HSBC Bank USA, National Association as Trustee for Nomura Asset Acceptance Corporation, Mortgage Pass-Through Certificates, Series 2005-AP2 v. Thunder Properties Inc. et al, No. 3:2016cv00467 - Document 34 (D. Nev. 2018)

Court Description: ORDER granting ECF No. 33 Stipulation Staying Discovery Pending Resolution of Dispositive Motion. Signed by Magistrate Judge William G. Cobb on 1/10/2018. (Copies have been distributed pursuant to the NEF - KW)
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HSBC Bank USA, National Association as Trustee for Nomura...005-AP2 v. Thunder Properties Inc. et al Doc. 34 Case 3:16-cv-00467-RCJ-WGC Document 33 Filed 01/09/18 Page 1 of 7 1 2 3 4 5 6 7 8 9 10 John S. Delikanakis, Esq. Nevada Bar No. 5928 Nathan G. Kanute, Esq. Nevada Bar No. 12413 SNELL & WILMER L.L.P. 50 West Liberty Street, Suite 510 Reno, Nevada 89501-1961 Telephone: 775-785-5440 Facsimile: 775-785-5441 Email: jwillis@swlaw.com nkanute@swlaw.com Attorneys for Plaintiff, HSBC Bank USA, National Association as Trustee for Nomura Asset Acceptance Corporation, Mortgage Pass-Through Certificates, Series 2005-AP2 UNITED STATES DISTRICT COURT 11 DISTRICT OF NEVADA L.L.P. LAW OFFICES 50 West Liberty Street, Suite 510 Reno, Nevada 89501 775-785-5440 Snell & Wilmer 12 13 14 15 16 17 18 19 20 HSBC BANK USA, NATIONAL ASSOCIATION as Trustee for Nomura Asset Acceptance Corporation, Mortgage PassThrough Certificates, Series 2005-AP2, Plaintiff, vs. Case No. 3:16-cv-00467-RCJ-WGC STIPULATION AND ORDER STAYING DISCOVERY PENDING RESOLUTION OF DISPOSITIVE MOTION THUNDER PROPERTIES INC., a Nevada corporation; EAGLE CANYON ASSOCIATION, a Nevada non-profit corporation; RED ROCK FINANCIAL SERVICES, LLC, a Delaware limited-liability company, Defendants. 21 22 HSBC Bank USA, National Association as Trustee for Nomura Asset Acceptance 23 Corporation, Mortgage Pass-Through Certificates, Series 2005-AP2 (“HSBC”), Thunder 24 Properties Inc. (“Thunder Properties”), Eagle Canyon Association (the “HOA”), and Red Rock 25 Financial Services, LLC (“Red Rock”, collectively with HSBC, Thunder Properties, and the 26 HOA, the “Parties”) hereby stipulate and agree and jointly move this Court to stay discovery 27 pursuant to Rule 26 of the Federal Rules of Civil Procedure. In support of their request for a stay 28 of discovery, the Parties show as follows: 4842-3124-6936 Dockets.Justia.com Case 3:16-cv-00467-RCJ-WGC Document 33 Filed 01/09/18 Page 2 of 7 1 MEMORANDUM OF POINTS AND AUTHORITIES 2 INTRODUCTION 3 This Court should stay discovery in this matter pending resolution of HSBC’s Motion for 4 Summary Judgment (the “MSJ”) [ECF No. 31] because it raises potentially dispositive legal 5 questions regarding the constitutionality of NRS § 116.3116 et seq. (the “Statute”), which the 6 Ninth Circuit has previously determined is facially unconstitutional. See Bourne Valley Court 7 Trust v. Wells Fargo Bank, NA, 832 F.3d 1154 (9th Cir. 2016). Because this case might be 8 disposed of pursuant to the pending motion, discovery is not required at this point in time— 9 instead, any discovery would be burdensome, inefficient, and inequitable at this stage. Therefore, 10 this Court should stay discovery until after a ruling on the MSJ. 11 BACKGROUND L.L.P. LAW OFFICES 50 West Liberty Street, Suite 510 Reno, Nevada 89501 775-785-5440 Snell & Wilmer 12 13 14 15 16 17 On August 5, 2016, HSBC filed its complaint in this Court against Thunder Properties, the HOA, and Red Rock seeking, among other things, declaratory relief under the Takings and Due Process Clauses of the U.S. Constitution and a determination that HSBC’s security interest remained on the real property commonly known as 840 Alena Way, Sparks, Nevada (the “Property”) despite the foreclosure sale conducted by the HOA. Thunder Properties is the record purchaser of the Property at the HOA foreclosure sale. 18 19 20 Red Rock filed its Answer on November 14, 2016 [ECF No. 12]. Thunder Properties filed its Answer on November 15, 2016 [ECF No. 14]. The HOA filed its Answer on February 22, 2017 [ECF No. 27]. HSBC filed its MSJ on December 15, 2017 [ECF No. 31]. 21 22 23 24 25 26 27 LEGAL ARGUMENT I. Standard of Review Governing Motions to Stay Discovery District courts have “wide discretion in controlling discovery.” See Little v. City of Seattle, 863 F.2d 681, 685 (9th Cir. 1988); see also Tradebay, LLC v. eBay, Inc., 278 F.R.D. 597, 601 (D. Nev. 2011) (“The district court has wide discretion in controlling discovery, and its rulings will not be overturned in the absence of a clear abuse of discretion.”). “In evaluating the propriety of an order staying or limiting discovery while a dispositive motion is pending,” courts “consider[] 28 4842-3124-6936 -2- Case 3:16-cv-00467-RCJ-WGC Document 33 Filed 01/09/18 Page 3 of 7 1 the goal of Rule 1 of the Federal Rules of Civil Procedure [which] directs that the Rules shall ‘be 2 construed and administered to secure the just, speedy, and inexpensive determination of every 3 action.’” Tradebay, 278 F.R.D. at 602. requires to protect a party or person from annoyance, embarrassment, oppression, or undue 6 burden or expense.’” Id. at 601 (quoting Wagh v. Metris Direct, Inc., 363 F.3d 821,829 (9th Cir. 7 2003)). Further, a stay of discovery may be appropriate to “further[] the goal of efficiency for the 8 court and the litigants.” Id. “[W]hen there are no factual issues . . . and the issue[s] before the 9 Court are purely questions of law that are potentially dispositive,” this Court has approved stays 10 of discovery. See id. at 602. In deciding whether to stay discovery, this Court considers (1) 11 whether the pending motion is “potentially dispositive of the entire case or at least dispositive of 12 L.L.P. LAW OFFICES 50 West Liberty Street, Suite 510 Reno, Nevada 89501 775-785-5440 Indeed, courts may limit discovery “upon a showing of good cause or where ‘justice 5 Snell & Wilmer 4 the issue on which discovery is sought” and (2) whether the “pending potentially dispositive 13 motion can be decided without additional discovery.” Id. 14 This two part test requires the Court to take a “‘preliminary peek’ at the merits of the 15 potentially dispositive motion to assess whether a stay is warranted.” Id. The “preliminary peek 16 . . . is not intended to prejudge [the potentially dispositive motion’s] outcome”; rather, the 17 “[C]ourt’s role is to evaluate the propriety of an order staying or limiting discovery with the goal 18 of accomplishing the objectives of Rule 1.” Id. at 603. Thus, for example, this Court has stayed 19 discovery where it was convinced that no claim for relief could be stated. See U.S. ex rel. Howard 20 v. Shoshone Paiute Tribes, Case No. 2:10-cv-01890, 2012 WL 2327676, at *4 (D. Nev. June 19, 21 2012) (staying discovery pending resolution of a motion to dismiss on sovereign immunity 22 grounds); Pettit v. Pulte Mortg., LLC, Case No. 2:11-cv-00149, 2011 WL 5546422, at *5 (D. 23 Nev. Nov. 14, 2011). 24 II. A Stay Is Appropriate Because the MSJ Could Resolve the Litigation Entirely.1 25 Under the above standard, a stay of discovery is appropriate here because, if granted, 26 HSBC’s MSJ will dispose of all claims related to HSBC’s challenge of the HOA’s foreclosure 27 28 1 Thunder Properties, Red Rock, and the HOA intend to oppose the MSJ. All parties reserve their arguments against the pending motions. 4842-3124-6936 -3- Case 3:16-cv-00467-RCJ-WGC Document 33 Filed 01/09/18 Page 4 of 7 1 sale. Thunder Properties contends that HSBC’s interest in the Property was extinguished by the 2 foreclosure of the HOA lien and HSBC’s deed of trust was rendered null, void and unenforceable. 3 Thunder Properties also contends that, by virtue of its purchase of the Property at the HOA’s 4 foreclosure sale, it became the sole owner of all right, title and interest in the Property free and 5 clear of any encumbrances of HSBC. In contrast, HSBC argues, among other things, that the 6 Statute violates the Due Process Clause and Takings Clauses of the U. S. Constitution. If HSBC 7 prevails on either issue, then the Court may find that the HOA foreclosure sale did not extinguish 8 the deed of trust, and HSBC will prevail on its claim for declaratory relief. Since the issues 9 surrounding the HOA foreclosure sale would be nearly the only issues on which discovery would 10 be necessary, such a ruling would obviate the need for any discovery. L.L.P. LAW OFFICES 50 West Liberty Street, Suite 510 Reno, Nevada 89501 775-785-5440 As set out in the MSJ, HSBC alleges that the Ninth Circuit has already determined that the 12 Snell & Wilmer 11 Statute is unconstitutional. See Bourne Valley, 832 F.3d 1154. Therefore, under the first prong of 13 the stay test, HSBC asserts that the fact that the Ninth Circuit has already ruled on this issue in 14 favor of HSBC’s position weighs in favor of granting a stay of discovery to ensure the just, 15 speedy, and inexpensive determination of this matter. See U.S. ex rel. Howard, 2012 WL 16 2327676, at *4; Pettit, 2011 WL 5546422, at *5. With respect to this issue, Thunder Properties 17 does not necessarily agree that discovery will not ultimately be necessary. Specifically, Thunder 18 Properties asserts that if HSBC received actual notice of the foreclosure proceedings, its right to 19 due process could not have been violated even if Bourne Valley is applied. While prima facie 20 evidence may exist regarding the notice had by HSBC by virtue of the recitals of the HOA 21 Foreclosure Deed, discovery may be necessary regarding this issue. With that said, Thunder 22 Properties recognizes, and HSBC believes, that the Court may hold that actual notice is not 23 relevant. While Thunder Properties believes that such a holding would be in error, the Parties do 24 agree, though, that the Court’s decision on the MSJ will almost certainly provide guidance 25 regarding the scope of discovery required. Thus, without waiving any arguments that will be 26 made in response to HSBC’s MSJ, Thunder Properties is agreeable to a stay of discovery pending 27 a decision on the MSJ. 28 Moreover, the MSJ will satisfy the second prong if the Court determines that actual notice 4842-3124-6936 -4- Case 3:16-cv-00467-RCJ-WGC Document 33 Filed 01/09/18 Page 5 of 7 1 is not relevant to the Bourne Valley analysis. As discussed above, Thunder Properties believes 2 that the evidence disclosed to date indicates that HSBC received actual notice of the foreclosure 3 proceedings and that its due process rights were thus not violated. HSBC believes that actual 4 notice is irrelevant to the due process question under Bourne Valley since the Statute is facially 5 unconstitutional. To the extent that the Court agrees with HSBC’s position, discovery on this 6 issue will not be required. The Court’s decision on the MSJ will likely provide at the very least 7 guidance regarding the scope of discovery required. discovery, the MSJ presents potentially dispositive legal questions that could resolve the dispute 10 between HSBC, Thunder Properties, Red Rock, and the HOA without discovery. Therefore, it is 11 “more just to delay or limit discovery and other proceedings to accomplish the inexpensive 12 L.L.P. LAW OFFICES 50 West Liberty Street, Suite 510 Reno, Nevada 89501 775-785-5440 As in Tradebay, U.S. ex rel Howard, and Pettit, where the Court granted stays of 9 Snell & Wilmer 8 determination of th[is] case.” See U.S. ex rel Howard, 2012 WL 2327676, at *4. CONCLUSION 13 14 15 16 17 18 19 20 21 22 23 24 Based on the foregoing, the Parties respectfully request that the Court stay discovery pending resolution of the MSJ. Dated: January 9, 2018 Dated: January 8, 2018 SNELL & WILMER L.L.P. LIPSON, NEILSON, COLE, SELTZER & GARIN, P.C. By: /s/ Nathan G. Kanute John S. Delikanakis (NV Bar No. 5928) Nathan G. Kanute (NV Bar No. 12413) 50 West Liberty Street, Suite 510 Reno, Nevada 89501-1961 Attorneys for Plaintiff, HSBC Bank USA, National Association as Trustee for Nomura Asset Acceptance Corporation, Mortgage Pass-Through Certificates, Series 2005-AP2 By: /s/ Megan H. Hummel (with permission) Kaleb D. Anderson (NV Bar No. 7582) Megan H. Hummel (NV Bar No. 12404) 9900 Covington Cross Drive, Suite 120 Las Vegas, NV 89144 Attorneys for Eagle Canyon Association 25 26 27 28 4842-3124-6936 -5- Case 3:16-cv-00467-RCJ-WGC Document 33 Filed 01/09/18 Page 6 of 7 1 Dated: January 8, 2018 Dated: January 8, 2018 2 KOCH & SCOW, LLC ROGER P. CROTEAU & ASSOCIATES, LTD. 3 4 5 6 7 By: /s/ Steven B. Scow (with permission) David R. Koch (NV Bar No. 8830) Steven B. Scow (NV Bar No. 9906) Brody B. Wight (NV Bar No. 13615) 11500 South Eastern Avenue, Suite 210 Henderson, Nevada 89052 Attorney for Red Rock Financial Services, LLC By: /s/ Timothy E. Rhoda (with permission) Roger P. Croteau (NV Bar No. 4958) Timothy E. Rhoda (NV Bar No. 7878) 9120 West Post Road, Suite 100 Las Vegas, Nevada 89148 Attorney for Thunder Properties Inc. 8 9 10 11 ORDER L.L.P. LAW OFFICES 50 West Liberty Street, Suite 510 Reno, Nevada 89501 775-785-5440 Snell & Wilmer 12 13 14 15 16 IT IS ORDERED that discovery in this matter is stayed until the resolution of HSBC’s Motion for Summary Judgment. If the Motion for Summary Judgment is denied, the Parties shall submit a revised scheduling order within 30 days after the Court enters an order denying the Motion for Summary Judgment. 17 WILLIAM G. COBB UNITED STATES MAGISTRATE JUDGE 18 19 20 DATED: January 10, 2018 21 22 23 24 25 26 27 28 4842-3124-6936 -6-