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Grady v. Federal Deposit Insurance Corporation

United States District Court, D. Arizona

August 5, 2014

Michael Grady, et al., Plaintiffs,
Federal Deposit Insurance Corporation, et al., Defendants.


JAMES A. TEILBORG, Senior District Judge.

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 Bond[1] in favor of Plaintiffs, Michael and Jennifer Grady. Additionally, at the Court's request[2] (Doc. 207), TCNB filed a Supplemental 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).


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).


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.

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 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. ...

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