Ib Prop. Holdings Llc v. Rancho Del Mar Apartments Ltd. P'ship

• Decision Date: 23 August 2011
• Docket Number: No. 2 CA–CV 2011–0030.,2 CA–CV 2011–0030.
• Citation: 615 Ariz. Adv. Rep. 13,228 Ariz. 61,263 P.3d 69
• Parties: IB PROPERTY HOLDINGS, LLC, a Delaware limited liability company, Plaintiff/Appellee,v.RANCHO DEL MAR APARTMENTS LIMITED PARTNERSHIP, an Arizona limited partnership; and M.P.I. General II, Inc., an Arizona corporation, Defendants/Appellants.
• Court: Arizona Court of Appeals

228 Ariz. 61

263 P.3d 69

615 Ariz. Adv. Rep. 13

IB PROPERTY HOLDINGS, LLC, a Delaware limited liability company, Plaintiff/Appellee,

v.RANCHO DEL MAR APARTMENTS LIMITED PARTNERSHIP, an Arizona limited partnership; and M.P.I. General II, Inc., an Arizona corporation, Defendants/Appellants.

No. 2 CA–CV 2011–0030.

Court of Appeals of Arizona, Division 2, Department A.

Aug. 23, 2011.

Gust Rosenfeld P.L.C. By Matthew D. Bedwell, Phoenix, Attorneys for Plaintiff/Appellee.Sherman & Howard L.L.C. By David A. Weatherwax, Dewain D. Fox, Phoenix, Attorneys for Defendants/Appellants.

OPINION

BRAMMER, Judge.

¶ 1 Rancho Del Mar Apartments Limited Partnership (Rancho) and M.P.I. General II, Inc. (MPI) (collectively referred to herein as Rancho) appeal from the trial court's order granting a preliminary injunction against it in favor of IB Property Holdings, LLC (IB) and the court's denial of Rancho's motion to dissolve the injunction. Rancho argues the court erred by applying the wrong standard when determining whether to issue the preliminary injunction, by finding IB would suffer irreparable harm if the injunction was not granted, and by finding IB had a strong likelihood of success at trial. We affirm.

Factual and Procedural Background

¶ 2 We view the facts in the light most favorable to upholding the trial court's ruling. Smith v. Beesley, 226 Ariz. 313, ¶ 3, 247 P.3d 548, 551 (App.2011). This case involves a dispute about an easement among owners of a three-phase apartment complex. David Case and Mark Breen own equal shares of MPI. MPI is the operating general partner of Rancho, which owns Phase I of the complex. IB took title to Phase II following a trustee sale after Phase II's previous owner, Del Moral Limited Partnership (Del Moral), which Case owned in part, defaulted on loan obligations it had secured with a deed of trust on Phase II. Las Montañas Village Limited Partnership, also affiliated with Case, owns Phase III. Prior to Del Moral's default, all three phases of the apartment complex were treated as a single entity operating under shared use agreements.

¶ 3 In 1991, Rancho granted an easement to Del Moral's predecessor, Resolution Trust Corporation (RTC).¹ Case and Breen were involved in negotiating and executing the easement.² Del Moral paid for the construction of a security gate at the main Campbell Avenue entrance to the project and also constructed a gate across the easement, obstructing access to Bilby Road. The Bilby Road gate remained locked from its construction until IB opened it after it took title to Phase II. Rancho relocked the gate, and IB reopened it. After IB opened the gate for a second time, Rancho closed the gate again and constructed a fence completely blocking access to Bilby Road.

¶ 4 IB filed a complaint seeking injunctive relief and damages after Rancho built the fence, accompanied by a motion for a temporary restraining order to enjoin Rancho from blocking the easement. The parties stipulated to vacating the temporary restraining order hearing and agreed to an evidentiary hearing on IB's request for a preliminary injunction. At the conclusion of the hearing, the trial court granted the preliminary injunction. Rancho then filed a motion for reconsideration limited to the issue of irreparable harm and requesting in the alternative a stay pending appeal, which the court denied. The court signed an amended order granting the preliminary injunction. Rancho filed a motion to dissolve the preliminary injunction pursuant to Rule 65(c), Ariz. R. Civ. P., which the court denied. This appeal followed. We have jurisdiction pursuant to A.R.S. § 12–2101(A)(5)(b).

Discussion

¶ 5 “Granting or denying a preliminary injunction is within the sound discretion of the trial court, and its decision will not be reversed absent an abuse of that discretion.” Valley Med. Specialists v. Farber, 194 Ariz. 363, ¶ 9, 982 P.2d 1277, 1280 (1999). We defer to the court's factual findings unless clearly erroneous, but review its legal conclusions de novo. Flying Diamond Airpark, LLC v. Meienberg, 215 Ariz. 44, ¶ 9, 156 P.3d 1149, 1152 (App.2007).

The Shoen Standard for Preliminary Injunctive Relief

¶ 6 Rancho argues the trial court erred when it utilized the standard for granting preliminary injunctive relief established by Division One of this court in Shoen v. Shoen, 167 Ariz. 58, 63, 804 P.2d 787, 792 (App.1990). The court in Shoen adopted a Ninth Circuit standard the United States Supreme Court subsequently overturned in Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 20–21, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008), and Rancho urges us to follow the more stringent standard Winter announced. As a preliminary matter, although the court in Shoen cited both federal and state law as authority for the standard it ultimately adopted, it did not suggest Arizona either should or would follow federal rather than state precedent as that law developed. 167 Ariz. at 63, 804 P.2d at 792. To the extent Rancho suggests we should do so now, we decline the invitation.

¶ 7 Although Rancho contends Arizona courts “have long followed the same standard” as federal courts when considering whether to issue preliminary injunctions, it offers no authority supporting its suggestion that we should reject Arizona's established standard in the face of the developed conflicting federal law. Our supreme court adopted the Shoen standard in Smith v. Arizona Citizens Clean Elections Commission, 212 Ariz. 407, ¶ 10, 132 P.3d 1187, 1190–91 (2006), as have we, see Kromko v. City of Tucson, 202 Ariz. 499, ¶ 3, 47 P.3d 1137, 1139 (App.2002), and we are bound to follow decisions of our supreme court, Green v. Lisa Frank, Inc., 221 Ariz. 138, ¶ 13, 211 P.3d 16, 23 (App.2009). Our court of appeals has continued to employ the Shoen standard since Winter was decided. See Ariz. Ass'n of Providers for Persons with Disabilities v. State, 223 Ariz. 6, ¶ 12, 219 P.3d 216, 222 (App.2009); see also White v. Greater Ariz. Bicycling Ass'n, 216 Ariz. 133, ¶ 14, 163 P.3d 1083, 1087–88 (App.2007) (we consider decisions of coordinate courts highly persuasive and binding). The Shoen standard thus remains the law in Arizona, and the trial court did not err in applying it here.

¶ 8 Additionally, the distinction Rancho urges here does not affect the outcome in this case. The relevant difference between the Winter and Shoen standards is that Winter requires the party seeking an injunction to demonstrate that irreparable injury is likely, rather than merely possible. See Winter, 555 U.S. at 22, 129 S.Ct. 365. Here, although Rancho argues the trial court found irreparable harm was only “possible,” in its final amended order granting the injunction the court indeed found “[IB] will suffer irreparable injury if an injunction is not granted.” A finding that irreparable injury will occur plainly satisfies a requirement that irreparable injury be likely.

Evidence of Irreparable Harm

¶ 9 Rancho argues the trial court erred in granting, and then failing to dissolve, the preliminary injunction because IB had failed to show a likelihood of irreparable harm. The party seeking a preliminary injunction must establish:

1) A strong likelihood that he will succeed at trial on the merits;

2) The possibility of irreparable injury to him not remediable by damages if the requested relief is not granted;

3) A balance of hardships favors himself; and

4) Public policy favors the injunction.Shoen, 167 Ariz. at 63, 804 P.2d at 792. The court found as to factors (3) and (4) “the harm to [IB] if the injunction is not granted outweighs the harm to [Rancho] if the injunction is granted” and “public policy favors enforcement of the easement contract”; Rancho does not challenge those findings on appeal. The court also found:

[IB] will suffer irreparable injury if an injunction is not granted because the lack of access to Bilby will reduce occupancy of [IB]'s property, cause loss of income and loss of value of the property at a time when [IB] is seeking buyers for the property, and the amount of loss will be difficult to measure with reasonable certainty.

Rancho contends this finding was not supported by the evidence because IB's alleged injury “is remediable by damages” and monetary damages are adequate as a matter of law.

¶ 10 As Shoen provides, the party seeking an injunction must show a possibility of irreparable injury “not remediable by damages.” 167 Ariz. at 63, 804 P.2d at 792. Monetary damages may provide an adequate remedy at law. See Cracchiolo v. State, 135 Ariz. 243, 247, 660 P.2d 494, 498 (App.1983). However, where a loss is uncertain, monetary damages may be inadequate.³ See Phoenix Orthopaedic Surgeons, Ltd. v. Peairs, 164 Ariz. 54, 59, 790 P.2d 752, 757 (App.1989), overruled on other grounds by Farber, 194 Ariz. 363, 982 P.2d 1277. To determine whether damages would be an adequate remedy at law, the court should consider “the difficulty of proving damages with reasonable certainty.” Restatement (Second) of Contracts § 360 (1981); see also Restatement § 352 (damages not recoverable for loss beyond amount established with reasonable certainty); Restatement § 360 cmt. b (damages inadequate remedy if injured party can prove some but not all loss); Haralson v. Fisher Surveying, Inc., 201 Ariz. 1, ¶ 35, 31 P.3d 114, 121 (2001) (McGregor, J., concurring in part and dissenting in part) (Arizona courts generally apply law of the Restatement absent Arizona law to contrary).

¶ 11 Rancho argues IB's injury is remediable by damages because its complaint alleged it had suffered monetary damages “in an amount to be proven at trial” and did not allege that the full amount of its damages would be difficult to calculate.⁴ However, even if some damages may be proved and recovered, injunctive relief may be appropriate if those damages are inadequate to address the full harm suffered. See Peairs, 164 Ariz. at 59, 790 P.2d at 757.

¶ 12 Rancho also challenges the trial court's...