Due-Process Requirements for Civil Contempt Hearing

Hyundai Construction Equipment Americas, Inc., and Hyundai Heavy Industries Co., Ltd. v. Southern Lift Trucks, LLC, [Ms. SC-2023-0109, Nov. 3, 2023] __ So. 3d __ (Ala. 2023). The Court (Cook, J; Parker, C.J., and Shaw, Wise, Sellers, Stewart, and Mitchell, JJ., concur; Bryan and Mendheim, JJ., concur in the result) reverses the contempt order entered by the Washington County Circuit Court and remands the case for hearing.

This case involves a commercial dispute between Southern Lift Trucks, LLC and Hyundai. Southern alleges that Hyundai violated the terms of its dealer agreement by allowing a competitor to sell equipment in Southern’s designated territory. Southern’s lawsuit included a request for a preliminary injunction preventing Hyundai from allowing other dealers to sell certain equipment withing that territory. The circuit court granted the preliminary injunction and Hyundai appealed.

While that appeal was pending, Southern learned that Hyundai was still distributing equipment at another dealer within Southern’s territory. Southern then filed a contempt petition seeking sanctions against Hyundai. Hyundai filed an opposition response, and the matter was set for hearing. Approximately thirty minutes before the contempt hearing, Southern filed a reply brief. Attached to the reply was email correspondence from Hyundai’s counsel indicating that four sales had been made in Southern’s territory in violation of the injunction. Southern’s reply argued that these four sales represented an additional basis for contempt and sanctions. Ms. *14.

At the hearing and on appeal, Hyundai objected to Southern’s reply and supporting evidence. Hyundai argued that it had not had an opportunity to review Southern’s reply before the hearing. Further, Hyundai contended the reply contained new charges that Hyundai did not have proper notice of under Ala. R. Civ. P. 70A. The circuit court allowed the hearing to proceed as scheduled. Later, it issued an order granting in part Southern’s motion for contempt and sanctions. The order did not state that the circuit court excluded Southern’s reply arguments.

On appeal, the Court finds that the allegations of new sales contained in Southern’s reply constituted new allegations not presented in the initial contempt petition. Ms. **30-31. Under Ala. R. Civ. P. 70A(c)(1), a party charged with contempt must have notice of “the essential facts constituting the alleged contemptuous conduct.” Ms. *24. Thus, the Court concludes that “Hyundai was denied the ability to prepare a proper defense.” Ms. *32. The Court notes that contempt allegations are serious, and that particular attention must be paid to the procedures addressing the due-process requirements for such hearings.

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