Arbitration

Judicial Review – “Drowsy” Arbitrator – Forfeiture

Loren Imhoff Homebuilder Inc. v. Taylor, 2020 WI App 80 (filed 5 Nov. 2020) (ordered published 23 Dec. 2020)

HOLDING: Parties forfeited arguments relating to an arbitrator’s “drowsiness” and “sleeping” during testimony because the parties did not first raise them with the arbitrator.

SUMMARY: Homeowners sued a builder, alleging multiple contractual breaches. An arbitrator conducted a five-day evidentiary hearing, deciding a number of issues in each party’s favor but delivering a net award in the builder’s favor. The homeowners then filed this action alleging multiple grounds for reversing the arbitrator’s decision. The circuit court rejected all but one ground for vacating the arbitration award. The only ground that the circuit court did not reject was that the arbitrator had allegedly fallen asleep on multiple occasions and his drowsiness undermined his decision. See Wis. Stat. § 788.10(1)(d).

The court of appeals reversed in an opinion authored by Judge Blanchard. The court of appeals held that the homeowners had forfeited their claims about the arbitrator by not first raising them before the arbitrator himself (see ¶¶ 3, 14). Although the homeowners had asked the arbitrator to recuse himself based on bias, they did not raise any questions about his understanding or grasp of the evidence related to his alleged sleepiness. Thus, the arbitrator had no opportunity to address his alleged drowsiness or to “fix any problems caused by dozing or sleeping” (¶ 14).

The opinion focused on the forfeiture issue as it applies to the judicial review of arbitration awards (see ¶ 19). Forfeiture doctrine discourages parties in litigation from “sandbagging” and gives agencies and lower courts an opportunity to correct mistakes early on. In an arbitration context, the forfeiture doctrine serves the parties’ agreement to engage in binding arbitration and is consistent with the “highly deferential standard of review” accorded arbitration awards.

“As a general rule, should a party that has contracted to abide by the results of binding arbitration and then participates in the arbitration be allowed to seek to have a circuit court vacate the results based on an issue that the party could have, but did not, bring to the attention of the arbitrator in a clear manner? In other words, can a party that effectively remains silent and deprives the arbitrator of the opportunity to avoid violating one of the party’s rights then prevail in court on a challenge to arbitration based on a violation of that right? As we now explain, Wisconsin has answered ‘no,’ as a general rule” (¶ 23). The opinion closely examines the case law supporting its holding.

Applying the law to the record, “the facts here easily fall within the rationale of the general rule of forfeiture in the arbitration context” (¶ 35). The discussion was necessarily fact intensive, but the court explicitly rejected the homeowners’ contention that they sufficiently raised the issue by making various attempts to awaken or rouse the arbitrator from his alleged slumber (see ¶¶ 41-42), nor did the awkwardness of raising this issue with the arbitrator himself excuse their failure (see ¶ 46). The court also deemed inadequate the homeowners’ purported efforts to actually raise the issue in their post-hearing submissions.

Health Care Records

Patient Records – Copy Costs – “Agents”

Townsend v. ChartSwap LLC, 2020 WI App 79 (filed 17 Nov. 2020) (ordered published 23 Dec. 2020)

HOLDING: When a designated “agent” provides copies of health care records on behalf of a health care provider, it is subject to statutory limits governing costs in Wis. Stat. section 146.83.

SUMMARY: The plaintiff was injured in a motor vehicle accident. Her attorneys obtained a one-page health care record (a billing statement) from her radiologist through ChartSwap, the radiologist’s agent. ChartSwap charged the plaintiff $36 for the single page. The plaintiff filed this class action alleging that ChartSwap was subject to the statutorily regulated rates provided by Wis. Stat. section 146.83(3f)(b). The circuit court granted ChartSwap’s motion to dismiss, ruling that only health care providers themselves are subject to the statute.

The court of appeals reversed in an opinion authored by Judge Donald. The court’s holding is an exercise in statutory construction. The term “health care provider” does not explicitly apply to medical-records providers or medical-billing agencies as defined in the statute (see ¶ 8). Nonetheless, the statute cannot be interpreted in a “vacuum.”

“Instead, we read this statute in conjunction with the remedial provision set forth in Wis. Stat. § 146.84(1)(b), which explicitly imposes liability upon ‘any person … who violates [§] 146.83,’ and Wis. Stat. § 990.001(9), which expressly states that when construing legislative requirements found in all statutes, the legislature’s requirements apply with equal force to the acts of agents” (¶ 10). As an agent, ChartSwap was subject to the same regulations as its principals.

The court of appeals considered and rejected a contrary opinion by a federal district court (see ¶ 13). “To allow a third-party to circumvent the statutory limitation on health care providers simply because it does not provide actual health care services would defeat the purpose of Wis. Stat. § 146.83(3f)(b) in and of itself and would yield absurd results. The intent of the legislature was to ensure that patients have access to medical records in the custody and control of health care providers without being charged more than the reasonable costs of copying and mailing them” (¶ 14).

Motor Vehicle Law

Operating While Intoxicated – Mandatory Minimum Term of Confinement – Successful Completion of Substance Abuse Program

State v. Gramza, 2020 WI App 81 (filed 10 Nov. 2020) (ordered published 23 Dec. 2020)

HOLDING: The mandatory minimum term of initial confinement for a seventh-offense operating while intoxicated (OWI) conviction must be served in full by the defendant, regardless of the fact that the defendant successfully completed the Substance Abuse Program.

SUMMARY: Defendant Gramza pleaded guilty to seventh-offense OWI. The circuit court was statutorily required to impose a mandatory minimum term of initial confinement of three years, which it did. It also imposed a three-year period of extended supervision to follow the confinement portion of the defendant’s sentence. The court also made the defendant eligible for the Substance Abuse Program (SAP) without including any explicit conditions on that eligibility. Upon successful completion of the SAP, the defendant would be entitled to release from prison with the remainder of his prison time converted to extended supervision time. See Wis. Stat. § 302.05.

The defendant completed the SAP approximately six months into his sentence and sought release from confinement pursuant to the SAP statute. The circuit court denied the request, presuming that in requiring a mandatory minimum term of initial confinement for a seventh-offense OWI conviction, the legislature intended that the defendant actually serve the sentence (see ¶ 12).

In an opinion authored by Judge Brash, the court of appeals affirmed. It concluded that “the most reasonable interpretation of these statutes, when considered in conjunction with each other under these circumstances, is that the mandatory minimum term of initial confinement of the OWI-7th statute must be served in full by Gramza, regardless of his successful completion of the SAP” (¶ 26).

The court also rejected the defendant’s argument that because the circuit court granted him eligibility for the SAP, the later denial of his release upon successful completion of the SAP was a double-jeopardy violation. Said the court: “[W]e have already concluded that the most reasonable interpretation of the OWI-7th statute is that the three year mandatory minimum term of initial confinement must be served in full. Therefore, Gramza’s double jeopardy argument – which relies on the incorrect presumption that he was entitled to early release under the SAP despite that mandatory minimum term – fails” (¶ 29).

Taxation

Tax Assessment Determinations – Certiorari Review

State ex rel. City of Waukesha v. City of Waukesha Bd. of Review, 2020 WI App 77 (filed 18 Nov. 2020) (ordered published 23 Dec. 2020)

HOLDING: Wisconsin Statutes section 70.47(13) did not authorize the city’s certiorari appeal of its board of review’s property assessment determination.

SUMMARY: The city of Waukesha assessor increased the assessed value of a local church. The church filed an objection to the increase, and a hearing was held before the city’s board of review. The board ruled in favor of the church, accepting the church’s valuation of the subject property. The city then petitioned the circuit court under Wis. Stat. section 70.47 for a writ of certiorari. The court issued the writ, and the board responded with a motion to quash the writ. The circuit court denied the motion, and the board appealed to the court of appeals.

The issue before the appellate court was whether Wis. Stat. section 70.47(13) authorized or empowered the city to take a certiorari appeal of the board’s determination. In an opinion authored by Chief Judge Neubauer, the court concluded “that, after examining the language of Wis. Stat. § 70.47(13), considering the statutory scheme and purpose as a whole, and employing [relevant] rules of statutory interpretation, § 70.47(13) is clear and did not authorize the City’s certiorari appeal of its Board’s determination to the circuit court” (¶ 22).      

The court was not persuaded by the city’s arguments that, if it is not allowed to appeal, no one can ensure that the board acts according to law and keeps within its jurisdiction, and no good public policy reasons exist to interpret the statute as the board suggests (see ¶ 34).

Among other things, the court of appeals noted that “the legislature may have set up the certiorari appeal provision for use only by the taxpayer because the City, through its appointed assessor, and its appointed Board of Review, has more than ample opportunity for input in the individual assessment process…” (¶ 35). “Moreover, had the legislature intended to allow the City to take a certiorari appeal here, it could have said so” (¶ 40), just as it has done in other statutory schemes.

Accordingly, the court of appeals reversed the decision of the circuit court and remanded the matter with directions to the circuit court to quash the writ of certiorari and dismiss the action.

Property Tax Assessments – Classification of Property as Residential Rather Than Agricultural

State ex rel. Nudo Holdings LLC v. Board of Review, 2020 WI App 78 (filed 25 Nov. 2020) (ordered published 23 Dec. 2020)

HOLDINGS: 1) The Kenosha Board of Review correctly applied Wisconsin law on property classification for tax-assessment purposes. 2) There was sufficient evidence supporting the board’s determination that the petitioner’s land was properly classified as “residential.”

SUMMARY: The issue in this tax-assessment case was whether vacant land slated for residential development, on which the landowner made minimal efforts to farm naturally growing crops, was correctly classified as residential rather than agricultural. This was significant for the landowner, petitioner Nudo Holdings LLC, because there is a significantly lower comparative tax burden for agricultural property. The city of Kenosha assessor classified Nudo’s property as residential. The city’s board of review upheld this classification, as did the circuit court on certiorari review. In a majority opinion authored by Judge Davis, the court of appeals affirmed.

For tax-assessment purposes, “a parcel is generally best classified as agricultural where it was used primarily for [Department of Revenue]-specified agricultural activities in the previous year and could support such use in the coming year” (¶ 16). As pertinent to this case, the Department of Revenue definition of “agricultural use” encompasses three activities that Nudo claimed as the basis for an agricultural classification: growing Christmas trees, farming walnuts, and keeping chickens (see ¶ 14).

The court first concluded that the board of review correctly applied the law in classifying Nudo’s property as “residential.” The assessor and the board relied on proper sources in classifying Nudo’s property (see ¶ 22). Among other things, the Wisconsin Property Assessment Manual (WPAM) provides that the intended future use of the property is a pertinent consideration and may be dispositive in the absence of sufficient evidence to support a different classification. The WPAM states that the residential class “includes vacant land in cities and villages where the most likely use would be for residential development” (¶ 23).

The assessor and the board properly considered the future use of Nudo’s property, which was located within the St. Peters Neighborhood Plan (meaning that the city had slated the location for single-family residential development) (see ¶¶ 7, 23).

The court also concluded that the board’s decision classifying Nudo’s property as residential rather than agricultural was supported by sufficient evidence. A large portion of the parcel, which contained few or no walnut trees, consisted of extremely heavy underbrush. It contained an unknown number of Christmas trees, which Nudo did not plant, harvest, or cultivate in any fashion. Neither chickens nor other livestock were raised on this portion in the relevant tax year.

A small portion of the parcel contained walnut trees, but “the only actions Nudo took with respect to these trees were cutting a trail to their location, planting a protective ‘windbreak packet,’ and engaging in vague efforts to gather some undisclosed quantity of walnuts” (¶ 31). It was Nudo’s burden to establish agricultural use, for example by submitting documentation to establish the yield of walnuts or by providing evidence of agricultural practices (see ¶ 32).

Said the court: “We hold only that neither the law nor the evidence permits us to overturn the residential classification of an overgrown, uncultivated vacant lot awaiting future residential development, given the minimal showing of agricultural activity in the record before us” (¶ 37).

Judge Reilly filed a dissenting opinion.