Bixby v. Lifespace Communities, Inc.

Background

Marlene H. Bixby, Martha Rogers, and William and Eleanor Nickles lived in separate townhomes at Friendship Village of Bloomington, which Lifespace Communities, Inc. owned and operated. Each plaintiff had entered into a Residency Agreement with Lifespace requiring Lifespace to make a specified living unit available for the resident’s lifetime, subject to the agreement’s terms. The agreements were not leases and did not grant the residents an interest in real property, but they identified specific units and limited Lifespace’s ability to terminate the agreements to stated grounds for “just cause.”

In November 2017, Lifespace told the plaintiffs that it planned to redevelop the Village grounds and completely demolish their homes. Lifespace offered them the choice of waiting for another unit or leaving the Village, and required them to decide by May 31, 2018. Lifespace did not identify a breach by the plaintiffs or a basis for termination under the agreements. Lifespace admitted that the agreements were binding and that the plaintiffs had satisfied their occupancy requirements, but denied that it intended to breach the agreements or force the plaintiffs to move.

The plaintiffs sued for breach and anticipated breach of contract, seeking specific performance and damages, and for a declaration that Lifespace was or would be in material breach. The court had previously issued a temporary restraining order and then considered the plaintiffs’ request for a preliminary injunction.

Preliminary-Injunction Analysis

A preliminary injunction is temporary relief intended to preserve the existing situation until the court decides the merits. The court considered the plaintiffs’ likelihood of success, the threat of irreparable harm, the balance of harms, and the public interest.

Likelihood of success. Applying Minnesota contract law, the court concluded that the plaintiffs had shown a strong likelihood of success on their anticipatory-breach claim. An anticipatory breach occurs when a contracting party clearly indicates before performance is due that it will not perform. Lifespace admitted that the contracts existed and that the plaintiffs had performed their obligations. The court found that Lifespace’s redevelopment plan, marketing of new units, plans to take deposits, and letters requiring the plaintiffs to relocate or leave showed a strong likelihood that Lifespace did not intend to honor the agreements, despite its denial of that intent.

The court also found that the plaintiffs might be entitled to specific performance, a remedy requiring compliance with the contract rather than merely awarding money damages. Although the plaintiffs acknowledged that they did not own the townhomes, the court found that their contractual interests resembled an ownership interest or life estate because the agreements concerned specific units, the homes had been their primary residences for years, and the agreements required homestead classification for some of the units. The court also found a strong likelihood of success on the plaintiffs’ request for a declaratory judgment concerning Lifespace’s anticipated breach.

Irreparable harm. The court found that losing the plaintiffs’ homes could not be fully compensated with money. The townhomes were their primary residences, the plaintiffs were elderly, and comparable affordable housing might not be available. The court also found the harm imminent because Lifespace planned to collect deposits and begin construction, and had required the plaintiffs to terminate their agreements or sign settlement agreements to move by May 31, 2018.

Balance of harms and public interest. The court found that the substantial harm to the plaintiffs outweighed the harm Lifespace identified. It also concluded that the public interest favored enforcing contractual agreements and avoiding the involvement of third parties in the redevelopment while the case was being litigated.

Bond

Federal Rule of Civil Procedure 65 generally permits a court to require security, commonly called a bond, to cover damages from an injunction that later proves wrongful. Lifespace requested a bond of $340,000 per month. The court declined to require one because Lifespace had not provided a rational basis for that amount, had not explained why the bond should continue accruing monthly, and had not shown that delaying deposits would cause non-speculative harm. The court also cited the plaintiffs’ high likelihood of success and Lifespace’s failure to contest the strength of their case.

Disposition

The court granted the plaintiffs’ Motion for Preliminary Injunction. Until further order, Lifespace and anyone acting in concert or participation with it were temporarily enjoined from:

- terminating the plaintiffs’ Residency Agreements; - demolishing or destroying the plaintiffs’ homes, in whole or in part; - beginning or continuing construction for the proposed redevelopment; or - selling, agreeing to sell, or promising to sell any part or interest in a development or redevelopment affecting the plaintiffs’ homes.

The court ordered that no bond was required under Rule 65(c) and referred the matter to United States Magistrate Judge Katherine M. Menendez for a settlement conference.