Can parties recover attorney fees for resisting preliminary injunctions after wrongful temporary restraining orders? IKON Office Solutions v. Crook Explained

In IKON Office Solutions v. Crook, the Utah Court of Appeals clarified when parties can recover attorney fees under Rule 65A after being wrongfully enjoined by temporary restraining orders. The decision addresses the challenging question of which fees are recoverable when defending against both temporary restraining orders and subsequent preliminary injunctions.

Background and Facts

IKON Office Solutions obtained a temporary restraining order against eight former employees who had joined competitor Uinta Business Systems, alleging breach of non-compete agreements and other claims. IKON then moved for a preliminary injunction to continue the restraint. At the preliminary injunction hearing, the trial court granted defendants’ motion for directed verdict, denied the preliminary injunction, and dissolved the temporary restraining order. After all claims were eventually dismissed, Uinta sought attorney fees under Rule 65A(c), which allows recovery of costs and fees incurred by parties wrongfully enjoined.

Key Legal Issues

The court addressed two primary issues: whether Uinta could recover fees for resisting the preliminary injunction when it was never actually issued, and whether Uinta could recover fees that would have been incurred in litigating the underlying merits regardless of the injunctive proceedings.

Court’s Analysis and Holding

The Court of Appeals held that parties may recover attorney fees for successfully resisting preliminary injunctions that would continue wrongful temporary restraining orders. The court reasoned that opposing a preliminary injunction is an effective way to eliminate wrongful enjoinder, and the fees incurred in this defense are a direct result of the wrongful temporary restraining order. However, applying the “but for” test from Tholen v. Sandy City, the court held that parties cannot recover fees they would have incurred in litigating the underlying lawsuit, even when those fees were necessary to show the moving party was unlikely to succeed on the merits.

Practice Implications

This decision provides important guidance for practitioners defending against injunctive relief. When seeking Rule 65A attorney fees, careful documentation is essential to distinguish between fees incurred solely due to the wrongful enjoinder and fees that would have been necessary for the underlying litigation. The ruling also confirms that parties need not file separate motions to dissolve temporary restraining orders when preliminary injunction hearings are already scheduled.