Date: 1/2/2017

Injunction Bond Requirement Leads to Reversal of Damages Awarded for Wrongful Injunction

 

A party that is wrongfully enjoined may recover damages for a wrongful injunction, including attorneys’ fees. See § 60.07, Fla. Stat. Some courts have opined in dicta that without a bond such damages are unavailable. But in Vital Pharmaceuticals, Inc. v. Professional Supplements, LLC, No. 4D15-1123, involving an alleged breach of a restrictive covenant in an employment agreement, the issue was squarely presented and decided, with the court holding that a bond is necessary in order for a defendant to recover damages for a wrongful injunction.

After notice and hearing, the trial court granted a temporary injunction against former employees of Vital Pharmaceuticals, but did not require a bond. The injunction was soon dissolved, and that order was affirmed on appeal without a written decision. Thereafter, the wrongfully enjoined employee / defendants sought and were awarded their attorneys’ fees as damages.

On appeal by Vital Pharmaceuticals, handled by Beverly Pohl, Partner, and Christina Lehm, Associate in the Fort Lauderdale office, the Fourth DCA reversed after oral argument. The court held that the injunction bond required by rule 1.610(b), Fla. R. Civ. P., is the sole source of any damages for a wrongful injunction. The general rule is that without a bond, an injunction is not enforceable. And without a bond, the wrongfully enjoined defendant cannot recover damages. Note that alternate prevailing party fee provisions, such as by contract or statute, cannot be invoked until after final judgment, when the prevailing party can be determined. Those fee shifting provisions cannot be applied to non-final orders or to claims for damages for a wrongful injunction.

This decision demonstrates the importance—to both sides—of an injunction bond. At oral argument, the court pressed counsel about who has the burden to demand a bond if the trial court fails to impose one on its own. The answer is that the movant must request a bond to make any injunction effective, but a defendant who fails to do so risks having no damages remedy if the injunction is later set aside. At a hearing on bond amount, the defendant bears the burden to establish the amount, although it is within the trial court’s discretion.

To view the VPX decision, please click here.