This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A03-1895

 

 

Progress Land Company, Inc.,

Respondent,

 

vs.

 

Soo Line Railroad Company,

Appellant,

 

City of Rosemount,

Respondent.

 

 

Filed July 6, 2004

Reversed and remanded

Toussaint, Chief Judge

 

Dakota County District Court

File No. C0-03-09440

 

Anne Olson, Gary A. Van Cleve, Christopher John Deike, Larkin, Hoffman, Daly & Lindgren, Ltd. 1500 Wells Fargo Plaza, 7900 Xerxes Avenue South, Bloomington, MN 55431-3800 (for respondent Progress Land Company, Inc.)

 

Donald Troy Campbell, Leonard Street and Deinard, 150 South Fifth Street, Suite 2300, Minneapolis, MN 55402 (for appellant Soo Line Railroad)

 

George C. Hoff, Justin Lee Templin, Hoff, Barry & Kuderer, P.A., 160 Flagship Corporate Center, 775 Prairie Center Drive, Eden Prairie, MN 55344 (for respondent City of Rosemount)

 

            Considered and decided by Peterson, Presiding Judge; Toussaint, Chief Judge, and Anderson, Judge.

 

 

U N P U B L I S H E D  O P I N I O N

 

TOUSSAINT, Chief Judge

 

In this appeal from orders granting injunctive relief in a real-estate dispute, appellant easement holder argues that the district court abused its discretion by misapplying the Dahlberg factors.  Because the district court granted the permanent relief requested in the landowner’s complaint without conducting a hearing on the merits of the case, we reverse and remand for trial.

FACTS

 

            On March 26, 2001, respondent Progress Land Company, Inc. (Progress) acquired acreage by a warranty deed indicating the property was subject to easements of record and “[s]pur [railway] tracks crossing over [the] subject property as shown on [a March 2, 2000] survey.”  Progress purchased the property for a residential development and obtained the City of Rosemount’s (the City) approval of a planned-unit development and agreement to subdivide. 

The subdivision agreement required that Progress would obtain easements for utilities and the City would install the utilities.  For drainage of the affected area, the City would install pipes under the spur tracks and into the “Wye area,” surrounded by railroad tracks, where a drainage pond would be located. 

On October 4, 2002, Progress, by its then-attorney Ward R. Anderson, wrote to appellant Soo Line Railroad inquiring about the spur line.  Anderson stated that he and the title companies “had been unable to ascertain any interest in the spur line railroad tracks or an easement over the property on which those railroad tracks are situated.”  He gave Soo Line notice that Progress “will commence, thirty (30) days after the date of this letter, activities which will physically remove the tracks from” Progress’s property.  He also stated that if Soo Line has “written documentation of a reservation or right, or some other basis for which your company retains some interest over the tracks,” he wanted that documentation before expiration of the 30-day period.  Progress did not wait 30 days before it began removing tracks.

When settlement negotiations failed, Progress simultaneously filed a verified complaint and a motion for a temporary restraining order.  The motion sought to enjoin Soo Line “from interfering with Progress’s installation of utilities on its property until Progress’s claims and defenses are finally disposed of by trial, hearing or settlement.”  The complaint sought a declaratory judgment that Progress had the legal right to install the utilities and requested preliminary and permanent injunctions enjoining Soo Line from interfering with Progress’s installation of utilities and requiring the City to install the utilities. 

After oral argument, the district court granted the requested temporary restraining order (TRO).  The August 27 order restrained Soo Line “from interfering with [Progress’s] or [Progress’s] agents’ right to install utilities on its real property” and required Progress to post $25,000 as security.  The court based its order on the factors enunciated in Dahlberg Bros. v. Ford Motor Co., 272 Minn. 264, 137 N.W.2d 314 (1965), concluding that they favored Progress.

           Progress then decided to proceed with excavation of the drainage pond in the Wye area.  Soo Line objected and moved the district court for clarification of the TRO.  Warren Israelson, who is Progress’s president, owner, and the engineer who designed the drainage system, testified at the hearing on the motion for clarification.  In the court’s subsequent order of September 16, it reiterated that Soo Line was enjoined from interfering with Progress’s installation of utilities; clarified that utilities included drainage pipes and a drainage pond; and added that the City “is ordered forthwith to install the integrated drainage system, consisting of underground pipes and a drainage pond, between the ‘Wye’ tracks on [Progress’s] real property . . . and across the surface area of [Soo Line’s] claimed easement.” 

Soo Line appealed, the City settled its appeal with Progress, and the district court issued a stay of proceedings pending review by this court. 

D E C I S I O N

A district court has discretion whether to grant or deny injunctive relief.  Bird v. Wirtz, 266 N.W.2d 166, 167 (Minn. 1978).  A reviewing court will not disturb that decision absent a clear abuse of discretion.  Carl Bolander & Sons Co. v. City of Minneapolis, 502 N.W.2d 203, 209 (Minn. 1993).  A clear abuse of discretion occurs when the district court disregards either facts or applicable principles of equity.  First State Ins. Co. v. Minn. Mining & Mfg. Co., 535 N.W.2d 684, 687 (Minn. App. 1995), review denied (Minn. Oct. 18, 1995).

Three stages of injunctive relief are available under Minnesota rules and substantive law.  See generally 2A David F. Herr & Roger S. Haydock, Minnesota Practice § 65.1 (1998).  A temporary restraining order is issued on an emergency basis and operates to prevent immediate irreparable injury until the need for a temporary injunction is determined at a hearing.  Berg v. Wiley, 264 N.W.2d 145, 151 (Minn. 1978).  A temporary injunction is issued after a hearing to preserve the status quo pending adjudication at a trial on the merits.  Pickerign v. Pasco Mktg., Inc., 303 Minn. 442, 446, 228 N.W.2d 562, 565 (1975).  A permanent injunction is issued only after the right to permanent relief has been established at trial.  Bio-Line, Inc. v. Burman, 404 N.W.2d 318, 320 (Minn. App. 1987).

Here, the August 27 order restrained Soo Line from interfering with Progress’s or Progress’s agents’ right to install utilities on the subject property.  This was the permanent relief requested by Progress against Soo Line in its complaint.  Although the district court did not use the term “permanent injunction” in the August 27 order, it granted all of the injunctive relief requested by Progress in its action against Soo Line and ordered the excavation of the Wye area, the surface rights of which were claimed by both parties.  When the court clarified its order on September 16, it reissued all of the permanent injunctive relief sought by Progress in its complaint against Soo Line and then added the remaining permanent injunctive relief requested by Progress against the City.

Temporary injunctive relief is justified if the threatened irreparable harm renders the relief available ineffective or impossible to grant at a later time.  2A Herr & Haydock, supra, at § 65.4.  The injury must be significant and irreparable in the sense that money damages cannot properly compensate for the loss.  Thomas v. Ramberg, 240 Minn. 1, 5-6, 60 N.W.2d 18, 21 (1953).  It is improper to use temporary injunctive relief as a vehicle for granting permanent relief without conducting a hearing on the merits of the case.  Bio-Line, 404 N.W.2d at 320.

Although the district court supported its TRO with a Dahlberg analysis, the principles of equity and the facts did not support its findings.  SeeDahlberg,272 Minn. at 274-75, 137 N.W.2d at 321-22 (setting out factors to be considered on motion for temporary restraining order).  First, there is no support in the record for the district court’s finding that Progress would suffer “an incalculable loss of community good will[] and a devastating loss of reputation and prestige with other developers and sub-contractors.”  While economic loss may be presumed, it alone does not constitute irreparable harm justifying an injunction.  See Rexton, Inc. v. State, 521 N.W.2d 51, 54 (Minn. App. 1994) (absent showing that award of monetary damages would be inadequate, district court properly denied motion for temporary injunction).  Second, an order does not maintain the status quo between parties if it grants all of the rights claimed by one party and denies all of the rights claimed by the other party; the district court’s equitable power protects the basic rights of the parties pending resolution of the dispute.  Pickerign, 303 Minn. at 446-47, 228 N.W.2d at 565 (purpose of both TRO and temporary injunction is preservation of status quo).  Third, the district court’s analysis of the merits of the claims disregarded Soo Line’s claimed rights as easement holder.  Even though the court correctly cited the legal principle that a landowner’s rights are subject to those of the easement holder, it neither assessed the extent of Soo Line’s claimed easement rights nor recognized their superiority to the fee holder’s rights. See Minneapolis Athletic Club v. Cohler, 287 Minn. 254, 259, 177 N.W.2d 786, 790 (1970).  Fourth, the district court’s balancing of harms disregarded Soo Line’s potential damages.  The court stated that Progress’s loss of its right to utilize its private property would be “inestimable,” but was silent as to the impact on Soo Line if it were to lose its right to utilize its private property.  In short, the Dahlberg analysis accompanying the August 27 TRO did not assess both parties’ positions and Progress’s need for immediate equitable relief.  

A district court may order the trial of the action on the merits to be advanced and consolidated with the hearing on a motion for a temporary injunction.  Minn. R. Civ. P. 65.02 (c).  Here, however, there is no indication that the district court issued such an order or conducted a trial on the merits.  See Berggren v. Town of Duluth, 304 N.W.2d 24, 26 (Minn. 1981). Although Progress’s president testified at the September hearing, it is evident from the transcript that the court was not conducting a trial and the parties were not litigating the merits of the dispute that day.  Soo Line, the moving party, had only moved for a clarification of the extant TRO.  For its part, the City stated on the record that it considered itself a third party to the primary dispute between Soo Line and Progress, and the court confirmed that it had intentionally excluded the City from the August 27 TRO.  Absent the process litigants are accorded in a trial on the merits, it was improper to grant all of the injunctive relief requested by Progress at the temporary-injunction hearing.

Reversed and remanded.