United States District Court, D. Nevada
WELLS FARGO BANK, NA, AS TRUSTEE, ON BEHALF OF THE HOLDERS OF STRUCTURED ASSET MORTGAGE INVESTMENTS II, INC., BEAR STEARNS MORTGAGE FUNDING, TRUST 2007-AR5, MORTGAGE PASS THROUGH CERTIFICATES, SERIES 2007-AR5, Plaintiff,
SFR INVESTMENTS POOL 1, LLC, a Nevada limited liability corporation; SILVERSTONE RANCH COMMUNITY ASSOCIATION, a Nevada non-profit corporation, Defendants.
Cline Ebron, Esq. Nevada Bar No. 10580 Jacqueline A. Gilbert,
Esq. Nevada Bar No. 10593 Karen L. Hanks, Esq. Nevada Bar No.
9578 Kim Gilbert Ebron Attorney for Defendant, SFR
Investments Pool 1, LLC
MOTION TO STAY CASE
RICHARD F. BOULWARE, II UNITED STATES DISTRICT JUDGE
Investments Pool 1, LLC (“SFR”) hereby moves to
stay this matter.
OF POINTS AND AUTHORITIES
August 12, 2016, a divided Ninth Circuit panel issued its
decision in Bourne Valley Court Tr. v. Wells Fargo Bank,
N.A., 832 F.3d 1154, 1159-60 (9th Cir. 2016), holding
that Nevada Revised Statutes Chapter 116's Association
non-judicial foreclosure scheme, as it existed before
amendment in 2015, violates the Due Process Clause and is
facially unconstitutional. The Bourne Valley
majority opinion does not address that the Supreme Court of
Nevada construed NRS 116 to require notice to the mortgage
lenders. See SFR Investments Pool 1, LLC v. U.S. Bank,
NA., 334 P.3d 408, 417-18 (Nev. 2014) (en banc). Even
the dissenting justices in SFR agreed this was the
proper interpretation of Nevada's statutory scheme.
See id. at 422. Further, the Supreme Court of Nevada
has already concluded that NRS 116 does not offend due
process. Id. at 418. The Court of Appeals issued its
mandate in Bourne Valley on December 14, 2016,
vacating and remanding the judgment to the United States
District Court, District of Nevada.
April 26, 2017, this Court certified a question regarding NRS
116's notice requirement to the Nevada Supreme Court.
See The Bank of New York Mellon v. Star Hill Homeowners
Association, et al., Case No. 2:16-cv-02561-RFB-PAL,
[ECF No. 41]. And this question has been accepted by the
Nevada Supreme Court. See SFR Investments Pool 1, LLC v.
The Bank of New York Mellon, Nevada Supreme Court Case
No. 72931 (Jun. 13, 2017)(Order Accepting Certified
Question). Briefing is currently in process. Given the
potential impact the ultimate outcome this certified question
may have on the issues in this litigation, a temporary stay
of litigation in this matter is appropriate.
a dispute over the effect of a non-judicial foreclosure sale
of a home conducted by Silverstone Ranch Community
Association (“Association”). Specifically, the
home's prior owner failed to pay Association assessments,
the Bank failed to preserve its deed of trust by not paying
the Association lien before the foreclosure sale, and a bona
fide purchaser, SFR, bought the property. Subsequently,
despite the fact Bourne Valley has run its course on
appeal, good cause exists to continue the stay. On April 26,
2017, a Certified Question was presented by your Honor to the
Nevada Supreme Court regarding NRS 116's notice
requirement. See The Bank of New York Mellon v. Star Hill
Homeowners Association, et al., Case No.
2:16-cv-02561-RFB-PAL, [ECF No. 41]. Specifically, the
Certified Question presented is as follows: “Whether
NRS § 116.31168(1)'s incorporation of NRS §
107.090 requires homeowner's association to provide
notices of default to banks even when a bank does not request
notice?” On June 13, 2017, the Nevada Supreme Court
issued an Order accepting the Certified Question. See SFR
v. The Bank of New York Mellon, Nevada Supreme Court
Case No. 72931 (Jun. 13, 2017)(Order Accepting Certified
Question). Briefing in that matter is currently in progress.
affirmative answer to this Certified Question will mean that
NRS 116.31168 fully incorporates NRS 107.090, and mandates
notice to junior lienholders of record such as the Bank.
This, in turn, will establish that NRS Chapter 116's
notice provisions are constitutional based on a ruling from
Nevada's highest court, and will wholly supersede
Bourne Valley. As noted in the order certifying,
“‘It is solely within the province of the state
courts to authoritatively construe state legislation.”
Star Hill Homeowners Association, No. 2:16-cv-02561
[ECF 41] at p.6. (quoting Cal. Teachers Ass'n v.
State Bd. of Educ., 271 F.3d 1141, 1146 (9th Cir.
2001)). “[I]f the state court disapproves of the
interpretation given by the federal court, then the federal
courts must follow the interpretation by the state court.
Id., citing Huddleston v. Dwyer, 322 U.S.
232, 236 (1944); Owen v. United States, 713 F.2d
1461, 1464 (9th Cir.1983) (a federal court's construction
of state law is “only binding in the absence of any
subsequent indication from the [state appellate] courts that
our interpretation was incorrect.”)).” “[A]
state supreme court can overrule [the 9th Circuit] on a
question of state law, ” Henderson v. Pfizer,
Inc., 285 F. App'x 370, 373 (9th Cir. 2008)
(emphasis added), and “we are required to follow
intervening decisions of the [Nevada] Supreme Court that
interpret state law in a way that contradicts our earlier
interpretation of that law.” Bonilla v. Adams,
423 F. App'x 738, 740 (9th Cir. 2011).
stay is not entered into in this case, the parties will be
required to brief, and the Court will have to determine
issues, relating to the impact of the Bourne Valley
decision. However, in the likely event the Nevada Supreme
Court interpretation of NRS 116 is different and supersedes
the Ninth Circuit interpretation of NRS 116.31168, this
briefing will have to be completely redone and would
essentially require a restart in handling these issues. A
stay of this case would conserve not only the resources of
the party but of this Court.
Staying the Litigation at This Juncture is Beneficial to
All Parties Involved and Would Promote the Efficient use of
Court has previously found, relying on U.S. Supreme Court
precedent, 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 American Co.,
299 U.S. 248, 254-55 (1936). When determining whether a stay
is appropriate pending the resolution of another case, the
district court must consider: (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, (3) and 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. Dependable Highway
Exp., Inc. v. ...