In an action, inter alia, for a judgment declaring that the plaintiff is entitled to recover under an insurance policy, the defendant third-party plaintiff, Merchants & Businessmen’s Mutual Insurance Company, appeals from an order of the Supreme Court, Westchester County (Silverman, J.), entered January 28, 1998, which, upon prior orders of the same court, inter alia, granting the motion of the third-party defendant for the imposition of a sanction against it, and upon a hearing to determine the amount of the sanction, imposed a sanction upon it pursuant to 22 NYCRR 130-1.1 and 1.2 in the amount of $10,000, to be paid to the third-party defendants Herman Poritzky and Suburban Ventures.
Ordered that the order is reversed, without costs or disbursements, and the matter is remitted to the Supreme Court, Westchester County, for a new determination in accordance herewith.
The Supreme Court properly determined that the defendant third-party plaintiff, Merchants & Businessmen’s Mutual Insurance Company, engaged in frivolous conduct by commencing a third-party action without evidentiary grounds to believe that its claim was meritorious. After a hearing, the court determined that the attorney’s fee, costs, and disbursements incurred by the third-party defendants in the undisputed amount of $13,720.95, were fair and reasonable. It then imposed what it termed a sanction in the maximum amount of $10,000 against the appellant, and directed that it be paid to the third-party defendants.
Pursuant to 22 NYCRR 130-1.1 (a), the court may award “costs in the form of reimbursement for actual expenses and reasonable attorney’s fees” as a result of frivolous conduct. In *520addition to or in lieu of costs, the court may impose a sanction against either an attorney or a party to the litigation or both (see, 22 NYCRR 130-1.1 [a], [b]). While such a sanction may not exceed $10,000 (see, 22 NYCRR 130-1.2), there is no similar limit on the amount that the court may award as costs. Moreover, an award of costs is to be made to a “party or attorney in any civil proceeding or action” (22 NYCRR 130-1.1 [a]), but a sanction is to be “deposited with the Lawyers’ Fund for Client Protection” (22 NYCRR 130-1.3).
Here, it cannot be determined whether the court intended to sanction the appellants, or to award costs to the third-party defendant in the amount of its reasonable attorney’s fee, costs, and disbursements, or both. Therefore, the matter must be remitted for a new determination. S. Miller, J. P., Thompson, McGinity and Luciano, JJ., concur.