Bank of New York Mellon v. Granite Crest Homeowners Association
2:17-cv-00365
D. Nev.Apr 21, 2017Background
- The Bank of New York Mellon (plaintiff) challenges an HOA nonjudicial foreclosure sale under Nevada's NRS Chapter 116, arguing it violated the bank's due-process rights and thus did not extinguish its first trust deed.
- Granite Crest Homeowners Association (defendant) moved to dismiss the complaint.
- Nevada Supreme Court decisions (notably SFR Investments) have held HOA nonjudicial foreclosures can extinguish a mortgage; a later Nevada decision (Saticoy Bay) reaffirmed that HOA nonjudicial foreclosure does not implicate federal or state due-process clauses.
- A Ninth Circuit panel in Bourne Valley reached the opposite conclusion, holding Chapter 116’s pre-2015 foreclosure scheme facially violated mortgage lenders’ due-process rights, creating a circuit/state split potentially warranting Supreme Court review.
- The district court stayed the case pending resolution of certiorari petitions in Bourne Valley and Saticoy Bay to avoid wasteful, duplicative briefing and to promote efficient, orderly adjudication.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the HOA nonjudicial foreclosure violated the bank's due-process rights and thus did not extinguish its mortgage | Bank: the Chapter 116 scheme denied mortgage lenders due process, so the sale had no legal effect | HOA: under Nevada law, nonjudicial HOA foreclosure extinguishes the mortgage and does not implicate due process | Stayed: court did not decide merits; case stayed pending Supreme Court action on related certiorari petitions |
| Whether to dismiss the complaint now or defer pending higher-court guidance | Bank: merits should be resolved in light of controlling precedent and constitutional protections | HOA: move to dismiss based on existing Nevada precedent and statutory framework | Denied without prejudice: motion to dismiss denied without prejudice and may be refiled within 20 days after stay lifted |
| Whether a district court should stay proceedings pending potential Supreme Court review of conflicting authority | Bank: staying avoids wasted resources if Supreme Court resolves the split | HOA: not explicitly opposed in opinion; focus on resolving case now | Granted: court exercised Landis authority to stay to promote judicial economy and orderly proceedings |
| Appropriate length and reasonableness of a stay tied to certiorari timeline | Bank: anticipated Supreme Court action will be relatively prompt | HOA: no competing prejudice shown that outweighs judicial economy | Stay limited: stay tied to disposition of cert petitions and expected to be brief; parties may move to lift after resolution |
Key Cases Cited
- SFR Investments Pool 1, LLC v. U.S. Bank, 334 P.3d 408 (Nev. 2014) (Nevada Supreme Court held HOA nonjudicial foreclosure can extinguish a first deed of trust)
- Landis v. North American Co., 299 U.S. 248 (1936) (district courts have inherent power to stay proceedings to manage their dockets)
- Lockyer v. Mirant Corp., 398 F.3d 1098 (9th Cir. 2005) (articulated Landis factors for stays pending resolution of related proceedings)
- Dependable Highway Exp., Inc. v. Navigators Ins. Co., 498 F.3d 1059 (9th Cir. 2007) (discussed district court’s authority to stay cases for efficient judicial administration)
- Freedom Mortgage Corp. v. Las Vegas Dev. Group, LLC, 106 F. Supp. 3d 1174 (D. Nev. 2015) (district-court discussion of conflicts arising from HOA foreclosure jurisprudence)