Deutsche Bank National Trust Company v. REO Investments Advisors V, LLC
2:17-cv-00694
D. Nev.Nov 21, 2017Background
- Deutsche Bank filed a federal quiet-title and wrongful-foreclosure suit challenging a 2014 nonjudicial foreclosure of 2776 Jupiter Creek Street, Las Vegas, seeking a declaration that its deed of trust survived the sale.
- The same property was the subject of an earlier-filed Nevada state-court quiet-title action that Deutsche Bank initiated nearly two years before the federal suit.
- REO Investment Advisors V, LLC (purchaser at the foreclosure sale) moved to stay the federal case pending resolution of the earlier state action, asserting the prior-exclusive-jurisdiction doctrine.
- The state case remained active: court minutes and the state docket showed it was never formally closed, REO had answered and counterclaimed, and a motion hearing was scheduled.
- The court found that, because the state court first asserted jurisdiction over the res, federal exercise of in rem/quasi in rem jurisdiction is precluded under Ninth Circuit and Nevada precedent, but the parties had not fully briefed dismissal.
- The district court therefore granted a stay (a Landis stay), denied pending motions to dismiss without prejudice, and allowed parties to move later to lift or dismiss based on the Chapman line of cases or Colorado River doctrine.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal court may proceed when a prior state action already exercises jurisdiction over the same res | Deutsche Bank: state action was dismissed the day after federal filing, so state jurisdiction terminated and federal court has exclusive in rem jurisdiction | REO: state action remains pending and therefore precludes federal in rem/quasi in rem jurisdiction under the prior-exclusive-jurisdiction doctrine | Court: State case was never closed and remains pending; prior-exclusive-jurisdiction likely precludes federal jurisdiction, so stay warranted while state proceedings resolve |
| Whether the proper remedy is dismissal or stay given the state action | Deutsche Bank: because state case allegedly terminated, dismissal unnecessary | REO: dismissal appropriate if state action proceeds; requested stay subject to dismissal | Court: Dismissal may be proper but parties hadn’t briefed it fully; court granted a Landis stay and denied dismissal motions without prejudice |
| Whether a Landis stay is appropriate pending state-court resolution | Deutsche Bank: urged federal court to proceed | REO: requested stay to avoid conflicting rulings and preserve judicial resources | Court: Weighed Landis factors (potential harm, hardship, orderly course of justice) and found stay appropriate given developments in state case and unresolved jurisdictional questions |
| Relief for pending motions to dismiss | Deutsche Bank: sought adjudication in federal court | REO: sought stay before motions decided | Court: Denied pending motions to dismiss without prejudice; allowed refiling within 20 days after stay lifted |
Key Cases Cited
- Chapman v. Deutsche Bank Nat’l Trust Co., 651 F.3d 1039 (9th Cir.) (prior-exclusive-jurisdiction doctrine explained)
- Chapman v. Deutsche Bank Nat’l Trust Co., [citation="531 F. App'x 832"] (9th Cir.) (application of doctrine to quiet-title action when state action is pending)
- SFR Investments Pool 1, LLC v. U.S. Bank, 334 P.3d 408 (Nev. 2014) (quiet-title challenges to nonjudicial foreclosures are in rem or quasi in rem)
- Kline v. Burke Constr. Co., 260 U.S. 226 (U.S. 1922) (principle that one court exercising jurisdiction over a res precludes another)
- Landis v. North American Co., 299 U.S. 248 (U.S. 1936) (district court's power to stay proceedings to control its docket)