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Sanctions and Costs, Compared

by Gary Muldoon

For engaging in "frivolous" conduct, Part 130 of the Rules of Court authorizes two remedies. The court may grant an award of costs or impose sanctions. Both are financial in nature. What is the difference?

Costs are paid to another party

"Costs," as set forth in 22 NYCRR § 130-1.1(a), are "in the form of reimbursement for actual or expenses reasonably incurred and reasonable attorney’s fees." These, then, are to be paid to an opposing party as payment for engaging in frivolous conduct.

Sanctions are paid to Lawyers’ Fund

In contrast, "sanctions" are a financial penalty that go to the State of New York. More precisely, sanctions are deposited with the Lawyers’ Fund for Client Protection. § 130-1.3.

$10,000 maximum for sanctions

With sanctions, the maximum amount is $10,000 for any single occurrence of frivolous conduct. § 130-1.2. With costs, no maximum is set forth in the rules; the amount of costs awarded can exceed $10,000, and cases have granted costs in excess of that amount. See Galasso, Langione & Botter, LLP v Liotti, 867 NYS2d 666 (Sup 2008).

Two penalties imposed

The rules provide that sanctions may be imposed "In addition to or in lieu of awarding costs . . .." Thus, both sanctions and costs may be granted. See Curcio v J P Hogan Coring and Sawing Corp., 303 AD2d 357, 756 NYS2d 269 (2d Dept 2003).

In a custody proceeding, a party was ordered to pay both costs and sanctions for frivolous motions, sought by the other party and a law guardian. Tercjak v Tercjak, 49 AD3d 773, 854 NYS2d 454 (2d Dept 2008).

In a malpractice suit against an accounting firm, baseless claims were asserted. These confused and delayed defendant’s legitimate attempt to conduct discovery to avoid furnishing documents that would tend to show plaintiff’s commission of state sales tax fraud. A sanction of $10,000 as well as nearly $28,000 in attorney fees and costs were imposed. Barco Auto Leasing Corp v Grant Thornton, LLP, 298 AD2d 341, 751 NYS2d 204 (2d Dept 2002).

A law firm continued to refuse to vacate a temporary restraining order on a bank account, after it was established that individual defendants in the prior action, which had led to the order, were not signatories to the account. A sanction was proper, based on false assertion of material facts, and costs were also granted for refusing to release the TRO. Intercontinental Bank Ltd v Micale & Rivera, LLP, 300 AD2d 207, 753 NYS2d 449 (1st Dept Dept 2002).

Judgment required

Regardless of whether sanctions or costs are imposed, a judgment is to be entered by the court. § 130-1.2. Weissman v Weissman, 8 AD3d 263, 777 NYS2d 678 (2d Dept 2004).

© 2009 by Gary Muldoon.