The Bank of New York Mellon v. Stone Canyon West Homeowners Association
2:16-cv-01904
D. Nev.Apr 20, 2017Background
- Plaintiff Bank of New York Mellon brought this action concerning a homeowners association (HOA) nonjudicial foreclosure under Nev. Rev. Stat. § 116.3116 that affected a first deed of trust.
- The central legal dispute is whether an HOA’s nonjudicial foreclosure of a superpriority lien extinguishes a first deed of trust (per SFR) or is void because the statutory scheme violates mortgagees’ due process rights (per Bourne Valley).
- The Ninth Circuit in Bourne Valley held Chapter 116’s nonjudicial foreclosure scheme was facially unconstitutional (pre-amendment), a decision potentially dispositive of this and many similar cases.
- Given Bourne Valley’s potential precedential effect, the district court stayed all proceedings pending final resolution (exhaustion of appeals) of Bourne Valley.
- The court denied all pending motions without prejudice (leave to refile within 21 days after the stay is lifted) and ordered SFR to maintain the subject property and file periodic joint status reports while the stay remains in effect.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an HOA nonjudicial foreclosure under NRS 116.3116 extinguishes a first deed of trust | SFR (and plaintiff) relies on Nevada Supreme Court holding that a proper HOA superpriority foreclosure extinguishes a first deed of trust | Bourne Valley argues the Chapter 116 nonjudicial scheme is facially unconstitutional and thus cannot extinguish a mortgage | Court stayed the case pending final resolution of Bourne Valley, finding Bourne Valley potentially dispositive |
| Whether to stay proceedings pending resolution of related appellate authority | Bank contended case should proceed (implicit) | Movant argued staying avoids wasted resources and inconsistent rulings while appeals in Bourne Valley proceed | Court exercised Landis discretion and granted stay, finding minimal prejudice and docket efficiency favored a stay |
| Effect of pending appellate developments on judicial economy | Plaintiff would have to litigate issues possibly resolved by higher courts | Defendant emphasized litigation would waste resources if Bourne Valley is affirmed/modified | Court found staying would simplify issues and preserve judicial resources |
| Management of property and case administration during stay | Plaintiff sought preservation measures (implicit) | Court required defendant SFR to maintain property and file periodic status reports | Court ordered preservation, periodic joint status reports every 180 days, and denied motions without prejudice |
Key Cases Cited
- SFR Invs. Pool 1, LLC v. U.S. Bank, 334 P.3d 408 (Nev. 2014) (held HOA superpriority lien foreclosure can extinguish a first deed of trust)
- Bourne Valley Court Trust v. Wells Fargo Bank, NA, 832 F.3d 1154 (9th Cir. 2016) (held Nevada’s Chapter 116 nonjudicial foreclosure scheme facially violated mortgagees’ due process rights)
- Landis v. N. Am. Co., 299 U.S. 248 (1936) (district courts have inherent power to stay proceedings for orderly docket management)
- Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857 (9th Cir. 1979) (approving stays pending resolution of independent proceedings that bear on the case)
- CMAX, Inc. v. Hall, 300 F.2d 265 (9th Cir. 1962) (factors to consider when deciding whether to grant a stay)
- Dependable Highway Exp., Inc. v. Navigators Ins. Co., 498 F.3d 1059 (9th Cir. 2007) (district court’s decision to grant or deny a Landis stay reviewed for abuse of discretion)