On certification to the Superior Court, Appellate Division, whose opinion is reported at 261 N.J. Super. 126 (1992).
For affirmance -- Chief Justice Wilentz, and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- None. The opinion of the Court was delivered by Pollock, J.
[134 NJ Page 276] At issue is an arbitration clause in a contract for the purchase of a new home. The initial question is whether the arbitration clause comports with The New Home Warranty and Builders' Registration Act, N.J.S.A. 46:3B-1 to -20 (the Act). If so, does it bar the purchaser, Ronald Marchak, from suing the builder, Claridge
Commons, Inc. (Claridge), for construction defects? In an unreported opinion, the Law Division granted summary judgment for defendants Claridge and its principals, Ronald Racioppi, Frank Racioppi, and Zygmunt Wilf. The court also granted summary judgment for the municipal building inspector, Salvatore Mauro, and he no longer is in the case. The Appellate Division reversed and remanded for trial. 261 N.J. Super. 126, 132, 617 A.2d 1256, 1259 (1992). We granted the builder's petition for certification, 133 N.J. 440, 627 A.2d 1145 (1993), and now affirm.
Plaintiff, Marchak, contracted with Claridge to purchase a new single-family home in a subdivision in Union, New Jersey. The contract provided:
Seller shall provide buyer with insurance-backed warranty coverage and protection under New Jersey's Homeowners Warranty Act.
Buyer and seller acknowledge and agree that the warranty and insurance remedies contained in the homeowners warranty provided by seller to buyer constitute the exclusive remedies of the buyer. The parties agree that the conciliation and arbitration procedures as outlined in the Homeowner's Warranty Act, are better suited to the determination of outstanding issues, if any, between the parties than any remedy which may be sucured [sic] by resort to legal process. Buyer represents that he has read the act to which reference is made and that he has secured the advice of counsel in making this election of remedies. This election of remedies, it is agreed, shall survive closing of title.
At the closing on July 13, 1987, Claridge delivered to Marchak a "Home Buyers Warranty," which provided in paragraph IV, Conciliation and Arbitration:
If the Builder and the Homeowner do not reach agreement with respect to the extent of, or the responsibility for, any alleged defects claimed in accordance with the warranty documents and the Construction Quality Standards, or if the Homeowner is not satisfied with any repair of defects made by the Builder, either the Builder or the Homeowner may request an impartial third party arbitration with the A.A.A., which will be conducted in accordance with its rules and regulations. The Homeowner can demand arbitration by completing a Request for Arbitration form which shall be provided by the Service. In accordance with the Act and the Regulations, the Homeowner has the right to pursue remedies other than conciliation and arbitration; however, election of other remedies shall bar the Homeowner
from pursuing the same claim under this warranty. Non-Magnuson-Moss rights and remedies pertaining to consumer products may be pursued without first resorting to the conciliation and arbitration process.
The "Home Buyers Warranty" included, among other warranties, a one-year warranty that the "housing unit" would be free from "[d]efects in materials or workmanship as established in the Constructive Standards," a two-year warranty covering "defects in the electrical, plumbing and mechanical systems," and a ten-year warranty on "major construction defects." The warranties were consistent with the requirements of the Act, which provides:
b. The time periods of warranties established pursuant to this act are as follows: (1) One year from and after the warranty date the dwelling shall be free from defects caused by faulty workmanship and defective materials due to noncompliance with the building ...