§ 1.8.1 In General.

• Jurisdiction: Arizona

§ 1.8.1 In General. Rule 65(e) of the Arizona Rules of Civil Procedure provides in pertinent part:

No restraining order or preliminary injunction shall issue except upon the giving of security by the applicant, in such sum as the court deems proper, for the payment of such costs and damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained.

The purpose of this provision is to provide an adequate fund from which the enjoined party may later be compensated for his injuries, if the injunction is found to have been issued wrongfully. Northeast Airlines, Inc. v. Nationwide Charters & Conventions, Inc.,413 F.2d 335 (1st Cir. 1969) ; Washington Capitols Basketball Club, Inc. v. Barry,304 F. Supp. 1193 (N.D. Cal.) , aff’d,419 F.2d 472 (9th Cir. 1969) .

The requirement of Rule 65(e) that a plaintiff post security as a condition of preliminary relief appears mandatory. Bayham v. Funk,3 Ariz. App. 220, 413 P.2d 279 (1966) . This conclusion is reinforced by the general rule of construction that since injunction rules are set forth with considerable precision, they must be scrupulously observed. Bussart v. Superior Court,11 Ariz. App. 348, 464 P.2d 668 (1970) . Nonetheless, the Fifth Circuit has held “that the court ‘may elect to require no security at all.’” Kaepa, Inc. v. Achilles Corp.,76 F.3d 624, 628 (5th Cir. 1996) (quoting Corrigan Dispatch Co. v. Casa Guzman,569 F.2d 300, 303 (5th Cir. 1978) ).

Recognizing the requirement of security as mandatory, the question still remains as to the validity of an order that has been issued without security. Several courts have held that orders issued without security are void, and presumably may simply be disobeyed by the party enjoined. State v. Nettz,114 Ariz. 296, 560 P.2d 814 (Ct. App. 1977). See generallyPioche Mines Consolidated, Inc. v. Dolman,333 F.2d 257 (9th Cir. 1964) , cert. denied, 380 U.S. 956 (1965) ; Bayham v. Funk,3 Ariz. App. 220, 413 P.2d 279 (1966) . More recently, however, the Arizona Court of Appeals, disagreeing with Bayham v. Funk, reasoned that since Rule 65(f) was eliminated, the failure to post a bond does not render an injunction unenforceable. Matter of Wilcox Revocable Trust,192 Ariz. 337, 340, 965 P.2d 71, 74 (Ct. App. 1998) . Other courts simply have held the order subject to reversal. Telex Corp. v. IBM Corp.,464 F.2d 1025 (8th Cir. 1972).

Although probably misinterpreting the rationale of Bayham v. Funk and the status...