Opinion ID: 853418
Heading Depth: 2
Heading Rank: 2

Heading: Governmental Liability for Wrongful Injunctions

Text: Many jurisdictions make special provision for preliminary injunctions by government agencies, but most simply exempt the government from the requirement to post a bond. Governmental entities are exempt under the federal counterpart to Trial Rule 65(C), but there is no provision in the federal rule purporting to impose liability on the government for a wrongful injunction. Many states also require no bond from a governmental entity before it may obtain a preliminary injunction, but make no express provision for liability. See 42 Am.Jur.2d Injunctions § 287 (2000). Indiana is in a distinct minority in its inclusion of express language calling for government liability for a wrongful preliminary injunction. Some authorities explain the government's exemption as based on a desire to spare the public the cost of posting a bond. E.g., Provident Mgmt. Corp. v. City of Treasure Island, 718 So.2d 738, 740 (Fla. 1998). Others state that it is because the government is presumed to be fiscally responsible in the event any loss is incurred. Id.; Howard D. Johnson, 169 Ind.App. at 389, 348 N.E.2d at 663; cf. Juniata Foods, Inc. v. Mifflin County Dev. Auth., 87 Pa.Cmwlth. 127, 486 A.2d 1035, 1037 (1985) (The bond requirement ... is merely to insure a ready source for payment of damages if due.); Norco Constr., Inc. v. King County, 106 Wash.2d 290, 721 P.2d 511, 513-14 (1986) (government not required to post supersedeas bond because the State treasury provides an adequate guaranty that the prevailing party will be able to collect the amount of the judgment). Some states have concluded that the government is required to answer in damages even though it has not posted a bond. This rule is sometimes grounded in a statute or rule, and sometimes not. See Corpus Christi Gas Co. v. City of Corpus Christi, 46 F.2d 962, 963 (5th Cir.1931) (construing Texas statute providing that city shall be liable in the same manner, and to the same extent, as if the bond, undertaking or security in ordinary cases had been duly given and executed); Provident Mgmt., 718 So.2d at 740; cf. Norco Constr., 721 P.2d at 514 ([A] party that is exempt from the bond requirement is in the same position as if it had posted a bond.). Other courts have concluded that in the absence of a bond, a party wrongfully enjoined simply has no recourse against a government entity, consistent with principles of sovereign immunity. Village of Lake in the Hills v. Laidlaw Waste Sys., Inc., 160 Ill.App.3d 427, 112 Ill.Dec. 184, 513 N.E.2d 598, 602-03 (1987); Orange County v. Heath, 282 N.C. 292, 192 S.E.2d 308, 310 (1972). This issue has not been decisively determined under federal law. But see SEC v. Unifund SAL, 910 F.2d 1028, 1039-40 (2d Cir.1990) (suggesting that party seeking redress for wrongful injunction against federal entity may be without recourse altogether). Only North Carolina and Illinois have explicitly discussed the interaction between sovereign immunity and a rule or statute that dispenses with the bond requirement for governmental agencies but explicitly provides for damages to the party wrongfully enjoined. For different reasons, both have concluded that a governmental entity is not liable for damages to the wrongfully enjoined defendant. Illinois by statute allows recovery for wrongful injunction at the hands of a private party whether or not bond has been posted. However, this claim for wrongful enjoinment has been deemed tort-like enough to implicate that state's immunity act if the government is the party seeking the injunction. Laidlaw, 112 Ill.Dec. 184, 513 N.E.2d at 601. In Laidlaw, the Illinois Court of Appeals concluded that villages were immune from a claim for a wrongful injunction under the state's tort immunity act. In so doing, it opted for a broader definition of tort, even though it acknowledged that obtaining a wrongfully issued preliminary injunction is not technically a tort. Id. I do not believe that reasoning applies under Indiana law. Traditionally, at common law, sovereign immunity was the norm in this state. However, by 1972, this Court had taken the last step in a series of decisions that had largely abrogated common law sovereign immunity. Campbell v. State, 259 Ind. 55, 63, 284 N.E.2d 733, 737-38 (1972) (abrogating sovereign immunity for state); Klepinger v. Board of Comm'rs, 143 Ind.App. 155, 177-78, 239 N.E.2d 160, 173 (1968), trans. denied (abrogating sovereign immunity for counties); Brinkman v. City of Indianapolis, 141 Ind.App. 662, 231 N.E.2d 169 (1967), trans. denied (abrogating sovereign immunity for cities). Accordingly, the Tort Claims Act was enacted in 1974 in the context of an Indiana common law presumption against governmental immunity. Because the Indiana Act is in derogation of the common law, it is to be narrowly construed against a grant of immunity. Mullin v. Municipal City of South Bend, 639 N.E.2d 278, 281 (Ind. 1994). For this reason, I do not agree with the Laidlaw court's conclusion that nontortious activity is immunized by the Tort Claims Act, nor with the majority's unstated conclusion that Noble County has committed a tort as understood by the Act. North Carolina took the view that the enactment of its procedural rule 65(C) did not waive government immunity for torts, apparently assuming that a suit for wrongful injunction is a tort, without saying so explicitly. Heath, 192 S.E.2d at 310. No express reliance was placed on North Carolina's Trial Rule 65(C), which, like Indiana's, specifically provides that no bond is required of a governmental entity, but that the governmental entity is nevertheless responsible for damages arising from wrongful enjoinment. Id. Because I believe that the recovery is essentially contractual in nature, I also find that authority unpersuasive.