Prosper Investments, LLC v. Carrington Mortgage Services, LLC

Filing 9

ORDER STAYING CASE. Once the proceedings in the U.S. Supreme Court have concluded, any party may move to lift the stay. Signed by Judge Andrew P. Gordon on 4/12/2017. (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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***

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PROSPER INVESTMENTS, LLC,

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Plaintiff,

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v.

Case No. 2:17-cv-00672-APG-CWH
ORDER STAYING CASE

CARRINGTON MORTGAGE SERVICES,
LLC,
Defendant.

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This is one of many disputes over the effect of a nonjudicial foreclosure sale conducted by

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a homeowners association (“HOA”) after the prior owner failed to pay HOA assessments. On

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August 12, 2016, a divided Ninth Circuit panel in Bourne Valley Court Trust v. Wells Fargo Bank

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held that Nevada Revised Statutes Chapter 116’s HOA nonjudicial foreclosure scheme, as it

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existed before the statutory scheme was amended in 2015, “facially violated mortgage lenders’

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constitutional due process rights.” 832 F.3d 1154, 1155 (9th Cir. 2016); but see id. at *6-11

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(Wallace, J., dissenting). Those motions were denied and the mandate issued on December 14,

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2016. Bourne Valley Court Tr. v. Wells Fargo Bank, 9th Cir. Dkt. No. 15-15233, ECF Nos. 75,

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76.

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The Supreme Court of Nevada recently decided Saticoy Bay LLC Series 350 Durango 104

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v. Wells Fargo Home Mortgage, holding that “the Due Process Clauses of the United Sates and

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Nevada Constitutions are not implicated in an HOA’s nonjudicial foreclosure of a superpriority

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lien.” 388 P.3d 970, 975 (Nev. 2017). The losing parties in both Bourne Valley and Saticoy Bay

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have indicated they intend to file petitions for certiorari in the United States Supreme Court.

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Because Bourne Valley and Saticoy Bay reached opposite conclusions, the constitutionality of

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Nevada’s HOA nonjudicial foreclosure scheme may be decided by the United States Supreme

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Court. See Sup. Ct. R. 10(b) (identifying as a compelling reason for granting certiorari that “a

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state court of last resort has decided an important federal question in a way that conflicts with the

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decision . . . of a United States court of appeals”). I therefore sua sponte stay this case pending a

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decision on the petitions for certiorari in Bourne Valley and Saticoy Bay.

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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. N. 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. 2007).

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When determining whether to stay a case pending the resolution of another case, I must consider

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

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

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

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Lockyer v. Mirant Corp., 398 F.3d 1098, 1110 (9th Cir. 2005). I find that a Landis stay is

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appropriate here.

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The crux of the parties’ dispute is whether the HOA foreclosure sale extinguished the

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deed of trust. If the HOA sale was void because Chapter 116 is facially unconstitutional, then the

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parties’ dispute is, in large part, resolved or at least simplified. The Supreme Court’s

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consideration of the petitions in Bourne Valley and Saticoy Bay thus could be dispositive of this

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case, or at least of significant issues in the case. As the jurisprudence and the parties’ arguments

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in this area evolve, the parties file new motions or move to supplement the pending briefs,

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burdening our already-busy docket. Bourne Valley and Saticoy Bay no doubt will inspire more

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motions and supplements. Staying this case pending the Supreme Court’s disposition of the

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petitions in Bourne Valley and Saticoy Bay will permit the parties to present arguments and

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evidence in the context of complete and resolved precedent, and it will allow me to evaluate the

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claims in light of this legal authority. Consequently, a stay pending the disposition of the

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certiorari proceedings will simplify the proceedings and promote the efficient use of the parties’

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and the court’s resources.

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Resolving the claims or issues in this case before the Supreme Court decides whether to

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grant or deny the petitions could impose a hardship on both parties. A stay will prevent

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unnecessary or premature briefing on Bourne Valley and Saticoy Bay’s impact on this case.

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

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longer for resolution of this case and any motions that they intend to file in the future. But a

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delay would also result from new briefing that may be necessitated if the Supreme Court grants

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certiorari. So a stay pending the Supreme Court’s decision will not necessarily lengthen the life

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of this case. Any possible damage that a stay may cause is minimal.

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Finally, I expect the stay pending the Supreme Court’s disposition of the petitions for

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certiorari to be reasonably short. The petition in Bourne Valley was filed on April 3, 2017. The

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petition in Saticoy Bay is due April 25, 2017. The length of this stay is tied to the Supreme

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Court’s decision on the petitions for certiorari, so the stay will be reasonably brief and is not

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indefinite.1 The stay will remain in place until the proceedings in the Supreme Court have

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concluded.

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IT IS THEREFORE ORDERED that this case is administratively STAYED. Once the

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proceedings in the United States Supreme Court in Bourne Valley Court Trust v. Wells Fargo

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Bank and Saticoy Bay LLC Series 350 Durango 104 v. Wells Fargo Home Mortgage have

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concluded, any party may move to lift the stay.

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DATED this 12th day of April, 2017.

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ANDREW P. GORDON
UNITED STATES DISTRICT JUDGE

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The Supreme Court of Nevada stayed the issuance of the remittitur in Saticoy Bay pending the
Supreme Court’s disposition of the certiorari proceedings. No. 68630, Dkt. No. 17-04543 (Nev. Feb. 8,
2017).

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