INDIANA CASE LAW UPDATE: Merging Merits Trial With Preliminary Injunction

Merging Merits Trial With Preliminary Injunction

Stephen E. Arthur

 

Trial Rule 65(A)(2) permits a trial court to advance and consolidate a trial on the merits with a preliminary injunction hearing.  The court may order consolidation before or after commencement of the injunction hearing.  Not expressly addressed in the rule is whether the trial court must provide notice of consolidation to the parties, and, if notice is not given, what is the consequence.

This problem is significant, especially where the injunction hearing is conducted shortly after the lawsuit is filed, the parties have had little opportunity to conduct discovery, and the court does not announce its intention to consolidate under the hearing has concluded.

Trial Rule 65(A)(2) also does not address whether a party may waive error in a trial court’s failure to provide notice of consolidation, especially if the moving party asks the court to grant final judgment-type relief, such as money damages.  The Indiana Supreme Court examined both of these issues in John C. Roberts v. Community Hospitals of Indiana, Inc., 897 N.E.2d 458 (Ind. 2008).

Roberts, a physician, sued Community Hospitals, claiming a breach of Roberts’ residency contract.  Roberts requested a temporary restraining order and preliminary injunction reinstating him as a resident of Community Hospitals.  The trial court denied the request for temporary restraining order and set a hearing on the request for preliminary injunction to be held two months later.  The preliminary injunction hearing lasted eight hours and involved the admission of several documents and testimony of several doctors, including Roberts.  The trial court asked the parties to submit proposed findings of fact and conclusions of law.  In response, Roberts submitted a proposed order that requested not only a preliminary injunction but also asked for specific performance and monetary damages.  Thereafter, the trial court advanced and consolidated the application for preliminary injunction with the final judgment.  Roberts filed a Motion to Correct Error, which contained an affidavit by Roberts’ counsel stating that, had notice of consolidation been provided, Roberts would have engaged in further discovery, retained an expert, and called additional witnesses at trial.  The Motion to Correct Error was denied and, on transfer, the Supreme Court affirmed the trial court. 

In an opinion authored by Justice Boehm, the Supreme Court affirmed that Trial Rule 65(A)(2) is intended to promote judicial efficiency by permitting a trial court to consolidate proceedings where to do so will avoid the repetition of evidence in multiple proceedings.  The Court referenced a number of Indiana cases which hold that the trial court must provide parties with adequate notice of consolidation.  Notwithstanding this requirement, the court concluded that consolidation without notice will not constitute reversible error absent a showing of prejudice.  Prejudice requires something more than a party’s statement that it might have presented more evidence had it received advance notice of consolidation.  “Bare assertions that discovery was incomplete or witnesses were not called will not suffice, at least where, as here, there was time for significant discovery.”  Id. at 466.  Rather, the party opposing consolidation must identify evidence specifically, which, if admitted, could reasonable change the outcome on the merits.  Alternatively, the party may demonstrate why available evidence was not accessible and could not be presented at the injunction hearing.          

The Supreme Court identified five factors a court must consider in deciding whether prejudice exists: (1) the scope of the issues in the case, (2) the opportunity that the parties have had for discovery, (3) the degree to which continuance and discovery requests have been honored, (4) the extent to which the parties litigated the merits of the case at the preliminary injunction hearing, and/or (5) the realistic ability of the trial court to render judgment using the testimony and evidence elicited at the preliminary injunction hearing.  The court noted that the case for relaxing these prejudice requirements may be stronger where the opponent of the consolidation is also the party who opposed injunctive relief.

Finally, the court examined the extent to which a party may waive a failure of notice, even where prejudice is established under the standard adopted in the Roberts case, by requesting final judgment or non-injunctive-type relief.  Although the court found no waiver in the conduct of Roberts, it clearly admonished the Indiana bar to be careful when requesting relief during or after the preliminary injunction hearing.  “[P]arties should be mindful that a request for relief available only in a final judgment after a preliminary injunction hearing may invite consolidation under Trial Rule 65(A)(2) and waive any objection to lack of notice.” Id. at 469.

 

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Stephen Arthur is a partner with Harrison & Moberly, LLP (

www.harrisonmoberly.com)

, in Indianapolis, and concentrating his practice in federal and state business and tort litigation. He is the author of Indiana Civil Trial Practice, published by West Publishing, and co-author of Professor Harvey’s Indiana Rules of

Procedure Annotated.  Paul Carroll assisted with this review. The opinions and analysis expressed in this column are those of the author.