Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-02480/USCOURTS-azd-2_12-cv-02480-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA

Michael Wassef, husband, et al.,

Plaintiffs, 

v. 

JPMorgan Chase Bank, N.A.; U.S. Bank 

National Association, as Trustee for J.P. 

Morgan Mortgage Acquisition Trust 2006-

CH2, Asset Backed Pass-Through 

Certificates, Series 2006-CH2, 

Defendants.

No. CV-12-02480-PHX-DGC

ORDER 

 Plaintiffs Michael and Angela Wassef filed a motion to alter or amend the 

judgment pursuant to Federal Rule of Civil Procedure 59(e), or for relief from judgment 

pursuant to Rule 60(b). Doc. 24. Plaintiffs seek the reinstatement of their claims for 

(1) breach of contract and breach of implied covenant of good faith and fair dealing, (2) 

specific performance and equitable reformation, and (3) declaratory judgment against 

Chase Bank, N.A. (“Chase”) and U.S. Bank National Association as Trustee for J.P. 

Morgan Mortgage Acquisition Trust 2006-CH2, Asset Backed Pass-Through Certificates, 

Series 2006-CH2 (“U.S. Bank”). For the reasons that follow, the Court will deny the 

motion. 

I. Background. 

Plaintiffs allege that on March 12, 2012, they entered into a repayment plan 

(“Repayment Agreement”) with Chase to pay arrearages on their delinquent mortgage. 

Amended Complaint ¶¶ 11-13. In exchange, Chase agreed not to take legal action and to 

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proceed as if no default had occurred. Id., ¶ 12. Plaintiffs allege that they made the 

payments required by the Repayment Agreement, but that Chase rejected them. Id., 

¶¶ 14-18. Chase later informed Plaintiffs that it was canceling the Repayment 

Agreement. Id., ¶ 24. Plaintiffs filed an Amended Complaint alleging the three claims 

they seek to have reinstated, among others. Id., ¶¶ 28-75.

 Defendants filed a motion to dismiss the Amended Complaint for failure to state a 

claim. Doc. 7. Defendants argued that the Repayment Agreement was not a valid 

contract because it lacked consideration. Doc. 7 at 5-6. The Court agreed, and ruled that 

Plaintiffs’ preexisting duty to pay arrearages could not constitute valid consideration. 

Doc. 22 at 4. Plaintiffs argued in their opposition to the motion to dismiss that 

consideration was valid on two other grounds. Doc. 15 at 4-5. First, Plaintiffs claimed 

that the express language of the agreement acknowledged valid consideration. Id. at 4. 

The Court found that the language did not indicate valid consideration because it did not 

impose obligations in addition to those already owed by Plaintiffs. Doc. 22 at 4-5. 

Second, Plaintiffs argued that consideration was valid because, under the Repayment 

Agreement, Chase had more rights than it would have had through foreclosure. Doc. 15 

at 4-5. The Court rejected this argument as well because Chase had not yet initiated 

foreclosure; thus, Plaintiffs had not forfeited any rights and they remained contractually 

obligated to cure their default. Doc. 22 at 5. The Court dismissed all Plaintiffs’ claims 

with prejudice pursuant to Federal Rule of Civil Procedure 12(b)(6). Doc. 22 at 13. 

II. Legal Standard.

 The Court has discretion to reconsider and vacate its order granting dismissal. See 

Barber v. Hawaii, 42 F.3d 1185, 1198 (9th Cir. 1994); United States v. Nutri-Cology, 

Inc., 982 F.2d 394, 396 (9th Cir. 1992). Motions for reconsideration are disfavored, 

however, and are not the place for parties to make new arguments not raised in their 

original briefs. See Northwest Acceptance Corp. v. Lynnwood Equip., Inc., 841 F.2d 918, 

925-26 (9th Cir. 1988). Nor is it the time to ask the Court to rethink its analysis. See 

United States v. Rezzonico, 32 F. Supp. 2d 1112, 1116 (D. Ariz. 1998) (citing Above the 

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Belt, Inc. v. Mel Bohannon Roofing, Inc., 99 F.R.D. 99, 101 (E. D. Va. 1983)). 

 Any motion to alter or amend judgment pursuant to Rule 59(e) must “be filed no 

later than 28 days after entry of the judgment.” Fed. R. Civ. P. 59(e). A judgment may 

not properly be reopened under Rule 59 “‘absent highly unusual circumstances[.]’” 

Weeks v. Bayer, 246 F.3d 1231, 1236 (9th Cir. 2001) (citation omitted). The Court may 

do so only if (1) it is presented with newly discovered evidence, (2) it committed clear 

error or the initial decision was manifestly unjust, or (3) there is an intervening change in 

controlling law. See Sch. Dist. No. 1J, Multnomah County, Or. v. ACandS, Inc., 5 F.3d 

1255, 1263 (9th Cir. 1993); Zimmerman v. City of Oakland, 255 F.3d 734, 740 (9th Cir. 

2001). “This requirement is a high hurdle ... to meet.” Weeks, 246 F.3d at 1236. 

 The Court may grant a motion for relief from judgment pursuant to Rule 60(b) 

only “upon a showing of (1) mistake, surprise, or excusable neglect; (2) newly discovered 

evidence; (3) fraud; (4) a void judgment; (5) a satisfied or discharged judgment; or 

(6) extraordinary circumstances which would justify relief.” Id. at 1263; see Fed. R. Civ. 

P. 60(b); Allmerica Fin. Life Ins. & Annuity Co. v. Llewellyn, 139 F.3d 664, 666 (9th Cir. 

1997) (stating that party must show “extraordinary circumstances” to obtain relief under 

Rule 60(b)(6)). 

III. Analysis. 

Plaintiffs base their claims for relief under Rules 59(e) and 60(b) on clear error. 

Plaintiffs allege that the Court committed two clear errors. First, Plaintiffs claim the 

Court erred in finding that the Repayment Agreement was not a valid contract for failure 

of consideration. Second, Plaintiffs claim the Court erred in denying them an opportunity 

to amend their complaint. Clear error is an exacting standard that requires a clear 

conviction of error. Teamsters Local 617 Pension and Welfare Funds v. Apollo Group, 

Inc., 282 F.R.D. 218, 220 (D. Ariz. 2012). The movant must show “wholesale disregard, 

misapplication, or failure to recognize” controlling law. Id.

 A. Count 1: Lack of Consideration. 

 In response to Plaintiffs’ motion, the Court conducted further research regarding 

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the validity of consideration for the Repayment Agreement. The Court was unable to 

find any authority to support an argument that the mere restructuring of preexisting 

contractual payments is valid consideration in Arizona. Restructuring a preexisting 

financial agreement in a manner that provides all of the benefit to one party and all of the 

detriment to the other is not a valid contract. See K-Line Builders, Inc. v. First Federal 

Sav. & Loan Ass’n, 677 P.2d 1317, 1321 (Ariz. Ct. App. 1983) (holding that there was no 

consideration for an agreement that raised the interest rate in an existing lending 

contract). Valid consideration requires that there be a mutuality of obligations, and 

mutuality fails where only one party is obligated to perform. See Carroll v. Lee, 712 P.2d 

923, 926 (Ariz. 1986). Just as the revision in K-Line lacked consideration because one 

party bore the entire burden and the other reaped the entire benefit, the Repayment 

Agreement lacks consideration because Chase is the only party burdened. Chase 

received a less advantageous payment schedule and Plaintiffs received the benefit of 

restructured payments. Consideration fails because there is no mutuality of obligations. 

 Plaintiffs argue that the Court’s reasoning overlooks A.R.S. § 44-121, which says 

that “every contract in writing imports a consideration.” Doc. 24 at 3; see also A.R.S. 

§ 44-121. Plaintiffs argue that this statute confirms that the written Repayment 

Agreement included valid consideration. Id. at 3-4. 

 This is a new argument that should have been raised in Plaintiffs’ original briefs. 

Plaintiffs cannot raise it for the first time in a motion for reconsideration. 

 In addition, this new argument does not change the outcome of the motion to 

dismiss. Section 44-121 creates a presumption of consideration, with the burden of proof 

on the party claiming a lack of consideration. Bank of the West, Inc. v. Organic Grain & 

Milling, Inc., No. CV-08-2220-PHX-FJM, 2010 WL 995459, at *1 (D. Ariz. Mar. 2010); 

see also Dunlap v. Fort Mohave Farms, Inc., 363 P.2d 194, 198 (Ariz. 1961). The Court 

honored that presumption by taking all allegations of the Amended Complaint as true. 

Defendants then carried their burden of showing that the Repayment Agreement lacked 

valid consideration. Defendants successfully rebutted the presumption of consideration 

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imported in written agreements. 

 Plaintiffs claim that the presumption established by § 44-121, coupled with the 

language of the Repayment Agreement – “in consideration of the Recitals above, the 

mutual promises contained herein” – creates a question of fact to be resolved at trial. The 

Court disagrees. Affirmative defenses may properly be considered on a motion to 

dismiss if the allegations in the complaint suffice to establish the defense. Jones v. Bock, 

549 U.S. 199, 215 (2007). The complaint was sufficient to establish a failure of 

consideration. It alleged that in exchange for withholding legal action, Chase would 

accept the “monthly payment of $4,562.89 due under the Modification Agreement” plus 

“payment of arrearages due under the Modification Agreement.” Amended Complaint 

¶¶ 11-13. The Amended Compliant establishes that Plaintiffs’ promise to Chase in the 

Repayment Agreement, including the payment of arrearages, was a preexisting legal 

obligation and therefore failed as consideration. Plaintiffs have not shown clear error. 

 B. Count Two: Opportunity to Amend the Complaint. 

 Plaintiffs claim that they expressly requested permission to cure pleading 

deficiencies through amendment, and that it was clear error to deny them that 

opportunity. Doc. 24 at 4. Chase argues that amendment was futile because Plaintiffs 

failed, both in opposition to the motion to dismiss and in the pending motion, to show 

that amending the complaint could cure the defects. Doc. 25 at 5. The Court agrees. 

 Leave to amend a complaint should be freely given when justice requires. 

Klamath-Lake Pharmaceutical Ass’n v. Klamath Medical Serv. Bureau, 701 F.2d 1276, 

1292 (9th Cir. 1983) (holding that a proposed amendment would not affect the outcome 

of the lawsuit). Futile amendments should not be permitted. Id. The decision to allow 

leave to amend is at the Court’s discretion. Id. Denying leave to amend without a 

justifying reason is an abuse of discretion. Foman v. Davis, 371 U.S. 178, 182 (1962). 

 Plaintiffs argue that leave to amend should have been granted unless it appeared 

beyond doubt that no set of facts could be proved that would entitle them to relief. 

Doc. 24 at 4; see also DCD Programs, Ltd. V. Leighton, 833 F.2d 183, 188 (9th Cir. 

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1987) (finding that the district court erred in denying leave to amend without giving any 

explanation of the reason). The Court concluded and concludes again, however, that 

Plaintiffs could not cure the defects in the Amended Complaint. Chase argued in the 

motion to dismiss that the Repayment Agreement was not a valid contract for lack of 

consideration. Doc. 7 at 5. In response, Plaintiffs failed to present the Court with any 

facts that would support their claim that consideration for the contract was valid. Doc. 22 

at 4-5, 12-13. Although Plaintiffs argue that the Court should have granted them leave to 

amend, they still do not make any showing that they could cure the defects through 

amendment. Doc. 24 at 4. Nor have they provided any evidence in their documents 

supporting reconsideration that supports the finding of valid consideration. As in 

Klamath-Lake, Plaintiffs did not propose an amendment that would alter the outcome of 

the case. Unlike DCD Programs, the Court had a valid reason for denying leave to 

amend, and gave an explanation of that reason in the order dismissing the Amended 

Complaint. Doc. 22 at 12-13. Because Plaintiffs’ proposed amendment was futile, the 

Court did not commit clear error in denying leave to amend the complaint. 

IT IS ORDERED:

 1. Plaintiffs’ motion to alter or amend judgment (Doc. 24) is denied. 

 2. The Clerk is directed to terminate this matter. 

 Dated this 13th day of June, 2013. 

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