Wells Fargo Bank, N.A. v. SFR Investments Pool 1, LLC et al

Filing 12

ORDER denying ECF No. 9 Motion for Demand for Security for Costs. Signed by Judge Larry R. Hicks on 06/29/2017. (Copies have been distributed pursuant to the NEF - KW)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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*****
WELLS FARGO BANK, N.A.,

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Plaintiff,
v.

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3:17-cv-00332-LRH-WGC
ORDER

SFR INVESTMENTS POOL 1, LLC;
THE FOOTHILLS AT WINGFIELD
HOMEOWNERS ASSOCIATION;
FULLER JENKINS CLARKSON, P.C.,
Defendants.

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Before the court is SFR Investments Pool 1, LLC’s (“SFR”) motion for security for costs

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pursuant to NRS 118.130(1). ECF No. 9.

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This case involves a homeowners association’s (“HOA”) non-judicial foreclosure of real

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property in Sparks, Nevada. ECF No. 1 at 2. Plaintiff Wells Fargo Bank is the beneficiary of the

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subject property’s deed of trust, which the foreclosure purportedly extinguished under

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NRS 116.3116 et seq. Id. Wells Fargo filed suit in this court against the HOA and SFR, the

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property’s purchaser, claiming that the Nevada statute is unconstitutional on its face and as

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applied.1 Id. Wells Fargo has also brought state-law claims, asserting that the foreclosure sale

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violated NRS 116.3116 and resulted in unjust enrichment. Id. at 12–13. Ultimately, Wells Fargo

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is seeking quiet title and declaratory relief establishing that its deed of trust was not extinguished

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and that the foreclosure sale and transfer of title are void. Id. at 14.

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Specifically, Wells Fargo claims that NRS 116.3116 violates the Fifth Amendment’s Takings
Clause and Due Process Clause, as well as the Supremacy Clause. ECF No. 1 at 7–9; see also
ECF No. 4.
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SFR now moves for security for costs pursuant to NRS 18.130(1). The statute states in

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pertinent part that, “[w]hen a plaintiff in an action resides out of the State, or is a foreign

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corporation, security for costs and charges which may be awarded against such plaintiff [not to

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exceed $500] may be required by the defendant, by the filing and service on plaintiff of a written

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demand therefor within the time limited for answering the complaint.” Nev. Rev. Stat.

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§ 18.130(1). While such security is not required under the Federal Rules of Civil Procedure, “[i]t

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has been the policy of the United States District Court for the District of Nevada to enforce the

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requirements of NRS § 18.130 in diversity actions.” Hamar v. Hyatt Corp., 98 F.R.D. 305 (D.

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Nev. 1983).

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However, “[w]hen suit is brought under a federal statute, state provisions requiring

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security for costs or expenses clearly are inapplicable.” 10 Charles Alan Wright & Arthur R.

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Miller, Federal Practice and Procedure § 2671 (3d ed.). Instead, the court may apply its own

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rules or state practice to require security for costs as a discretionary matter, taking into account

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the policy of the underlying federal statute, the defendant’s ability to recover costs from an out-

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of-state plaintiff if the defendant prevails, the plaintiff’s solvency, and any other pertinent

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factors. Id.

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Here, Wells Fargo filed suit in this court pursuant to both federal-question and diversity

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jurisdiction. ECF No. 1 at 1. However, it is evident from its complaint that its claims are

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primarily constitutional in nature. The court finds that it would be contrary to public policy to

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automatically require security for costs under NRS 18.130 in cases involving alleged violations

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of the U.S. Constitution. Moreover, SFR has made no attempt to present grounds for requiring

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security for costs on the facts of this case. The court will therefore deny its motion.

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IT IS THEREFORE ORDERED that SFR Investments Pool 1, LLC’s motion for security
for costs pursuant to NRS 118.130(1) (ECF No. 9) is DENIED.

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IT IS SO ORDERED.

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DATED this 29th day of June, 2017.

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LARRY R. HICKS
UNITED STATES DISTRICT JUDGE

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