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JPMorgan Chase Bank, N.A. v. SFR Investment Pool1, LLC

United States District Court, D. Nevada

October 5, 2017

SFR INVESTMENT POOL1, LLC et al, Defendants.


          Kent J. Dawson United States District Judge.

         Presently before the Court is SFR Investment Pool1, LLC (“SFR”)'s Counter-Motion to Stay All Proceedings (#41). JPMorgan Chase Bank, N.A. (“Bank”), filed a response (#46) to which SFR replied (#51).

         I. Background

         On December 5, 2016, the Bank filed a complaint seeking declaratory relief and quiet title. The Bank argues that in light of the Ninth Circuit's decision in Bourne Valley and under the return doctrine, NRS Chapter 116's notice scheme should return to its 1991 version. The Bank alleges that the HOA foreclosure sale at issue did not extinguish the Bank's deed of trust because NRS 116.3116, as it existed prior to the amendments that took effect on October 1, 2015, facially violated mortgage lenders' constitutional due process rights. As such, the Bank claims that any notice they did receive was inadequate and insufficient.

         II. Analysis

         A. Certified Question

         On April 21, 2017, this Court certified the following question to the Nevada Supreme Court: “Whether NRS § 116.31168(1)'s incorporation of NRS § 107.090 requires homeowners['] associations to provide notices of default to banks even when a bank does not request notice?” Bank of New York Mellon v. Star Hill Homeowners Assoc., 2017 WL 1439671, at *5 (D. Nev. April 21, 2017). In granting certification, the Court reasoned the following: In Bourne Valley, the Ninth Circuit definitively stated the statute's “opt-in” framework is unconstitutional. Bourne Valley Court Trust v. Wells Fargo Bank, NA, 832 F.3d 1154, 1160 (2016). However, that leaves this Court with the unresolved question of what notice must be provided. The Ninth Circuit has stated “[i]t is solely within the province of the state courts to authoritatively construe state legislation.” Cal. Teachers Ass'n v. State Bd. of Educ., 271 F.3d 1141, 1146 (9th Cir. 2001). As such, state law questions of first impression like this one should be resolved by the state's highest court. See Huddleston v. Dwyer, 322 U.S. 232, 237 (1944).

         B. Stay of the Case

         SFR argues the best course of action for this Court to take in the present case is to institute a stay until the pending certified question in Bank of New York Mellon is resolved by the Nevada Supreme Court. A district court has the inherent power to stay cases to control its docket and promote the efficient use of judicial resources. Landis v. North Am. Co., 299 U.S. 248, 254-55 (1936); Dependable Highway Exp., Inc., v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 2007). When determining whether a stay is appropriate pending the resolution of another case - often called a “Landis stay” - the district court must weigh: (1) the possible damage that may result from a stay; (2) any “hardship or inequity” that a party may suffer if required to go forward; and (3) “the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law” that a stay will engender. Lockyer v. Mirant Corp., 398 F.3d 1098, 1110 (9th Cir. 2005). Weighing these considerations, the Court finds that a Landis stay is appropriate.

         1. Damage from a stay

         The only potential damage that may result from a stay is that the parties may have to wait longer for resolution of this case and any motions that they have filed or intend to file in the future. But a delay would also result from any rebriefing or supplemental briefing that may be necessitated pending the Nevada Supreme Court's answer to the certified question. It is not clear that a stay will ultimately lengthen the life of this case.

         Additionally, a stay of this case pending resolution of the certified question is expected to be reasonably short. This Court certified the question approximately five months ago, and briefing on the pending petition in Nevada's Supreme Court is nearing completion. Because the length of this stay is directly tied to the petition proceedings in that case, it is reasonably brief, and not indefinite. Thus, the Court finds only minimal possible damage that this stay may cause.

         2. Hardship and inequity

         Both parties equally face hardship or inequity if the Court resolves the claims or issues before the certified question has been resolved. Further, in the interim both parties stand to benefit from a stay, regardless of the outcome of the certified question. A stay will prevent unnecessary ...

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