United States District Court, D. Nevada
DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11, Plaintiff,
LEE FAMILY PROPERTIES, LLC; LP HOMEOWNERS ASSOCIATION AKA LAS PALMERAS HOMEOWNERS ASSOCIATION; and ALESSI & KOENIG, LLC, Defendants.
ORDER (DEF.'S MOTION TO STAY - ECF NO.
MIRANDA M. DU UNITED STATES DISTRICT JUDGE.
case arises out of a homeowner association's
(“HOA”) foreclosure and involves the notice
provisions applicable to foreclosure sales under Nevada
Revised Statutes (“NRS”) Chapter 116. Before the
Court is Defendant Lee Family Properties, LLC's
(“Lee”) Motion to Stay. (ECF No. 31.) Plaintiff
Deutsche Bank National Trust Company (“Deutsche
Bank”) has opposed (ECF No. 38), and Lee has replied
(ECF No. 41).
district court has discretionary power to stay proceedings in
its own court. Landis v. N. Am. Co., 299 U.S. 248,
254-55 (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, courts should consider “the
possible damage which may result from the granting of a stay,
the hardship or inequity which a party may suffer in being
required to go forward, and 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.” Lockyer v. Mirant
Corp., 398 F.3d 1098, 1110 (9th Cir. 2005) (quoting
Landis, 299 U.S. at 268). Courts should also
consider “the judicial resources that would be saved by
avoiding duplicative litigation.” Pate v. DePuy
Orthopaedics, Inc., No. 2:12-cv-01168-MMD-CWH, 2012 WL
3532780, at *2 (D. Nev. Aug. 14, 2012) (quoting Rivers v.
Walt Disney Co., 980 F.Supp. 1358, 1360 (C.D. Cal.
Court finds that significant judicial resources will be saved
if the Court refrains from issuing a decision in this case
until the Nevada Supreme Court determines whether NRS §
116.31168 incorporates the notice provisions of NRS §
107.090. (ECF No. 68 at 2 (citing Nev. S.Ct. Case No.
72931).) NRS §§ 116.31168 and 107.090 prescribe two
fundamentally different notice mechanisms. The first requires
lenders to affirmatively request notice of foreclosure sales
from HOAs. The second requires HOAs to notify lenders as a
matter of course, regardless of whether a request was made.
Ninth Circuit recently held the first mechanism facially
unconstitutional because it impermissibly shifts the burden
to lenders in violation of their procedural due process
rights. Bourne Valley Court Tr. v. Wells Fargo Bank,
N.A., 832 F.3d 1154, 1156 (9th Cir. 2016), cert.
denied, 137 S.Ct. 2296 (2017). NRS § 107.090 seems
to ameliorate this burden-shifting problem by requiring the
HOAs to provide notice to lenders absent any request from
lenders for notice; however, the Ninth Circuit has held that
NRS § 107.090 is not incorporated in NRS §
116.31168. Id. at 1159. If it were, the Ninth
Circuit reasoned, the opt-in notice scheme would be
question of whether NRS § 116.31168 incorporates NRS
§ 107.090 is now pending before the Nevada Supreme Court
in Case No. 72931. Moreover, that court has hinted it will
answer the question in the affirmative. See Nationstar
Mortg., LLC v. Saticoy Bay LLC Series 227 Shadow Canyon,
405 P.3d 641, 648 n.11 (Nev. 2017). If the Nevada Supreme
Court holds that NRS § 107.090 is incorporated, then a
factual question would arise in this case: did the HOA
provide notice to the lender consistent with NRS §
107.090? As the law stands currently, it is irrelevant
whether the HOA provided notice to the lender-foreclosure
sales conducted pursuant to Chapter 116 could not have
satisfied the lenders' constitutional due process rights.
See, e.g., U.S. Bank, N.A. v. Emerald Ridge
Landscape Maint. Ass'n, No. 2:15-cv-00117-MMD-PAL,
2017 WL 4386967, at *3 (D. Nev. Sept. 29, 2017). But if NRS
§ 116.31168 incorporated NRS § 107.090, then some
foreclosure sales may have satisfied constitutional due
process requirements (i.e., those in which HOAs gave lenders
notice consistent with NRS § 107.090). Notice is at
issue in this case. Deutsche Bank alleges that it did not
receive notice in its Complaint (ECF No. 1 at 6), and
Defendant LP Homeowners Association denies those allegations
in its answer (ECF No. 14 at 5).
Bank first opposes Lee's motion on the ground that
Bourne Valley controls while the decision before the
Nevada Supreme Court is pending. (ECF No. 38 at 3-6.) While
technically correct, a decision by the Nevada Supreme Court
could render Bourne Valley inapplicable in this
case, as explained supra.
Bank next opposes Lee's motion because the proposed stay
is allegedly indefinite. (Id. at 6.) Lee argues that
the stay is not indefinite as it is tied to resolution of the
certified question pending before the Nevada Supreme Court.
(ECF No. 41 at 5.) The Court agrees with Lee-the Nevada
Supreme Court's answer to the certified question will
serve as a definite endpoint to the requested stay.
also argue that the length of the stay is unreasonable
because it could take a year or more for the Nevada Supreme
Court to answer the certified question. (ECF No. 38 at 7.)
While it is difficult to predict how quickly the Nevada
Supreme Court will answer the certified question, it is not
unreasonable to stay this case because the Nevada Supreme
Court's decision could moot a decision by this Court as
explained supra. And as Lee points out, “[a]
stay would prevent unnecessary briefing and the expenditures
of time, attorney's fees, and resources that would be
wasted in the event Bourne Valley's
interpretation is deemed incorrect by the Nevada Supreme
Court.” (ECF No. 41 at 4.)
Bank next argues that Lee will not suffer any hardship or
inequity in the absence of a stay. (ECF No. 38 at 7.) The
Court disagrees-both parties will suffer hardship if the
Court issued a decision in this case that is subsequently
mooted by the Nevada Supreme Court's decision.
Deutsche Bank argues that a stay does not promote the orderly
course of justice because the Nevada Supreme Court's
decision only has the potential to dispose of one of several
claims. (ECF No. 38 at 8.) Deutsche Bank argues that the
Nevada Supreme Court's decision will not resolve their
claims for “takings, wrongful foreclosure, violation of
NRS § 116.3116, and quiet title.” (Id.)
However, if the Court were to resolve this case by applying
Bourne Valley, and the Nevada Supreme Court's
decision rendered Bourne Valley inapplicable, then
the Court's decision would be moot. Plaintiffs do not
explain how the Court could resolve this case without
applying Bourne Valley, and in fact urge the Court
to apply Bourne Valley throughout most of their
response. (Id. at 3-6.)
therefore ordered that Lee's Motion to Stay (ECF No. 31)
is granted. This action is temporarily stayed until
resolution of the certified question in Nev. S.Ct. Case No.
72931. The stay will be lifted upon such resolution. The
parties must file a status report within five days from such
resolution. All pending motions (ECF Nos. 28, 39) are denied
without prejudice and ...