Opinion ID: 2635336
Heading Depth: 2
Heading Rank: 2

Heading: Sanctions against the SFC-S

Text: ¶ 61 We review the imposition of sanctions for abuse of discretion. [103] Based on title 23, section 103, the trial court found the Spartanburg defendants asserted in bad faith both that they were not liable for the Oklahoma defendants' acts and that the court lacked in personam jurisdiction over them. Having found the trial court lacked in personam jurisdiction over the holding companies, we address the sanctions only as imposed on SFC-S. ¶ 62 Title 23, section 103, allows sanctions to be imposed against the non-prevailing party not to exceed $10,000.00 for reasonable costs, including attorneys fees, incurred with respect to such claim or defense. The imposition of sanctions imposed pursuant to title 23, section 103 requires: (1) a claim for damages for injury to person or personal rights, (2) adjudication of the claim on the merits, (3) motion for reimbursement of attorney fees and costs made by the prevailing party, and (4) a judicial determination that a non-prevailing party's assertion of a claim or a defense was made in bad faith, was not well grounded in fact, or was unwarranted by existing law or a good faith argument for the extension, modification, or reversal of existing law. [104] A bad faith claim is strictly limited to a claim made for oppressive reasons. [105] ¶ 63 As part of its judicial determination, the trial court must re-examine the record to determine the merits of the claim or defense and whether it fits within the fourth requirement regardless of the rulings and judgment in the case. [106] Further, the award must be based upon and supported by evidence presented in an adversary proceeding in which the facts and computation upon which the trial court rests its determination are set forth in the record with a high degree of specificity. [107] ¶ 64 It is clear from the transcript that the trial court did not re-examine the record as required, did not conduct an adversarial proceeding on the amount of the award, and did not base the amount of the award on facts and computation. Rather the court based the decision on memory and on the subsequent adjudication on the merits. In considering the issues of lack of in personam jurisdiction and of alter-ego liability, the trial court treated all the Spartanburg defendants as one entity, as did the plaintiff throughout the proceedings in the trial court. On remand, the trial court must vacate the order imposing sanctions on the holding companies and re-examine the sanctions against SFC-S in light of the lack of in personam jurisdiction over the holding companies to ensure that the defenses raised were not done in bad faith. If the trial court finds that SFC-S is still subject to sanctions under title 23, section 103, the amount of the award must be restricted to what the plaintiff incurred with respect to SFC-S' assertion of lack of in personam jurisdiction over it. To the extent attorney fees were incurred only in pursuing its claims against the holding companies, those are not recoverable.