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Nolan v. Homes

Decided: October 28, 1988.

J. MICHAEL NOLAN AND KATHLEEN MURRAY NOLAN, PLAINTIFFS,
v.
HOMES BY BRINKERHOFF, INC., FRANK SERRA AND THE ESTATE OF WILLIAM BRINKERHOFF AND HOME OWNERS WARRANTY CORPORATION OF NEW JERSEY, DEFENDANTS



Arnold, P.J.Cv.

Arnold

This is the return day of motions for summary judgment brought by the defendants, the builder and the administrator of a warranty insurance program for a new home. The issue raised by the motions is whether the buyer of a new home may bring suit under an alternate new home warranty security program, established pursuant to N.J.S.A. 46:3B-8, after the buyer has participated in an informal dispute settlement proceeding. Because the new home warranty given to the buyer in this case provided for non-binding informal dispute settlement and informed the buyer that he could bring suit, this court holds that this action is not barred by the election of remedies provision, N.J.S.A. 46:3B-9, of "The New Home Warranty and Builders' Registration Act," or N.J.A.C. 5:25-3.10.

Since 1979 every buyer of a new home in New Jersey has been entitled to receive a warranty from the builder covering certain defects. N.J.S.A. 46:3B-4; N.J.A.C. 5:25-3.1. To insure that there are funds to pay for defects in new homes, builders may either pay moneys into a State administered new

home warranty security fund or may provide the buyer with insurance coverage from a private insurer approved by the Commissioner of the Department of Community Affairs, as an alternate new home warranty security program. N.J.S.A. 46:3B-8. Here the defendant builder, Homes By Brinkerhoff, provided the plaintiffs, J. Michael Nolan and Kathleen Murray Nolan with an insurance policy from a private insurance company, Home Owners Warranty Insurance Company (HOWIC). The defendant, Home Owners Warranty Corporation, (HOW), is the administrator of the insurance warranty program.

Pursuant to N.J.A.C. 5:25-4.2(e)2 such a private plan must provide for "conciliation and/or arbitration of any warranty claim dispute." The private plan must also provide the owner with an opportunity to accept or reject a "conciliation decision in satisfaction of the claim and notice of the opportunity to appeal that decision to a court of competent jurisdiction." N.J.A.C. 5:25-4.2(e)3. The insurance policy given to the plaintiffs by the builder provided in relevant part:

REQUEST FOR WARRANTY SERVICE. If you have a complaint, first send a clear and specific written complaint to your Builder. Ordinarily, your Builder will supply the warranty service provided in this Warranty without the need for direct involvement by HOW.

REQUEST FOR WARRANTY PERFORMANCE. If you believe your Builder has not performed as provided in this Warranty, you may submit your Request directly to HOW. You should make any such request by mailing the attached "Request for Warranty Performance" form to HOW at the mailing address shown on the Declarations page, or by sending a letter specifically demanding such performance and identifying yourself, your Builder, the defect, and the remedy you seek.

TIME OF NOTICE OF CLAIM. You must give written notice of a defect in any item under this Warranty to HOW no later than 30 days after the warranty coverage on that item expires. If such notice is not given to HOW by that deadline, the claims for the defect will be rejected.

DISPUTE SETTLEMENT. Upon receiving your "Request for Warranty Performance" HOW will notify your Builder and ask him to respond to your complaint. If your Builder disagrees with your complaint, HOW will arrange for informal dispute settlement between you and your Builder by a neutral third party. Your builder will be bound by such third-party decision upon HOW's receipt of your "Acceptance of Decision". (see below). [Emphasis supplied].

Under the Magnuson-Moss Warranty Act and under this Warranty, you may not file suit against your Builder until your claim has been submitted to

informal dispute settlement and a decision has been reached or you have waited 40 days for a decision following your submission of a Request for Warranty performance, whichever comes first. State or federal laws may permit ...


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