United States District Court, D. Arizona
U.S. Bank NA, Plaintiff,
Henry A Varela, Jr., et al., Defendants.
Douglas L. Rayes, United States District Judge
the Court is Defendant/Counterclaimant Henry A. Varela,
Jr.'s Motion for Reconsideration of the Court's Order
Granting U.S. Bank's Motion for Summary Judgment on Bona
Fide Purchaser Issue and Count I of Defendant's
Counterclaim. (Doc. 91.) For the following reasons, Mr.
Varela's motion is denied.
case involves a dispute between Mr. Varela and
Plaintiff/Counterdefendant U.S. Bank National Association
(U.S. Bank) over title to certain real property in Yuma,
Arizona (Property). Initially, spouses Frederick and
Christine Wood owned the Property, which was encumbered by a
deed of trust recorded in November 1987 (Woods Deed of
Trust). In December 1987, Mr. Wood and Mr. Varela entered
into a residential lease (Woods Lease), which was recorded
several years later in December 1991. Only Mr. Wood and Mr.
Varela signed the Woods Lease, though it identified Mr. and
Mrs. Woods as lessors and Mr. Varela and his spouse as
lessees. The Woods Lease had a 30-year term and granted Mr.
Varela an option to purchase the Property during that time.
February 1992, the Property was sold at a trustee's sale
(First Trustee's Sale). The Property was sold again in
August 1992, this time to James Sandoval. Mr. Sandoval
executed a deed of trust encumbering the Property in favor of
his lender, Casa Blanca Mortgage, Inc., which was recorded in
February 2006 (Sandoval Deed of Trust). The Sandoval Deed of
Trust covenanted “the Property is unencumbered, except
for encumbrances of record[.]” Nonetheless, Mr.
Sandoval was aware of the Woods Lease when he purchased the
Property and Mr. Varela continued to reside at the Property
and pay rent. Mr. Sandoval and Mr. Varela did not execute a
written lease on the same terms as the Woods Lease. Instead,
the only written lease between Mr. Sandoval and Mr. Varela
was entered into so that Mr. Varela could present it to a
court as a condition of his release from jail on house arrest
(Sandoval Lease). The Sandoval Lease did not include a
purchase option and was not recorded.
September 2011, U.S. Bank purchased the Property at a
trustee's sale (Second Trustee's Sale). Several years
later, Mr. Varela purported to exercise his right to purchase
the Property. As a result, U.S. Bank initiated this action
seeking a declaratory judgment that it has clean title. Mr.
Varela brought a three-count counterclaim, Count I of which
alleged breach of contract and sought, inter alia, a
declaratory judgment that the purchase option contained in
the Woods Lease is enforceable against U.S. Bank and an award
of specific performance. U.S. Bank moved for summary judgment
on its claim for declaratory relief and on Count I of Mr.
Varela's counterclaim and, on December 9, 2016, the Court
granted U.S. Bank's motion. Mr. Varela now moves for
for reconsideration should be granted only in rare
circumstances. Defenders of Wildlife v. Browner, 909
F.Supp. 1342, 1351 (D. Ariz. 1995). Mere disagreement with a
previous order is an insufficient basis for reconsideration.
See Leong v. Hilton Hotels Corp., 689 F.Supp. 1572,
1573 (D. Haw. 1988). “Reconsideration is appropriate if
the district court (1) is presented with newly discovered
evidence, (2) committed clear error or the initial decision
was manifestly unjust, or (3) if there is an intervening
change in controlling law.” School Dist. No. 1J,
Multnomah Cty. v. ACandS, Inc., 5 F.3d 1255, 1263 (9th
Cir. 1993). Such motions should not be used for the purpose
of asking a court “‘to rethink what the court had
already thought through-rightly or wrongly.'”
Defenders of Wildlife, 909 F.Supp. at 1351 (quoting
Above the Belt, Inc. v. Mel Bohannon Roofing, Inc.,
99 F.R.D. 99, 101 (E.D. Va. 1983)).
Varela does not present newly discovered evidence or argue
that there has been an intervening change in controlling law.
He, instead, argues that the Court committed clear error and
its order was manifestly unjust. He raises four distinct
arguments, none of which warrant reconsideration.
Mr. Varela contends that the Court clearly erred when it
accepted “new evidence and a legal theory of judicial
estoppel concerning the Sandoval Lease, ” introduced by
U.S. Bank in its reply memorandum. (Doc. 91 at 2-3.) The
Court disagrees. U.S. Bank did not introduce new evidence
with its reply memorandum; all evidence relied upon by U.S.
Bank in its reply was introduced earlier, either with its
motion for summary judgment or with Mr. Varela's response
thereto. (Docs. 34, 40, 64.) Nor was U.S. Bank's judicial
estoppel argument outside the scope of reply. Though
arguments raised for the first time in a reply brief
generally will not be considered, arguments made in response
to those raised in the opposing party's brief are
permissible rebuttal arguments. See Beckhum v.
Hirsch, No. CV 07-8129-PCT-DGC (BPV), 2010 WL 582095, at
*8 (D. Ariz. Feb. 17, 2010). Mr. Varela argued in his
response brief that the Sandoval Lease was not intended by
the parties to be binding and enforceable, and was instead
prepared as an accommodation to law enforcement as a
condition of his release on house arrest. (Doc. 63 at 4-5.)
U.S. Bank rebutted by arguing that Mr. Varela was judicially
estopped from disavowing the Sandoval Lease because he had
presented it to a prior court, which required that a lease be
produced as a condition of Mr. Varela's release. (Doc. 67
at 3-4.) The Court did not clearly err by considering U.S.
Bank's rebuttal argument.
even if it was error to consider U.S. Bank's judicial
estoppel argument, such error was harmless. Notably, Mr.
Varela does not argue in his motion for reconsideration that
the Court's judicial estoppel analysis was erroneous.
Further, judicial estoppel was not the sole basis for the
Court's ruling. The Court first concluded that the
purchase option granted to Mr. Varela was extinguished in
1992 by the First Trustee's Sale. (Doc. 87 at 5.) The
Court explained that Arizona's statute of frauds, A.R.S.
§ 44-101(6), requires a real estate purchase option
agreement to be in writing, and then found that no written
purchase option was executed after the Woods Lease was
extinguished. (Id. at 6.) Finally, the Court noted
that the Sandoval Lease, which was the only written agreement
post-dating the First Trustee's Sale, did not include a
purchase option, that the parol evidence rule precluded
extrinsic evidence of contrary intent or unwritten
understandings between Mr. Sandoval and Mr. Varela, and that
Mr. Varela was judicially estopped from asserting that the
Sandoval Lease was inoperable or nonbinding. (Id. at
6-7.) Even if the Court were to ignore U.S. Bank's
judicial estoppel argument, the fact remains that no written
purchase option was executed after the First Trustee's
Sale and the parol evidence rule precludes Mr. Varela from
disavowing the Sandoval Lease by pointing to extrinsic
evidence of contrary intent. Mr. Varela's argument
therefore does not provide a basis for reconsidering the
Court's summary judgment order.
Sufficiency of Mr. Varela's Factual Denials
Mr. Varela argues that Court clearly erred “when it
failed to acknowledge [his] denial of [U.S. Bank's]
Statement of Facts.” (Doc. 91 at 3.) Specifically, Mr.
Varela quarrels with footnote 2 of the Court's summary
judgment order, which states:
Many of [Mr. Varela's] responses to U.S. Bank's
separate statement of facts are either non-responsive to the
factual statements made by U.S. Bank or consist of legal
arguments and conclusions. (See, e.g., Doc. 64 at 2,
¶¶ 3-4, 9.) For purposes of this order, the Court
accepts as true all factual statements not properly disputed.
87 at 1 n.2.) Mr. Varela contends that the record is unclear
as to which of his responses were deemed improper. To the
extent Mr. Varela seeks clarification on this point, the
Court will oblige. Paragraphs 3, 4, 9, and 14 of Mr.
Varela's Controverting Statement of Facts were deemed
either to be non-responsive to the facts asserted by U.S.
Bank, to contain legal arguments and conclusions rather than
facts, or both. Before explaining further, an examination of
this Court's local rules provides useful context.
Rule of Civil Procedure 56.1 governs summary judgment
motions. As ...