In Most Cases, You Have To Be A Party To Seek Sanctions Or To Have To Pay Them

by Gary Beaver

A trial court order sanctioned a plaintiff company and its owner with dismissal of claims, striking of pleadings, and default on counterclaims due to multiple failures to make proper discovery responses.  On January 4, 2011, in Honeycutt Contractors, Inc. v. Otto, the N.C. Court of Appeals reversed the sanctions against the individual owner because, though the pleadings alleged piercing the corporate veil, the owner was never made a party to the case and, therefore, the court lacked jurisdiction over him.  The sanctions against the company stood.  On the other side of the coin, in Lucas v. R.K. Lock & Associates, filed on March 1, 2011, the same court held that a company lacked standing to move for and the court lacked jurisdiction to grant Rule 11 sanctions where the company was listed only as a "dba" in the plaintiff's Complaint, the trial court had ruled that insufficient to make it a party, and the named defendant did not appeal that ruling.