492 P.3d 793
Utah Ct. App.2021Background
- John and Jennifer Adams began building a house after obtaining municipal permits; neighbors Tannin and Megan Fuja sued alleging CC&R violations and sought a TRO and preliminary injunction to stop construction.
- Court entered a TRO conditioned on a $5,000 cash bond; after a hearing on proffer the court then issued a preliminary injunction without requiring additional security.
- The Adamses retained counsel, moved to dissolve the injunction, disavowed any monetary-damage claim at trial, and presented no evidence of monetary damages during the two-day bench trial.
- The district court found the Adamses had violated the CC&Rs in one respect but were innocent and concluded an injunction was unwarranted; it vacated the injunction and awarded the Adamses attorney fees and costs.
- After the court’s ruling, the Adamses submitted a post-judgment motion seeking over $45,000 in damages from the wrongful injunction; the district court denied the damages claim as untimely and the Adamses appealed.
- The Court of Appeals reversed, holding a wrongful-injunction damages claim may be brought for the first time after a court declares an injunction wrongful and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument (Adams) | Defendant's Argument (Fujas) | Held |
|---|---|---|---|
| Whether a claim for damages from a wrongfully issued TRO/preliminary injunction must be asserted before the injunction is adjudicated wrongful | Claim may be asserted for the first time after the court determines the injunction was improperly granted because the cause of action does not accrue until that point | Claim was untimely because Adamses never pleaded damages, disavowed damages at trial, and failed to present evidence | Court held claim need not be stated before adjudication of wrongfulness; claim accrues only after injunction is declared wrongful and may be raised afterward; reversal and remand |
| Whether Rule 65A(c) summary procedures (on-bond motions) apply when damages are sought from the principal (not just a surety) | Rule procedures apply to principals as well; the enjoined party may either file a separate action or seek relief by motion in the underlying case | Argued procedures/requirements tied to sureties only (respondent pressed other procedural objections) | Court adopted federal authority and held the rule’s procedures apply to principals as well; party may choose motion in the case or separate suit |
| Whether prior disavowal, failure to plead/counterclaim, or omission from initial disclosures makes a post-judgment damages claim untimely | Such omissions do not make the claim untimely because the claim had not yet accrued; equitable defenses remain possible but are distinct | Fujas argued prejudice and lack of notice/waiver should bar the claim | Court said those facts do not automatically render the claim untimely; opposing party must be given notice and opportunity to respond; equitable defenses (laches, waiver, estoppel) may be raised on remand |
Key Cases Cited
- Mountain States Tel. & Tel. Co. v. Atkin, Wright, & Miles, Chartered, 681 P.2d 1258 (Utah 1984) (an aggrieved party may enforce bond or pursue relief in the underlying action)
- Wright v. Westside Nursery, 787 P.2d 508 (Utah Ct. App. 1990) (right of action on injunction bond does not arise until court dissolves injunction or determines it was improper)
- Fillmore City v. Reeve, 571 P.2d 1316 (Utah 1977) (opposing party entitled to notice and opportunity to respond to a wrongful-injunction damages claim)
- W.R. Grace & Co. v. Local Union 759, Int’l Union of United Rubber Workers, 461 U.S. 757 (U.S. 1983) (common-law rule that damages on erroneous injunction are limited to bond absent rules altering that scheme)
- Global NAPs, Inc. v. Verizon New Eng., Inc., 489 F.3d 13 (1st Cir. 2007) (federal Rule 65.1 procedures applying to sureties are applied to principals as well)
- Monroe Div., Litton Bus. Sys., Inc. v. De Bari, 562 F.2d 30 (10th Cir. 1977) (claim for damages on injunction bond accrues only after final determination that plaintiff was not entitled to the injunction)