Federal National Mortgage Association v. SFR Investments Pool 1, LLC et al

Filing 56

ORDER. IT IS ORDERED that Plaintiff/counter-defendant Federal National Mortgage Association's 38 Motion to Stay Discovery is GRANTED. SFR's 44 Countermotion to Stay is GRANTED. See Order for details/deadlines. Signed by Magistrate Judge Peggy A. Leen on 4/19/2018. (Copies have been distributed pursuant to the NEF - MR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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FEDERAL NATIONAL MORTGAGE
ASSOCIATION,

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v.

Case No. 2:17-cv-01750-APG-PAL
ORDER

Plaintiff,

(Mot Stay Disc – ECF No. 38)
(Mot Stay Case – ECF No. 44)

SFR INVESTMENTS POOL 1, LLC, et al.,

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Defendants.

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Before the court are two separate motions to stay--Plaintiff/counter-defendant Federal

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National Mortgage Association’s Motion to Stay Discovery (ECF No. 38), and

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defendant/counter/cross defendant SFR Investments Pool 1, LLC’s Countermotion to Stay the

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Case Pending a Decision on SFR’s Motion for Reconsideration (ECF No. 44). The court has

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reviewed the motions, defendant Southern Highlands Community Association’s Opposition (ECF

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No. 41), SFR’s Response (ECF No. 43), plaintiff’s Reply (ECF No. 45), plaintiff’s Reply in

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Support of Motion to Stay Discovery (ECF No. 50), plaintiff’s Opposition, and SFR’s Reply (ECF

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No. 55).

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Fannie Mae requests a stay until its pending motion for summary judgment is decided. The

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motion for summary judgment argues its interest in the property at issue was not extinguished by

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an HOA foreclosure sale by operation of the Federal Foreclosure Bar which preempts the Nevada

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statute under which the foreclosure was conducted. The Ninth Circuit has recently held in a series

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of decisions that Fannie Mae’s protected property interest is preserved when a servicer or nominee

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acting on its behalf appears as record deed-of-trust beneficiary. The Ninth Circuit has also held

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that evidence materially identical to that offered by Fannie Mae in this case is sufficient for a

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district court to find that its interest was protected by federal law. Multiple district judges have

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granted similar summary judgments in favor of Fannie Mae on this issue. No discovery is required
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to decide the motion for summary judgment. If granted, the motion is dispositive of the entire

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case, and a “preliminary peek” of the motion demonstrated it will be granted. Thus the court should

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stay.

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SFR opposes Fannie Mae’s motion to stay arguing it needs discovery concerning Fannie

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Mae’s interest in the property at issue. However, SFR seeks its own stay of discovery until after

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the district judge decides its Motion for Reconsideration concerning SFR’s Motion to Dismiss.

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SFR claims the district judge incorrectly decided that Fannie Mae’s claims in this case were not

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barred by the applicable Nevada statute of limitations, but reached the opposite conclusion in

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another HOA foreclosure case. SFR therefore seeks a stay until its motion for reconsideration is

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decided because if, granted, it is dispositive of the entire case.

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The HOA does not oppose Fannie Mae’s motion to stay to the extent “it is not directed at

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the Association” but opposes the motion “out of an abundance of precaution” to the extent Fannie

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Mae seeks to preclude it from engaging in discovery related to allegations the foreclosure sale was

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unconstitutional, wrongful, commercially unreasonable, negligent etc.

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On April 13, 2018 SFR filed a response to Fannie Mae’s motion for summary judgment

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and countermotion for relief under Fed. R. Civ. P. 56(d) (ECF No 53 & 54). SFR argues, inter

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alia, that the court should stay the case until the motion for reconsideration is decided and that

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discovery is needed before the court can rule on Fannie Mae’s summary judgment motion.

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Discovery is needed to answer the threshold question of whether the subject mortgage was held in

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trust “because ownership is not the question, succession is.” Therefore, the Ninth Circuit case

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addressing the evidence required to establish Fannie Mae’s interest is inapposite.

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Having reviewed and considered the moving and responsive papers, the court will stay

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discovery in this case until both the motion for reconsideration and the motion for summary

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judgment are decided. The outcome of these motions will likely determine whether any claims

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against any party remain. Although SFR opposes Fannie Mae’s request to stay because it believes

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it is entitled to discovery SFR will not need any discovery if the district judge agrees with it that

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the case should be dismissed on statute of limitations grounds. Additionally, SFR has coupled its

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response to the motion for summary judgment with a countermotion for discovery under Rule
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56(d). The district judge will determine whether discovery is required before Fannie Mae’s

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summary judgment motion based on the federal foreclosure bar/federal preemption is decided.

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IT IS ORDERED:

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1. Plaintiff/counter-defendant Federal National Mortgage Association’s Motion to Stay

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Discovery (ECF No. 38) is GRANTED.

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2. SFR’s Countermotion to Stay (ECF No. 44) is GRANTED.

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3. The parties shall have 14 days from decision of the last motion decided to submit an

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amended discovery plan and scheduling order to complete discovery on any claim that

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survives.

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DATED this 19th day of April, 2018.

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PEGGY A. LEEN
UNITED STATES MAGISTRATE JUDGE

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