STATE OF MINNESOTA
IN COURT OF APPEALS
School of Communication Arts, Inc., et al.,
Academy Education Center, Inc., et al.,
Filed September 22, 1998
Hennepin County District Court
File No. 981192
James T. Martin, Dan T. Ryerson, Gislason, Martin & Varpness, P.A., 7600 Parklawn Avenue South, Suite 444, Edina, MN 55435 (for respondents)
Ronald L. Snelling, Jill N. Moeller, Snelling, Christensen & Laue, P.A., 5101 Vernon Avenue South, Suite 400, Edina, MN 55436 (for appellants)
Considered and decided by Kalitowski, Presiding Judge, Amundson, Judge, and Holtan, Judge.*
U N P U B L I S H E D   O P I N I O N
Appellant Academy Education Center (AEC) challenges the district court's order of a temporary injunction in AEC's counterclaim for breach of contract against respondent School of Communication Arts (SCA). Appellant contends that because respondent breached the parties' contract, the district court erred in enjoining appellant from further use of respondent's curricula and materials and from soliciting respondent's students and faculty. Respondent contests the amount of the injunction bond. We affirm.
A district court has discretion to issue a temporary injunction, and a reviewing court will not overturn that decision unless there is a clear abuse of discretion. Carl Bolander & Sons v. City of Minneapolis, 502 N.W.2d 203, 209 (Minn. 1993). A district court abuses its discretion by disregarding either facts or equitable considerations. Thompson & Barnes, 200 N.W.2d 921, 925 (Minn. 1972). On appeal, the evidence considered by the district court should be viewed in the light most favorable to the prevailing party. Thiesen's, Inc. v. Red Owl Stores, Inc., 309 Minn. 60, 66, 243 N.W.2d 145, 149 (1976).
The purpose of a temporary injunction is to maintain the status quo between the parties until the case can be decided on its merits. Miller v. Foley, 317 N.W.2d 710, 712 (Minn. 1982). The court considers five factors in its decision to grant a temporary injunction:
1) The nature and background of the relationship between the parties pre-existing the dispute giving rise to the request for relief;
2) The harm to be suffered by the plaintiff if the temporary restraint is denied, as compared to that inflicted on the defendant if the injunction is issued;
3) The likelihood that the party seeking relief will prevail on the merits at trial;
4) Any questions of public policy that may be raised by the fact situation, as expressed in state or federal statute; and,
5) Administrative burdens, if any, involved in judicial supervision and enforcement of the injunction.
Dahlberg Brothers, Inc. v. Ford Motor Co., 272 Minn. 264, 274-75, 137 N.W.2d 314, 321-22 (Minn. 1965). Both parties agree that the most important factor here is the third.
In the underlying case, both parties contend that the other first breached the agreement involving the transfer of respondent's educational curricula and equipment to appellant. Appellant asserts it was justified in its continued use of the curricula and equipment already transferred because respondent had been selling equipment appellant contends was part of the transfer.
We agree with the district court that appellant's reliance on the argument that respondent first breached the agreement is misplaced. Even if respondent's actions constituted a breach, appellant at least arguably was not entitled to continue to use the copyrighted and proprietary materials given in anticipation of the agreement. As noted by the district court:
Plaintiff has shown that it will likely prevail at trial as to the non-fulfillment of the agreement and the lack of any contractual basis upon which defendant AEC can base a claim of right to use SCA's copyrighted and proprietary materials or to take over and perform a "teach-out" of SCA program.
Because the use of the materials and solicitation of respondent's business is the subject of the injunction, we cannot say the district court erred in concluding, in its assessment of likely success on the merits, that appellant was benefiting from the failed agreement without a corresponding benefit to respondent. Therefore, given our limited standard of review for district court injunctions, we conclude there was no clear abuse of discretion.
Respondent claims the $538,000 security bond set by the district court was too high. However, the district court may set the amount it "deems proper" to cover the costs imposed by the temporary injunction. Minn. R. Civ. P. 65.03 (a). Based on the evidence, we cannot say the bond amount determined by the district court is an abuse of discretion in light of both the delay caused by the temporary injunction and the equipment that appellant had to purchase after the agreement fell through.
* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.