Opinion ID: 515232
Heading Depth: 2
Heading Rank: 3

Heading: Surety Bonds.

Text: 49 The Murats assign as error the decision of the lower court denying them execution on surety bonds (in the amount of $57,500) given by the appellants for a preliminary injunction and a writ of attachment pursuant to Fed.R.Civ.P. 65(c). Fed.R.Civ.P. 65(c) provides: 50 (c) Security. No restraining order or preliminary injunction shall issue except upon the giving of security by the applicant, and 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. 51 See also Fed.R.Civ.P. Rule 65.1 (Security: Proceedings Against Sureties). 52 Our standard of review of the trial court's decision is somewhat unclear. Some courts treat the issue under a typical abuse of discretion standard. H & R Block, Inc. v. McCaslin, 541 F.2d 1098, 1099 (5th Cir.1976) (per curiam), cert. denied, 430 U.S. 946, 97 S.Ct. 1582, 51 L.Ed.2d 793 (1977); Page Communications Eng., Inc. v. Froehlke, 475 F.2d 994, 997 (D.C.Cir.1973) (per curiam). Other courts apply a de novo standard. Coyne-Delany Co., Inc. v. Capital Dev. Bd., 717 F.2d 385, 392 (7th Cir.1983); Atomic Oil Co. v. Bardahl Oil Co., 419 F.2d 1097, 1102 (10th Cir.1969), cert. denied, 397 U.S. 1063, 90 S.Ct. 1500, 25 L.Ed.2d 685 (1970). We hold that the lower court's decision that it was premature to execute on the surety bonds was a decision of law to which we apply a de novo standard. United States v. McConney, 728 F.2d 1195, 1201 (9th Cir.) (en banc), cert. denied, 469 U.S. 824, 105 S.Ct. 101, 83 L.Ed.2d 46 (1984). 53 The lower court held that the defendants' execution motion was premature because the court, by retaining jurisdiction over the appellants' RICO claims pending this appeal, had not made a final decision as to all claims in the case. The Murats argue that the preliminary injunction was based on a finding that the plaintiffs would likely prevail on the merits of their securities claims. Consequently, once the lower court granted them summary judgment on the securities claims, the injunction dissolved by operation of law. Thus, there was a final determination as to all the claims giving rise to an injunction and execution of the bond should proceed. 54 The appellants' claim that the injunction was based solely on a preliminary finding that the plaintiffs' security claims would likely prevail on the merits is incorrect. The order granting the preliminary injunction, and the memorandum of decision accompanying it, did not state that the injunction was based solely on analysis of the securities claims. Rather, the court simply found that it had federal question and pendent jurisdiction and that the plaintiffs [had] made a sufficiently clear showing of probable success on the merits.... Thus, the injunction was based as much on analysis of the RICO and state claims as on the securities claims. This circuit, however, has held that a private RICO claim cannot support an injunction. See Religious Technology Center v. Wollersheim, 796 F.2d 1076, 1084 (9th Cir.1986), cert. denied, 479 U.S. 1103, 107 S.Ct. 1336, 94 L.Ed.2d 187 (1987). In Wollersheim, the court concluded that there was no clear indicia of congressional intent to authorize private injunctive relief for RICO plaintiffs. Id. at 1088. Because the district court here dismissed the pendent state claims--a decision within the trial court's discretion--the injunction could only be based on the RICO claims. Given that the Ninth Circuit precludes an injunction in a private RICO action, there are no proper claims on which to base an injunction. Thus, it was not premature for the trial court to grant execution on the bonds. We order execution on the surety bonds. 55 The appellees argue that they should recover attorney's fees and interest on the money held during the period of the injunction. Neither Fed.R.Civ.P. 65(c) nor 65.1 explicitly delineate what damages are recoverable in an action on a preliminary injunction bond. An improperly enjoined party may not demand damages on the bond simply because the injunction was improperly granted. He must demonstrate injury as a consequence of the injunction. United Motors Serv., Inc. v. Tropic-Aire, Inc., 57 F.2d 479, 487 (8th Cir.1932); 11 C. Wright & A. Miller, Federal Practice and Procedure Sec. 2973, at 654-55 (1973). Also, this circuit has held that the limit of damages a party can obtain for wrongful injunction, both against the surety and the plaintiff, is the amount of the bond. Buddy Sys., Inc. v. Exer-Genie, Inc., 545 F.2d 1164, 1168 (9th Cir.1976), cert. denied, 431 U.S. 903, 97 S.Ct. 1694, 52 L.Ed.2d 387 (1977). 56 Attorney's fees are not recoverable as damages in an action on an injunction bond. Fireman's Fund Ins. Co. v. S.E.K. Constr. Co., 436 F.2d 1345, 1351 (10th Cir.1971). Whether the appellees can obtain interest on the money tied up by the injunction is an item of damages for the lower court to consider. In no case, however, may an award based on these interest damages or other damages exceed the amount of the surety bond. 19 57