On appeal from the Superior Court of New Jersey, Law Division, Essex County, L-1544-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted December 13, 2006
Before Judges Collester, Lyons and Sabatino.
The opinion of the court was delivered by SABATINO, J.S.C. (temporarily assigned).
This case raises a novel question under the New Jersey Arbitration Act, N.J.S.A. 2A:23B-1 to -32, enacted in 2003 ("the Arbitration Act"). The question is whether an arbitrator retained pursuant to the parties' written agreement to "submit all matters in difference between them" to arbitration had the authority under the Arbitration Act to award statutory treble damages and counsel fees, in circumstances in which the advance statement of issues submitted by the parties to the arbitrator made no reference to statutory claims nor contained any demands for treble damages or statutory fees.
We hold that, in the absence of indicia that all parties to the arbitration have reasonable advance notice that the scope of the arbitration includes potential liability for treble damages and counsel fees, an arbitrator may not impose such extraordinary relief in the award.
The pertinent facts are as follows. Plaintiffs Virginia and Daniel Block own a home in Upper Montclair. In late 2003 or early 2004, the Blocks hired an architect to prepare blueprints and specifications for an addition to their residence. After the architect completed those plans, the Blocks solicited bids from home contractors to perform the work. They selected from those bids defendant James Plosia, a sole proprietor in East Rutherford with a construction business trading at times as "J. Plosia Construction" and "Plosia Construction Co." Plosia had been favorably recommended to the Blocks.
In August 2004, the Blocks and Plosia entered into a written agreement for the construction on the Blocks' residential addition. The contract price was $64,000. The agreement was prepared by Plosia in the form of a contractor's invoice. The agreement briefly indicated the scope of the work in nine one-line summaries. The agreement did not detail the principal products and materials to be used in the construction. Nor did it refer to the architect's plans or contain any time frames for when their work would commence or was expected to be completed. However, Plosia apparently made an oral representation to the Blocks that the work would be finished in about two months or early November 2004.
After the construction contract was signed, the Blocks paid Plosia a $4,000 deposit. Thereafter the Blocks paid Plosia weekly installments of $10,000 each, eventually remitting $60,000 of the agreed-upon $64,000 contract price.
The construction did not progress to the Blocks' satisfaction, and remained incomplete through December 2004. Plosia was not present when the local building inspector attempted to inspect the framing in early December 2004. The inspection was rescheduled for early January 2005, at which time the inspector determined that Plosia had not built the space above the garage in a manner consistent with the architect's plans. This deviation required the Blocks to rehire the architect, who prepared "as built" plans to satisfy the building inspector. Another framing inspection was scheduled.
At the end of December 2004, Plosia requested the Blocks to pay the remaining $4,000 due on the contract price. At the same time, Plosia allegedly promised the Blocks that he would finish all of the work in a prompt and satisfactory manner after the last framing inspection on February 16, 2005. The Blocks did not pay the $4,000 sum,*fn1 and became increasingly dissatisfied with Plosia's work. They complained of unworkmanlike construction, particularly in the garage area and on the addition's deck. They also noted that the garage roof leaked, causing water to seep into the garage throughout the construction.
Ultimately, on May 4, 2005, the Blocks discharged Plosia. They hired other contractors to complete the work, causing them to expend substantial funds. The Blocks sought recourse from Plosia, who disputed their complaints.
The parties agreed to submit their dispute to binding arbitration. They jointly selected a retired judge to serve as the arbitrator. Following the selection of the arbitrator, the parties signed an arbitration agreement, consisting of ten numbered provisions. Because the provisions of that agreement are important to our analysis and are relatively brief, we quote them here in full:*fn2
1. The parties do mutually agree to submit all matters in difference between them to the award and final determination of [an] Arbitrator selected by them.
2. The parties do agree that they will abide by and perform the award and determination of the Arbitrator, which shall be in writing and signed by the Arbitrator.
3. At least 14 days prior to the Arbitration Hearing the parties shall submit to the Arbitrator, with a copy to each other, a limited statement of issues which each party shall present to the Arbitrator during the hearing, together with any documents or other writings that will be used at the hearing.
4. The parties do further agree that the award of the Arbitrator shall be binding and judgment on such award may be entered in ...