Loren Imhoff Homebuilder, Inc. v. Taylor
| Citation | 400 Wis.2d 611,2022 WI 12,970 N.W.2d 831 |
| Decision Date | 01 March 2022 |
| Docket Number | 2019AP2205 |
| Parties | LOREN IMHOFF HOMEBUILDER, INC., Petitioner-Appellant, v. Lisa TAYLOR and Luis Cuevas, Respondents-Respondents-Petitioners. |
| Court | United States State Supreme Court of Wisconsin |
For the respondents-respondents-petitioners, there were briefs filed by Deborah C. Meiners, Barret V. Van Sicklen, Jordan Rohlfing, and DeWitt LLP, Madison. There was an oral argument by Barret V. Van Sicklen.
For the petitioner-appellant, there was a brief filed by Paul W. Schwarzenbart, Jeffrey W. Younger, and Stafford Rosenbaum LLP, Madison. There was an oral argument by Paul W. Schwarzenbart.
KAROFSKY, J., did not participate.
¶1 We review the decision of the court of appeals1 that applied the doctrine of forfeiture as the basis for its reversal of the circuit court's2 vacatur of Loren Imhoff Homebuilder, Inc.’s ("Imhoff") arbitral award under Wis. Stat. § 788.10(1) (2019-2020).3 On our review, Lisa Taylor and Luis Cuevas ("the homeowners") urge us to reverse the court of appeals, arguing that they did not forfeit their objections to the arbitrator's conduct because they properly raised them before the arbitral award was issued. Furthermore, they assert that the arbitrator's sleeping was both misbehavior that resulted in prejudice and indicative of a flawed process to the extent that the vacatur of the arbitral award was required under both §§ 788.10(1)(c) and (1)(d).
¶2 We conclude that, because the homeowners objected to the arbitrator's sleeping before he issued the arbitral award, they did not forfeit their objection. However, we are evenly divided on whether the arbitration award should be vacated pursuant to Wis. Stat. § 788.10. Therefore, we reverse the decision of the court of appeals and remand the matter to the court of appeals for consideration of § 788.10 issues.
¶3 This case originates from a construction contract that Imhoff entered into with the homeowners for a remodeling project on their home. Eight months into the contract, the homeowners were dissatisfied with the work completed by Imhoff, alleging a number of deficiencies that they asserted breached the construction contract, as well as discrepancies in Imhoff's billing invoices. Following an unsuccessful attempt at mediation, Imhoff filed a petition to compel arbitration under the terms of the contract, which was granted by the circuit court.
¶4 The arbitration commenced before a single arbitrator and consisted of a five-day evidentiary hearing. Following the conclusion of the hearing, but prior to the conferment of the arbitral award, the homeowners raised objections to the arbitration proceedings and asked the arbitrator to recuse. Specifically, the homeowners asserted that the arbitrator was biased towards Imhoff, and that the arbitrator repeatedly fell asleep and missed the presentation of evidence by their expert witness. The arbitrator denied the homeowners’ motion and awarded Imhoff over $320,000 in damages and fees. The arbitrator did not directly address the homeowners’ allegation that he was sleeping during the hearing.4 Imhoff subsequently brought a motion in circuit court to confirm the arbitral award. The homeowners opposed Imhoff's motion and moved to vacate the award based, partly, on the arbitrator's sleeping.
¶5 The circuit court took testimony from the parties and their counsel regarding the arbitrator's sleeping during the arbitration hearing. The homeowners testified that his sleeping happened repeatedly and that "[t]here was never a day ... where he was not sleeping." Specifically, the homeowners noted that the arbitrator had "glazed eyes, haziness, drowsiness, and sometimes [went into a state of outright] sleep." The homeowners further testified that the arbitrator's sleeping prejudiced their case because it often coincided with their expert witness's testimony.
¶6 After hearing testimony from the parties and Imhoff's attorney in regard to the allegation that the arbitrator was sleeping, the circuit court said it found the homeowners’ testimony regarding the sleeping to be "credible." Conversely, it found Imhoff's counsel's testimony—that he did not see the arbitrator sleeping—to be "more [of] an acknowledgment" and "certainly not a denial" because he did not reject "the general proposition that [the arbitrator] was sleeping."
¶7 Following the testimony, the circuit court concluded that the homeowners had "satisfied [their] burden by clear and convincing evidence that [the arbitrator] so imperfectly executed his power that an award upon the subject was not made." Accordingly, the circuit court denied Imhoff's motion to confirm the award, granted the homeowners’ motion to vacate, and remanded the case for a new arbitration of the dispute with a different arbitrator. Imhoff appealed.
¶8 The court of appeals reversed, holding that by failing to raise the arbitrator's sleeping during evidentiary testimony at the hearing, failing to voice an objection requesting the arbitrator to reconsider any missed evidence, and waiting to raise the issue of sleeping until after the close of evidence, "the homeowners forfeited drowsiness or sleeping by the arbitrator as a basis to vacate the award."5 Loren Imhoff Homebuilder, Inc. v. Taylor, 2020 WI App 80, ¶14, 395 Wis. 2d 178, 953 N.W.2d 353.
¶9 We granted the homeowners’ petition for review. We determine: (1) whether the doctrine of forfeiture may be applied in an arbitration setting and, if so, (2) whether it should have been applied here.
¶10 Whether a party has forfeited its right to raise an issue on appeal is a question of law that we review independently. City of Eau Claire v. Booth, 2016 WI 65, ¶6, 370 Wis. 2d 595, 882 N.W.2d 738. See also State v. Coffee, 2020 WI 1, ¶17, 389 Wis. 2d 627, 937 N.W.2d 579 (). Additionally, whether a violation of Wis. Stat. § 788.10(1) occurred, thereby requiring vacatur of an arbitral award, is a question of law that we review independently. Racine Cnty. v. Int'l Ass'n of Machinists & Aerospace Workers Dist. 10, AFL-CIO, 2008 WI 70, ¶11, 310 Wis. 2d 508, 751 N.W.2d 312. And finally, we affirm the "circuit court's findings of fact unless they are unsupported by the record and are ... clearly erroneous." Royster-Clark, Inc. v. Olsen's Mill, Inc., 2006 WI 46, ¶11, 290 Wis. 2d 264, 714 N.W.2d 530.
¶11 Arbitration is, first and foremost, a matter of contract. Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 67, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010). It is "a method of dispute resolution in which the parties submit a dispute to an impartial person who has been selected by the parties for a final and binding decision." 7 Jay E. Grenig & Nathan A. Fishbach, Wisconsin Practice Series: Arbitration § 86:40 (5th ed. 2021). Arbitration can provide a "prompt and efficient method for resolving disputes without the expense, delays, or complications that are inherent in litigation." Id. Because arbitration occurs outside of the court system, it does not carry with it the same formality inherent in the judicial process. Id.
¶12 Arbitration proceedings are not required to follow procedures that are applicable to a court. Arbitration procedures are established by contract and are "enforceable except upon such grounds as exist at law or in equity for the revocation of any contract." Wis. Stat. § 788.01. The arbitrators are not required to have any legal education or background and are, instead, chosen based on "their integrity and impartiality as well as for their professional competence and knowledge of business affairs." Grenig & Fishbach, supra, § 86:44; see also Newark Stereotypers’ Union No. 18 v. Newark Morning Ledger Co., 397 F.2d 594, 599 (3d Cir. 1968) (). Unless limited by statute, rule, or arbitration agreement, "arbitrators have considerable discretion as to the mode of conduct[ing] the proceeding." See Grenig & Fishbach, supra, § 86:45. In addition, representation by counsel is not required in all arbitrations. Id.
¶13 We "often [have] referred to the issue preservation rule as the ‘waiver rule’ in the past." State v. Huebner, 2000 WI 59, ¶11 n.2, 235 Wis. 2d 486, 611 N.W.2d 727. Although opinions sometimes use State v. Ndina, 2009 WI 21, ¶29, 315 Wis. 2d 653, 761 N.W.2d 612 (quoting United States v. Olano, 507 U.S. 725, 733, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993) ).
¶14 Whether a right is forfeited or waived depends, in part, on the state of mind of the non-objecting party. Forfeiture has been consistently understood as failing to claim a right at trial or the simple failure to object. Ndina, 315 Wis. 2d 653, ¶30, 761 N.W.2d 612. Non-actions may result in forfeiture of the right on appellate review. Id. There is no subjective component to the forfeiture analysis; it occurs by operation of law. See State v. Kelty, 2006 WI 101, ¶18 n.11, 294 Wis. 2d 62, 716 N.W.2d 886 ().
¶15 Conversely, because waiver is the intentional relinquishment of a known right, see Ndina, 315 Wis. 2d 653, ¶29, 761 N.W.2d 612, there is a subjective component to determine whether the failure to assert the right was done knowingly. The determination of whether there has...
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Loren Imhoff Homebuilder, Inc. v. Taylor
...of the award. Loren Imhoff Homebuilder, Inc. v. Taylor , 2020 WI App 80, ¶13, 395 Wis. 2d 178, 953 N.W.2d 353 ( Imhoff I ), rev'd , 2022 WI 12, ¶22, 400 Wis. 2d 611, 970 N.W.2d 831 ( Imhoff II ). This court reversed the circuit court based on our conclusion that the homeowners had forfeited......