United States District Court, D. Nevada
M. Navarro, United States District Court Chief Judge
and investors have been at odds over the legal effect of a
homeowners' association's (“HOA”)
nonjudicial foreclosure of a superpriority lien on a
lender's first trust deed pursuant to Nevada Revised
Statutes § 116.3116. See Freedom Mortg. Corp. v. Las
Vegas Dev. Grp., LLC, 106 F.Supp.3d 1174, 1180 (D. Nev.
2015). The Nevada Supreme Court seemed to have settled the
debate in SFR Invs. Pool 1, LLC v. U.S. Bank, 334
P.3d 408, 419 (Nev. 2014), holding that “NRS
116.3116(2) gives an HOA a true superpriority lien, proper
foreclosure of which will extinguish a first deed of
trust.” SFR, 334 P.3d at 419.
on August 12, 2016, two members of a Ninth Circuit panel held
in Bourne Valley Court Trust v. Wells Fargo Bank
that Chapter 116's nonjudicial foreclosure scheme
“facially violated mortgage lenders' constitutional
due process rights” before it was amended in 2015.
Bourne Valley Ct. Trust v. Wells Fargo Bank, 832
F.3d 1154, 1160 (9th Cir. 2016). As a result, Bourne
Valley is likely dispositive of this and the hundreds of
other foreclosure cases pending in both state and federal
court. To save the parties from the need to invest resources
briefing the effect of the Bourne Valley opinion
before the finality of that opinion has been determined, the
Court STAYS all proceedings in this case pending exhaustion
of all appeals of Bourne Valley.
power to stay proceedings is incidental to the power inherent
in every court to control the disposition of the causes of
action on its docket with economy of time and effort for
itself, for counsel, and for litigants.” Landis v.
N. Am. Co., 299 U.S. 248, 254 (1936). “A trial
court may, with propriety, find it is efficient for its own
docket and the fairest course for the parties to enter a stay
of an action before it, pending resolution of independent
proceedings which bear upon the case.” Leyva v.
Certified Grocers of Cal., Ltd., 593 F.2d 857, 863 (9th
Cir. 1979). In deciding whether to grant a stay, a court may
weigh the following: (1) the possible damage which may result
from the granting of a stay; (2) the hardship or inequity
which a party may suffer in being required to go forward; (3)
the orderly course of justice measured in terms of the
simplifying or complicating of issues, proof, and questions
of law which could be expected to result from a stay.
CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir.
1962). However, “[o]nly in rare circumstances will a
litigant in one case be compelled to stand aside while a
litigant in another settles the rule of law that will define
the rights of both.” Landis, 299 U.S. at 255.
A district court's decision to grant or deny a
Landis stay is a matter of discretion. See
Dependable Highway Exp., Inc. v. Navigators Ins. Co.,
498 F.3d 1059, 1066 (9th Cir. 2007).
center of this case are the HOA-foreclosure sale conducted
pursuant to Nevada Revised Statutes § 116.3116 and the
competing arguments that the foreclosure sale either
extinguished the bank's security interest under the
SFR holding or had no legal effect because the
statutory scheme violates due process. Because the Ninth
Circuit in Bourne Valley held that the scheme was
facially unconstitutional, see Bourne Valley, 832
F.3d at 1160, the Bourne Valley opinion and
any modification of that opinion have the potential to be
dispositive of this case. Under this circumstance, the
Landis factors weigh strongly in favor of staying
this action pending final resolution of the Bourne
Valley decision. Indeed, the possible prejudice to the
parties is minimal as the only potential harm is that the
parties may wait longer for resolution of this case if it is
stayed. However, if this case is not stayed, a delay would
also result from any motions for reconsideration that may be
necessitated if the current decision in the Bourne
Valley case does not stand. Accordingly, a stay is not
likely to appreciably lengthen the life of this case.
Further, in the absence of a stay, judicial resources may be
unnecessarily expended to resolve issues which may ultimately
be decided by higher courts to which this Court is bound to
adhere. Because the Bourne Valley decision is
squarely on point, the orderly course of justice likewise
weighs in favor of a stay. Accordingly, the Court finds that
staying this action pending final resolution of Bourne
Valley would be efficient for the Court's own docket
and the fairest course for the parties. See Leyva,
593 F.2d at 863.
THEREFORE ORDERED that this case is administratively STAYED
pending exhaustion of all appeals of Bourne Valley Court
Trust v. Wells Fargo Bank, 832 F.3d 1154 (9th Cir.
2016). Once exhaustion occurs, any party may move to lift the
stay. Until that time, all proceedings in this action are
FURTHER ORDERED that all pending motions are DENIED without
prejudice with leave to refile within twenty-one days after
the stay is lifted.
FURTHER ORDERED that current occupant SFR Investments Pool 1,
LLC shall care for, preserve, and maintain the Property.
FURTHER ORDERED that, beginning on August 24, 2017, the
parties must file a joint status report updating the Court on
the status of this case every one-hundred and eighty days.
Along with the joint status report, SFR Investments Pool 1,
LLC shall submit a statement affirming that all expenses
necessary to maintain the property, including but not limited
to, timely and full payment of all homeowners association
assessments, property taxes, and property insurance premiums
due and owing or past due at any time during the effective
period of this Stay are current and up to date.
FURTHER ORDERED that this Order does not prevent the parties
from continuing to engage in settlement conference