Bank of New York Mellon v. Vegas Property Services, Inc. et al

Filing 78

ORDER temporarily staying this action until resolution of the certified question in Nev. S. Ct. Case No. 72931; denying without prejudice ECF Nos. 44 , 63 Motions for Summary Judgment. Signed by Judge Miranda M. Du on 7/26/2018. Copies have been distributed pursuant to the NEF - KR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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THE BANK OF NEW YORK MELLON FKA Case No. 2:17-cv-00776-MMD-NJK
THE BANK OF NEW YORK AS TRUSTEE
FOR THE CERTIFICATEHOLDERS OF
ORDER
THE CWABS, INC. ASSET-BACKED
CERTIFICATES, SERIES 2005-11,

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Plaintiff,
v.

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VEGAS PROPERTY SERVICES, INC.;
SHADOW
SPRINGS
COMMUNITY
ASSOCIATION; and DOES 1 THROUGH
10, INCLUSIVE,

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Defendants.

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This case arises out of a homeowner association’s (“HOA”) foreclosure and

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involves the notice provisions applicable to foreclosure sales under Nevada Revised

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Statutes (“NRS”) Chapter 116. Currently there is a federal-state split in the interpretation

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and effect of the notice provisions found at the pre-2015 version of NRS Chapter 116.

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However, a question regarding the applicable notice provisions was recently certified to

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the Nevada Supreme Court, asking whether the notice provisions found at NRS § 107.090

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were incorporated by reference into the pre-2015 version of NRS § 116.31168. Defendant

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Shadow Springs Community Association (“Shadow Springs”) contends that Plaintiff Bank

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of New York Mellon (“BNYM”) received actual notice of the foreclosure sale at issue in this

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case. (ECF No. 50 at 19 (arguing that “BNYM had actual notice of the foreclosure”).)

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Accordingly, this Court sua sponte stays this action in its entirety until the Nevada

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Supreme Court resolves the certified question.

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A district court has discretionary power to stay proceedings in its own court. Landis

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v. N. Am. Co., 299 U.S. 248, 254-55 (1936). “A trial court may, with propriety, find it is

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efficient for its own docket and the fairest course for the parties to enter a stay of an action

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before it, pending resolution of independent proceedings which bear upon the case.”

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Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863 (9th Cir. 1979). In deciding

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whether to grant a stay, courts should consider “the possible damage which may result

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from the granting of a stay, the hardship or inequity which a party may suffer in being

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required to go forward, and the orderly course of justice measured in terms of the

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simplifying or complicating of issues, proof, and questions of law which could be expected

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to result from a stay.” Lockyer v. Mirant Corp., 398 F.3d 1098, 1110 (9th Cir. 2005) (quoting

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Landis, 299 U.S. at 268). Courts should also consider “the judicial resources that would

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be saved by avoiding duplicative litigation.” Pate v. DePuy Orthopaedics, Inc., No. 2:12-

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cv-01168-MMD-CWH, 2012 WL 3532780, at *2 (D. Nev. Aug. 14, 2012) (quoting Rivers

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v. Walt Disney Co., 980 F. Supp. 1358, 1360 (C.D. Cal. 1997)).

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The Court finds that significant judicial resources will be saved if the Court refrains

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from issuing a decision in this case until the Nevada Supreme Court determines whether

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NRS § 116.31168 incorporates the notice provisions of NRS § 107.090 in Nev. S. Ct. Case

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No. 72931. NRS §§ 116.31168 and 107.090 prescribe two fundamentally different notice

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mechanisms. The first requires lenders to affirmatively request notice of foreclosure sales

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from HOAs. The second requires HOAs to notify lenders as a matter of course, regardless

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of whether a request was made.

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The Ninth Circuit recently held the first mechanism facially unconstitutional because

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it impermissibly shifts the burden to lenders in violation of their procedural due process

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rights. Bourne Valley Court Tr. v. Wells Fargo Bank, N.A., 832 F.3d 1154, 1156 (9th Cir.

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2016), cert. denied, 137 S. Ct. 2296 (2017). NRS § 107.090 seems to ameliorate this

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burden-shifting problem by requiring the HOAs to provide notice to lenders absent any

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request from lenders for notice; however, the Ninth Circuit has held that NRS § 107.090

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is not incorporated in NRS § 116.31168. Id. at 1159. If it were, the Ninth Circuit reasoned,

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the opt-in notice scheme would be superfluous. Id.

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The question of whether NRS § 116.31168 incorporates NRS § 107.090 is now

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pending before the Nevada Supreme Court in Case No. 72931. Moreover, that court has

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hinted it will answer the question in the affirmative. See Nationstar Mortg., LLC v. Saticoy

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Bay LLC Series 227 Shadow Canyon, 405 P.3d 641, 648 n.11 (Nev. 2017). If the Nevada

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Supreme Court holds that NRS § 107.090 is incorporated, then a factual question would

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arise in this case: did the HOA provide notice to the lender consistent with NRS § 107.090?

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As the law stands currently, it is irrelevant whether the HOA provided notice to the lender—

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foreclosure sales conducted pursuant to Chapter 116 could not have satisfied the lenders’

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constitutional due process rights. See, e.g., U.S. Bank, N.A. v. Emerald Ridge Landscape

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Maint. Ass’n, No. 2:15-cv-00117-MMD-PAL, 2017 WL 4386967, at *3 (D. Nev. Sept. 29,

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2017). But if NRS § 116.31168 incorporated NRS § 107.090, then some foreclosure sales

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may have satisfied constitutional due process requirements (i.e., those in which HOAs

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gave lenders notice consistent with NRS § 107.090). Shadow Springs contends that it

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provided such notice in this case. (ECF No. 50 at 19.)

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The parties may be concerned that a stay will be prejudicial to them. However, any

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damage to the parties from a stay will be outweighed by the fees that all parties will surely

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incur from continued litigation—a decision in the proceedings before the Nevada Supreme

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Court could moot a decision by this Court. Until there is finality on the issue of whether

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NRS § 116.31168 incorporates NRS § 107.090, a stay will benefit the parties and conserve

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judicial resources.

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It is therefore ordered that this action is temporarily stayed until resolution of the

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certified question in Nev. S. Ct. Case No. 72931. The stay will be lifted upon such

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resolution. The parties must file a status report within five days from such resolution.

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It is further ordered that all pending motions (ECF Nos. 44, 63) are denied without

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prejudice and may be refiled within thirty (30) days from the date the stay in this case is

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lifted.

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DATED THIS 26th day of July 2018.

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MIRANDA M. DU
UNITED STATES DISTRICT JUDGE

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