New from Indiana Court of Appeals: Damages for a Wrongful Discharge

Last week the Indiana Court of Appeals published its opinion in Debbie Pflederer v. Kesslerwood Lake Association, Inc. (Pdf format) about damages for a wrongful injunction.

In National Sanitary Supply Co. v. Wright, we explained that Trial Rule 65(C)

is an exception to the American Rule, recognized in Indiana, which generally makes parties responsible for their own attorney fees. The reason for the exception is that preliminary injunctions do not require a full hearing on the facts of a case and, thus, there is a likelihood that an injunction may be wrongfully issued. The security contemplated by T.R. 65(C) is intended to protect and compensate a defendant for any damages incurred as a result of a wrongfully issued preliminary injunction.

644 N.E.2d 903, 905 (Ind. Ct. App. 1994) (citations omitted), trans. denied (1995). We went on to hold that

the test for determining if a preliminary injunction was wrongfully issued is not whether the injunction was ultimately dissolved but rather whether injunctive relief was warranted under the facts of the case. A defendant’s entitlement to attorney fees and costs under T.R. 65(C) arises when he proves that it has been finally or ultimately determined that injunctive relief was not warranted on the merits.

Id. at 906 (footnote omitted).

It is undisputed that the preliminary injunction in favor of KLA was wrongfully issued. Given that KLA appealed the trial court’s dissolution of the preliminary injunction and denial of its request for a permanent injunction, the wrongfulness of the injunction was not “finally or ultimately determined” until October 3, 2006.....

Reversed for a new hearing on damages for the wrongful injunction.