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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Kasper Smoke Kastle LLC,

Plaintiff,

v. 

Atlantic Casualty Insurance Company,

Defendant.

No. CV-18-00950-PHX-JAT

ORDER 

Pending before the Court is Defendant Atlantic Casualty Insurance Company’s 

Motion for New Trial (Doc. 175). The Court now rules on the motion.

I. BACKGROUND

A four-day trial for Plaintiff Kasper Smoke Kastle LLC’s breach of contract claim

against Defendant began on January 14, 2020, and concluded on January 17, 2020. The 

jury considered whether Defendant adequately compensated Plaintiff for damage to the 

contents of Plaintiff’s Phoenix building under the parties’ insurance policy after a 2016 

arson fire. The jury returned a verdict in Plaintiff’s favor and awarded damages of 

$94,013.59. (Doc. 133).

On June 6, 2020, Plaintiff filed “Plaintiff’s Notice of Remediation of Sworn 

Deposition Testimony” (Doc. 173), which stated that its owner’s, Gilbert Enriquez, sworn 

deposition testimony contained inaccurate information. (Id.). Specifically, Enriquez 

testified that he filed Plaintiff’s 2014, 2015, and 2016 tax returns, and according to the 

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Notice of Remediation, Enriquez has not filed tax returns since 2011. (Id.).

Shortly thereafter, Defendant requested a new trial under Federal Rule of Civil 

Procedure (“Rule”) 60(b)(2) and (3). (Doc. 175). Because the Court was divested of 

jurisdiction after the parties appealed, Defendant requests that the Court issue an indicative 

ruling under Rule 62.1(a), stating that the Court would grant the motion if the Court of 

Appeals remands or that the motion raises a substantial issue. (Id.).

II. DISCUSSION

A. Rule 60(b)(2) —Newly Discovered Evidence

Rule 60(b)(2) provides that “the court may relieve a party . . . from a final judgment” 

in light of “newly discovered evidence that, with reasonable diligence, could not have been 

discovered in time to move for a new trial under Rule 59(b)(1).” To merit relief under Rule 

60(b)(2), “the movant must show the evidence (1) existed at the time of the trial, (2) could 

not have been discovered through due diligence, and (3) was of such magnitude that 

production of it earlier would have been likely to change the disposition of the case.” Jones 

v. Aero/Chem Corp., 921 F.2d 875, 878 (9th Cir. 1990) (internal quotation omitted).

Defendant fails to meet this burden because Enriquez’s admission that he did not 

file tax returns as stated in his deposition is not so significant as to change the disposition 

of the case. First, there is no evidence that the tax forms, even though not filed, did not 

accurately represent Plaintiff’s actual income. And even if the income was incorrectly 

reported on the forms provided to Defendant, the jury considered losses resulting from 

damage to Plaintiff’s business property, not loss of business income. Defendant 

acknowledges this in its reply, which states that Defendant did not independently verify 

whether Enriquez or his accountant filed the returns “in light of the ultimate relative 

unimportance to the remaining business personal property claim.” (Doc. 182 at 6).

Instead, Defendant’s primary argument is that the impeachment value of the newly 

discovered evidence would have changed the disposition. (Doc. 175 at 3–4). Relying on 

Nehara v. California, No. 1:10-CV-00491 JLT, 2013 WL 3968173 (E.D. Cal. July 31, 

2013), aff’d sub nom. Nehara v. California Dep’t of Corr. & Rehab., 650 F. App’x 495 

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(9th Cir. 2016), Defendant argues that “[s]ignificant impeachment evidence satisfies the 

[Rule] 60(b)(2) requirements.” (Doc. 175 at 3). Although this may be true as a general 

matter in some cases, but see Thermacor Process, L.P. v. BASF Corp., 567 F.3d 736, 744 

(5th Cir. 2009) (“A judgment will not be reopened if the evidence is merely cumulative or 

impeaching and would not have changed the result.” (citation omitted)), the potential 

impeachment value in the instant case does not rise to the level of Nehara. In Nehara, the 

court awarded damages and backpay following a jury verdict in the plaintiff’s favor on his 

Title VII retaliation claim. Id. at *1. The amount of the plaintiff’s recovery “was premised 

significantly upon the fact that” the plaintiff had been unable to secure other employment. 

Id. at *6. Evidence discovered after trial, however, demonstrated that contrary to the 

assertions in his deposition, the plaintiff had been working outside the country and did not 

suffer an emotional injury that impacted his ability to work. Id. at *2–5. The court noted 

this factual inconsistency would have had significant impeachment value as the claim 

relied primarily on the plaintiff’s uncorroborated testimony, and it was probable that the 

new evidence would have caused the jury to disbelieve the core of his testimony. Id. at *6. 

Accordingly, the court granted the defendant’s Rule 60(b)(2) motion. Id. at *7.

Unlike the plaintiff in Nehara and contrary to Defendant’s assertions, although 

Enriquez’s testimony was certainly relevant to the jury’s consideration, this case did not 

turn primarily on Enriquez’s testimony. The jury had to consider whether the restoration 

company’s performance satisfied Defendant’s obligation under the insurance policy to 

restore the property to its pre-fire condition. The jury also determined the extent of the 

damage to the property and whether Plaintiff was entitled to the replacement value of the 

business property rather than the restoration cost.

The most relevant testimony to this point was that of the building co-owner, who 

dealt primarily with Defendant and the restoration company. He testified that the 

restoration company cleaned the building’s contents against his wishes and that the 

cleaning did not (and could not) adequately restore the building’s contents to its pre-fire 

condition. (Doc. 183 at 214, 218; Doc. 184 at 224). He also provided substantial testimony 

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as to the value of the building’s contents. (Doc. 184 at 277, 296–97). Although it is true 

that Enriquez testified to the value of business property as well, considering the trial as a 

whole, the Court does not find that evidence that Enriquez did not file Plaintiff’s taxes is

of such a magnitude as to change the jury’s disposition.1

And in any event, Defendant also fails to demonstrate why the Court would even

admit evidence of Enriquez’s failure to file taxes. Defendant argues that “it could have 

used the false testimony to impeach [Enriquez’s] credibility, and, to a limited extent, his 

character.” (Doc. 182 at 7). But, as discussed above, business income was not the issue at 

trial, and Enriquez did not testify before the jury as to whether he filed tax returns. The 

Court rejects Defendant’s request to inject this collateral issue into a new proceeding solely 

for the purpose of impeaching Enriquez. See United States v. Williamson, 202 F.3d 974, 

979 (7th Cir. 2000) (“A matter is collateral if it could not have been introduced into 

evidence for any purpose other than contradiction.” (citation omitted)); United States v. 

Higa, 55 F.3d 448, 452 (9th Cir. 1995).

Accordingly, the Court denies relief under Rule 60(b)(2).

B. Rule 60(b)(3) —Fraud, Misrepresentation, or Misconduct

Defendant also argues that relief is warranted under Rule 60(b)(3), which provides 

that the Court may set aside a judgment in light of “fraud (whether previously called 

intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party.” “To prevail, 

the moving party must prove by clear and convincing evidence that the verdict was 

obtained through fraud, misrepresentation, or other misconduct and the conduct 

complained of prevented the losing party from fully and fairly presenting the defense.” De 

Saracho v. Custom Food Mach., Inc., 206 F.3d 874, 880 (9th Cir. 2000). “The rule is aimed 

1

In its response to Defendant’s motion, Plaintiff states that “[w]hile the[] tax returns are 

relevant to the issues on appeal with the Ninth Circuit, they were not relevant to the issues 

presented to the jury . . . .” (Doc. 180 at 2). Defendant replies that “[t]aking [Plaintiff] at 

its word, the unfiled tax returns would be, therefore, relevant to the judgment, and the 

untimely correction of a false statement in a deposition, and material misrepresentation 

adversely affected the litigation, the trial outcome, and the judgement.” (Doc. 182 at 1).

Because the Court independently finds that the evidence would not have affected the 

disposition, neither Plaintiff’s assertion nor Defendant’s extrapolation affect the Court’s 

conclusion.

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at judgments which were unfairly obtained, not at those which are factually incorrect.” In 

re M/V Peacock on Complaint of Edwards, 809 F.2d 1403, 1405 (9th Cir. 1987).

The Court does not find that Defendant was prevented from fully presenting its case

or that the judgment was unfairly obtained. As discussed above, the case largely turned on 

whether the jury believed that the restorative services provided adequately returned the 

business property to its pre-fire condition. Whether Enriquez was honest about filing taxes 

was immaterial to that consideration. This distinguishes the instant case from the cases

involving Rule 60(b)(3) cited in Defendant’s motion, which involved a party withholding 

material evidence, thereby rendering the judgments involuntarily obtained. See Hernandez 

v. Results Staffing, Inc., 907 F.3d 354, 358–59, 365–66 (5th Cir. 2018) (holding relief from 

judgment was appropriate after the defendant discovered the plaintiff failed to disclose

medical records indicating the plaintiff visited an emergency room primarily because of a 

headache, rather than a pre-existing back injury as the plaintiff alleged); Nehara, 2013 WL 

3968173; Canady v. Erbe Elektromedizin GmbH, 99 F. Supp. 2d 37, 49 (D.D.C. 2000)

(setting aside summary judgment in a patent action because party failed to disclose “clearly 

responsive, relevant and non-privileged documents”); see also Norwest Bank (Minn.), N.A. 

v. Symington, 3 P.3d 1101, 1103–04, 1107, ¶¶ 6–7, 26 (Ariz. Ct. App. 2000) (holding that 

the appellee unfairly obtained a deficiency judgment under Arizona Rule of Civil 

Procedure 60(b)(3)2 by failing to disclose an unfavorable appraisal and a settlement 

agreement that included a damages model).

3 For these reasons, the Court denies 

Defendant’s request for relief under Rule 60(b)(3).

C. Request for Alternative Relief

In the last two sentences of the motion before the conclusion, Defendant also

requests alternative relief:

Alternatively, Atlantic requests that the Court agree to allow 

2 Because there has been no material revision, the Court cites to the current version of the 

rule.

3 Defendant also cites to Pumphrey v. K.W. Thompson Tool Co., 62 F.3d 1128 (9th Cir. 

1995) to support its argument. That case, however, involved a scheme to perpetrate fraud 

on the court under Rule 60(b) rather than focusing on solely the failure to disclose 

information to an opposing party. Id. at 1130–33.

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limited discovery regarding Kasper’s lack of candor and/or file 

a motion for fees and costs associated with that lack of candor. 

Atlantic therefore requests that the Court exercise its 

jurisdiction under Fed. R. Civ. P., Rule 62.1(a)(3) and inform 

the Ninth Circuit Court of Appeals that it would be inclined 

either to grant this motion or that this motion raises a

“substantial issue.”

(Doc. 175 at 5). These two sentences are the entirety of the argument, cite nothing to 

support that the Court has the power to grant the remedy of “discovery” under Rule 62.1(a), 

nor do these sentences offer any argument, legal or factual, as to what would constitute a 

substantial issue justifying remand for discovery assuming such is even a remedy.

Although at least one court has concluded such a remedy is available, it granted 

relief under different circumstances. See Kravitz v. U.S. Dep’t of Commerce, 382 F. Supp. 

3d 393, 396 (D. Md. 2019). In Kravitz, the court entered judgment in the defendants’ favor 

on the plaintiffs’ Equal Protection and 42 U.S.C. § 1985 claims because the evidence 

presented at trial “fell just short of establishing discriminatory intent by a preponderance 

of the evidence.” Id. at 397–98, 400. The plaintiffs later filed a motion for relief from 

judgment under Rule 60(b)(2) and requested an indicative ruling under Rule 62.1(a), citing 

specific pieces newly discovered evidence directly relevant to the issue of discriminatory 

intent. Id. at 398–401. As a result, “the Court [found that] a substantial issue ha[d] been 

raised” and stated that “if the case [wa]s remanded, the Court w[ould] reopen discovery for 

no more than 45 days, order an expedited evidentiary hearing, and provide a speedy ruling.” 

Id. at 402.

Here, however, Defendant does not identify what additional relevant evidence it 

might discover during a reopened period of discovery. Nor does it describe a potential 

course of “limited discovery” that would lead to evidence that Enriquez intentionally 

provided false deposition testimony, and one is not immediately apparent to the Court. If, 

for example, the Court permitted another deposition of Enriquez on this issue, it seems 

likely that Enriquez would either deny that he knowingly provided false testimony or 

invoke the Fifth Amendment. Both options would lead either to a dead end or to additional 

discovery that would devolve into a mini-trial on whether Enriquez knowingly failed to 

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file Plaintiff’s taxes.

Further, as the record now exists before the Court, it appears undisputed that 

Enriquez’s testimony regarding the filing of tax returns was inaccurate. The Court has 

found this undisputed evidence was nonetheless not material to the verdict and therefore 

does not justify relief under Rule 60(b)(2) or (3) as discussed above. Thus, even assuming 

that discovery is a remedy under Rule 62.1(a) if a substantial issue is identified, the Court 

finds neither a substantial issue in this case, nor a dispute of material fact that would justify 

discovery.

Accordingly, this request for alternative relief is also denied.

III. CONCLUSION

For the foregoing reasons, 

IT IS ORDERED that pursuant to Rule 61.2(a)(2), Defendant’s Rule 60 Motion 

for New Trial (Doc. 175) is DENIED.

Dated this 23rd day of September, 2020.

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