Ditech Financial LLC v. T-Shack, Inc.
2:16-cv-02812
D. Nev.Apr 19, 2017Background
- Ditech Financial sued to challenge an HOA nonjudicial foreclosure sale under Nevada’s NRS Chapter 116, arguing the sale violated its due-process rights and extinguished its deed of trust.
- The dispute arises amid conflicting authority: Nevada Supreme Court decisions (notably SFR) uphold HOA sales, while a Ninth Circuit panel (Bourne Valley) found Chapter 116 facially unconstitutional pre-2015 amendments.
- The Supreme Court had pending certiorari petitions in Bourne Valley and Saticoy Bay that could resolve the circuit/state split on Chapter 116’s constitutionality.
- Ditech moved for summary judgment relying on Bourne Valley; competing motions were pending (summary judgment and a motion to stay discovery).
- The district court exercised its inherent Landis power to stay the case pending resolution of the Supreme Court petitions, denied the pending summary-judgment motion without prejudice, and denied the discovery-stay motion as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HOA nonjudicial foreclosure under Chapter 116 violates lenders’ due-process rights | Ditech: Bourne Valley controls; Chapter 116 is facially unconstitutional and the sale had no effect | T-Shack: SFR and Nevada precedent uphold HOA sales and foreclosures do not implicate federal due process | Court avoided deciding merits pending potential Supreme Court guidance — stay issued so claims not resolved now |
| Whether to decide Ditech's summary-judgment motion now | Ditech: asks resolution based on existing Ninth Circuit authority (Bourne Valley) | T-Shack: supports waiting for higher-court resolution and Nevada precedent | Court denied the summary-judgment motion without prejudice and stayed the case pending Supreme Court action |
| Whether to stay discovery pending Supreme Court resolution | Ditech: sought a stay of discovery pending certiorari outcomes | T-Shack: opposed further delay (position not elaborated) | Court found stay of case appropriate but denied the separate discovery-stay motion as moot (case-level stay covers discovery) |
| Appropriateness and duration of a Landis stay | Ditech: benefit in avoiding wasted resources if Supreme Court grants certiorari | T-Shack: potential prejudice from delay (not shown to be substantial) | Court found minimal harm from delay, likely short duration tied to certiorari timelines, and granted the stay |
Key Cases Cited
- SFR Inv. Pool 1 v. U.S. Bank, 334 P.3d 408 (Nev. 2014) (Nevada Supreme Court holding HOA nonjudicial foreclosure can extinguish a first deed of trust under Chapter 116)
- Landis v. North American Co., 299 U.S. 248 (1936) (district courts have inherent power to stay proceedings to control their dockets)
- Dependable Highway Exp., Inc. v. Navigators Ins. Co., 498 F.3d 1059 (9th Cir. 2007) (discussing district-court authority to stay and manage litigation)
- Lockyer v. Mirant Corp., 398 F.3d 1098 (9th Cir. 2005) (articulating factors for evaluating a Landis stay)