Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-02060/USCOURTS-azd-2_11-cv-02060-13/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
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 Grady, et al., 

Plaintiffs, 

v. 

Federal Deposit Insurance Corporation, et 

al., 

Defendants.

No. CV-11-02060-PHX-JAT

ORDER 

 Pending before the Court is third-party Tri City National Bank’s (TCNB) Motion 

for Reconsideration pursuant to LRCiv 7.2(g) (Doc. 206) of the Court’s June 30, 2014 

Order (Doc. 199) exonerating the Bond1

 in favor of Plaintiffs, Michael and Jennifer 

Grady. Additionally, at the Court’s request2

 (Doc. 207), TCNB filed a Supplemental 

 

1

 Originally ordered by the Maricopa County Superior Court in two separate bond orders (collectively, the “Bond”), Plaintiff posted a total amount of $268,330.00. (June 

30, 2014 Order, Doc. 199 at 2–3). By the Bond’s explicit terms, this amount consisted of 

$218,400.00 in missed mortgage payments (24 months multiplied by $9,100.00 per month), $28,500.00 in costs, and $21,430.00 in due property taxes. (Id.). Also by the Bond’s explicit terms, the Bond did not include a provision for TCNB’s attorneys’ fees. (Id. at 8–9). 

2

 In a text-only Order (Doc. 207), the Court explained that 

TCNB’s motion [for reconsideration] does not appear to address the issue 

of how or why Plaintiffs’ unpaid principal and interest on the Note (Doc. 206 at 3:1–2) is distinct from Plaintiffs’ debt on the note (id. at 3:15–18) 

extinguished by the Trustees Sale and language in the Trustees Deed Upon Sale. Accordingly, IT IS ORDERED that TCNB may file a 2-page (exclusive of captioning) supplemental brief on this issue[.] 

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Memorandum (Doc. 208) regarding the essential character of the funds secured by the 

Bond. The Court has not requested that Plaintiffs respond to TCNB’s motion. See 

LRCiv 7.2(g)(2). 

I. LEGAL STANDARD 

 Generally, motions for reconsideration are appropriate only if: (1) the movant 

presents newly discovered evidence; (2) the Court committed clear error or the initial 

decision was manifestly unjust; or (3) an intervening change in controlling law has 

occurred. School Dist. No. 1J, Multnomah Cnty., Or. v. AC and S, Inc., 5 F.3d 1255, 1263 

(9th Cir. 1993). A party should not file a motion to reconsider to ask a court “to rethink 

what the court had already thought through, rightly or wrongly.” Above the Belt, Inc. v. 

Mel Bohannon Roofing, Inc., 99 F.R.D. 99, 101 (E.D. Va. 1983). “No motion for 

reconsideration shall repeat in any manner any oral or written argument made in support 

of or in opposition to the original motion.” Motorola, Inc. v. J.B. Rodgers Mech. 

Contractors, Inc., 215 F.R.D. 581, 586 (D. Ariz. 2003). The Court ordinarily will deny “a 

motion for reconsideration of an Order absent a showing of manifest error or a showing 

of new facts or legal authority that could not have been brought to its attention earlier 

with reasonable diligence.” LRCiv 7.2(g)(1). 

II. ANALYSIS 

 Here, TCNB does not contend that there is newly discovered previously 

unavailable evidence or that there has been an intervening change in controlling law. 

Rather, TCNB argues that “[r]econsideration is appropriate here because there was clear 

error in the Order based on undisputed facts relating to the credit bid at the Trustee’s 

Sale, as well as the timing of the motions seeking to exonerate the [B]ond.” (Doc. 206 at 

2). More specifically, TCNB argues that the Court: erred by (1) “premis[ing] its ruling on 

the mistaken belief that TCNB made a ‘full credit bid’ at the Trustee’s Sale,” when the 

bid was actually “merely a credit bid” (id.); and (2) “finding that TCNB’s damages were 

extinguished . . . because the damages it incurred, and its right to those damages, arose 

prior to the Trustee’s Sale” (id. at 5). The Court addresses each claim of error in turn. 

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A. “Full Credit Bid”

 TCNB argues that its $1,900,000 credit bid at the Trustee’s Sale was not a “full 

credit bid” because the Plaintiff’s debt obligation under the Note exceeded $2,258,220.36 

at the date of the Trustee’s Sale. (Doc. 206 at 3). The Court was aware of this fact at the 

time of its Order, but nonetheless determined that TCNB’s credit bid had the effect of a 

full credit bid because TCNB asserts that its credit bid extinguished Plaintiffs’ debt under 

the Note. (Doc. 199 at 7 (citing TCNB’s papers)). As TCNB’s motion adroitly explains, 

the full credit bid rule exists so that 

lenders can make a rational choice: bid in the full debt and let the matter 

rest, or bid a lesser amount and preserve any rights that may exist to seek a deficiency judgment or to pursue others for insurance, tort damages, and so forth. [M&I Bank, FSB v. Coughlin, 805 F. Supp. 2d 858, 866 (D. Ariz. 2011)]. This is exactly what TCNB did here—it elected to bid less than the 

full amount of the debt[.] 

(Doc. 206 at 4). In fact, the Court agrees with TCNB that, to the extent that TCNB credit 

bid less than the total debt obligation at the time of the Trustee’s Sale,3

 TCNB did not 

submit a “full credit bid” here. As explained in Coughlin, TCNB’s less-than-full credit 

bid preserved TCNB’s “rights that may exist to seek a deficiency judgment” against 

Plaintiffs. 805 F. Supp. 2d at 866. 

 Practically speaking, however, TCNB vitiated these possibly-existing rights 

against Plaintiffs by repeatedly and expressly representing to the Court that TCNB’s 

(apparently less-than-full) credit bid extinguished Plaintiffs’ debt obligations under the 

Note: 

 “In this case, the fact that TCNB was the successful bidder for the Property at the 

Trustee’s Sale, through a credit bid, means that Plaintiffs’ debt under the Note was 

extinguished.” (Doc. 180 at 3 (citing Coughlin, 805 F. Supp. 2d at 858)). 

 “[Extinguishment of the debt under the Note] also does not mean that Plaintiffs 

could not be held liable to TCNB for any other actions apart from their debt on the 

 3

 And to the extent that the note-holder can submit a “partial” credit bid at a 

Trustee’s Sale. 

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Note.” (Doc. 180 at 3). 

 “The only thing which [Arizona’s anti-deficiency statute,] A.R.S. § 33-814(G)[,] 

does is prevent TCNB from seeking the balance of debt owed on the Property after 

the Trustee’s Sale of the Property.” (Doc. 180 at 3 (citing Coughlin, 805 F. Supp. 

2d at 858)). 

 “Through its Reply in Support of the Motion to Exonerate the Bond, TCNB 

acknowledged that as a result of being the successful bidder, it made a ‘credit bid’ 

which thereby extinguished Plaintiffs’ debt on the Note.” (Doc. 206 at 3 (citing 

Doc. 180 at 3)). 

 “In other words, TCNB cannot seek a deficiency judgment against Plaintiffs for 

the remaining balance due and owing on the Note after the Trustee’s Sale.” (Doc. 

206 at 3). 

As TCNB repeatedly and expressly concedes, Plaintiffs’ debt obligations under the Note 

have been extinguished. Thus, with respect to Plaintiffs, TCNB’s less-than-full credit bid 

has the same operative effect as a full credit bid—extinguishing Plaintiffs’ debt 

obligations under the Note. Consequently, regardless of the precise character of TCNB’s 

credit bid, TCNB has no legal right or entitlement to any damages or judgment seeking 

the unpaid portion of Plaintiffs’ debt under the Note, including debt under the Note 

masquerading as damages for wrongful enjoinment.4

 

4

 Indeed, TCNB appears to agree that, in this case, the operative effect of a full credit bid is to extinguish all of TCNB’s damages attributable to Plaintiffs and stemming from the Note, including those for wrongful enjoinment: 

 In the Order, the Court concludes that “TCNB extinguished its damages resulting from Plaintiffs’ debt obligations . . . .” [(Doc. 199 at 6– 7)]. However, this conclusion is premised on the faulty assumption that TCNB made a full credit bid, which would have extinguished its damages. Because TCNB merely made a credit bid, the damages which it felt at the hand of Plaintiffs as a result of being wrongfully enjoined from proceeding with the Trustee’s Sale [were] not extinguished.” 

(Doc. 206 at 4 (emphasis added)). Although, obviously, TCNB disagrees with the Court’s conclusion that TCNB’s less-than-full credit bid had the same operative effect as a full credit bid because of TCNB’s repeated and express representations to the Court (as 

well as, perhaps, Arizona’s anti-deficiency statute, A.R.S. § 33-814(G)). 

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 Nonetheless, TCNB attempts to circumvent the consequences of extinguishing 

Plaintiffs’ debt obligations under the Note by mischaracterizing the Bond proceeds as 

some nonspecific thing other than a debt obligation under the Note. (Doc. 180 at 3–4 

(“exoneration of the bond is premised on a Rule of Civil Procedure, separate and apart 

from the efforts of TCNB to enforce the Note”); Doc. 208 at 2–3 (“The Note and the 

damages suffered by wrongful enjoinment are distinct and separate.”). While the Court 

agrees with TCNB that extinguishment of the debt under the Note “does not mean that 

any other debt Plaintiffs had to TCNB also magically disappeared” (Doc. 180 at 3), 

TCNB has failed to adequately explain how the damages the Bond secures (i.e. damages 

for wrongful enjoinment) are something other than a debt obligation under the Note—and 

therefore the type of debt that does magically disappear. 

 Here, it is beyond dispute that the quanta of damages for wrongful enjoinment 

contemplated by the Bond consisted of Plaintiffs’ missed mortgage payments otherwise 

due under the Note. At the Exoneration stage, TCNB explained5

 that, 

[o]n the most basic level, the damages incurred by TCNB in being wrongfully enjoined since 2009 are the payments on the Note not being made by the Plaintiffs from the time TCNB owned the Note through the date the injunction was dissolved, as well as the attorneys’ fees TCNB incurred in seeking to conduct the Trustee’s Sale and have the Court find 

Plaintiffs’ claims were futile.6

(TCNB Reply in Supp. of Mot. to Exonerate Bond and Resp. to Pls.’ Cross-Mot. to 

Exonerate Bond, Doc. 180 at 5 (emphasis and footnote added)). At the instant 

Reconsideration stage, TCNB again explained the relation between the Note and the 

wrongful enjoinment damages: “[t]he Superior Court elected to multiply the time TCNB 

 

5

 TCNB is reminded of the doctrine of judicial estoppel: “where a party assumes a certain position in a legal proceeding, and succeeds in maintaining that position, he may not thereafter, simply because his interests have changed, assume a contrary position, especially if it be to the prejudice of the party who has acquiesced in the position formerly taken by him.” New Hampshire v. Maine, 532 U.S. 742, 742–43 (2001) (citing Davis v. Wakelee, 156 U.S. 680, 689 (1895)). 

6

 In the Court’s June 30, 2014 Order, the Court determined that the Bond did not 

secure TCNB’s attorneys’ fees (Doc. 199 at 8–9); TCNB has not asked the Court to 

reconsider this ruling (see Docs. 206, 208). 

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was delayed by the monthly payment amount as its reasonable estimate of damages.” 

(TCNB’s Supplemental Br., Doc. 208 at 2 (citing Superior Ct. Orders, Doc. 208 at Ex. 

A)). Moreover, TCNB has consistently proffered a simplistic wrongful enjoinment 

damages calculation: the amount required to pay-off the Note at the time of the Trustee’s 

Sale minus the $1,900,00.00 credit bid (which results in an amount exceeding the Bond 

amount). (See Docs. 176, 180, 206, 208). Given that TCNB, itself, clearly believes the 

quanta of its wrongful enjoinment damages is the missed mortgage payments, TCNB 

cannot expect the Court to come to a different conclusion. 

 By definition, missed mortgage payments are a debt under the Note—a debt 

TCNB acknowledges that it extinguished by effect of its credit bid. Consequently, the 

Court cannot agree with TCNB that “[t]he Bond was not designed to reimburse TCNB 

for missed payments on the Note, but instead, to compensate TCNB for damages it 

suffered from the delayed enforcement of its legal rights.” (Doc. 208 at 2). Rather, 

because the essence and quanta of these wrongful enjoinment damages are the missed 

mortgage payments (a debt under the Note), the damages secured by the Bond and the 

debt under the Note are neither separate nor distinct. Here, the Superior Court’s Orders 

and TCNB’s representations to the Court establish that this Bond was designed to 

compensate TCNB for damages it suffered from the delayed enforcement of its legal 

rights by reimbursing TCNB for missed payments on the Note. Unfortunately for TCNB, 

the extinguishment of Plaintiffs’ outstanding debt obligations under the Note 

extinguished TCNB’s rights to the outstanding balance of the Note, regardless of whether 

TCNB pursued the balance through a deficiency action or through exoneration (via 

entitlement to wrongful enjoinment damages) of this7

 Bond. 

 In sum, the Court finds that regardless of whether or not TCNB made a full or 

 

7

 To be clear, the Court does not hold that every wrongfully-enjoined note-holder who extinguishes a debtor’s obligations under the note is not entitled to wrongful enjoinment damages secured by an injunction bond. The result here may have been different if the essence and quanta of these wrongful enjoinment damages were something other than a debt under the Note (for example, the fair-market rental value of the home secured under the Note and wrongfully possessed by Plaintiffs during the pendency of the wrongful injunction, see Ariz. R. Eviction P. 17(c)). 

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partial credit bid, TCNB extinguished Plaintiffs’ debt obligations under the Note, 

including entitlement to the wrongful enjoinment damages at issue here. Accordingly, 

with regard to the full credit bid rule, the Court does not find clear error or manifest 

injustice in its June 30, 2014 Order. 

B. Timing of TCNB’s Motion to Exonerate the Bond 

 Alternatively, TCNB argues (Doc. 206 at 5–7) that “the Order finding that 

TCNB’s damages were extinguished should be reconsidered because the damages it 

incurred, and its right to those damages, arose prior to the Trustee’s Sale” (id. at 5). More 

specifically, TCNB argues that the Bond was held in “trust” for TCNB, the wrongly 

enjoined party, because the injunction was dissolved prior to the Trustee’s Sale (and 

therefore prior to the extinguishment of Plaintiffs’ debt obligations under the Note). The 

Court finds that this is a new argument raised for the first time in TCNB’s Motion for 

Reconsideration. (Compare Docs. 176, 180 (never using the word “trust”—or concept—

outside of the context of the Deed of Trust and Trustee’s Sale) and June 30, 2104 Order, 

Doc. 199 (not addressing the instant “trust” argument), with Doc. 206 at 5–7). 

Consequently, the Court will not consider the “trust” argument. Motorola, Inc. v. J.B. 

Rodgers Mech. Contractors, 215 F.R.D. 581, 582 (D. Ariz. 2003) (“Motions for 

reconsideration are disfavored, however, and are not the place for parties to make new 

arguments not raised in their original briefs.”) (citing Northwest Acceptance Corp. v. 

Lynnwood Equip., Inc., 841 F.2d 918, 925–26 (9th Cir. 1988). 

III. CONCLUSION 

 TCNB must show more than a disagreement with the Court’s decision; the Court 

should not grant a motion for reconsideration unless there is need to correct a clear error 

of law or prevent manifest injustice. See Motorola, Inc, 215 F.R.D. at 586. Such is not the 

case here. TCNB has failed to present the Court with cause to reconsider its June 30, 

2014 Order exonerating the Bond at issue in favor of the Plaintiffs. For the reasons set 

forth above, TCNB’s Motion for Reconsideration is denied. 

 Accordingly, 

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IT IS ORDERED that Plaintiff’s Motion for Reconsideration (Doc. 206) is 

DENIED. 

IT IS FURTHER ORDERED that the Court’s Stay of the release of the Bond 

proceeds (Doc. 203) is hereby lifted as follows: the Bond in the amount of $268,330.00 is 

released to Plaintiffs, Michael and Jennifer Grady (to be sent to their counsel). 

 Dated this 5th day of August, 2014. 

Case 2:11-cv-02060-JAT Document 213 Filed 08/05/14 Page 8 of 8