Hallick v. Greenpoint Asset Mgmt. II
| Docket Number | 2021AP1052 |
| Decision Date | 25 May 2023 |
| Parties | Erick Hallick, Petitioner-Respondent, v. Greenpoint Asset Management II, LLC and Michael G. Hull,Respondents-Appellants,Chrysalis Financial LLC, Christopher Nohl, Greenpoint Global Mittelstand I, LLC, Greenpoint Real Estate Development Fund, LLC, Greenpoint Fine Art Fund, LLC, Greenpoint Asset Management, LLC, Greenpoint Asset Management IV, LLC, Greenpoint Asset Management V, LLC, Bluepoint Investment Counsel, LLC, Respondents. |
| Court | Court of Appeals of Wisconsin |
This opinion will not be published. See Wis. Stat. Rule 809.23(1)(b)5.
Appeal from an order of the circuit court for Dane County: Cir. Ct. No. 2021CV304 VALERIE BAILEY-RIHN, Judge. Affirmed.
Before Kloppenburg, Fitzpatrick, and Nashold, JJ.
Per curiam opinions may not be cited in any court of this state as precedent or authority, except for the limited purposes specified in Wis.Stat. Rule 809.23(3).
¶1 Erick J. Hallick ("Hallick") entered into an agreement ("Settlement Agreement" or "Agreement") that resolved Hallick's claims against the settling entities which were pending in prior arbitration and litigation.[1] The Settlement Agreement provided that an "initial payment" and a "final payment" totaling $14,000,000 be made to Hallick. When the final payment was not made, Hallick returned to arbitration to enforce the Settlement Agreement. In the ensuing arbitration, Hallick and the participating Respondents disputed whether the Settlement Agreement imposes liability for the final payment due Hallick on all of the Respondents or only one specific Respondent; the dispute matters because that one Respondent had declared bankruptcy and its assets were not available to satisfy the final payment. Also in the ensuing arbitration, some of the participating Respondents moved to amend their response to Hallick's Statement of Claim to assert counterclaims alleging that Hallick breached the Settlement Agreement and his duty of good faith and fair dealing.
¶2 The arbitrator issued a written decision and order concluding that, based on the arbitrator's interpretation of the Settlement Agreement, the Agreement imposes joint and several liability on all of the Respondents; the arbitrator also denied the motion to amend. The arbitrator granted an award to Hallick in the amount of $13,625,000 which was the remaining amount of the final payment due under the Settlement Agreement.
¶3 Hallick sought confirmation of the arbitration award in the circuit court. Some of the participating Respondents objected and moved to vacate the arbitration award. The circuit court denied the motions to vacate and confirmed the arbitration award. Two of the participating Respondents, Greenpoint Asset Management II, LLC and Michael G. Hull (collectively "Greenpoint II"), appeal.[2]
¶4 On appeal, Greenpoint II makes two arguments: (1) the arbitrator exceeded his powers when he manifestly disregarded Wisconsin contract law in interpreting the Settlement Agreement to impose joint and several liability on all of the Respondents; and (2) the arbitrator imperfectly executed his powers when he denied Greenpoint II's motion to amend its response to assert counterclaims against Hallick.
¶5 We conclude that the arbitrator did not exceed his powers by manifestly disregarding Wisconsin contract law because there is a reasonable basis in the Settlement Agreement for his interpretation of the Agreement. We also conclude that the arbitrator did not imperfectly execute his powers when he denied the motion to amend based on the arbitrator's explanation that the counterclaims are not relevant to the purpose of the arbitration, which is to enforce the Agreement as the arbitrator interpreted it. Accordingly, we affirm the circuit court.
¶6 The following undisputed facts are taken from the arbitration decision and order.
¶7 In April 2019, Hallick entered into a Settlement Agreement with a number of Respondents, including Greenpoint II, to resolve all of Hallick's claims asserted against the Respondents pending in prior arbitration and litigation, with the exception of certain claims that were explicitly carved out of the Agreement and that are not at issue in this appeal.
¶8 The Settlement Agreement resolved Hallick's claims for a total of $14,000,000. The total included an initial payment of $375,000 to be made shortly after the execution of the Settlement Agreement, and a final payment of $13,625,000 to be made by July 21, 2019. The initial payment was made, but the final payment was not. We will present additional details regarding the contents of the Settlement Agreement in the discussion that follows.
¶9 In the summer of 2019, Hallick returned to arbitration to enforce the Settlement Agreement and invoked a provision in the Agreement calling for an in-kind distribution of assets in the possession of one of the Respondents, Greenpoint Tactical Income Fund ("GTIF"), to satisfy the final payment. These procedures "came to a halt" when GTIF filed for bankruptcy protection in October 2019.
¶10 In September 2020, Hallick filed in the arbitration proceeding a Statement of Claim to enforce the Settlement Agreement against all of the Respondents ("the named Respondents"), except GTIF and another Respondent that were both in bankruptcy.[3] The Statement of Claim alleged that the named Respondents breached the Settlement Agreement by not making the final payment and that each named Respondent is jointly and severally liable for the amount remaining unpaid. The Respondents do not dispute that Hallick's claim was properly before the arbitrator.
¶11 Two of the named Respondents settled with Hallick prior to the arbitration decision and the claims against them were dismissed. Five of the named Respondents defaulted when they did not appear before the arbitrator. The remaining named Respondents (as noted above, "the participating Respondents") formed two separate groups and each group responded to Hallick's claim, denying liability.
¶12 Pertinent to this appeal, the arbitrator addressed two issues: (1) "the liability, if any, of the [Respondents] under the Settlement Agreement" for the amount remaining unpaid to Hallick; and (2) whether one group of the participating Respondents should be allowed to amend its response in order to assert counterclaims alleging that Hallick breached the Settlement Agreement and his duty of good faith and fair dealing.[4]
¶13 As to the first issue, as we now summarize, the arbitrator concluded that As to the second issue, the arbitrator denied the motion to amend because the subject of the proposed counterclaims has "nothing to do with the dispute between the parties to this arbitration [and, therefore,] the interests of justice are not served by allowing the amendment."
¶14 Hallick petitioned the Dane County Circuit Court to confirm the arbitration award. Some of the participating Respondents objected to the confirmation and moved to vacate the arbitration award.
¶15 After briefing and oral argument, the circuit court denied the motions to vacate the arbitration award and confirmed the award. Greenpoint II appeals.
¶16 Greenpoint II seeks to vacate the arbitrator's award under Wis.Stat. § 788.10(1)(d) (2021-22), which provides that "the court … must make an order vacating the [arbitration] award … [w]here the arbitrators exceeded their powers, or so imperfectly executed them that a mutual final and definite award upon the subject matter submitted was not made."[5] As stated, Greenpoint II argues that: (1) the arbitrator exceeded his powers when he "manifestly disregarded Wisconsin contract law" in interpreting the Settlement Agreement; and (2) the arbitrator imperfectly executed his powers when he denied the motion to amend to assert counterclaims.
¶17 Whether an arbitration decision must be vacated presents a question of law that the court reviews de novo. Orlowski v. State Farm Mut. Auto. Ins. Co., 2012 WI 21, ¶14, 339 Wis.2d 1, 810 N.W.2d 775. We address each of Greenpoint II's arguments in turn.
¶18 Arbitrators exceed their powers through "perverse misconstruction, positive misconduct, a manifest disregard of the law, or when the award is illegal or in violation of strong public policy." Baldwin-Woodville Area Sch. Dist. v. West Cent. Educ. Ass'n-Baldwin Woodville Unit, 2009 WI 51, ¶21, 317 Wis.2d 691, 766 N.W.2d 591 (quoted source omitted). Greenpoint II argues that the arbitrator "manifestly deviated from applicable Wisconsin law regarding the interpretation of contracts" when he interpreted the Settlement Agreement as providing that all of the Respondents that signed the Agreement are jointly and severally liable for the $13,625,000 balance remaining after Hallick was paid the initial $375,000.
¶19 Our review of an arbitrator's award under Wis.Stat. § 788.10(1)(d) is highly deferential, as this summary of Wisconsin case law explains:
The standard for our review of the arbitrator's decision is the same as that for the circuit court, and we review the arbitrator's decision without deference to the decision of the circuit court. The scope of the court's review is limited. We presume the arbitrator's decision is valid, and we disturb it only where invalidity is shown by clear and convincing evidence. Essentially the court's role is supervisory in nature-to insure that the parties receive what they bargained for when they agreed to resolve certain...
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