Evander Tsosie, 18, faces a first-degree murder charge and third-degree felony tampering with evidence after he allegedly stabbed and killed 29-year-old Nathan Lee.
Lee was found dead in the parking lot of the store after witnesses reported seeing the two men fight.
Tsosie did not take the stand in his defense during a preliminary hearing Wednesday in magistrate court in Farmington, but according to police testimony, Tsosie told detectives that Lee brandished a knife, attacked him and tried to stab at him.
One witness contradicted Tsosie's statements when she told the court, which was packed with Lee's family and friends, that she heard Tsosie tell his brother that he stabbed Lee with his own knife.
Assistant District Attorney Ken Stalter argued that Tsosie's statements to police should be taken with "a grain of salt" as they are "self-serving."
"It's clear he's trying to go up to the line to exculpate himself as well as he can," Stalter said.
The fact that Lee was stabbed in the back indicates Tsosie was not acting in self defense, Stalter said.
Tsosie told Farmington police detective Heather Chavez that he took off after the incident, heard running water and threw the knife in an irrigation ditch.
Prosecutors on Wednesday attempted unsuccessfully to add a charge of armed robbery to Tsosie's existing charges, arguing that Tsosie killed Lee after he stole a bottle of alcohol from him.
Lee suffered multiple stab wounds on the neck and back. He died clutching a red bottle cap.
Magistrate Judge Stanley King declined to bind over the armed robbery charge because he felt the state did not present enough evidence.
Santa Fe-based defense attorney Michael Jones also argued the state did not meet its burden of proof on the first-degree murder charge, contending that Tsosie's actions were not "willful, deliberate or premeditated."
Police responded to the store about 8:40 p.m. that day because of reports of a fight. When they arrived, they found Lee dead in the parking lot.
Lee, who is from Shiprock, had purchased alcohol from the store and met several people nearby. Witnesses reported three men and one female began fighting with Lee until he fell to the ground.
Lee's brother testified Wednesday that family members last saw Lee at the 7-to-11 store on West Main Street. Lee reportedly told them that four people were pushing him around. Minutes later, his family found him in the parking lot, dead.
While detectives honed in early on Tsosie as a potential suspect, nearly two months passed before investigators arrested him. He was arrested May 22 at his home in Pi-on, Ariz., by special agents from the U.S. Marshals Service, Farmington police detectives and Navajo Police investigators.
Tsosie will next be arraigned on the murder and tampering charges in district court. King declined a request to reduce Tsosie's $500,000 cash-only bond and Tsosie remains incarcerated at San Juan County Adult Detention Center in Farmington.