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It May Be Okay for the Arbitrator to Sleep, But Counsel Needs to Stay Sharp

In Loren Imhoff Homebuilder, Inc. v. Taylor2020 WI App 80, the Court of Appeals held that homeowners forfeited their claim that an arbitration award should be vacated because the arbitrator was drowsy or sleeping during the arbitration, reversing the trial court’s decision that the arbitrator imperfectly executed his powers.

Briefly, a dispute arose between homeowners and a contractor.  Presumably pursuant to contract language the dispute was mediated and then submitted to a single member arbitration; an award was made in favor of the builder/contractor.  While awaiting the decision, the homeowners asked the arbitrator to recuse himself alleging that he was biased, which included an assertion that he was exhibiting drowsiness or sleeping during the hearing.  This was disputed by the builder.  The arbitrator rejected the request.

The homeowners then moved to vacate the award in the circuit court pursuant to §788.10 (1)(d).  The court held that there was clear and convincing evidence that the arbitrator had rejected the homeowners’ expert’s testimony due to drowsiness or sleeping, also finding that the homeowners had not forfeited their claims and had shown prejudice.

In reversing the trial court, the Court of Appeals held that the homeowners had, in fact, forfeited their claim that drowsiness or sleeping prejudiced them.  The Court found that the homeowners did not specifically raise drowsiness or sleeping before the arbitrator, did not note any particular occasion that the homeowners attempted to rouse him, did not ask to resubmit evidence or reargue any particular point that he allegedly missed, and did not ask the arbitrator to fix any problems caused by the alleged drowsiness or sleeping.  The Court noted that great deference is given to an arbitrator’s award, and by agreeing to arbitration any issues with or during the arbitration should be brought to the arbitrator’s attention; remaining silent deprives the arbitrator the opportunity to avoid violating one party’s rights; timely objection is required to avoid the waste of time and expense later.  The forfeiture doctrine prevents “sandbagging” and gives agencies and lower courts the opportunity to correct mistakes early on.

Arbitration is an alternative dispute resolution method that parties may avail themselves to by mutual agreement, by contract or by court direction pursuant to statute (§§802.10 and 802.12).  Arbitrations are typically held before a single arbitrator or a 3 member panel.  Arbitration can be a time and cost-effective method of dispute resolution.  Although often a more informal setting than a trial, do not get lulled into a false sense of security by that informality.  The Loren Imhoff Homebuilder case provides a cautionary tale:  first, while a sole arbitrator may be easier to schedule and cost less than a 3 member panel, your case is at the whim, propensities and proclivities of one person; and second, timely and specific objections must be made to protect oneself from error.  So, make wise choices and speak now or forever hold your peace.

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