Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-00079/USCOURTS-azd-2_12-cv-00079-2/pdf.json

Nature of Suit Code: 423
Nature of Suit: Bankruptcy Withdrawal 28 USC 157
Cause of Action: 28:0157 Motion for Withdrawal of Reference

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Krystal Energy Co. Inc., 

Plaintiff, 

vs.

Navajo Nation, 

Defendant. 

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CV-12-0079-PHX-FJM

CV-12-0282-PHX-FJM

BK 01-00166-GBN

AP 01-00171-GBN

ORDER

The court has before it defendant’s motion to alter or amend the judgment pursuant

to Rule 59(e), Fed. R. Civ. P. (doc. 25), plaintiff’s response (doc. 26), and defendant’s reply

(doc. 27). 

This action arises from plaintiff’s eviction from two oil well sites on defendant’s

property in 1999. Plaintiff originally filed this adversary proceeding for turnover of property

under 11 U.S.C. § 542 on March 5, 2001, contending that defendant improperly removed or

otherwise failed to return plaintiff’s property at the time of the eviction. In 2008, the

bankruptcy judge found that defendant is liable to plaintiff on the turnover claim. That

decision was affirmed by this court on interlocutory appeal. In re Krystal Energy, Co., 2008

WL 4446703 (D. Ariz. Sept. 30, 2008). The bankruptcy court then held an evidentiary

hearing on the issue of damages and issued proposed findings of fact and conclusions of law

pursuant to 28 U.S.C. § 157(c)(1). The court recommended that we issue judgment in favor

Case 2:12-cv-00079-FJM Document 28 Filed 02/01/13 Page 1 of 3
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of plaintiff on the turnover claim in the amount of $4,000,000 (doc. 1). On May 24, 2012,

we issued an order adopting the bankruptcy judge’s recommendation (doc. 17), and on

August 24, 2012, judgment was entered in favor of plaintiff and against defendant in the

amount of $4,000,000 (docs. 23, 24). 

Defendant now asks us to alter or amend that judgment pursuant to Rule 59(e), Fed.

R. Civ. P., arguing that the burden of proof was improperly placed on defendant to disprove

plaintiff’s ownership of the property that is the subject of the turnover claim. Defendant also

challenges the method used to calculate damages.

We have already addressed and rejected both of these arguments. Defendant argued

in its objections to the bankruptcy judge’s proposed findings and conclusions that plaintiff

had not introduced evidence of its property rights and therefore it did not meet its burden of

proof on the turnover claim. We rejected that argument and concluded that plaintiff

presented evidence establishing its ownership of the property. See doc. 17 at 6-7. Our

acknowledgment that defendant presented no evidence to contradict plaintiff’s ownership

does not improperly shift the burden to defendant. Instead, it is a recognition that defendant

had the opportunity to contest plaintiff’s claim of ownership, but it made no effort to do so.

In our order adopting the bankruptcy court’s findings and conclusion we noted that “the

hearing transcript reveals that defendant was provided with a full and fair opportunity to

present witnesses and evidence. For whatever reason, it chose not to admit the leases, and

it chose not to call witnesses to testify about whether plaintiff could remove the well

casings.” Id. at 7. Plaintiff’s experts presented valuation evidence of the personal property

located at the well sites and expressly assumed that all of the property was owned by

plaintiff. Appendix Ex. D-1 at 7. At no time did defendant challenge that assumption,

notwithstanding its full and fair opportunity to do so. Consequently it has waived its right

to challenge it now. We reiterate our conclusion that a “post-hearing change in strategy does

not justify the re-opening of the record in this decade-long adversary proceeding.” Doc. 17

at 7.

We also reject defendant’s renewed objection to the valuation of plaintiff’s property.

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Defendant again argues that the plaintiff’s expert’s valuations were improperly based on “fair

market value in continued use” rather than the 1999 market value of the property. Motion

at 6. We have already considered and rejected this argument. See doc. 17 at 8-9. As we

stated before, defendant presented no evidence to establish 1999 market value or to otherwise

rebut plaintiff’s expert’s calculations. Defendant’s only witness presented a 2008 forced

liquidation value of the New Mexico site, but provided no opinion regarding the 1999 value.

Rule 59(e), Fed. R. Civ. P., requires a showing of newly discovered evidence, clear

error, an intervening change in controlling law, or a decision that is manifestly unjust.

Ybarra v. McDaniel, 656 F.3d 984, 998 (9th Cir. 2011). Defendant’s repeated objections to

the bankruptcy court’s findings and conclusions do not satisfy this burden.

IT IS ORDERED DENYING defendant’s motion to alter or amend the judgment

(doc. 25). 

DATED this 1st day of February, 2013.

Case 2:12-cv-00079-FJM Document 28 Filed 02/01/13 Page 3 of 3