the following: In Bourne Valley, the Ninth

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Circuit definitively answered the question that the statute’s “opt-in” framework was

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unconstitutional. Bourne Valley Court Trust v. Wells Fargo Bank, NA, 832 F.3d 1154, 1160 (9th

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Cir. 2016). However, that leaves this Court with the unresolved question of what notice must be

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provided. “It is solely within the province of the state courts to authoritatively construe state

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legislation.” Cal. Teachers Ass’n v. State Bd. of Educ., 271 F.3d 1141, 1146 (9th Cir. 2001). As

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such, state law questions of first impression like this one should be resolved by the state’s

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highest court. See Huddleston v. Dwyer, 322 U.S. 232, 237 (1944). Allowing the Nevada

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Supreme Court to answer this question before considering any other motions will provide this

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Court the necessary guidance as to how to handle the issues of notice and actual notice in light of

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Bourne Valley.

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In Bank of New York Mellon, the Court did not and could not rely upon any controlling

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state law as to the requirements of notice. This Court faces the same predicament here. An

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answer to the above already 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.

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B. Stay of the Case

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The pending motions in this case implicate the previously certified question regarding

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what notice state law requires. To save the parties from the need to invest further resources into

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the issues surrounding the notice requirement, the Court sua sponte stays all proceedings in this

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case and denies all pending motions without prejudice.

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

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efficient use of judicial resources. Landis v. North Am. Co., 299 U.S., 248, 254-55 (1936);

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Dependable Highway Exp., Inc. v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 200).

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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

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

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(3) “the orderly course of justice measured in terms of the simplifying or complicating of issues,

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proof, and question of law” that a stay will engender. Lockyer v. Mirant Corp., 398 F.3d 1098,

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1110 (9th Cir. 2005). Weighing these considerations, the Court finds that a Landis stay is

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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 will have

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

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

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be necessitated pending the Nevada Supreme Court’s answer to the certified question. It is not

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clear that 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 nine months

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ago, and briefing on the pending petition in Nevada’s Supreme Court is completed. Because the

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length of this stay is directly tied to the petition proceedings in that case, it is reasonably brief,

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and 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. And in the interim, both parties stand to

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

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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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A focal point of this case is the question of what notice is now required under

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NRS Chapter 116 in light of the Ninth Circuit decision Bourne Valley. The jurisprudence in this

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area of unique Nevada law continues to evolve, causing parties in the scores of foreclosure-

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challenge actions to file new motions or to supplement the ones that they already have pending,

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resulting in “docket-clogging entries and an impossible-to-follow chain of briefs in which

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arguments are abandoned and replaced.” Nationstar Mortg. LLC v. Springs at Spanish Trail

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Assoc., 2017 WL 752775, at *2 (D. Nev. Feb. 27, 2017). Staying this case pending the Nevada

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Supreme Court’s disposition of the certified question in Bank of New York Mellon will permit

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the parties to evaluate, simplify, and streamline the proceedings and promote the efficient use of

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the parties’ and the Court’s resources.

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Therefore, the Court orders this action stayed. Once the Nevada Supreme Court has

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resolved the question certified in Bank of New York Mellon, any of the parties may move to lift

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the stay.

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III. Conclusion

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Accordingly, IT IS HEREBY ORDERED that Plaintiff’s Motion for Summary Judgment
(#42) is DENIED.
IT IS FURTHER ORDERED that Defendant Northbrook Homeowners Association, Inc.’s
Motion for Summary Judgment (#43) is DENIED.
IT IS FURTHER ORDERED that Defendant SFR Investments Pool 1, LLC’s Motion for
Summary Judgment (#44) is DENIED.
IT IS FURTHER ORDERED that this action is STAYED.
Dated this 25th day of July, 2018.

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_____________________________
Kent J. Dawson
United States District Judge

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