Bank of America, N.A. v. Bailey, 2:14-cv-00885

Bank of America (BOA) sued for declaratory relief and quiet title to establish priority of its security interest in 4850 Impressario Court, Las Vegas.
Original borrower Peter Aguilar obtained a Countrywide loan in 2008, then refinanced with BOA in January 2010; BOA’s deed of trust was executed 1/23/2010 but not recorded until 10/21/2011.
Aguilar and defendant Samuel Bailey were principals in an entity that obtained an SBA loan from Meadows; Meadows recorded a second-position deed of trust on 7/1/2010.
Franklin later made a loan secured by a first deed recorded 12/1/2010 and assigned that deed to BOA in 2012; Bailey later acquired Meadows’ interest and recorded notices of default and sale and obtained a trustee’s deed.
Bailey asserted counterclaims (offset, unjust enrichment, slander of title, attorneys’ fees); BOA moved to bifurcate trial into (1) BOA’s equitable subrogation/quiet title and (2) Bailey’s monetary counterclaims.
The court previously denied parts of cross-motions for summary judgment and found factual dispute over whether Franklin’s expectation of subrogation was reasonable.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether to bifurcate the trial into (A) BOA’s equitable subrogation/quiet title and (B) Bailey’s offset/unjust enrichment claims	Bifurcation promotes efficiency and economy; try title/subrogation first to avoid unnecessary litigation of monetary claims if BOA prevails	Bifurcation would prejudice Bailey: BOA could foreclose after winning phase one, leaving Bailey without adequate remedies; Bailey must be allowed to assert equitable defenses and counterclaims contemporaneously	Denied. Court exercised discretion under Fed. R. Civ. P. 42(b) and ordered a single trial as the most efficient and appropriate means to resolve all disputed claims.

Hirst v. Gertzen, 676 F.2d 1252 (9th Cir. 1982) (bifurcation decisions are within the trial court’s discretion)