Pure Wafer Inc. v. City of Prescott

• Decision Date: 31 July 2017
• Docket Number: No. CV–13–08236–PCT–JAT,CV–13–08236–PCT–JAT
• Citation: 275 F.Supp.3d 1173
• Parties: PURE WAFER INCORPORATED, Plaintiff, v. CITY OF PRESCOTT, et al., Defendants.
• Court: U.S. District Court — District of Arizona

275 F.Supp.3d 1173

PURE WAFER INCORPORATED, Plaintiff,

v.CITY OF PRESCOTT, et al., Defendants.

No. CV–13–08236–PCT–JAT

United States District Court, D. Arizona.

Signed July 31, 2017

Kenneth Layne Morrill, Martin A. Aronson, Stephanie Lynn Samuelson, Morrill Law PLC, Paradise Valley, AZ, for Plaintiff.

Andrew L. Pringle, Kenneth A. Hodson, Robert Alan Shull, Nicole Felker Bergstrom, Dickinson Wright PLLC, Phoenix, AZ, for Defendants.

ORDER AND PERMANENT INJUNCTION

James A. Teilborg, Senior United States District Judge

Pending before the Court is Pure Wafer, Inc.'s ("Pure Wafer's")Motion for Judgment on Remand ("Motion").(Doc. 135).The City of Prescott(the "City") and the City's individual administrators in their official capacities filed a Response to Pure Wafer's Motion.(Doc. 139).Pure Wafer has filed a Reply, (Doc. 141), and the City has filed an Objection to Pure Wafer's Reply, (Doc. 145).The Court now rules on Pure Wafer's Motion.

I.BACKGROUND

The Court previously detailed the factual and procedural background in its Findings of Fact and Conclusions of Law and Permanent Injunction ("Findings and Conclusions").(SeeDoc. 87at 1–13).After a bench trial, the Court found that the City violated the Contract Clause of the U.S. Constitution when it declared that its sewage treatment plant would no longer accept effluent discharged by Pure Wafer.(Seeid. at 13–29).Because the Court found in favor of Pure Wafer on its Contract Clause claims, it did not reach the merits of Pure Wafer's alternative claims for breach of contract and the implied covenant of good faith and fair dealing resulting from the parties' obligations under a Development Agreement.(Id. at 29).The Court also granted Pure Wafer's request for a permanent injunction, enjoining the City from enforcing various provisions of the City's OrdinanceNo. 4856–1313(the "Ordinance") against Pure Wafer.(Seeid. at 29–32).The Court finally entered a final judgment in Pure Wafer's favor.("Judgment,"Doc. 88).

The City appealed the Findings and Conclusions as well as the Judgment.(Doc. 95).The Ninth Circuit Court of Appeals(the "Ninth Circuit") affirmed-in-part and reversed-in-part and remanded for further proceedings.Pure Wafer Inc. v. City of Prescott , 845 F.3d 943, 959(9th Cir.2017).In particular, the Ninth Circuit held:

[W]hile the City prevails on its appeal of the Contract Clause issue, judgment for Pure Wafer can be sustained on the alternative ground that the City has breached its contract with Pure Wafer.We leave it for the district court on remand to decide the appropriate remedy.

Id. at 958.The Ninth Circuit also affirmed the Court's judgment on the City's counterclaim.Id. at 958 n.14.

After reviewing the parties' Joint Status Report on Remand, the Court continued to exercise supplemental jurisdiction over Pure Wafer's breach of contract claims and deemed Pure Wafer's complaint amended to conform to the evidence presented at trial.(Doc. 134at 1–2).The Court also ordered supplemental briefing on the appropriate remedy in light of the Ninth Circuit's opinion.(Id. ).

II.LEGAL STANDARD

A plaintiff must satisfy the following four-factor test before a court may grant permanent injunctive relief: (1)the plaintiff must suffer irreparable injury; (2) legal remedies, such as money damages, are inadequate; (3) an equitable remedy is warranted in light of the balance of hardships between the parties; and (4) a permanent injunction would not disserve the public interest.Monsanto Co. v. Geertson Seed Farms , 561 U.S. 139, 156–57, 130 S.Ct. 2743, 177 L.Ed.2d 461(2010)(citingeBay Inc. v. MercExchange, L.L.C. , 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641(2006) )."[T]he decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts, and ... such discretion must be exercised consistent with traditional principles of equity."eBay , 547 U.S. at 394, 126 S.Ct. 1837.

III.ANALYSIS¹

Pure Wafer argues that the Court should grant its request for a permanent injunction that (1) enjoins the City from enforcing portions of the Ordinance against Pure Wafer; and (2) orders the City to comply with specific portions of the Development Agreement.(SeeDoc. 135–1at 28–29).The City argues that Pure Wafer's request is duplicative, and the Court should only order it to comply with specific portions of the Development Agreement.(SeeDoc. 139–1at 2–3).Because the basis justifying Pure Wafer's remedy is different from the basis the Court relied upon in its Findings and Conclusions, the Court will re-analyze the four factors necessary to issue a permanent injunction consistent with the Ninth Circuit's mandate.

A.Specific Performance or a Permanent Injunction

As a threshold matter, the parties disagree whether the Court should order specific performance and/or grant Pure Wafer's request for a permanent injunction.In particular, Pure Wafer argues that both remedies are appropriate, (Docs. 135 at 5–10;141 at 2–3), while the City argues that only specific performance is an appropriate remedy, (Doc. 139at 4).The Court disagrees with each party's contentions.

In a breach of contract case, like this one, the distinction between specific performance and injunctive relief is not as clear as the parties suggest.When a party breaches a contract, a court may, in certain circumstances, order specific performance of a contract duty or order an injunction against breach of a contract duty.Restatement (Second) of Contracts§ 357(Am. LawInst. 1981).If a court"orders a party to render the performance that [it] promised," that remedy is typically classified as specific performance.Id.§ 357 cmt. a. If a court orders a party to refrain from certain conduct that would be inconsistent with the party's obligations under the contract, the remedy could be classified as either specific performance of the duty or an injunction against the prohibited conduct.Seeid.§ 357 cmt. b. Further, the fact that an injunction may be mandatory or prohibitory undermines any distinction between specific performance and injunctive relief in a contract case.SeeMarlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co. , 571 F.3d 873, 878–79(9th Cir.2009).

Perhaps recognizing the difficulty in distinguishing between specific performance and injunctions, courts often characterize requests for specific performance of contractual duties as requests for injunctive relief.SeePower P.E.O., Inc. v. Emps. Ins. of Wausau , 201 Ariz. 559, 38 P.3d 1224, 1228(Ariz. Ct. App.2002).("Indeed, courts frequently characterize an injunction preventing a party from breaching a contract as an order of specific performance.")(citingDaley v. Earven , 131 Ariz. 182, 639 P.2d 372(Ariz. Ct. App.1981) );see alsoLansmont Corp. v. SPX Corp. , No. 5:10-cv-05860 EJD, 2012 WL 6096674, at *5–6(N.D. Cal.Dec. 7, 2012)(recognizing a permanent injunction as a means of ordering specific performance).Likewise here, where the parties have not cited—and the Court has not located—any authority requiring it to characterize the relief requested by Pure Wafer as specific performance, the Court treats Pure Wafer's request as one for a permanent injunction subject to eBay 's four-factor test.

Additionally, while the City strenuously argues against the Court granting Pure Wafer's request for a permanent injunction, its own proposed form of relief is, by definition, a permanent injunction.(See, e.g. , Doc. 139–1at 3(proposing an order "that the City shall not ... refuse to accept [specified] wastewater into the City sewer system so long as the concentration of fluoride in that wastewater does not exceed 100 mg/L")).Thus, the Court finds that the parties' disagreement on whether the Court should order specific performance or grant Pure Wafer's request for a permanent injunction is legally irrelevant.Instead, the parties actually disagree over whether the subject of the permanent injunction should be the Development Agreement, the Ordinance, or both.

B.Irreparable Harm and Inadequate Remedies Available at Law

Pure Wafer argues that a permanent injunction is justified because merely ordering the City to pay damages while the City continues to breach the terms of the Development Agreement would be "contrary to the ends of justice."(Doc. 135at 8 n.3).In particular, Pure Wafer argues that, upon signing the Development Agreement, it did not have the expectation that it would be required to pre-treat its effluent or design, construct, and operate its own fluoride treatment facilities.(Id. ).The City does not disagree that there is irreparable harm and an inadequate remedy at law, but instead argues that the irreparable harm stemming from its breach of the Development Agreement is not proportionate to a permanent injunction against the City's enforcement of Ordinance.(Doc. 139at 4–6).In particular, the City notes that the Ninth Circuit did not make detailed conclusions regarding the specific provisions of the Ordinance that led the City to breach the Development Agreement.(Id. at 6).The Court agrees.

Irreparable harm is "that for which compensatory damages are unsuitable."MGM Studios, Inc. v. Grokster, Ltd. , 518 F.Supp.2d 1197, 1210(C.D. Cal.2007)(quotingWildmon v. Berwick Universal Pictures , 983 F.2d 21, 24(5th Cir.1992) ).Because a breach of contract is generally compensable by money damages, a permanent injunction will rarely issue based on a breach of contract absent evidence of intangible injuries that may stem from the breach.However, irreparable harm may nonetheless be present in a breach of contract case.See, e.g. , Cazorla v. Hughes , No. CV 14-02112 MMM (CWx), 2014 WL 12235425, at *18–21(C.D. Cal.Apr. 7, 2014);Google, Inc. v. Jackman , No. 5:10-cv-04264 EJD (HRL), 2011 WL 3267907, at *5(N.D. Cal.July 28, 2011);see alsoRent–A–Ctr., Inc. v. Canyon Television & Appliance Rental, Inc. , 944 F.2d 597, 603(9th Cir.1991)(noting that ...