U.S. Bank National Association v. Fidelity National Title Insurance Company

D. Nevada

U.S. Bank National Association v. Fidelity National Title Insurance Company

District Court, D. Nevada·Decided August 11, 2022·No. 2:19-cv-00809·Unknown

Opinion

1 UNITED STATES DISTRICT COURT

2 DISTRICT OF NEVADA

3 ) 4 ) U.S. BANK NATIONAL ASSOCIATION, ) Case No.: 2:19-cv-00809-GMN-BNW 5 Successor Trustee to Bank of America, N.A., ) as Successor Trustee to LaSalle Bank, N.A., as 6 ) ORDER Trustee for the Holders of the First Franklin ) 7 Mortgage Loan Trust, Mortgage Loan Asset- ) Backed Certificates, Series 2007-FF1, ) 8 ) 9 Plaintiff, ) vs. ) 10 ) ) 11 FIDELITY NATIONAL TITLE INSURANCE ) COMPANY and LAWYERS TITLE ) 12 INSURANCE COMPANY, ) 13 ) Defendants. ) 14 15 Pending before the Court is the Motion to Extend Stay, (ECF No. 31), filed by 16 Defendants Fidelity National Title Insurance Company and Lawyers Title Insurance Company 17 (collectively, “Defendants”). Plaintiff U.S. Bank National Association (“Plaintiff”) filed a 18 Response, (ECF No. 32), and Defendants filed a Reply, (ECF No. 34). 19 Also pending before the Court is Plaintiff’s Countermotion to Lift Stay, (ECF No. 33). 20 Defendants filed a Response, (ECF No. 35), and Plaintiff filed a Reply, (ECF No. 36). For the 21 reasons discussed herein, the Court GRANTS Defendants’ Motion to Extend Stay, and 22 DENIES Plaintiff’s Motion to Lift Stay. 23 This case arises out of the numerous and long-standing HOA foreclosure actions 24 prevalent in Nevada. Currently at issue in these types of cases is whether a title insurance 25 claim involving an HOA assessment lien, and subsequent foreclosure sale, was covered by the 1 corresponding title insurance policy. (Order 1:25–27, ECF No. 19). The parties dispute how to 2 interpret the standard form language in the 1992 American Land Title Association (“ALTA”) 3 loan policy of title insurance and the California Land Title Association (“CLTA”) 100/ALTA 9 4 endorsement. (Mot. Extend Stay 3:23–4:1, ECF No. 31). In 2019, the Court granted a stay in 5 many of the title insurance cases, including this one, pending the Ninth Circuit’s resolution of 6 Wells Fargo Bank, N.A. v. Fidelity National Title Ins. Co., Ninth Cir. Case No. 19-17332 (Dist. 7 Ct. Case No. 3:19-cv-00241-MMD-WGC) (the “Wells Fargo II Appeal”), which the parties 8 anticipated would interpret the “cookie cutter” policy language at issue in the 1992 ALTA loan 9 policy and the CLTA 100/ALTA 9 endorsement. (See Stipulation 2:10–13, ECF No. 18); (Mot. 10 Extend Stay 3:23–4:1). However, the Wells Fargo II Appeal concluded without reaching the 11 policy interpretation issue. (See Memorandum/Opinion of USCA, Wells Fargo Bank, N.A. v. 12 Fidelity National Title Insurance Company, Case No. 3:19-cv-00241-MMD-CSD (D. Nev. 13 2019), ECF No. 17) (vacating and remanding the district court’s order granting a motion to 14 dismiss without leave to amend). Defendants now claim that PennyMac Corp. v. Westcor Land 15 Title Ins. Co., Nev. Sup. Ct. Case No. 83737 (Eighth Judicial District Case No. A-18-781257- 16 C) (the “PennyMac Appeal”), which is currently pending in the Nevada Supreme Court, will 17 shed light on the policy language because it also concerns the 1992 ALTA loan policy and the 18 CLTA 100/ALTA 9 endorsement. (Mot. Extend Stay 3:13–20). See also PennyMac Corp. v. 19 Westcor Land Title Ins. Co., No. A-18-781257-C, 2021 WL 5492852, at *9–15, 21 (Nev. Dist. 20 Ct. Oct. 22, 2021). 21 A district court’s power to stay a proceeding is “incidental to the power inherent in every 22 court” to manage its docket and promote the efficient use of judicial resources. Landis v. North 23 American Co., 299 U.S. 248, 254 (1936). However, “[o]nly in rare circumstances will a litigant 24 in one cause be compelled to stand aside while a litigant in another settles the rule of law that 25 will define the rights of both,” and a party seeking such a stay must “make out a clear case of 1 hardship or inequity in being required to go forward, if there is even a fair possibility that the 2 stay for which he prays will work damage to someone else.” Id. In considering whether a 3 “Landis Stay” is warranted, the Court weighs “the competing interests which will be affected 4 by the granting or refusal to grant a stay.” Lockyer v. Mirant Corp., 398 F.3d 1098, 1110 (9th 5 Cir. 2005). Those competing interests are: (1) the possible damage which may result from a 6 stay, (2) hardships or inequities a party may suffer if required to go forward, and (3) the 7 “orderly course of justice measured in terms of the simplifying or complicating of issues, proof, 8 and questions of law” which could be expected to result from a stay. Id. 9 Here, the Court finds that the benefits of continuing the stay outweigh any possible 10 hardships of lifting it. After a review of the issues at stake in the Wells Fargo II Appeal, the 11 PennyMac Appeal, and this case, it appears to the Court that the PennyMac Appeal may 12 provide the exact interpretation of the 1992 ALTA loan policy and the CLTA 100/ALTA 9 13 endorsement that the parties originally sought from the Wells Fargo II Appeal. The parties 14 themselves agreed that waiting for these interpretations from the Wells Fargo II Appeal “will 15 not prejudice either of the Parties, and that a stay of the instant action will best serve the 16 interests of judicial economy (given the possibility the Ninth Circuit Court of Appeals’ decision 17 on the Wells Fargo II appeal might affect the disposition of this case).” (Stipulation 2:19–21, 18 ECF No. 18). The Court finds no reason why waiting for the same interpretations from the 19 PennyMac Appeal would now cause prejudice or fail to serve the interests of judicial economy, 20 especially when considering that Plaintiff has not identified any hardship, other than the 21 passage of time, that it will suffer by continuing the stay. Therefore, the “orderly course of 22 justice” in this matter is best served by continuing the stay while the Nevada Supreme Court 23 considers the PennyMac Appeal. Lockyer, 398 F.3d at 1110. 24 // 25 // 1 Accordingly, 2 IT IS HEREBY ORDERED that Defendants’ Motion to Extend Stay, (ECF No. 31), is 3 GRANTED. 4 IT IS FURTHER ORDERED that Plaintiff’s Countermotion to Lift Stay, (ECF No. 5 33), is DENIED. 6 DATED this __1_1__ day of August, 2022. 7 8 ___________________________________ Gloria M. Navarro, District Judge 9 United States District Court 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

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1 UNITED STATES DISTRICT COURT

2 DISTRICT OF NEVADA

3 ) 4 ) U.S. BANK NATIONAL ASSOCIATION, ) Case No.: 2:19-cv-00809-GMN-BNW 5 Successor Trustee to Bank of America, N.A., ) as Successor Trustee to LaSalle Bank, N.A., as 6 ) ORDER Trustee for the Holders of the First Franklin ) 7 Mortgage Loan Trust, Mortgage Loan Asset- ) Backed Certificates, Series 2007-FF1, ) 8 ) 9 Plaintiff, ) vs. ) 10 ) ) 11 FIDELITY NATIONAL TITLE INSURANCE ) COMPANY and LAWYERS TITLE ) 12 INSURANCE COMPANY, ) 13 ) Defendants. ) 14 15 Pending before the Court is the Motion to Extend Stay, (ECF No. 31), filed by 16 Defendants Fidelity National Title Insurance Company and Lawyers Title Insurance Company 17 (collectively, “Defendants”). Plaintiff U.S. Bank National Association (“Plaintiff”) filed a 18 Response, (ECF No. 32), and Defendants filed a Reply, (ECF No. 34). 19 Also pending before the Court is Plaintiff’s Countermotion to Lift Stay, (ECF No. 33). 20 Defendants filed a Response, (ECF No. 35), and Plaintiff filed a Reply, (ECF No. 36). For the 21 reasons discussed herein, the Court GRANTS Defendants’ Motion to Extend Stay, and 22 DENIES Plaintiff’s Motion to Lift Stay. 23 This case arises out of the numerous and long-standing HOA foreclosure actions 24 prevalent in Nevada. Currently at issue in these types of cases is whether a title insurance 25 claim involving an HOA assessment lien, and subsequent foreclosure sale, was covered by the 1 corresponding title insurance policy. (Order 1:25–27, ECF No. 19). The parties dispute how to 2 interpret the standard form language in the 1992 American Land Title Association (“ALTA”) 3 loan policy of title insurance and the California Land Title Association (“CLTA”) 100/ALTA 9 4 endorsement. (Mot. Extend Stay 3:23–4:1, ECF No. 31). In 2019, the Court granted a stay in 5 many of the title insurance cases, including this one, pending the Ninth Circuit’s resolution of 6 Wells Fargo Bank, N.A. v. Fidelity National Title Ins. Co., Ninth Cir. Case No. 19-17332 (Dist. 7 Ct. Case No. 3:19-cv-00241-MMD-WGC) (the “Wells Fargo II Appeal”), which the parties 8 anticipated would interpret the “cookie cutter” policy language at issue in the 1992 ALTA loan 9 policy and the CLTA 100/ALTA 9 endorsement. (See Stipulation 2:10–13, ECF No. 18); (Mot. 10 Extend Stay 3:23–4:1). However, the Wells Fargo II Appeal concluded without reaching the 11 policy interpretation issue. (See Memorandum/Opinion of USCA, Wells Fargo Bank, N.A. v. 12 Fidelity National Title Insurance Company, Case No. 3:19-cv-00241-MMD-CSD (D. Nev. 13 2019), ECF No. 17) (vacating and remanding the district court’s order granting a motion to 14 dismiss without leave to amend). Defendants now claim that PennyMac Corp. v. Westcor Land 15 Title Ins. Co., Nev. Sup. Ct. Case No. 83737 (Eighth Judicial District Case No. A-18-781257- 16 C) (the “PennyMac Appeal”), which is currently pending in the Nevada Supreme Court, will 17 shed light on the policy language because it also concerns the 1992 ALTA loan policy and the 18 CLTA 100/ALTA 9 endorsement. (Mot. Extend Stay 3:13–20). See also PennyMac Corp. v. 19 Westcor Land Title Ins. Co., No. A-18-781257-C, 2021 WL 5492852, at *9–15, 21 (Nev. Dist. 20 Ct. Oct. 22, 2021). 21 A district court’s power to stay a proceeding is “incidental to the power inherent in every 22 court” to manage its docket and promote the efficient use of judicial resources. Landis v. North 23 American Co., 299 U.S. 248, 254 (1936). However, “[o]nly in rare circumstances will a litigant 24 in one cause be compelled to stand aside while a litigant in another settles the rule of law that 25 will define the rights of both,” and a party seeking such a stay must “make out a clear case of 1 hardship or inequity in being required to go forward, if there is even a fair possibility that the 2 stay for which he prays will work damage to someone else.” Id. In considering whether a 3 “Landis Stay” is warranted, the Court weighs “the competing interests which will be affected 4 by the granting or refusal to grant a stay.” Lockyer v. Mirant Corp., 398 F.3d 1098, 1110 (9th 5 Cir. 2005). Those competing interests are: (1) the possible damage which may result from a 6 stay, (2) hardships or inequities a party may suffer if required to go forward, and (3) the 7 “orderly course of justice measured in terms of the simplifying or complicating of issues, proof, 8 and questions of law” which could be expected to result from a stay. Id. 9 Here, the Court finds that the benefits of continuing the stay outweigh any possible 10 hardships of lifting it. After a review of the issues at stake in the Wells Fargo II Appeal, the 11 PennyMac Appeal, and this case, it appears to the Court that the PennyMac Appeal may 12 provide the exact interpretation of the 1992 ALTA loan policy and the CLTA 100/ALTA 9 13 endorsement that the parties originally sought from the Wells Fargo II Appeal. The parties 14 themselves agreed that waiting for these interpretations from the Wells Fargo II Appeal “will 15 not prejudice either of the Parties, and that a stay of the instant action will best serve the 16 interests of judicial economy (given the possibility the Ninth Circuit Court of Appeals’ decision 17 on the Wells Fargo II appeal might affect the disposition of this case).” (Stipulation 2:19–21, 18 ECF No. 18). The Court finds no reason why waiting for the same interpretations from the 19 PennyMac Appeal would now cause prejudice or fail to serve the interests of judicial economy, 20 especially when considering that Plaintiff has not identified any hardship, other than the 21 passage of time, that it will suffer by continuing the stay. Therefore, the “orderly course of 22 justice” in this matter is best served by continuing the stay while the Nevada Supreme Court 23 considers the PennyMac Appeal. Lockyer, 398 F.3d at 1110. 24 // 25 // 1 Accordingly, 2 IT IS HEREBY ORDERED that Defendants’ Motion to Extend Stay, (ECF No. 31), is 3 GRANTED. 4 IT IS FURTHER ORDERED that Plaintiff’s Countermotion to Lift Stay, (ECF No. 5 33), is DENIED. 6 DATED this __1_1__ day of August, 2022. 7 8 ___________________________________ Gloria M. Navarro, District Judge 9 United States District Court 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

U.S. Bank National Association v. Fidelity National Title Insurance Company, (D. Nev. 2022).

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