The Appellate Division reversed the Order which sua sponte imposed sanctions in the amount of $10,000 on each of the parties, pursuant to 22 NYCRR 130-1.1. Although Supreme Court has the authority to sua sponte raise the issue of sanctions, the parties must be given a reasonable opportunity to be heard before sanctions are actually imposed. Here, the parties' appearance before the court was in connection with an application to for an interim stay of an ongoing trial based upon a disputed arbitration agreement. Supreme Court raised the issue of sanctions for the first time during that appearance. The appearance was brief and mostly related to the issue of the interim stay. While Supreme Court raised valid concerns about whether the parties were wasting valuable court time, when after multiple days of trial had been completed they put before the court a disputed agreement to arbitrate the very issues that were being addressed at trial, the parties were not given a reasonable opportunity to address the court's concerns. The Appellate Division remanded to the Supreme Court to give the parties an opportunity to be heard on the issue of sanctions.
Melohn v. Melohn, NY Slip Op 02344 (1st Dep't April 15, 2021)
