Attorneys for Appellant
Phillip A. Renz
Diana C. Bauer
Miller, Carson, Boxberger &
Fort Wayne, IN
Attorneys for Amicus Curiae State of Indiana
Jeffrey A. Modisett
Attorney General of Indiana
Deputy Attorney General
Attorney for Appellee
Crystal Rogers, Pro Se
INDIANA SUPREME COURT
NOBLE COUNTY et al.,
Appellants (Plaintiffs below),
Appellee (Defendant below ).
) Supreme Court No.
) Court of Appeals No.
APPEAL FROM THE NOBLE CIRCUIT COURT
The Honorable Kevin P. Wallace, Special Judge
Cause No. 57C01-9611-CP-140
ON PETITION TO TRANSFER
March 27, 2001
After a court overturned a restraining order that a county building inspector had
obtained against Crystal Rogers, she sought damages under a trial rule that awards
costs and damages to those wrongfully enjoined by governmental entities. Both the
trial court and the Court of Appeals held that Rogers could recover under
the trial rule despite the immunity provisions of the Indiana Tort Claims Act.
We hold that Rogers is not entitled to damages because the countys
conduct was not wrongful for purposes of the trial rule.
In November, 1996, Crystal Rogers began a renovation project on a house that
she owned in an unincorporated area of Noble County. Rogers had hoped
to add a second story to the home. However, a Noble County
building inspector issued a stop work order on November 12, 1996, asserting that
the project violated the Noble County Building Code because Rogers had not obtained
a building permit. Rogers continued construction until the county obtained a temporary
Rogers appealed the trial courts decision to the Court of Appeals, which reversed
and dissolved the temporary restraining order. Rogers v. Noble County By and
Through the Noble County Bd. of Commrs, 679 N.E.2d 158 (Ind. Ct. App.
1997), transfer denied. The court first held that the pertinent Noble County
ordinances amounted to a building code under Indiana Code § 36-7-8-3 and not
a housing code under Indiana Code § 36-7-8-4. It then dissolved the
temporary restraining order because such building codes do not apply to private homes
that are built by individuals and used for their own occupancy. See
Ind. Code § 36-7-8-3(d) (1998).
On remand, Rogers asserted that she was entitled to damages under Indiana Trial
Rule 65(C). Her counterclaim sought compensation for the cost of finding another
place to live while the restraining order was in place and for damage
to the house caused by exposure to the elements. Noble County moved
for summary judgment on the counterclaim, arguing that the Indiana Tort Claims Act
precluded her recovery. The trial court denied summary judgment, but certified its
order for interlocutory appeal.
The Court of Appeals held that Trial Rule 65 is procedural in nature
and therefore trumped the conflicting provisions of the Tort Claims Act. Noble
County ex rel. Noble County Bd. of Commrs v. Rogers, 717 N.E.2d 591,
596 (Ind. Ct. App. 1999). We granted transfer, thereby vacating the Court
of Appeals decision. Noble County ex rel. Noble County Bd. of Commrs
v. Rogers, 735 N.E.2d 227 (Ind. 2000) (table).
Rogerss primary contention in this appeal is that she is entitled to costs
and damages under Indiana Trial Rule 65(C), which reads:
No restraining order or preliminary injunction shall issue 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.
No such security shall be required of a governmental organization, but such
governmental organization shall be responsible for costs and damages as may be incurred
or suffered by any party who is found to have been wrongfully enjoined
(emphasis added). Rogers argues that because the restraining order was lifted after
her first appeal, Trial Rule 65(C) requires Noble County to pay for the
costs and damages she incurred while the restraining order was in effect.
Noble County contends that the Trial Rule conflicts with the immunity granted to
governmental entities by the Indiana Tort Claims Act (ITCA).
See Ind. Code
§§ 34-13-3-1 to § 34-13-3-25 (1998). Noble County argues that two of
the specific immunity provisions of Indiana Code § 34-13-3-3 preclude the damages Rogers
sought in her counterclaim:
A governmental entity or an employee acting within the scope of the employees
employment is not liable if a loss results from:
(5) the initiation of a judicial or an administr
(6) the performance of a discretionary function;
The parties ask us to resolve this apparent conflict by applying either the
Trial Rule or the ITCA to the exclusion of the other.
posture puts into tension the powers of coordinate branches of our state government
by asking us to ignore the pronouncement of one such branch. However,
we have long held that [i]f an act admits of two reasonable interpretations,
one of which is constitutional and the other not, we choose that path
which permits upholding the act. Price v. State, 622 N.E.2d 954, 963
(Ind. 1993), rehg denied.
See also A Womans Choice-East Side Womens Clinic
v. Newman, 671 N.E.2d 104, 111 (Ind. 1996)
(Dickson, J., concurring in result)
(discussing our overriding obligation to construe our statutes in such a way as
to render them constitutional if reasonably possible), rehg denied; Baldwin v. Reagan, 715
N.E.2d 332, 338 (Ind. 1999) (If there is more than one reasonable interpretation
of a statute, at least one of which is constitutional, we will choose
that path which permits upholding the act.).
To this end, a proper construction of the word wrongfully in the Trial
Rule resolves the conflict between the rule and the statute. We have
never had the opportunity to determine the scope of wrongful conduct for governmental
actors under T.R. 65(C). We now hold that their conduct is wrongful
only to the extent that they have acted with such bad faith and
malice that their actions undermine the authority of the court issuing the restraining
order or injunction.
This construction harmonizes the immunity provisions of the ITCA with our inherent power
to sanction litigants for improper or untoward b
ehavior in judicial proceedings. The
ITCA expresses a legislative policy to protect the States finances while ensuring that
public employees can exercise their independent judgment necessary to carry out their duties
without threat of harassment by litigation or threats of litigation over decisions made
within the scope of their employment. Celebration Fireworks, Inc. v. Smith, 727
N.E.2d 450, 452 (Ind. 2000) (quoting Indiana Dept. of Corr. v. Stagg, 556
N.E.2d 1338, 1343 (Ind. Ct. App. 1990), transfer denied). To achieve these
goals, the Legislature placed 20 categories of substantive behavior beyond the reach of
tort suits. See Ind. Code § 34-13-3-3 (1998).
The Legislatures ability to immunize government actions knows few limits, but those limits
are reached when immunity impinges upon the judiciarys constitutional sphere. That is,
while the Legislature may shield the State from substantive tort liabilities, it may
not immunize the State from our power to sanction the attorneys and parties
appearing before us. See State v. Kuespert, 411 N.E.2d 435, 438-39 (Ind.
Ct. App. 1980) (upholding power of the trial court to issue monetary sanctions
against the State for discovery violations under Trial Rule 37). Cf. Ind.
Const. art. VII, § 1 (The judicial power of the State shall be
vested in one Supreme Court, one Court of Appeals, Circuit Courts, and such
other courts as the General Assembly may establish.) (emphasis added); State ex rel.
Indianapolis-Marion County Bldg. Auth. v. Superior Court of Marion County, Room No. 1,
264 Ind. 313, 317, 344 N.E.2d 61, 64 (1976) (Over the years, this
Court, in its opinions, has circumscribed a segment of judicial authority and called
it inherent and incidental. Courts are vested with an inherent power to
order, in emergency situations, the removal of obstacles to the due administration of
justice in the court.).
This power to sanction is a necessary precondition
to the exercise of our independent judicial power:
To deny a court the power to enforce obedience to its lawful orders
against parties who have been subjected properly to its jurisdiction in the first
instance, is to nullify its effectiveness as an independent branch of our government.
The power of a court to enforce compliance with its orders and
decrees duly entered is inherent. No statutory sanction is needed. In
both equity and law a court would be powerless to give effective relief
were its arms tied by such requirements as relator asserts are necessary.
State ex rel. Brubaker v. Pritchard, 236 Ind. 222, 226-27, 138 N.E.2d 233,
235 (1956). See also OConner v. State, 178 Ind.App. 415, 382 N.E.2d 994,
998 (1978) (In protecting this discovery process, the trial court has the inherent
power to impose sanctions
.), affd, 272 Ind. 460, 399 N.E.2d 364
(1980). To protect the proper functioning of judicial proceedings, we also have
imbedded this power in numerous court rules. See, e.g., Ind. Trial Rule
11, Ind. Trial Rule 37, Zwiebel v. Zwiebel, 689 N.E.2d 746, 750 (Ind.
Ct. App. 1997) ([Under Trial Rule 11], the trial court has the discretion
to impose sanctions where it determines that the verified motion contains information that
the attorney knows to be false.), transfer denied. Similarly, the judicial power
encompasses the ability to hold a litigant in contempt. See, e.g., Meyer
v. Wolvos, 707 N.E.2d 1029, 1031 (Ind. Ct. App. 1999) (We have recognized
the inherent judicial power to deal with contempt. No statutory sanction is
needed as a courts power to enforce compliance with its orders and decrees
duly entered is inherent.), transfer denied; Crowl v. Berryhill, 678 N.E.2d 828, 831
(Ind. Ct. App. 1997) (Time and time again, Indiana appellate courts have recognized
the inherent judicial power to deal with contempt.).
It is beyond question that this power extends to governmental atto
rneys and parties.
When the State enters the court as a litigant, it places itself
on the same basis as any other litigant; subjecting itself to the inherent
authority of the court to control actions before it, just as any other
litigant. State v. Blenden, 748 So.2d 77, 88-89 (Miss. 1999), rehg denied.
See also State ex. rel. Mass Transp. Auth. of Greater Indianapolis v.
Indiana Revenue Bd., 146 Ind. App. 334, 337-38, 255 N.E.2d 833, 835-36 (holding
state auditor in contempt for refusing to comply with a court order), cert.
denied, 400 U.S. 877 (1970); State ex. rel. Indiana State Bar Assoc. v.
Moritz, 244 Ind. 156, 164, 191 N.E.2d 21, 25 (1963) (enjoining properly elected
prosecutor from appearing in court because prosecutor had not been admitted to the
bar); Bangs v. Northern Indiana Power Co., 211 Ind. 628, 635, 6 N.E.2d
563, 566 (1937) (upholding power of trial court to award damages against mayor
of Huntington for violating injunction; The courts are clothed with the power, in
such actions, to enter judgment of a coercive and remedial nature.). Other
jurisdictions similarly uphold this judicial power in the face of misconduct by the
, e.g., Nelson v. Steiner, 279 F.2d 944, 948 (7th Cir.1960)
(The executive branch of government has no right to treat with impunity the
valid orders of the judicial branch.).
Therefore, our interpretation of the word wrongfully in the last sentence of T.R.
65(C) must balance the limitations of the ITCA with the judiciarys inherent power
to sanction. So long as any damages granted under Trial Rule 65(C)
are part and parcel of our sanctioning power, the constitutional conflict the parties
point to is not at issue. Under this balance, a restraining order
or an injunction obtained by the government is wrongful only when the government
acts in bad faith or with malice so as to threaten the proper
functioning of the court. This standard protects the legislative policy of immunizing
discretionary government actions while preserving the courts ability to control litigation. We
therefore recognize that in those rare cases where this standard is met, T.R.
65(C) may operate as a sanction for the governments wrongful conduct despite the
immunity otherwise granted by the ITCA.
Here, however, Rogerss counterclaim sought damages solely on the basis of the dissolution
of the restraining order after her initial appeal, and no such bad faith
is presented in the record.
The dispute over the restrai
ning order focused
on the purely legal question
See footnote of the character
ization of a building code.
See Rogers v. Noble County By and Through the Noble County Bd. of
Commrs, 679 N.E.2d 158 (Ind. Ct. App. 1997). The record and
the two previous opinions reveal no hint that Noble County was motivated by
anything other than a concern for safety. The trial court should have
granted Noble Countys motion for summary judgment as to Rogerss damage claims.
Having previously granted transfer, thereby vacating the opinion of the Court of Appeals
pursuant to Ind. Appellate Rule 11(B)(3), we remand this case for proceedings
consistent with this opinion.
SHEPARD, C.J., and RUCKER, J., concur.
BOEHM, J., dissents with separate opinion in which DICKSON, J., co
ATTORNEYS FOR APPELLANTS
Phillip A. Renz
Diana C. Bauer
Fort Wayne, Indiana
ATTORNEY FOR APPELLEE
Crystal Rogers, Pro Se
Jeffrey A. Modisett
Attorney General of Indiana
Deputy Attorney General
SUPREME COURT OF INDIANA
NOBLE COUNTY et al., )
Appellants (Plaintiffs Below), ) Indiana Supreme Court
) Cause No. 57S03-0003-CV-218
) Indiana Court of Appeals
CRYSTAL ROGERS, ) Cause No. 57A03-9903-CV-124
Appellee (Defendant Below). )
APPEAL FROM THE NOBLE CIRCUIT COURT
The Honorable Kevin P. Wallace, Judge
Cause No. 57C01-9611-CP-140
ON PETITION TO TRANSFER
March 27, 2001
BOEHM, Justice, dissenting.
I respectfully dissent. I do not believe that a suit for wrongful
enjoinment implicates the Tort Claims Act. Rather, I would conclude that, under
Trial Rule 65(C), a governmental entity seeking a preliminary injunction voluntarily assumes the
obligation to pay costs and damages arising from a wrongful injunction. As
a result, the claim by a person wrongfully enjoined is not one arising
in tort and the Tort Claims Act, which bars only claims in tort,
does not preclude recovery of those costs and damages from a governmental entity.
More importantly, the majoritys approach does nothing to resolve the tension between
the Tort Claims Act and Trial Rule 65(C), and ignores the point that
this Trial Rule has been repea
tedly enacted by the legislature, both before and
after the Tort Claims Act. I also find no support for the
majoritys conclusion that a governmental entityor any other party to a lawsuitacts wrongfully
under Trial Rule 65(C) only where it acts in bad faith or with
malice in invoking the power of the courts. It seems to me
that the majoritys rule is inherently self-contradictory. If the Tort Claims Act
applies at all to a wrongful injunction, it provides protection to the governmental
entity even for acts taken maliciously or in bad faith. Indeed, as
explained below, the torts that the Act does immunizemalicious prosecution and abuse of
processhave bad faith as an element. Thus, allowing suit only in the
event of bad faith or malice, although possibly supportable as a policy matter,
is a position incompatible with the Tort Claims Act and, in my view,
amounts to rewriting the statute.
All parties agree that the resolution of this case turns on the interplay
between the Indiana Tort Claims Act, see Ind.Code §§ 34-13-3-1 to 25 (1998),
and Indiana Rule of Trial Procedure 65(C). Section 1 of the Tort
Claims Act declares that the Act applies only to a claim or suit
in tort. I.C. § 34-13-3-1. The Act goes on to bar
suit against governmental entities, including counties, under certain circumstances and for specific enumerated
activities, two of which are the initiation of a judicial or an administrative
proceeding and the performance of a discretionary function. Id. § 34-13-3-3(5) &
(6). Indiana Trial Rule 65(C), which requires a party seeking a preliminary
injunction to post a bond, exempts a governmental organization from that requirement but
provides that such governmental organization shall be responsible for costs and damages.
Thus, the issue is whether the Tort Claims Act bars a party who
is the subject of a wrongfully issued preliminary injunction from obtaining costs and
damages from a governmental entity notwithstanding the trial rule. If obtaining a
preliminary injunction that is ultimately vacated is a tort, then it is necessary
to determine whether the statute or the trial rule governs. This was
the inquiry of the Court of Appeals. If, however, Rogers claim is
not grounded in tort, the Tort Claims Act does not apply. The
issue then becomes whether Trial Rule 65(C) standing alone is a sufficient basis
to impose liability on Noble County for Rogers costs and damages.
The Remedy for a Wrongful Preliminary Injunction Is Contractual in Nature
Many states, either by statute or by rule of court, provide that a
bond must be posted as a prerequisite to obtaining a preliminary injunction.
Similarly, Federal Rule of Civil Procedure 65(C) provides for the issuance of security
as a precondition to the grant of a preliminary injunction by a federal
court. Indiana Trial Rule 65(C), like the trial rules of many other
states, is modeled on the federal rule. Essentially, for the privilege of
obtaining the expedited and, by definition, preliminary relief of a preliminary injunction, the
plaintiff offers security in an amount that will adequately compensate the defendant if
it is later determined that the interim relief was improperly granted. The
enjoined party is a third-party beneficiary of the bond, which is a contract
between the issuer and the party seeking the injunction. Accordingly, if recovery
is sought on the injunction bond, it is essentially a contract claim.
Curtis 1000, Inc. v. Youngblade, 878 F. Supp. 1224, 1277-78 (N.D. Iowa 1995)
(citing Note, Recovery for Wrongful Interlocutory Injunctions Under Rule 65(C), 99 Harv. L.
Rev. 828, 832-33 (1986)); In re Estate of Prichard, 425 N.W.2d 744, 748
(Mich. Ct. App. 1988).
The federal rule is that a defendant wrongfully enjoined has no cause of
action in the absence of a bond.
W.R. Grace & Co. v.
Local 759, 461 U.S. 757, 770 n.14 (1983). For the most part,
the same has been true under state law as well. Note, Interlocutory
Injunctions and the Injunction Bond, 73 Harv. L. Rev. 333, 343-44 (1959).
The view of a claim for wrongful injunction as essentially contractual in nature
is consistent with that result. If a party who has obtained an
ultimately vacated injunction has committed a tort, the enjoined party would have a
claim with or without a bond to secure payment. In addition, in
many jurisdictions, and in Indiana until 1976,
the amount of recovery is generally
limited to the amount of the bond. Coyne-Delany Co. v. Capital Dev.
Bd., 717 F.2d 385, 393-94 (7th Cir. 1983); State v. Zahourek, 935 P.2d
74, 77 (Colo. Ct. App. 1996), affd, 956 P.2d 556 (Colo. 1998) (generally,
no recovery is allowed unless the wrongfully enjoined party has a claim for
malicious prosecution, restitution, or unjust enrichment). The sum of this appears to
be that in the vast majority of jurisdictions recovery by a wrongfully enjoined
party is viewed as fulfilling an undertaking by the party seeking the relief
to compensate for a wrongful injunction, not as compensating for a tort.
In Indiana, the law is less clear because our case law, like that
of a few other states, allows both an action on the injunction bond
as well as an action for damages beyond the amount of the bond.
See generally 42 Am. Jur. 2d Injunctions § 346 (2000). This
is provided by statute in some jurisdictions. E.g., Ill. Comp. Stat. 110/11-110
(1984). Indiana has permitted recovery beyond the amount of the bond without
any statutory basis other than Trial Rule 65(C). National Sanitary Supply Co.
v. Wright, 644 N.E.2d 903, 905 (Ind. Ct. App. 1994), trans. denied; Howard
D. Johnson Co. v. Parkside Dev. Corp., 169 Ind. App. 379, 389, 348
N.E.2d 656, 663 (1976). And in Indiana, a wrongfully enjoined party may
recover actual damages even if no security was demanded. Wright, 644 N.E.2d
at 905. The sum of this is that a claim for wrongful
enjoinment has a long history in Indiana, but has never been explicitly characterized
as either a tort or a contract claim.
Governmental Liability for Wrongful Injunctions
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 governments 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., 486 A.2d 1035, 1037 (Pa. 1985) (The bond
requirement . . . is merely to insure a ready source for payment
of damages if due.); Norco Const., Inc. v. King County, 721 P.2d 511,
513-14 (Wash. 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., 513 N.E.2d 598, 602-03 (Ill.
App. Ct. 1987); Orange County v. Heath, 192 S.E.2d 308, 310 (N.C. 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
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 go
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 states immunity act if the government is the
party seeking the injunction. Laidlaw, 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 states 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.
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 immu
nity. Campbell v. State, 259
Ind. 55, 63, 284 N.E.2d 733, 737-38 (1972) (abrogating sovereign immunity for state);
Klepinger v. Board of Commrs, 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 courts conclusion that nontortious activity
is immunized by the Tort Claims Act, nor with the majoritys 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 Carolinas Trial Rule
65(C), which, like Indianas, 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.
Noble County Assumed the Liability Provided by Trial Rule 65(C)
In my view, the basis upon which Rogers seeks recovery from Noble County
is essentially contractual. There is no written contract between the two, and
no bond creating a third party beneficiary relationship. Nonetheless, by pursuing a
preliminary injunction under Rule 65(C), Noble County accepted the arrangement imposed by the
Rule and bound itself to reimburse Rogers for costs and damages if it
was subsequently determined that the injunction should not have issued. See 1
Samuel Williston & Richard A. Lord, A Treatise on the Law of Contracts
§ 4:2 (4th ed. 1990) ([B]roadly speaking, any conduct of one party from
which the other may reasonably draw the inference of a promise, is effective
in law as such a promise.); Restatement (Second) of Contracts § 19 (1981)
(The manifestation of assent may be made wholly or partly by written or
spoken words or by other acts or by failure to act.); see also
Grove v. Charbonneau Buick-Pontiac, Inc., 240 N.W.2d 853, 856-57 (N.D. 1976) (published rules
of contest are a valid offer that, if acted upon, create a binding
contract); Lucas v. Godfrey, 467 N.W.2d 180, 183-84 (Wis. Ct. App. 1991) (same).
Although Rule 65(C) now directly creates the obligation to reimburse for a wrongful
injunction, Indiana law has long required this result. Initially, this was accomplished
by the requirement that a bond be posted. Indeed, the requirement that
a party seeking an injunction reimburse a defendant who is wrongfully enjoined predates
Rule 65(C) by nearly a century. In 1881, the legislature provided the
code pleading procedure for obtaining injunctions. 1881 Ind. Acts ch. 38, §
183. This included the requirement that a party seeking an injunction e
into a written undertaking, with surety . . . for the payment of
all damages and costs which may accrue by reason of the injunction.
Ind.Code Ann. § 3-2107 (Michie 1968). Rule 65(C) became effective as of
January 1, 1970, and Section 3-2107 was repealed effective the same day.
Thus, Indiana law has long provided by either rule or statute for damages
to be recovered by a wrongfully enjoined party.
In 1970, the obligation of private parties to post a bond in order
to obtain a prelim
inary injunction was retained in Trial Rule 65(C). The
government was relieved of that obligation and instead the Rule itself provided for
compensation to wrongly enjoined parties without the need for a bond. Indiana
law has thus preserved and reaffirmed the longstanding rule that a party wrongfully
enjoined may recover damages. A trial rule cannot override a statute on
a point of substantive law. However, in 1969, Trial Rule 65(C) was
adopted by this Court and was also enacted by the General Assembly.
See Pub. L. No. 191-1969, § 1, 1969 Ind. Acts 661. It
has been reenacted twice since that time, both subsequent to the enactment of
the Tort Claims Act in 1974. Ind.Code § 34-5-1-6 (1984); Ind.Code §
34-8-2-2 (1998). Presumably this belt and suspenders approach was designed to meet
precisely the point that some provisions of the trial rules verge or encroach
on substantive law. The 1970 changes merely replaced the bond requirement, which
plainly directed a contractual obligation of the governmental entity with a simple requirement
that the entity reimburse directly. Basic contract principles and the doctrine that
statutes are to be construed in harmony if possible lead me to conclude
that the action for wrongful injunction is not a tort within the meaning
of the Tort Claims Act. In my view, if the legislature wishes
to change that rule of substantive law, it may do so, but the
laws on the books do not provide the immunity Noble County claims.
The Policy Considerations Are for the Legislature to Resolve
Noble County urges that considerations of public policy require immunity for a governmental
entity from liability for an ultimately unsuccessful preliminary injunction. The State, as
amicus curiae, urges that the as-yet-undefined threat of damage awards against government officials
and agencies seeking injunctive relief will hamper enforcement efforts in areas such as
environmental protection, health code enforcement, fire and building safety, and workplace safety.
Equally compelling public policy concerns favor allowing the wrongfully enjoined d
efendant to recover
against the government. The requirement of posting bond or alternatively undertaking exposure
to damages encourages private parties and the governmental entity alike to be cautious
before invoking the extreme remedy of an injunction based on a hastily developed
and sometimes incomplete record. Moreover, the threat of damage awards is not
necessarily as-yet-undefined. Anticipating Rogers damages would have been unproblematic. Rogers was
living with her family in a house with no roof. It was
obvious that she would be required to find another place to live during
an adjudication on the merits. That is precisely what happened after the
tarpaulin covering her house was ripped away during high winds and brought down
a power line. To be sure, taxpayers will shoulder the burden of
any damage awards against the government. But the countervailing concern is that
denying damages requires a single citizen to bear the loss even if proven
correct. Trial Rule 65(C) was adopted by this Court and also enacted
by the General Assembly. It resolved this debate in favor of distributing
the loss among the taxpayers of the governmental unit rather than letting it
fall on a single unfortunate citizen. If the legislature wishes to change
that balance, it can do so. Under the current legal regime, however,
I believe Rogers is entitled to recover as the Rule provides.
A Wrongful Preliminary Injunction Does Not Require Malice or Bad Faith
Wrongful injunction has uniformly been found to mean erroneous, not malicious, and the
error is by the court, not the party seeking the injunction. The
majority concludes that the proper interpretation of wrongful under Rule 65(C), as applied
to governmental entities, would include only preliminary injunctions sought maliciously or in bad
faith. As a preliminary matter, I would note that there is no
basis for this conclusion in the plain language of the Rule, which makes
no distinction between governmental and private parties in this respect. As the
majority notes, a trial rule is subject to standard rules of statutory construction.
Noble County v. Rogers, ___ N.E.2d ___, ___ n.3 (Ind. 2001).
I see no basis for the proposition that the wrongfulness of an injunction
varies depending on the identity of the party seeking the injunction. More
importantly, the majoritys view of the Rule runs counter to the common and
longstanding understanding of the law of preliminary injunctions.
The general rule at common law is that, in the absence of malicious
prosecution or abuse of process, a party is not liable in tort for
the wrongful issuance of a preliminary injunction. Sneakers v. Cobb County, 455
S.E.2d 834, 836 (Ga. 1995); Thayer Co. v. Binnall, 95 N.E.2d 193, 201
(Mass. 1950); Mayor of Lansing v. Ku Klux Klan, 564 N.W.2d 177, 180-81
(Mich. Ct. App. 1997); State ex rel. Douglas v. Ledwith, 281 N.W.2d 729,
734-35 (Neb. 1979); Church of Latter Day Saints v. Wallace, 573 P.2d 1285,
1288 (Utah 1978); 42 Am. Jur. 2d Injunctions § 337 (2000). Thus,
the prevailing authority on this matter is that a wrongful injunction, on the
one hand, and abuse of process and malicious prosecution, on the other, are
wholly separate concepts. A frequently stated rationale for this view that no
tort arises from a wrongful injunction is that any error arising from the
incorrect issuance of the preliminary injunction stems from the court, and not from
the party seeking the injunction. KKK, 564 N.W.2d at 180-81; Wallace, 573
P.2d at 1288; 42 Am. Jur. 2d Injunctions § 337.
The majoritys view mistakenly applies wrongful to describe not the courts action, but
the party seeking the injunction. Under the federal rule, after which our
rule is modeled, a party is wrongfully enjoined when it turns out the
party enjoined had the right all along to do what it was enjoined
Nintendo of America, Inc. v. Lewis Galoob Toys, 16 F.3d
1032, 1036 (9th Cir. 1994). This description in no way suggests that
actual wrongful conduct by the party seeking the injunction is required. There
is no requirement of malice or bad faith to recover for a wrongful
injunction. Rather, consistent with the accepted definition of wrongful, it is a
substantial departure from commonly understood preliminary injunction law under Rule 65(C) and its
counterparts around the country to conclude that a wrongfully enjoined person is entitled
to damages depending on the partys subjective state of mind.
Finally, the majoritys solution exacerbates the tension between the Tort Claims Act and
the Trial Rule. The majority establishes a rule that attempts to hold
the governmental entity in check by making it liable if it should act
in bad faith or with malice in seeking a pr
eliminary injunction. That
is a tort if committed by a private person, but it is also
a tort that the Tort Claims Act immunizes if committed by a governmental
entity. Thus, application of the Tort Claims Act does not turn on
the subjective state of mind of the governmental entity. Rather, with the
exception of a claim for false imprisonment or false arrest, under the Tort
Claims Act the governmental entity is immune from suits for malicious prosecution, which
include an element of bad faith. E.g., Butt v. McEvoy, 669 N.E.2d
1015, 1018 (Ind. Ct. App. 1996). Specifically, this immunity for malicious prosecution
extends to the context of the the initiation of a judicial or administrative
proceeding. Id. at 1017 (construing Ind.Code § 34-4-16.5-3(5), which was repealed but
not altered in the adoption of Ind.Code § 34-13-3-3(5)); Clifford v. Marion County
Prosecuting Attorney, 654 N.E.2d 805, 809 (Ind. Ct. App. 1995) (In view of
the fact that the primary tort which arises from initiating legal proceedings necessarily
includes the element of bad faith, the presence of bad faith cannot remove
the conduct from the very protection envisioned by the [Tort Claims] Act.).
As the Court of Appeals emphasized in Clifford, an activity is authorized under
the Tort Claims Act regardless of whether it was done negligently or done
with improper motive. 654 N.E.2d at 810. Ironically, because a suit
for malicious prosecution or abuse of process is by all accounts a tort,
the very language the majority invokes to describe the non-immune governmental action, i.e.,
malicious or in bad faith, simultaneously invokes the immunity of the Tort Claims
The Tort Claims Act does include language along the lines of the rule
established by the majority for two circumstances not relevant here.
section 34-13-3-3(8) provides immunity for an act or omission performed in good faith
and without malice under the apparent authority of a statute which is invalid
if the employee would not have been liable had the statute been valid.
Indiana Code section 34-13-3-3(20) provides for governmental immunity from errors resulting from
the Y2K bug so long as the act or omission did not amount
to gross negligence, willful or wanton misconduct, or intentional misconduct. Thus, where
the legislature intended to exempt bad faith actions from immunity, it has said
so. There is no such provision in the judicial proceedings or performance
of a discretionary function sections on which Noble County relies.
The Tort Claims Act is substantive law enacted by the legislature. It
grants immunity in tort to governmental entities for initiation of judicial proceedings.
Rule 65(C) imposes the requirement that the government assume the risk of liability
if it chooses to seek a preliminary injunction. I agree that this
provision could have been overridden by the legislature if it had chosen to
do so. But the Rule and statute as presently written are compatible
and do not encroach upon one another. Both have been repeatedly adopted
by the General Assembly. In sum, Noble County agreed to reimburse Rogers
when it sought to obtain a preliminary injunction. I would affirm the
DICKSON, J., concurs.
Although not cited in Noble Countys brief, two other subsections of Ind.
Code § 34-13-3-3 are arguably invoked by these facts:
(7) the adoption and enforcement of or failure to adopt or enforce a
law (including rules and regulations), unless the act of enforcement constitutes false arrest
or false imprisonment;
(8) an act or omission performed in good faith and without malice under
the apparent authority of a statute which is invalid, if the employee would
not have been liable had the statute been valid
We note that the Illinois Court of Appeals has held that a
statutory scheme of sovereign immunity overrides a trial rule that awards damages for
a wrongfully obtained injunction. See Village of Lake in the Hills v.
Laidlaw Waste Systems, Inc., 513 N.E.2d 598 (Ill. App. Ct. 1987).
When construing a trial rule, we employ such standard tools of statutory
interpretation. See Halsey v. Smeltzer, 722 N.E.2d 871, 873 (Ind. Ct. App.
2000) (citing Johnson v. State, 708 N.E.2d 912, 915 (Ind.Ct.App.1999), transfer denied), transfer
denied. Cf. Rumfelt v. Himes, 438 N.E.2d 980, 983-84 (Ind. 1982) (Generally,
the Rules of Trial Procedure are to be construed together and harmoniously if
possible. However, as with statutes, a specific rule controls over a general
one on the same subject matter.) (citations omitted).
Because the initial sentences of T.R. 65(C) deal solely with private parties
and do not operate against the backdrop of the ITCA, we express no
opinion as to what constitutes a wrongfully obtained restraining order or injunction in
a purely private suit. See, e.g., National Sanitary Supply Co. v. Wright, 644
N.E.2d 903, 906 (Ind. Ct. App. 1994) ([W]e hold that the test for
determining if a preliminary injunction was wrongfully issued [as between private entities] is
not whether the injunction was ultimately dissolved but rather whether injunctive relief was
warranted under the facts of the case.), transfer denied.
Courts in other jurisdictions have also recognized such inherent authority:
We have consistently upheld this Courts plenary power to control the course of
litigation in the trial courts. The legislature recognizes these pertinent constitutional provisions which
afford this Court full authority over rules of practice and procedure and the
Courts inherent power to prescribe rules. The prescription of the practice and procedure
attending the imposition of sanctions for the signing and filing of papers with
the courts is a procedural, not a substantive, matter. The legislature is prohibited
from enacting statutes pertaining to such matter.
Squillace v. Kelley, 990 P.2d 497, 501 (Wyo. 1999) (citations omitted). See
also Cotner v. Hopkins, 795 F.2d 900, 902 (10th Cir. 1986) (
strong precedent establishing the inherent power of federal courts to regulate the activities
of abusive litigants by imposing carefully tailored restrictions under the appropriate circumstances.).
However, several Indiana cases have refused to award attorneys fees and costs
against the government on the grounds that it is immune from punitive awards.
See, e.g., State v. Denny, 273 Ind. 556, 557, 406 N.E.2d 240, 241
(1980) (refusing to shift costs under Ind. Appellate Rule 15(g)); State v. Carter,
658 N.E.2d 618, 623-24 (Ind. Ct. App. 1995). These cases fall under
the so-called American rule that a party may not shift the expense of
bringing a lawsuit absent statutory authority. This refusal to allocate costs from
party to party as a providential matter is a separate analysis from a
courts power to sanction litigants.
Cf. Grand Trunk Western R. Co. v. Kapitan, 698 N.E.2d 363, 368
(Ind. Ct. App. 1998) (Darden, J., concurring in part and dissenting in part
) (Under Indiana Trial Rule 65(C), a party may recover damages, including attorneys
fees, for a wrongful injunction. However, I do not believe the injunction
in this case should be characterized as wrongful so as to warrant an
award of attorney fees [because the underlying issue] was a pure question of
I further believe such an award sets a bad precedent by
punishing litigants for an error on the part of the court and, as
such, augurs a chilling effect upon litigants.) (emphasis in original), transfer denied.
The Court of Appeals held, in Howard D. Johnson Co. v.
Parkside Development Corp., 169 Ind. App. 379, 389, 348 N.E.2d 656, 663 (1976),
that recoverable damages in the wrongful injunction suit are not limited to the
amount of posted bond. Prior to this decision, it appears that the
rule in Indiana mirrored those of most other statesno recovery was possible without
the bond. Consistent with this rule, a defendant who deemed the
amount of the bond insufficient to cover potential damages could petition the court
to increase the amount of the bond. See, e.g., Jones Drilling Corp.
v. Rotman, 245 Ind. 10, 13, 195 N.E.2d 857, 859 (1964).
The majority suggests that Indiana Code section 34-13-3-3(8) might also apply
to immunize Noble Countys actions in obtaining the preliminary injunction. I disagree.
This provision applies to a situation where a statute is subsequently declared
unconstitutional. Here, Noble County did not act under the apparent authority
of any statute that has subsequently been called into doubt. It acted
wrongly under a valid statute.