Deutsche Bank National Trust Company v. Eddie Haddad
2:17-cv-00242
| D. Nev. | May 17, 2017Background
- This case challenges an HOA nonjudicial foreclosure sale under Nevada's NRS Chapter 116 that allegedly extinguished Deutsche Bank's first trust deed.
- Deutsche Bank argues the Chapter 116 foreclosure scheme violated its federal due-process rights, relying on the Ninth Circuit decision in Bourne Valley.
- Defendant Eddie Haddad moved to dismiss, arguing Nevada Supreme Court precedent (Saticoy Bay / SFR line) controls and Bourne Valley is not binding.
- The Ninth Circuit and Nevada Supreme Court have reached conflicting results on whether HOA nonjudicial foreclosures implicate mortgage lenders’ due-process rights; a certiorari petition in Bourne Valley is pending before the U.S. Supreme Court.
- The district court exercised its inherent authority to stay the case pending the Supreme Court’s disposition of the Bourne Valley certiorari petition to avoid duplicative briefing and conserve judicial and party resources.
- The court denied the pending motion to dismiss without prejudice and ordered that any renewal be filed within 20 days after the stay is lifted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an HOA nonjudicial foreclosure under NRS Chapter 116 extinguished the bank's deed of trust | Chapter 116 foreclosures are unconstitutional under due process (following Bourne Valley) | Saticoy Bay/SFR control; Chapter 116 foreclosures valid and do not implicate due process | Court stayed the case; did not decide merits; motion to dismiss denied without prejudice |
| Whether the court should resolve competing circuit/state precedent before proceeding | Proceed now relying on Ninth Circuit ruling (Bourne Valley) | Wait for state supreme court and possible U.S. Supreme Court resolution | Court stayed proceedings pending Supreme Court action on Bourne Valley |
| Appropriateness of a stay pending Supreme Court action | Plaintiffs would be harmed by delay in final relief but want merits decided | Parties and court would waste resources if litigation proceeds before certiorari decision | Stay granted as proper Landis stay; minimal harm from delay |
| Effect on pending motion to dismiss | Motion should be decided under Bourne Valley | Motion should be denied as Saticoy Bay/SFR foreclose due-process claim | Motion to dismiss denied without prejudice to refiling after stay is lifted |
Key Cases Cited
- SFR Inv. Pool 1 v. U.S. Bank, 334 P.3d 408 (Nev. 2014) (Nevada Supreme Court held HOA nonjudicial foreclosure can extinguish a first deed of trust under NRS Chapter 116)
- Landis v. North American Co., 299 U.S. 248 (1936) (district courts have inherent authority to stay proceedings to control their dockets)
- Dependable Highway Exp., Inc. v. Navigators Ins. Co., 498 F.3d 1059 (9th Cir. 2007) (discussing standards for stays and management of litigation)
- Lockyer v. Mirant Corp., 398 F.3d 1098 (9th Cir. 2005) (articulating Landis stay factors)