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Yaroshefsky v. ADM Builders

March 05, 2002

ARTHUR YAROSHEFSKY AND CHERYL YAROSHEFSKY, PLAINTIFFS-APPELLANTS,
v.
ADM BUILDERS, INC., DEFENDANT/THIRD PARTY PLAINTIFF-RESPONDENT,
v.
CHESTER LAKONY, JOSE BONZINHO, BONZINHO CONSTRUCTION CORP., INC. AND KABLAN PLUMBING & HEATING, INC., THIRD PARTY DEFENDANTS, AND BLACKSTONE COMPANY, INC., THIRD PARTY DEFENDANT/ FOURTH PARTY PLAINTIFF-RESPONDENT,
v.
MI HOME PRODUCTS, INC. AND WALTER STOPKA, FOURTH PARTY DEFENDANTS.



On appeal from the Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-5711-97.

Before Judges Stern, Eichen and Parker.

The opinion of the court was delivered by: Stern, P.J.A.D.

As amended March 18, 2002.

ARTHUR YAROSHEFSKY AND CHERYL YAROSHEFSKY, PLAINTIFFS-APPELLANTS,
v.
ADM BUILDERS, INC., DEFENDANT/THIRD PARTY PLAINTIFF-RESPONDENT,
v.
CHESTER LAKONY, JOSE BONZINHO, BONZINHO CONSTRUCTION CORP., INC. AND KABLAN PLUMBING & HEATING, INC., THIRD PARTY DEFENDANTS, AND BLACKSTONE COMPANY, INC., THIRD PARTY DEFENDANT/ FOURTH PARTY PLAINTIFF-RESPONDENT,
v.
MI HOME PRODUCTS, INC. AND WALTER STOPKA, FOURTH PARTY DEFENDANTS.

On appeal from the Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-5711-97.

Philip Elberg argued the cause for appellants. (Medvin & Elberg, attorneys; Mr. Elberg and Jeffrey M. Wactlar, on the brief). Owen T. Hughes argued the cause for third party plaintiff-respondent Adm Builders, Inc. (Mandelbaum, Salsburg, Gold, Lazris, Discenza & Steinberg, attorneys; Lawrence C. Weiner, on the brief). William F. Mueller argued the cause for fourth party plaintiff-respondent Firstsource Northeast Group, Inc., formerly known as Blackstone Company, Inc. (Clemente, Mueller and Tobia, attorneys; Mr. Mueller, of counsel; Lori Anne Fee and Matthew A. Schiappa, on the brief).

Before Judges Stern, Eichen and Parker.

The opinion of the court was delivered by: Stern, P.J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued October 16, 2001

Plaintiffs purchased a new home in Wayne from defendant ADM Builders ("defendant" or "ADM"). Plaintiffs thereafter filed a complaint for breach of warranty and consumer fraud against defendant alleging that the house contained major defects including improperly installed windows, faucets that emitted brown water, depressions in the floor and cracks in the foundation. Plaintiffs appeal the judgment of July 17, 2000 granting summary judgment to defendant and dismissing the complaint "with prejudice" on the grounds that the New Home Warranty and Builders' Registration Act ("Act"), N.J.S.A. 46:3B-1 to -20, barred plaintiffs' suit because they had previously submitted their claims to arbitration.

Plaintiffs argue that submission of their claims to arbitration did not constitute an "election of remedies" under the Act, N.J.S.A. 46:3B-9, because they withdrew their claim and did not sign the arbitrator's "Acceptance of Decision" form.

Plaintiffs further assert that their warranty did not clearly indicate that the arbitration procedure was binding. Defendant contends that the initiation of the arbitration proceeding bars any further action irrespective of plaintiffs' withdrawal of the claim or their refusal to sign the acceptance form, and that plaintiffs' new home warranty adequately informed them that initiation of an arbitration proceeding barred any later civil suit.

Plaintiffs also contend that the judge failed to explain why their submission of a claim to arbitration resulted in the dismissal of their complaint which included an allegation under the Consumer Fraud Act, N.J.S.A. 56:8-1 to -106. However, the dismissal of that contention would necessarily flow if they made an "election of remedies."

I.

On March 17, 1995, plaintiffs and defendant entered into a Purchase Agreement for a new home located at 74 Andover Drive in Wayne, New Jersey. The Purchase Agreement, which plaintiffs negotiated with the assistance of an attorney, included the following warranty:

13. Seller's Warranty: The Seller agrees to give the Buyer certain warranties concerning construction of the Dwelling as follows:

(a) The Seller warrants the construction of the Dwelling in accordance with the provisions of the New Jersey Home Warranty and Builders' Registration Act, N.J.S.A. 46:3B-1 et seq. The Seller will enroll the Dwelling in an approved warranty security plan at or promptly after closing. The Seller will pay all requisite fees and premiums for enrollment and coverage, provided that the Buyer will be responsible for any deductibles which are a part of the warranty security plan.

On July 24, 1995, plaintiffs received a "Certificate of Participation" in a "New Home Warranty Plan" ("the policy") administered by the Home Buyers Warranty Corporation ("HBW"). The policy became effective on October 13, 1995, the date of closing. Attached to the "Certificate of Participation" was a letter which stated that the policy was "in compliance with the New Jersey New Home Warranty and Builders' and Registration Act, N.J.S.A. 46:3B-10 et seq. [sic]." The policy included a provision setting forth the procedure the plaintiffs should follow in the event that they discovered defects in the home. It provided:

IV. Conciliation and Arbitration

If the Homeowner(s) and Builder do not reach an agreement, if the [B]uilder does not make the repairs promptly or if the Homeowner is not satisfied with any repair of defects made by the [B]uilder, either the Builder or Homeowner(s) may request an impartial third- party arbitration with a Home Buyer Warranty approved arbitration service which will be conducted in accordance with their rules and regulations. The forms for requesting arbitration will be provided by the Home Buyers Warranty Service Office. In accordance with the Act and the Regulations, the Homeowner(s) has the right to pursue remedies other than conciliation and arbitration; however, election of other remedies shall bar the Homeowner(s) from pursuing the same claim under this warranty. (Emphasis added.)

After discovery of the alleged defects and defendant's failure or refusal to correct the defects, plaintiffs hired a plumber who discovered that the brown water was caused by nails left in pipes during construction. They also alleged ...


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