On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Camden County.
Approved for Publication February 3, 1997.
Before Judges Keefe, Conley and Loftus. The opinion of the court was delivered by Keefe, J.A.D.
The opinion of the court was delivered by: Keefe
The opinion of the court was delivered by
Defendant Trowbridge Builders (Trowbridge) appeals from a judgment entered against it and in favor of plaintiff James L. Ingraham (Ingraham) in the amount of $4,300 after a non-jury trial. On appeal, Trowbridge contends that the trial Judge erred in failing to apply N.J.A.C. 5:25-1.3, a regulation promulgated by the Department of Community Affairs (Department) pursuant to the New Home Warranty and Builders' Registration Act (the Act), to bar Ingraham's claim. Alternatively, Trowbridge contends that the trial Judge erred in failing to properly apply the doctrine of mitigation of damages to Ingraham's claim.
The primary issue at trial was whether Ingraham was entitled to damages under the Act, N.J.S.A. 46:3B-1 to -20. *fn1 In defense of that claim, Trowbridge relied upon the provisions of N.J.A.C. 5:25-1.3. If applied to this case, that regulatory provision would have precluded Ingraham's recovery. The trial Judge, however, determined that N.J.A.C. 5:25-1.3 was merely "an interpretive rule without the force and effect of law." In view of that determination, we granted the Department's motion to intervene. Although we do not endorse the trial Judge's reason for not applying the subject regulation to the facts of this case, we agree with the result, and, thus, affirm the judgment under review for the reasons stated herein.
The trial Judge made findings of fact relevant to liability that are not challenged on appeal. We take the following facts from his letter opinion and add certain uncontested facts from the record before us. Trowbridge constructed the house in question in 1986. In April 1987, Trowbridge decided to use the house as a model home. Accordingly, it obtained a temporary certificate of occupancy and secured new home warranty coverage (the HOW policy) under the Act.
Ingraham entered into a contract with Trowbridge to purchase the home and closed title to the property on February 24, 1989. Paragraph 23C of the contract stated: "The seller shall deliver at settlement a registration certificate for a HOW policy. Said policy is already in effect, and has a commencement date of April 22, 1987." Ingraham testified that he was not familiar with the details of the Act or regulations and, based upon representations made to him contemporaneous with the signing of the contract, was under the impression that he was buying a new home and had until April 1, 1989 to assert warranty claims against Trowbridge. Within a month of the closing, Ingraham complained to Trowbridge that rain water was seeping in through the front door. Indeed, in a letter dated March 21, 1989 *fn2, Ingraham asked Trowbridge for a six month extension of what he understood to be the warranty cutoff date.
Trowbridge made some attempts to satisfy Ingraham's complaint concerning the leak without success. Ultimately, in February 1990, Trowbridge agreed to replace and prime the door, but not paint it, at the cost of $325. The offer was not satisfactory to Ingraham because he felt Trowbridge had the obligation to repair without cost to him.
When further Discussions with Trowbridge were not productive, Ingraham filed a claim with the Home Owners Warranty Corporation (HOW). An inspector was dispatched by HOW to investigate the claim. Although the inspection report disclosed a defect in workmanship and materials which would have been covered if made during the first year of the warranty, HOW rejected the claim. The rejection was premised on HOW's determination that coverage under the policy began on April 22, 1987, and, thus, Ingraham's claim for the defects discovered during the inspection was simply untimely.
Inasmuch as Ingraham had not pursued a "remedy legally available to the owner" by filing a claim with HOW, the trial Judge found that Ingraham preserved his right to pursue "any remedy legally available to [him]" by filing this complaint in Superior Court. N.J.S.A. 46:3B-9. The trial Judge also found that Ingraham proved through expert testimony that the defect in the door frame that permitted water to enter the premises was covered under the first year statutory warranty. N.J.S.A. 46:3B-3b(1). The question presented was when the first year warranty period began. Did it begin on April 22, 1987, as Trowbridge contended, or did it begin on February 24, 1989 when Ingraham first occupied the house as a home? The Act provides that "[a] builder of a new home shall be liable to any owner thereof during the time period when the new home warranty, . . ., is applicable to the home for any defect therein which is covered by the warranty in accordance with its terms and conditions." N.J.S.A. 46:3B-4. The "Owner" is defined as "any person for whom the new home is built or to whom the home is sold for occupation by him or his family as a home . . . ." N.J.S.A. 46:3B-2e. The definition of "owner" does not include a "builder." N.J.S.A. 46:3B-2e and f.
As pertains to this case, the relevant statutory warranty given by the builder to the owner was as follows: "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 standards as approved by the commissioner . . . ." N.J.S.A. 46:3B-3b(1). (A two year warranty is given on "defects caused by faulty installation of plumbing, electrical, heating and cooling delivery systems," and a ten year warranty for major construction defects. N.J.S.A. 46:3B-3b(2) and (3).) As to each warranty, the new home ...