Bayview Loan Servicing, LLC v. Shadow Springs Community Association
2:16-cv-02677
D. Nev.Feb 28, 2017Background
- This case challenges a nonjudicial HOA foreclosure sale under Nevada's NRS Chapter 116; plaintiffs are Bayview Loan Servicing and FHLM Corporation (Freddie Mac).
- Plaintiffs argue the HOA sale violated lenders’ constitutional due process rights (invoking Bourne Valley).
- There is a post-crash split between Nevada state-court holdings (SFR line) that uphold HOA nonjudicial superpriority foreclosures and a Ninth Circuit panel (Bourne Valley) that held Chapter 116 facially violates lenders’ due process rights pre-2015 amendments.
- The Nevada Supreme Court recently reaffirmed SFR principles in Saticoy Bay; both Bourne Valley and Saticoy Bay parties signaled intent to seek certiorari in the U.S. Supreme Court.
- The district court sua sponte stayed the case pending the Supreme Court’s disposition of certiorari petitions in Bourne Valley and Saticoy Bay, finding a stay would simplify issues, conserve resources, and cause minimal prejudice.
- The court denied the pending motion to dismiss without prejudice, allowing refiling within 20 days after any stay is lifted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HOA nonjudicial foreclosure under NRS Chapter 116 violated lenders’ due process rights | Bourne Valley-style claim: Chapter 116 facially violates due process and therefore the sale had no legal effect | SFR/Saticoy Bay position: Chapter 116 does not implicate federal or state due process and the foreclosure can extinguish the mortgage | Court stayed proceedings; did not resolve the constitutional issue pending possible U.S. Supreme Court review |
| Whether the case should proceed now or be stayed pending Supreme Court action in related cases | Plaintiffs argued constitutional question may be dispositive but supported a stay to avoid wasted work | Defendants would be subject to delay, but acknowledged potential for conflicting precedents | Court found stay appropriate under Landis factors to promote orderly course of justice and conserve resources |
| Whether parties will suffer undue hardship from a stay | Plaintiffs would avoid wasted briefing and fees if Supreme Court acts; hardship from delay was minimal | Defendants asserted delay but court found any prejudice minimal and comparable to rebriefing after certiorari | Court held hardship and damage from stay minimal; stay length tied to cert petition timeline |
| Disposition of pending motion to dismiss | Plaintiffs’ claims contested; plaintiff’s briefing may be affected by future precedent | Defendants sought dismissal now | Court denied motion to dismiss without prejudice and allowed refiling within 20 days of lifting the stay |
Key Cases Cited
- SFR Inv. Pool 1 v. U.S. Bank, 334 P.3d 408 (Nev. 2014) (Nevada Supreme Court holding that HOA nonjudicial foreclosure can extinguish a first deed of trust)
- Landis v. North Am. Co., 299 U.S. 248 (1936) (district courts have inherent power to stay proceedings to control their dockets)
- Lockyer v. Mirant Corp., 398 F.3d 1098 (9th Cir. 2005) (factors for evaluating a stay pending resolution of another matter)
- Dependable Highway Exp., Inc. v. Navigators Ins. Co., 498 F.3d 1059 (9th Cir. 2007) (district court’s power to stay to promote efficient use of judicial resources)
- Freedom Mortg. Corp. v. Las Vegas Dev. Grp., LLC, 106 F. Supp. 3d 1174 (D. Nev. 2015) (discussing post-crash disputes over HOA foreclosure effects)