On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Monmouth County.
Gaulkin, Bilder and Arnold M. Stein. The opinion of the court was delivered by Arnold M. Stein, J.A.D.
[235 NJSuper Page 286] Plaintiffs appeal from an order entering summary judgment in favor of defendant builder Leisure Technology, Inc. and co-defendant Home Owners Warranty Corporation (HOW). The Law Division held that plaintiffs' civil action for damages was barred by N.J.S.A. 46:3B-9, the election of remedies provision of the New Home Warranty and Builders' Registration Act, N.J.S.A. 46:3B-1, et seq., and by N.J.A.C. 5:25-3.10, the remedies election regulation promulgated pursuant thereto. We reverse as to Leisure Technology, Inc., and affirm as to HOW.
On March 28, 1986, plaintiffs purchased a new condominium unit from Leisure Technology. They received a new home warranty from the builder, as required by N.J.S.A. 46:3B-4. The Act requires this warranty to be secured either by contributions from participating builders to a new home warranty security fund administered by the Commissioner of the Department of Community Affairs, or by a private plan covered by an insurer and approved by the Commissioner of Insurance (N.J.S.A. 46:3B-8). Leisure Technology provided plaintiffs with a policy from a private insurer. HOW is the administrator of the private insurer's warranty program.
Plaintiffs inspected the property just before the closing. They listed several deficiencies on a punch list provided by the builder. Of principal concern to plaintiffs was the carpeting, which they described as stained in several places, improperly seamed and consisting of several pieces assembled like a patchwork.
Plaintiffs were unsuccessful in getting the builder to correct the deficiencies listed on the punch list. They filed a claim with HOW. A dispute settler from HOW met with plaintiffs and the builder. He found the builder responsible for some claimed defects and not responsible for others. The dispute settler rejected plaintiffs' claim of defective carpeting.*fn1 The builder accepted all of the dispute settler's findings. Plaintiffs accepted all findings except those relating to the carpet.
The Expedited Dispute Settlement Rules furnished plaintiffs by HOW provided in Rule 24 as follows:
Other Remedies. The builder and the insurer are only obligated to perform on those items where the Dispute Settler has determined the builder to be responsible under the Limited Warranty. The home owner may have, and wish to exercise other legal remedies on those items where the builder was not found responsible under the Limited Warranty. [emphasis added].
The dispute settlement record completed by the dispute settler contains the following language directly above the signature line for the homeowner and the builder, each page of which must be signed by the builder and the homeowner:
I also understand that on those items where the Dispute Settler has found the Builder not responsible under the Limited Warranty, (boxes checked "No" under "Builder Responsible"), I may have other legal remedies which I am free to pursue.
Plaintiffs completed the Acceptance of Decision form provided by HOW, typing in the following language just above their signatures:
Owners expressly limit their acceptance to those items which the builder has been judged responsible. Owners expressly reserve the right to pursue other legal remedies for those items the Dispute Settler ...