United States District Court, D. Nevada
THE BANK OF NEW YORK AS TRUSTEE FOR THE CERTIFICATEHOLDERS CWALT, INC. ALTERNATIVE LOAN TRUST 2006-OA2 MORTGAGE PASS THROUGH CERTIFICATE, SERIES 2006-OA2 Plaintiff,
RONALD-GARCIA SANTOS, aka Ronald G. Santos, an individual; PAVAROTTI TRUST #8197, NV WEST SERVICING, LLC, as Trustee, DOES 1-10; and ROE CORPORATIONS 1-10, 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 Pavarotti Trust #8197, NV West Servicing,
LLC's (“Pavarotti”) Motion to Stay. (ECF No.
43.) Plaintiff Bank of New York (“BONY”) has
opposed (ECF No. 46), and Pavarotti has replied (ECF No. 47).
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. 43 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). Pavarotti
contends that the HOA provided such notice in this case.
(See ECF No. 49 at 2-3; see also ECF No. 37
at 2 (denying allegations that the HOA did not provide such
first opposes Pavarotti's motion on the ground that BONY
will be prejudiced if the case is stayed. (ECF No. 46 at 4.)
BONY explains that it has been prohibited from foreclosing
under the Deed of Trust. (Id.) However, any damage
to Plaintiff from a stay will be outweighed by the fees that
all parties will surely incur from continued litigation- a
decision in the proceedings before the Nevada Supreme Court
could moot a decision by this Court. Until there is finality
on the issue of whether NRS § 116.31168 incorporates NRS
§ 107.090, a stay will benefit the parties and conserve
next opposes Pavarotti's motion on the ground that
Pavarotti will not incur any hardship in the absence of a
stay. (Id. at 5.) However, all parties would suffer
hardship in the form of continued litigation if this Court
issued a decision that was subsequently mooted by the Nevada
BONY opposed Pavarotti's motion on the ground that the
Court can resolve this case based on Bourne Valley.
(Id. at 5-6.) The Nevada Supreme Court's
decision could render Bourne Valley inapplicable in
this case, however, as explained supra.
therefore ordered that Pavarotti's Motion to Stay (ECF
No. 43) 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 (5) days from
such resolution. All pending motions (ECF Nos. 36, 41) are
denied without prejudice and may ...