On appeal from the Superior Court of New Jersey, Law Division, Bergen County.
Before Judges Havey, Landau and Collester.
The opinion of the court was delivered by: Havey, P.j.a.d.
ubmitted September 15, 1997
Plaintiffs, Walter and Veronica Konieczny, appeal from a summary judgment dismissing their complaint against defendants, Frank and Antoinette Micciche (Micciche), JCH Home Inspection Service and James C. Hansen (collectively referred to as Hansen). Micciche, a general contractor, constructed a residential dwelling for plaintiffs. Hansen inspected the dwelling on plaintiffs' behalf before closing of title. In granting summary judgment, the motion Judge concluded that plaintiffs' election to proceed with binding arbitration under the New Home Warranty and Builders' Registration Act, N.J.S.A. 46:3B-1 to -20, precluded the present action for money damages against both Micciche and Hansen. We affirm in part and reverse in part.
The essential facts are undisputed. On March 31, 1992, plaintiffs entered into a contract with Micciche to purchase a newly-constructed home in Elmwood Park, Bergen County for a price of $320,000. Plaintiffs retained the services of Hansen, who conducted an inspection of the dwelling. Hansen found no significant problems, stating that the house "appears to be of sound construction." Plaintiffs thereafter closed title and took occupancy on July 3, 1992.
On September 26, 1992, plaintiffs submitted a "punch list" of items to Micciche, requesting that the list be addressed pursuant to plaintiffs' New Home Owners' Warranty. Many of the items were cosmetic in nature. However, plaintiffs also complained that the family room bathroom "doorway is sinking," "main beam is dropping," and the doorway frame is "out of plumb." Dissatisfied with Micciche's response to their letter, on November 23, 1992, plaintiffs submitted a request for dispute settlement with the Department of Community Affairs, Division of Codes and Standards, Bureau of Homeowner Protection (Division). Their request described the principal defect as "main beam dropped . . . causing a multitude of problems over it." They also submitted to the Division the "punch list" previously sent to Micciche, as well as a letter explaining the manner by which the house was "slowly sinking" over the "main beam." Plaintiffs demanded that the builder correct the "crookedness" by jacking up the beam and placing a longer column under it. The Division responded by sending plaintiffs a "Consent to Formal Dispute Settlement" form, and advised plaintiffs that a "neutral third-party dispute settler" would be assigned to the matter "in accordance with the regulations governing new home warranties." The letter also advised plaintiffs that, upon written consent by the homeowner and builder, the dispute settler was empowered to issue a binding award of arbitration covering all defects. Both plaintiffs and Micciche executed the "Dispute Settlement" form and agreed to binding arbitration.
On behalf of the Division, William Montague inspected plaintiffs' dwelling in the presence of Mr. Konieczny, Mr. Micciche and Micciche's attorney. In his certification, Micciche's attorney states that after the inspection, Montague told the parties that certain "problems" needed correction, but there was no evidence that the main basement girder (the "main beam") had deflected.
On January 25, 1993, the written decision rendered by Montague was sent to the parties. As to plaintiffs' principal claim, that the "main beam" had deflected, Montague found:
"While girder shows no signs of deflection, a lally column has been placed at center of girder. There is no evidence of any future failure at this time. However, the Builder shall adjust basement door to 1st story to within standards, sec. 5:23-3.5(g)1i. He shall also adjust 1st story bathroom door so as to operate and close."
Montague also directed that Micciche address unrelated claims concerning poor workmanship. The award ordered that Micciche complete the necessary repairs within sixty days and noted that the award was "final and binding." On January 29, 1993, four days after the written award was issued, plaintiffs, through their attorney, attempted to withdraw from the arbitration proceedings. *fn1 The Division rejected the request, noting that plaintiffs' filing of a claim against the warranty constituted an election of a remedy under N.J.S.A. 46:3B-9.
Plaintiffs thereafter filed the present action in the Law Division against Micciche and Hansen. As to Micciche, plaintiffs seek compensatory and punitive damages, claiming breach of contract, common-law fraud, violations of the Consumer Fraud Act, N.J.S.A. 56:8-1 to -48, and negligence. As to Hansen, plaintiffs seek damages for his professional negligence in failing to properly inspect the premises and discover the defects existing in the dwelling prior to closing of title. Plaintiffs also allege that Hansen breached their contract and violated the Consumer Fraud Act.
In granting summary judgment to all defendants, the motion Judge concluded that plaintiffs' initiation of the binding arbitration procedure under the New Home Warranty and Builders' Registration Act (Act) constituted an election of remedy which barred them from all other remedies in a court of law against both defendants.
We agree with the motion Judge that plaintiffs are barred from seeking a judicial remedy against Micciche for damages relating to the "main beam" defect. ...