Appeal from Sedgwick district court; DOUGLAS R. ROTH, judge.
1. As a general rule, attorney fees and expenses of litigation, other than court costs, incurred by a prevailing party are not recoverable against the defeated party in the absence of a clear and specific statutory provision or an agreement between the parties. Without statutory authority or an agreement by the parties, a trial court's equitable powers do not extend to the awarding of attorney fees.
2. Statutory provisions allowing attorney fees are typically construed strictly.
3. Attorney fees can be recovered under K.S.A. 60-905(b), which requires a bond to be posted before a temporary injunction can operate. The purpose of the bond is to secure to the party injured by a temporary injunction those damages the injured party may sustain, including attorney fees. Before damages can be recovered under K.S.A. 60-905(b), there are two requirements that must be met. First, it must be determined that the temporary injunction should not have been granted. Second, it must be established that the fees were incurred as the actual, natural, and proximate result of the granting of the temporary injunction.
4. Attorney fees recoverable under K.S.A. 60-905(b) are limited strictly to those fees incurred in the dissolution of the temporary injunction.
5. Where the trial court's authority to award attorney fees is questioned, an appellate court is presented with a question of law over which it exercises unlimited review.
6. Under K.S.A. 60-905(b), the analysis of whether a temporary injunction should not have been issued must be based upon whether the movant met the five conditions for a temporary injunction by establishing: a substantial likelihood of eventually prevailing on the merits; a reasonable probability of suffering irreparable future injury; the lack of obtaining an adequate remedy at law; the threat of suffering injury outweighs whatever damage the proposed injunction may cause the opposing party; and the impact of issuing the injunction will not be adverse to the public interest.
7. A party who files a counterclaim and seeks a declaratory judgment and injunction in addition to answering and opposing the entry of a permanent injunction in favor of the other party is entitled only to those fees incurred in seeking the dissolution of the temporary injunction and is not entitled to damages for fees that would necessarily have been incurred in pursuing the counterclaim and its attendant remedies, even if the issues relevant to the counterclaim are intertwined with the issues relevant to the temporary injunction.
The opinion of the court was delivered by: Luckert, J.
Reversed and remanded with directions.
This appeal raises an issue of first impression: When a party who receives a temporary injunction and posts an injunction bond does not ultimately prevail in the action, is the party liable under K.S.A. 60-905(b) for the attorney fees and expenses incurred by the opposing party, including fees incurred during a trial on the merits and during an appeal, even though the opposing party files a counterclaim and seeks a temporary and permanent injunction? Because damages payable by injunction bonds are generally limited to those actually and proximately resulting from the effect of the temporary injunction itself, as opposed to litigation expenses independent of the temporary injunction, we conclude that a party who files a counterclaim and seeks a declaratory judgment and injunction in addition to answering and opposing the entry of a permanent injunction in favor of the other party is entitled only to those fees incurred in seeking the dissolution of the temporary injunction and is not entitled to damages for fees that would necessarily have been incurred in pursuing the counterclaim and its attendant remedies.
The attorney fees and expenses at issue in this appeal arise from litigation that culminated in this court's decision in Idbeis v. Wichita Surgical Specialists, P.A., 279 Kan. 755, 112 P.3d 81 (2005) (Idbeis I). The focus of the litigation is the enforceability of restrictive covenants that prohibited employees of Wichita Surgical Specialists, P.A. (WSS), from competing against WSS. Gary S. Benton, M.D.; Robert H. Fleming, M.D.; and John D. Rumisek, M.D. (Surgeons) and other physicians filed the suit after giving WSS notice that they were voluntarily terminating their employment relationship. The Surgeons and some other WSS-employed physicians, including Dr. Idbeis, who is not a party to this appeal, intended to establish competing practices within the geographic territory and during the time period covered by the non-competition agreement and, in doing so, would have breached the restrictive covenants. Idbeis I, 279 Kan. at 761.
Through this action the Surgeons sought a judgment declaring the restrictive covenants unenforceable. Additionally, on March 15, 2002--the same date as the suit was filed--the Surgeons sought and received an ex parte temporary restraining order that prohibited WSS from enforcing the restrictive covenants.
Less than a week later, WSS filed a motion to vacate the temporary restraining order and on the same date filed a counterclaim seeking a declaratory judgment that the covenants were enforceable. WSS also sought a temporary and permanent injunction requiring compliance with the restrictive covenants.
The trial court conducted a hearing on the motion to vacate and on June 13, 2002, issued a temporary injunction prohibiting WSS from enforcing the restrictive covenants. Pursuant to K.S.A. 60-905(b), the trial court required the Surgeons to post an injunction bond.
Approximately 1 year later, after conducting discovery, the parties tried the case to the court. The trial court ruled that the restrictive covenants in the Surgeons' employment contracts were enforceable. However, the trial court granted the Surgeons' alternative request that they be allowed the option of paying liquidated damages and, upon doing so, continue their competing practice.
The Surgeons appealed and WSS cross-appealed. In Idbeis I, 279 Kan. 755, we affirmed the trial court's decision that the restrictive covenants in the Surgeons' employment contracts were enforceable, but we reversed the trial court's ruling grafting a liquidated damages provision into the contracts. Idbeis I, 279 Kan. at 775.
After this court issued its mandate in Idbeis I, WSS filed a motion for attorney fees and costs under K.S.A. 60-905(b). In its motion, WSS sought to recover as damages from the Surgeons (1) fees incurred in filing a motion to vacate the temporary order and in preparing for and conducting the hearing on the motion; (2) fees incurred in conducting discovery after the trial court's June 13, 2002, ruling; (3) fees incurred in the trial on the merits of the Surgeons' declaratory judgment claims and WSS's counterclaim; and (4) fees incurred in the Idbeis I appeal. WSS claimed a total of $375,218.38. WSS argues it is entitled to the fees and expenses because it ultimately prevailed in the underlying action based upon this court's ruling.
The trial court granted the motion and determined the amount of attorney fees and expenses to be $361,851.38. Consequently, the trial court entered judgment against each surgeon (Drs. Benton, ...