The Bank of New York Mellon v. Manchester at Huntington Homeowners Association
2:16-cv-02175-JAD-NJK
D. Nev.Feb 27, 2017Background
- The Bank of New York Mellon (plaintiff) challenges an HOA nonjudicial foreclosure sale under Nevada’s NRS Chapter 116 as violating its federal and state due-process rights and seeks relief from the sale’s effect on its first trust deed.
- There is a Circuit–state conflict: the Nevada Supreme Court in SFR Investments held HOA nonjudicial sales can extinguish a first deed of trust, while a Ninth Circuit panel in Bourne Valley found Chapter 116’s nonjudicial scheme facially violated lenders’ due-process rights (pre-2015 amendments).
- The Nevada Supreme Court reaffirmed SFR principles in Saticoy Bay v. Wells Fargo and held due process was not implicated by HOA nonjudicial superpriority foreclosures.
- Because petitions for certiorari in Bourne Valley and Saticoy Bay were pending before the U.S. Supreme Court, the district court stayed proceedings sua sponte to avoid wasted resources and duplicative or inconsistent briefing.
- The court applied Landis factors (control of docket, fairness, and judicial efficiency), finding a stay would simplify issues, avoid hardship (duplicative fees/briefing), and impose only minimal delay; it expected the stay to be short and tied to the Supreme Court’s certiorari disposition.
- The court ordered the case stayed and denied pending motions without prejudice, permitting refiling within 20 days after any stay lift.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the HOA nonjudicial foreclosure under NRS Chapter 116 violated Bank's due-process rights and thus had no legal effect on its deed of trust | Bank: Chapter 116’s nonjudicial sale deprived lender of due process and cannot extinguish its first deed of trust | HOA/defendants: Under Nevada precedent (SFR/Saticoy Bay), HOA nonjudicial superpriority foreclosures can extinguish the deed and do not implicate due process | Court did not decide merits; stayed case pending Supreme Court action that could be dispositive |
| Whether to stay proceedings pending U.S. Supreme Court resolution of related certiorari petitions | Bank: may prefer prompt decision but acknowledged potential for wasted briefing if higher court grants review | Defendants: favor stay to await controlling guidance and avoid rebriefing | Court: Granted Landis stay — stay appropriate to promote orderly course of justice and conserve resources |
| Effect on pending motions and case management | Bank: had motions (including Bourne Valley–based motion) on file | Defendants: would be affected by duplicative filing and rebriefing if certiorari granted | Court: Denied pending motions without prejudice; allowed refiling within 20 days of lifting stay |
Key Cases Cited
- Freedom Mortgage Corp. v. Las Vegas Dev. Grp., 106 F. Supp. 3d 1174 (D. Nev. 2015) (district discussion of Chapter 116 conflicts and HOAs’ nonjudicial sales)
- SFR Inv. Pool 1 v. U.S. Bank, 334 P.3d 408 (Nev. 2014) (Nevada Supreme Court recognized HOA sale can extinguish a first deed of trust)
- Landis v. North American Co., 299 U.S. 248 (1936) (district courts have inherent power to stay cases to manage docket)
- Dependable Highway Exp., Inc. v. Navigators Ins. Co., 498 F.3d 1059 (9th Cir. 2007) (discussing district court authority to stay litigation)
- Lockyer v. Mirant Corp., 398 F.3d 1098 (9th Cir. 2005) (Landis stay factors: damage from stay, hardship, and orderly course of justice)