A-1-CA-36038 | Omnilex

Testo completo

Court of Appeals of New Mexico
Filed 7/31/2019 1:40 PM

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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number:

Court of Appeals of New Mexico
Filed 7/31/2019 1:40 PM

Filing Date: July 31, 2019 Al
No. A-1-CA-36038 ~£ eof
Mark Reynolds
NORMAN GAUME,
Plaintiff-Appellant,
v.
THE NEW MEXICO INTERSTATE

STREAM COMMISSION, JIM DUNLAP,

in his official capacity as Chairman of the
Commission, THE GILA SUBCOMMITTEE
OF THE NEW MEXICO INTERSTATE
STREAM COMMISSION, BUFORD HARRIS,
in his official capacity as Chairman of the Gila
Subcommittee of the Commission, AMY HAAS,
in her official capacity as Acting Director of

the Commissions, SCOTT VERHINES, in his
official capacity as New Mexico State

Engineer and Secretary of the Commission,

Defendants-Appellees.

APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY
Francis J. Mathew, District Judge

Daniel Yohalem
Santa Fe, NM

Alto Street Environmental Consulting
Douglas W. Wolf
Reston, VA

for Appellant

WN hWN —

ao ~

Brownstein Hyatt Farber Schreck, LLP
Steven O. Sims

Dulcinea Z. Hanuschak
Albuquerque, NM

Keitha A. Leonard
Tesuque, NM

Interstate Stream Commission of New Mexico
Dominque M. Work
Santa Fe, NM

for Appellees

OPINION
VANZI, Judge.
{13 In this appeal, we consider whether the district court can award damages for
a wrongful injunction when it did not require Plaintiff to post security under Rule 1-
066(C) NMRA. We conclude that the district court had no discretion to award
damages to a wrongfully enjoined Defendant in the absence of an injunction bond.
Accordingly, we reverse the district court’s award of attorney fees accrued in
seeking to dissolve a wrongful injunction.
BACKGROUND
(23 | This case began when Plaintiff Norman Gaume filed a complaint against the
New Mexico Interstate Stream Commission (the Commission) based on purported
violations of the Open Meetings Act (OMA), NMSA 1978, §§ 10-15-1 to -4 (1974,
as amended through 2013). The majority of Plaintiff's complaint focused on the Gila
Committee, a committee created by the Commission to gather facts about the Gila
River Basin and provide input to the Commission concerning matters related to the
Arizona Water Settlements Act (AWSA), Pub. L. No. 108-451, 118 Stat. 3478
(2004); see generally Adrian Oglesby, Implementation of the Arizona Water
Settlement Act in New Mexico: An Overview of Legal Considerations, 52 Nat.
Resources J. 215 (2012) (discussing history of the AWSA and the Gila River).

Plaintiff alleged that the Gila Committee violated the OMA by meeting on at least

thirteen occasions in private and without notice. See § 10-15-1(B) (establishing
public meeting requirement); § 10-15-1(D) (discussing notice requirement).
Additionally, Plaintiff alleged that the Commission approved at least two large
service contracts at non-public meetings held in violation of the OMA. See § 10-15-
1(H)(6) (providing that “[t]he actual approval of purchase of the item or final action
regarding the selection of a contractor shall be made in an open meeting”).

3} Plaintiff also petitioned for a temporary restraining order (TRO) and
preliminary injunction preventing the Gila Committee “from taking any action or
making any decision related in any way to the AWSA or the Gila River.” As the
basis for the TRO and preliminary injunction, Plaintiff claimed that there was an
immediate risk of harm because the Gila Committee could “create new policy
regarding proposals considered under the AWSA,” which could lead to the improper
spending of state and federal funds. In addition, Plaintiff requested that the
Commission “be enjoined in the same manner as the [Gila Committee]” because the
Commission could take action relying on the Gila Committee’s recommendations.
{4 Judge Raymond Ortiz granted Plaintiff's request for a TRO ex parte, without
a hearing, on October 23, 2014. The TRO broadly ordered the Commission to “not
take any action regarding the Gila River and/or the [AWSA]” or “hold any meeting
of the [Commission] or the [Gila Committee].” The district court set a hearing for

the next week for the Commission to “show cause before the [district c]ourt why the

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[TRO] should not be extended or a preliminary injunction issued.” The day after the
district court issued the TRO, the Commission filed an emergency motion to dissolve
the TRO, claiming that Plaintiffs allegations were false. The Commission also
requested that the district court require Plaintiff to post a $1 million bond to
compensate the Commission for costs and damages for the wrongfully granted TRO.
See Rule 1-066(C). The Commission argued that the injunction bond was necessary
because the TRO had the possibility of preventing the State from obtaining
approximately $62 million in federal funding under the AWSA if the Commission
did not submit Gila River-related proposals to the Secretary of the Interior by the
end of the year.

5}. On October 30, 2014, the day set for the hearing on the preliminary injunction,
six local governments moved to intervene in support of the Commission. As a result,
the district court spent much of the hearing resolving the motion to intervene.
However, after the Commission informed the district court that it needed to hold
meetings within the next two weeks in order to meet deadlines under the AWSA, the
court agreed to modify the TRO and rescheduled the hearing on the preliminary
injunction for November 12, 2014. The district court entered a modified TRO on
November 3, 2014, which provided:

l. The [TRO] granted at Plaintiffs request on October 23, 2014, is

hereby modified to allow the [Commission] to hold public
meetings.

on NN Bb Wh

Ks)

2. The Commission is further allowed to conduct any and all
business, take any and all actions or votes, and make any and all
decisions concerning issues that are not related to the Gila River
Basin and the [AWSA].

3. With regard to the Gila River Basin and the AWSA, the
Commission is allowed to hold public, informational
meetings . .. but is not allowed to make decisions on AWSA or
Gila River Basin items at those meetings.

4. This order shall remain in force until further order of this Court.!

6} | Before the November 12, 2014, hearing, Judge Francis Mathew replaced
Judge Ortiz and rescheduled the hearing for November 20. At the hearing, the
Commission renewed its argument that the district court should dissolve the TRO
because it did not require Plaintiff to post an injunction bond or show good cause as
to why he should not post a bond under Rule 1-066(C). When the district court asked

Plaintiff how much of a bond he could afford in light of the millions of dollars in

damages the State could potentially incur Plaintiff stated that he could only afford a

'We note that our Rules of Civil Procedure only authorize a district court to
keep a TRO granted without notice in place for a maximum of twenty days. See Rule
1-066(B)(2) (“Every temporary restraining order granted without notice . . . shall
expire by its terms within such time after entry, not to exceed ten (10) days, as the
court fixes, unless within the time so fixed the order, for good cause shown, is
extended for a like period|.!” (emphases added)). By the time the district court
entered the modified TRO, the original TRO had been in place for twelve days. Thus,
it would appear that the modified TRO only remained effective until November 12
(i.e., nine more days) at most. However, as neither party disputes the district court’s
power to extend the TRO beyond the twenty days provided by Rule 1-066(B)(2),we
do not express an opinion as to the effect of the district court’s indefinite extension
of the TRO.

$500 bond. The district court replied that $500 would be insufficient and dissolved
the TRO. Additionally, after a short recess, Plaintiff voluntarily dismissed his
petition for a preliminary and permanent injunction.

{7} | The case proceeded forward on the merits of Plaintiff's OMA claims, and both
parties eventually moved for summary judgment. The district court granted partial
summary judgment to the Commission on all of Plaintiff's claims that the Gila
Committee violated the OMA. However, the court granted partial summary
judgment in favor of Plaintiff on his claims that the Commission violated the OMA
through its approval process of two service contracts. Following the ruling on the
merits, the parties litigated the issue of attorney fees and costs. The district court
ruled that it would not award the Commission any attorney fees for its successful
defense of the majority of Plaintiffs OMA claims because it did “not find that
Plaintiff brought his action without sufficient information or belief that good
grounds supported it, although he was mistaken in his belief as to some of the
grounds.” See § 10-15-3(C) (providing that “[a] public body defendant that prevails
in a court action brought under this section shall be awarded its reasonable attorney
fees from the plaintiff if the plaintiff brought the action without sufficient
information and belief that good grounds supported it”). However, the district court
found that the TRO was “overly broad when issued, restraining the [Commission]

from performing [its] lawful duties contrary to the law.” For this reason, the district

court awarded the Commission $35,752.50 (plus applicable gross receipts tax) for
the portion of its attorney fees related to its efforts to dissolve the TRO. This appeal
followed.

DISCUSSION

{8}, The sole issue on appeal is whether the district court abused its discretion in
awarding damages in the form of attorney fees to the Commission. Plaintiff makes
three arguments against the propriety of the district court’s attorney fee award. First,
Plaintiff argues that the district court cannot impose damages against him personally,
but only against a bond required by Rule 1-066(C), which the district court did not
require in this case. Second, Plaintiff argues that the TRO was not wrongful because
Plaintiff prevailed on two of his OMA claims relating to the approval of service
contracts. Lastly, Plaintiff claims that assessing attorney fees against Plaintiff would
contravene the public policy of OMA. We conclude that Plaintiff's first argument is
determinative in this appeal and hold that the district court abused its discretion in
awarding attorney fees in the absence of an injunction bond.

Standard of Review

493 | “New Mexico adheres to the so-called American rule that, absent statutory or
other authority, litigants are responsible for their own attorney[] fees.” N.M. Right
to Choose/NARAL v. Johnson (NARAL), 1999-NMSC-028, 4 9, 127 N.M. 654, 986

P.2d 450 (internal quotation marks and citation omitted). However, our courts

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recognize an equitable exception to this rule for awarding attorney fees as damages
to a wrongfully enjoined defendant. Jd. | 21-22. We review the award of attorney
fees for an abuse of discretion. Parkview Cmty. Ditch Ass’n v. Peper, 2014-NMCA-
049, 7 23, 323 P.3d 939. The district court abuses its discretion “when its decision
is contrary to logic and reason.” NARAL, 1999-NMSC-028, 4 6 (internal quotation
marks and citation omitted). Additionally, the district court abuses its discretion
when its decision is “premised on a misapprehension of the law.” /d. 7 (internal
quotation marks and citation omitted). In determining whether the district court
premised its decision on a misapprehension of the law, we review the application of
the law to the facts de novo. /d.
{10} In support of Plaintiff's first argument that the district court could not award
attorney fees against him because it did not require him to post an injunction bond,
Plaintiff cites Rule 1-066(C), which provides:

No restraining order[ or] preliminary injunction . . . shall issue or occur

except upon the giving of security by the applicant, in such sum as the

court deems proper, for the payment of such costs and damages as may

be incurred or suffered by any party who is found to have been

wrongfully enjoined or restrained, ... provided, however, that for good

cause shown and to be recited in the order made, the court or judge may
waive the furnishing of security.’

Contrary to Rule 1-066(C), Judge Ortiz’s orders granting and modifying the
TRO did not explicitly waive the furnishing of security. Nonetheless, the parties do
not dispute that Judge Ortiz granted and modified the TRO without requiring
Plaintiff to post security.

(Emphasis added.) Plaintiff claims the emphasized language indicates that
Defendants may seek payment for damages incurred due to a wrongful injunction
solely from the security that the district court requires under Rule 1-066(C). While
we agree with Plaintiff that the Commission has no right to recover damages in the
absence of an injunction bond, the answer does not lie in Rule 1-066(C). Rather, the
answer stems from the lack of a common law cause of action for a wrongful
injunction, which Rule 1-066(C) seeks to remedy. We explain.

History of Wrongful Injunctions and the Injunction Bond

41; Injunctions were first used by the English High Court of Chancery as early as
the fourteenth century. See David W. Raack, A History of Injunctions in England
Before 1700, 61 Ind. L.J. 539, 555 (1986). In the early history of equity
jurisprudence, the chancellor often issued preliminary injunctions ex parte without
requiring the plaintiff to put up any security. See Teasdale v. Jones, 40 Mo. Ct. App.
243, 246 (1890); Note, Interlocutory Injunctions and the Injunction Bond, 73 Harv.
L. Rev. 333 (1959) (noting that requiring the plaintiffs to put up security when
seeking ex parte injunctions did not become standard practice in England until the
mid-nineteenth century). However, in those cases where it was later determined that
the plaintiff was not entitled to the injunction, the chancellor had limited power to
award damages for the wrongful injunction. See Russell v. Farley, 105 U.S. 433, 436

(1881) (alluding to the practice of the High Court of Chancery and stating that

“[w]here no bond or undertaking has been required, it is clear that the court has no
power to award damages sustained by either party in consequence of the litigation”).
Consequently, wrongfully enjoined defendants seeking damages had to file suit for
malicious prosecution,’ in which they had to prove the plaintiff obtained the
injunction through malice or want of probable cause—a difficult burden to meet. See
Teasdale, 40 Mo. App. at 246; see also 2 James L. High, A Treatise on the Law of
Injunctions § 1648, at 1233 (Chicago, Callaghan & Co. 3rd ed. 1890) (stating that
“to support such action [for malicious prosecution], the plaintiff's pleading must
clearly negative the existence of probable cause for the injunction; it will not suffice
to allege that the writ was unjustly and wrongfully sued out, but there must be
distinct allegations of malice or a want of probable cause”). Thus, in cases where a
plaintiff requested an injunction to which he or she was not entitled (but did so in
good faith) the wrongfully enjoined defendants had no remedy. Courts characterized
the defendant’s damages as damnum absque injuria, that is, damage without a
wrongful act for which there was no legal redress, because courts regarded the
damages caused by the injunction as flowing from judgment of the court, rather than

the plaintiff. See Hamilton v. Hecht, 299 S.W.2d 577, 579 (Mo. Ct. App. 1957)

3New Mexico courts have merged the tort of malicious prosecution with the
tort of abuse of process into the single cause of action for malicious abuse of process.

See Hinkle v. State Farm Fire & Cas. Co., 2013-NMCA-084, 4 13, 308 P.3d 1009.
However, for ease of reference, we refer to the tort by its historic title in this section.

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(discussing common law liability for the plaintiffs who sought an injunction in good
faith, which was later dissolved and stating that “[a]ny damages suffered by [the]
defendant because of the [wrongful] injunction were traceable directly to the court
which had issued it, and were damnum absque injuria’”); damnum absque injuria,
Black’s Law Dictionary (11th ed. 2019); see also 1 Charles Fisk Beach, Jr., Modern
Equity: Commentaries on the Law of Injunctions § 158, at 177-78 (Albany, H.B.
Parsons 1895) (stating that neither law nor equity furnished a remedy to a wrongfully
enjoined defendant if the plaintiff requested the injunction in good faith because the
damages were regarded as flowing from the court’s order).

{12} This “defect” in the common law lead to the creation of the injunction bond.
See Powell v. Woodbury, 83 A. 541, 545 (Vt. 1912) (“No action lies at common law
for damages caused by an injunction unless it was sued out maliciously and without
probable cause. To remedy this defect, injunction bonds were devised, and then there
were two remedies, one on the bond and one for malicious use of the process without
probable cause.”); Glen Jean, Lower Loup & D.R. Co. v. Kanawha, Glen Jean &
E.R. Co., 35 S.E. 978, 978-79 (W. Va. 1900) (“The very purpose of the [L]egislature
in requiring an injunction bond to cover actual damages sustained [for a wrongful
injunction] was to supply this defect in the common law[.]”). As one court put it,

An injunction is a high prerogative writ; executed and enforced in a

summary manner. By service of the writ, the party is required
immediately to withdraw and cease operations; hence the propriety in

requiring a bond for the indemnity of the party in such damages as he
may sustain, by reason thereof.

Gear v. Shaw, | Pin. 608, 615 (Wis. 1846). Early American courts of equity used
their broad discretion to frame orders granting injunctions to condition the grant of
a TRO or preliminary injunction on a plaintiff's agreement to post a bond. See
Commerce Tankers Corp. v. Nat’l Mar. Union of Am., AFL-CIO, 553 F.2d 793, 800
(2d Cir. 1977); Teasdale, 40 Mo. App. at 246-47 (1890); 1 Fisk Beach, Jr., supra,
§ 158 at 177-78; Howard C. Joyce, Treatise on the Law Relating to Injunctions
§§ 158, 161, at 269, 274 (1909). Additionally, as early as 1788, states began enacting
statutes and rules requiring the plaintiffs to post injunction bonds when seeking a
TRO or preliminary injunction. See Interlocutory Injunctions and the Injunction
Bond, supra, at 333. Eventually, every state—including New Mexico—as well as
the federal courts, adopted statutes or rules providing for the posting of injunction
bonds. See Dan B. Dobbs, Should Security Be Required As a Pre-Condition to
Provisional Injunctive Relief, 52 N.C. L. Rev. 1091, 1196-97 (1974) (noting that
every state, except Massachusetts,‘ has a statutory or rule provision for an injunction
bond); 42 Am. Jur. 2d Injunctions § 315 (2019) (noting that “[t]he Federal Rules of
Civil Procedure and the statutes of the majority of the states require an injunction

bond”). While some of these provisions, like New Mexico’s, allow the trial court to

4Massachusetts has since enacted a rule to this effect. See Mass. R. Civ. P.
65(c) (2019).

waive the injunction bond requirement for good cause, others require plaintiffs to
post bonds in every case. Compare Rule 1-066(C) (allowing the district court judge
to waive the security requirement for good cause), with Cal. Civ. Proc. Code § 529(a)
(West 1992) (“On granting an injunction, the court or judge must require an
undertaking on the part of the applicant to the effect that the applicant will pay to the
party enjoined any damages, not exceeding an amount to be specified, the party may
sustain by reason of the injunction, if the court finally decides that the applicant was
not entitled to the injunction.”).

{13} Essentially a contract to indemnify, the injunction bond created a significantly
easier way for wrongfully enjoined defendants to recover damages. See
Interlocutory Injunctions and the Injunction Bond, supra, at 343. Although trial
courts retained varying degrees of discretion in determining whether to award
damages on the bond, the wrongfully enjoined defendants no longer had to prove the
plaintiff's malice or lack of probable cause. See City & Cty. of Denver v. Ameritrust
Co. Nat. Ass’n, 832 P.2d 1054, 1056 (Colo. App. 1992) (discussing the different
standards of discretion courts have in awarding damages on the injunction bond).
Instead, the defendants merely had to show that they suffered damages due to an
injunction to which the plaintiff was not entitled. See, e.g., Blumenthal v. Merrill
Lynch, Pierce, Fenner & Smith, Inc., 910 F.2d 1049, 1051 (2d Cir. 1990) (“Under

[Rule] 65(c), a party subjected to a preliminary injunction in district court who is

later found to have been ‘wrongfully enjoined’ may recover against the security bond
damages suffered as a result of the injunction.”); Parker Tampa Two, Inc. v.
Somerset Dev. Corp., 544 So. 2d 1018, 1021-22 (Fla. 1989) (“The standard for
determining whether an injunction was wrongfully issued is simply whether the
petitioning party was unentitled to injunctive relief.”); Hay v. Baumgartner, 903
N.E.2d 1044, 1047 (Ind. Ct. App. 2009) (“Where a temporary injunction is dissolved
and not replaced by a permanent injunction, the enjoined party is generally entitled
to compensation for the damages it incurred.” (internal quotation marks and citation
omitted)); Webb v. Beal, 1915-NMSC-030, 9 9, 20 N.M. 218, 148 P. 487 (“[I]f on
investigation it is found that the plaintiff had no just right either in the law or the
facts to justify him in asking and obtaining from the court such a harsh and drastic
exercise of its authority, he should indemnify the defendant in the language of his
bond for all damages he might sustain[.]” (internal quotation marks and citation
omitted)).

{14} However, in cases where the trial court did not require the plaintiff to post
security, courts continued to adhere to the historical practice of denying damages to
the wrongfully enjoined. See, e.g., Meyers v. Block, 120 U.S. 206, 211 (1887)
(“Without a bond for the payment of damages or other obligation of like effect, a
party against whom an injunction wrongfully issues can recover nothing but costs,

unless he can make out a case of malicious prosecution. It is only by reason of the

bond, and upon the bond, that he can recover anything.”); Robinson v. Kellum, 6 Cal.
399, 400 (1856) (“An action on the case will not lie for improperly suing out an
injunction, unless it is charged in the declaration as an abuse of the process of the
{c]ourt through malice, and without probable cause. If the act complained of is
destitute of these ingredients, then the only remedy of the injured party is an action
upon the injunction bond[.]”); Manlove v. Vick, 55 Miss. 567, 569 (1878) (“It is well
settled, both at common law and under statutory provisions requiring the giving of
bonds as conditions precedent to obtaining certain statutory writs, that no action can
be maintained against the party issuing the writs, except by showing malice and want
of probable cause in their issuance.”); [ron Mountain Bank v. Mercantile Bank, 4
Mo. App. 505, 506 (1877) (“There can be no recovery of damages arising from a[
wrongful] injunction, except in an action on the bond, unless it be averred and shown
that the process of the court was abused maliciously and without probable cause.”);
City of Yonkers v. Fed. Sugar Ref. Co., 221 N.Y. 206, 208 (1917) (“There was no
liability at common law for damages resulting from an injunction erroneously
granted unless the case was one of malicious prosecution.”). To hold otherwise, as
one scholar observed, would be “tantamount to permitting a malicious[]prosecution
action against a plaintiff without allowing him the usual common[]law shields of
good faith and probable cause.” Jnterlocutory Injunctions and the Injunction Bond,

supra, at 343-44. This appears to remain the general rule today in every jurisdiction

iv,2)

that has addressed the question. See generally, Annotation, Liability Apart From
Bond and in Absence of Elements of Malicious Prosecution for Wrongfully Suing
out Injunction, 45 A.L.R. 1517 (Originally published in 1926) (collecting cases on
the subject and observing that “[i]n the absence of the elements of an action for
malicious prosecution, it is established by the great weight of authority that no action
will lie by the defendant in an injunction suit, independently of bond or undertaking,
for damages for the wrongful suing out of the injunction”).

The Commission Cannot Recover Damages in the Absence of an Injunction
Bond

{15} The Commission cannot point to, and we cannot find, a New Mexico case
permitting a wrongfully enjoined defendant to recover damages despite the lack of
an injunction bond. While no New Mexico court has had the opportunity to decide
this issue, our Court has previously appeared to acknowledge the common law rule
that a wrongfully enjoined defendant cannot recover damages in the absence of a
bond. In Insure N.M., LLC v. McGonigle, 2000-NMCA-018, 128 N.M. 611, 995
P.2d 1053, the district court granted the plaintiff a TRO and preliminary injunction
prohibiting the defendant from soliciting specific customers of the plaintiff. Jd. { 5.
After a final hearing on the merits of the case, the district court dissolved the
preliminary injunction and denied the plaintiffs request for a permanent injunction.
Id. The defendant cross-appealed the district court’s granting of the preliminary

injunction. Jd. Jf 1, 26. On appeal, we determined that the defendant’s cross appeal

was moot because the district court properly dissolved the preliminary injunction
and denied the permanent injunction. Jd. J 26. Additionally, while it is unclear from
the opinion, it appeared that the district court did not require the plaintiff to post an
injunction bond because the defendant requested that we “remind the [district] court
that temporary injunctions where there is a potential for damages if the injunction is
wrongful normally should require a bond to protect the parties that may be harmed
by the improper injunction.” Jd. § 27 (internal quotation marks omitted). Although
we declined the defendant’s request in the absence of a justiciable issue, we noted
the defendant’s acknowledgment of a “lack of a remedy.” Jd.

{16} We make clear today what we appeared to accept as truth in McGonigle: a
wrongfully enjoined defendant may only recover damages if the plaintiff was
required to post an injunction bond. If the district court did not require the plaintiff
to provide a bond, the defendant’s only alternative is to bring an action for malicious
abuse of process. The common law provides no other avenue for redress.

{173 The Commission argues that the lack of a bond is not determinative and relies
on Monroe Divison, Litton Business Systems, Inc. v. De Bari, 562 F.2d 30 (10th Cir.
1977), for the proposition that the district court’s failure to require an injunction
bond does not prevent a defendant from recovering damages. In that case, the federal
district court issued a preliminary injunction barring the defendant from competing

with the plaintiff, a division of a conglomerate of companies. Jd. at 31. When the

defendant moved for the posting of security, pursuant to Rule 65 of the Federal Rules
of Civil Procedure, the federal counterpart to Rule 1-066, the plaintiff argued that it
did not need to provide security because it was “a corporation which ha[d] sufficient
assets to assure its ability to pay damages.” De Bari, 562 F.2d at 31. The district
court denied the defendant’s motion to post bail. /d. at 31. After a trial on the merits,
the district court found that that the injunction was overly broad. Jd. at 32. The
defendant then moved to “enforce liability on the wrongful preliminary injunction,”
which the district court denied. Jd. On appeal, the plaintiff argued, “[A]bsent a
security bond, there is no liability for damages or restitution because of a wrongful
injunction unless the circumstances give rise to a claim for malicious prosecution.”
Id. The Tenth Circuit disagreed. The court acknowledged Tenth Circuit precedent in
which it held that “the security requirement of Rule 65 gave the trial judge a
discretion to dispense with a security bond when the applicant for the injunction had
‘considerable assets’ and was ‘able to respond in damages.’ ” De Bari, 562 F.2d at
32 (citing Cont’l Oil Co. v. Frontier Ref. Co., 338 F.2d 780, 782-83 (10th Cir.
1964)). However, the court stated, “Rule 65 mandates security for the protection of
the person enjoined. That protection is not eliminated when the court relies on the
financial strength of the party seeking the injunction in place of the security of a
bond.” De Bari, 562 F.2d at 32 (citation omitted). Consequently, the appeals court

held that, even though the district court failed to comply with the security

requirement of Rule 65, “[t]he [district] court’s violation of this rule does not destroy
the defendant’s right to recover for a wrongful preliminary injunction.” De Bari, 562
F.2d at 32.

183} The Commission’s reliance on De Bari is misplaced. First, Tenth Circuit
decisions are not binding on our Court. See Moongate Water Co. v. Dofia Ana Mut.
Domestic Water Consumers Ass ’n, 2008-NMCA-143, § 20, 145 N.M. 140, 194 P.3d
755 (stating that “we are not bound by the analyses or conclusions” of federal cases).
Second, the facts of De Bari are distinguishable. Unlike De Bari, Plaintiff did not
argue that he should not have to post a bond because he had substantial assets to
assure his ability to cover the Commission’s potential damages. See De Bari, 562
F.2d at 31. To the contrary, when asked if he could afford to post security, Plaintiff
stated that the most he could provide for a cash bond was $500. Thus, this is not a
case where the plaintiff sought to avoid liability under a bond by capitalizing on his
financial strength. Furthermore, we question the vitality of De Bari’s holding. While
De Bari has yet to be overruled, the United States Supreme Court has since stated in
absolute terms, albeit in dicta, that “[a] party injured by the issuance of an injunction
later determined to be erroneous has no action for damages in the absence of a
bond.” W.R. Grace & Co. v. Local Union 759, Int'l Union of United Rubber, Cork,
Linoleum & Plastic Workers of Am., 461 U.S. 757, 770 n.14 (1983) (emphasis

added); see Firefighters Local Union No. 1784 v. Stotts, 467 U.S. 561, 597, n.2

(1984) (stating that “the city would have no claim for reimbursement against
respondents for securing an allegedly erroneous injunction [because no bond was
posted for the preliminary injunction]”); see also Continuum Co. v. Incepts, Inc., 873
F.2d 801, 803 (5th Cir. 1989) (citing De Bari and noting that “[c]ourts that have
waived the bond requirement have apparently assumed that, should the plaintiff later
lose on the merits, the defendant may recover the damages inflicted by the
injunction. That assumption was rendered doubtful, however, by the Supreme
Court’s declaration in W.R. Grace & Co.”); James T. Carney, Rule 65 & Judicial
Abuse of Power: A Modest Proposal for Reform, 19 Am. J. Trial Advoc. 87, 116
(1995) (discussing De Bari and noting that “if the Supreme Court’s dicta in W.R.
Grace & Co.[] is correct, then no recovery may be had for the issuance of wrongful
injunction if no bond is posted”). Therefore, we decline to rely on De Bari.

4193 The Commission also cites cases from other jurisdictions recognizing
exceptions to the general rule allowing courts to award damages when the plaintiff
did not post an injunction bond. See, e.g., Cagan v. Mut. Benefit Life Ins. Co., 28
F.3d 654, 656 (7th Cir. 1994) (stating that “in all but exceptional cases the lack of
an injunction bond means the unavailability of damages for wrongful injunction”).
However, the Commission fails to argue how one of these exceptions applies to the
present case. Therefore, we decline to address whether our courts should recognize

any such exceptions to the general rule we recognize today.

17
18

{20} Because we conclude that the district court cannot grant damages for a
wrongful injunction in the absence of an injunction bond, the district court had no
authority to grant the Commission damages in the form of attorney fees. Hence, the
district court abused its discretion. As the Commission has no remedy apart from an
independent action for malicious abuse of process, we need not determine whether
the injunction was wrongful or whether assessing attorney fees against Plaintiff
would contravene the public policy of the OMA. See McGonigle, 2000-NMCA-018,
{| 26-27 (refusing to issue an advisory opinion where the defendant’s claim was
moot).

CONCLUSION

21}. In sum, we hold that a district court cannot grant damages for a wrongful
injunction in the absence of an injunction bond. In such cases, the wrongfully
enjoined defendants’ only remedy is to pursue an independent action for malicious
abuse of process. Accordingly, we reverse the district court’s order granting attorney
fees to the Commission.

22} ITISSO ORDERED.

LINDA M. YANZI, Judge 8

WE CONCUR:
2 Jacqueline R. Medina 3 JACQUELINE R. MEDINA, Judge
Prugna
4 5
BRIANA H. ZAMORA, Judge
21

July 31, 2019- Norman Gaume v. The New Mexico Interstate Stream Commission, No. A-1-CA-36038

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