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High court lifts stay on arbitration over Green Bay construction project

By: Erika Strebel, [email protected]//February 21, 2019//

High court lifts stay on arbitration over Green Bay construction project

By: Erika Strebel, [email protected]//February 21, 2019//

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The Wisconsin Supreme Court on Thursday struck down a lower court’s decision to halt arbitration proceedings over a dispute involving a Green Bay construction project until an insurance dispute connected to the project had been resolved.

The decision stemmed from a petition for a supervisory writ filed by CityDeck Landing, asking the high court to take over the dispute and strike down a lower court’s stay on the arbitration. A supervisory writ is a path to take a matter straight to the Wisconsin Supreme Court without having to go through the typical appeals process.

CityDeck had hired the general contractor Smet Construction to build CityDeck Landing, an $11 million-dollar luxury apartment complex in Green Bay. The subcontractors on the project included Lunda Construction Co., Lakeland Construction Inc. and GB Builders of Northeastern Wisconsin. According to the construction contract, any disputes that arose during the work had to be resolved by arbitration.

A serious disagreement eventually did develop between Smet and CityDeck. In 2016, CityDeck filed a demand for arbitration alleging that Smet had breached its contract and committed theft by contractor.

Smet attempted to pull the subcontractors enlisted on the project into arbitration, arguing that some of them had been responsible for the deficiencies alleged by CityDeck and that the project’s subcontracts contained a provision essentially requiring them to defend Smet in the event of a dispute.

GB Builders told its insurer, Society Insurance, about the arbitration claim. Society responded by hiring a lawyer to represent GB Builders. Smet asserted that it was insured by GB Builders’ insurer and that Society Insurance would defend Smet. A final arbitration hearing in the dispute was scheduled in March 2018.

But another dispute developed, this time when Society Insurance filed a petition seeking a declaratory judgement in Brown County against CityDeck, Smet and GB Builders. Society sought a declaration on what its duties to Smet and GB Builders were as a result of CityDeck’s arbitration claims. Also, Society asked the court to stay the arbitration proceedings until the insurance dispute was decided.

Brown County Circuit Court Judge Thomas Walsh granted Society’s request in January last year and stayed the arbitration proceedings. CityDeck asked the court to reconsider its decision, contending that it had no authority to stay a private arbitration. The court ignored the request, and CityDeck asked for a supervisory writ in the Wisconsin Court of Appeals, which declined to weigh in.

CityDeck filed another petition for a supervisory writ, this time to the Wisconsin Supreme Court, which agreed to take up the matter last year and held oral argument in the case in October.

The justices, in a 4-2 decision, written by Justice Rebecca Bradley, granted CityDeck’s petition. Among other things, the court found that Walsh had overstepped his authority by halting the private arbitration proceedings.

“Nothing in the statutes or the cases authorizes a circuit court to halt a private arbitration so that an insurance company can litigate whether its policy provides coverage to an insured,” Bradley wrote in Thursday’s opinion.

Justice Ann Walsh Bradley, joined by Justice Shirley Abrahamson, dissented. She contended, among other things, that CityDeck hadn’t shown that the delay in the arbitration would have caused the “irreparable harm” or “grave hardship” required for the issuance of a supervisory writ.

Justice Rebecca Bradley withdrew from participation in the case.

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