On appeal from the Superior Court of New Jersey, Law Division, Civil Part, Salem County.
Before Judges Havey, Brochin and Kestin. The opinion of the court was delivered by Kestin, J.A.D.
The opinion of the court was delivered by: Kestin
The opinion of the court was delivered by
Plaintiffs appeal from the trial court's order dismissing their complaint, occasioned by a grant of defendants' motion for summary judgment. The trial court ruled that plaintiffs' suit was barred because they had elected an arbitration remedy under the New Home Warranty and Builders' Registration Act, N.J.S.A. 46:3B-1 to -12 (the Act). We affirm in part, reverse in part, and remand for further proceedings.
In August 1988, defendants Cyr completed construction of plaintiffs' new home. Pursuant to the Act, a new home warranty was issued effective August 15, 1988. Within a month or so, plaintiffs began to complain to defendants of a number of construction defects. On January 4, 1989, plaintiffs filed a request for dispute settlement with the New Home Warranty Program (Program), specifying seven problems. On March 14, the parties signed a "consent to formal dispute settlement" under the auspices of the Program, which included an explicit agreement to submit the claim to arbitration. On April 11, the arbitrator issued an award requiring defendants to correct or repair three of the problems, and noting that the remaining issues had been resolved.
Suit was filed in February 1993. Plaintiffs sought damages and costs of repair for improper construction of their home. Some of the defects encompassed in the complaint were items embraced in the 1989 arbitration; others were known to plaintiffs at the time of the arbitration, but were not raised therein; still others were items that came to light after the arbitration had concluded, some even after the one- and two-year warranty periods provided in N.J.S.A. 46:3B-3b (1) and (2). The trial court held all the claims to be barred by reason of the election of remedy provision of N.J.S.A. 46:3B-9:
Nothing contained herein shall affect other rights and remedies available to the owner. The owner shall have the opportunity to pursue any remedy legally available to the owner. However, initiation of procedures to enforce a remedy shall constitute an election which shall bar the owner from all other remedies. (emphasis supplied)
The trial court's determination was based upon its understanding of our holdings in Rzepiennik v. U.S. Home Corp., 221 N.J. Super. 230, 534 A.2d 89 (App. Div. 1987), and Haberman v. West Saddle Dev. Corp., 236 N.J. Super. 542, 566 A.2d 552 (App. Div. 1989). The motion Judge observed in his letter opinion:
Read together, the Rzepiennik and Haberman cases stand for the principle that where the arbitration procedure is selected under the Home Owners Warranty program, all claims against the builder, except any defects specifically excluded under the Warranty, may only be brought under the arbitration procedure and may not be elsewhere litigated.
The motion Judge also referred to a passage in the New Home Warranty Program Homeowner's Booklet published by the Department of Community Affairs, paraphrasing N.J.A.C. 5:25-3.10 which provides:
Pursuant to New Home Warranty and Builders' Registration Act (P.L.1977, c.467) the filing of a claim against the warranty specified by this subchapter shall constitute the election of a remedy and shall bar the owner from all other remedies. Nothing herein shall be deemed to limit the owner's right to elect other remedies except that such election shall bar the owner from pursuing the same claim under the warranty specified in this subchapter and in accordance with the procedures related hereto. For the purpose of this section, election of other remedies shall mean the filing of a complaint, counter-claim, cross-claim or third party complaint in any court that alleges matters covered by the warranty in particular or unworkmanlike construction in general.
In Rzepiennik, the homeowners filed a civil action to pursue relief that they had not sought (and which, in part, had not been available) in prior arbitration proceedings involving the very same defects. We held that the statutory election of remedy barred them "from seeking additional relief in the courts," 221 N.J. Super. at 237, ...