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Volpe Construction Corp. v. Scherrer


July 11, 2008


On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C-316-07.

Per curiam.


Argued: June 24, 2008

Before Judges Cuff and Fuentes.

Plaintiff Volpe Construction Corp. (Volpe), a builder of custom homes, appeals from an order denying its application to vacate an arbitration award. It argues that the requirement to replace the hardwood floors throughout the house exceeded the power of the arbitrator under the contract. We affirm.

Plaintiff built a new home for defendant in which it installed hardwood floors in nine of the fifteen rooms of the house. Defendant claimed that the flooring had separated and filed a claim under the warranty issued by plaintiff. The warranty administrator submitted the matter for resolution through the Construction Arbitration Program.

A single arbitrator issued an award on February 2, 2007. The arbitrator directed the builder to repair the cracks in the flooring by filling and refinishing to match the wood surface as closely as possible. Plaintiff appealed the decision to an arbitration appellate panel.

The Appellate Arbitrator conducted a site visit and issued a finding that the hardwood flooring "is shifting and/or loose." The Appellate Arbitrator also found gaps between planks in excess of standards and planks that had lifted. The Appellate Arbitrator upheld the prior arbitration award and ordered both parties to submit proposals to repair the defects. Plaintiff submitted a proposal to fill and refinish the existing hardwood flooring. The homeowner submitted a proposal to replace the flooring throughout the house with prefinished flooring. The Appellate Arbitrator accepted the homeowner's remedy.

On appeal, plaintiff argues that the arbitrator exceeded his authority to fashion an award. Plaintiff also contends that the arbitration award exceeds the coverage and remedies of the warranty.

Agreements to arbitrate made on or after January 1, 2003, are governed by a modified version of the Uniform Arbitration Act of 2000 (the Uniform Arbitration Act), N.J.S.A. 2A:23B-1 to -32. N.J.S.A. 2A:23B-3a; Wein v. Morris, 194 N.J. 364, 375 (2008). The Uniform Arbitration Act replaces the earlier version of the New Jersey Arbitration Act, N.J.S.A. 2A:24-1 to -11, except that the prior statute continues to govern arbitration agreements in the collective bargaining context. N.J.S.A. 2A:24-1.1; Wein, supra, 194 N.J. at 375. The warranty here had an effective date of November 2, 2005, and is therefore governed by the Uniform Arbitration Act.

The New Home Warranty and Builders' Registration Act (the Act), N.J.S.A. 46:3B-1 to -20, and its attendant regulations, N.J.A.C. 5:25-1.1 to -5.5, govern this action. The Act requires registration by all new home builders, and in order to register, the builder must participate in the Department of Community Affairs' (the Department) new home warranty security fund or an alternate new home warranty security program approved by the Department. Marchak v. Claridge Commons, Inc., 134 N.J. 275, 279 (1993) (citing N.J.S.A. 46:3B-5). "The Act standardizes the requirements of new home builders by superseding a patchwork of municipal requirements providing for the licensing of builders and the provision of performance bonds." Ibid.

A homeowner's warranty was purchased by Volpe and issued by 2-10 Home Buyers Warranty, a private company authorized by the Department to provide New Jersey statutory homeowners' warranties. The warranty provisions, as they apply to hardwood floors, provide in pertinent part:

For repairable deficiencies, repair crack, chips or dents by filling and refinishing to match the wood surface as closely as possible. For non-repairable deficiencies, replace and finish affected area to match the remaining flooring as closely as possible. Homeowner shall report such deficiencies to Builder within 30 days of the warranty start date if there was no pre-closing walk-through inspection. (emphasis added.)

N.J.S.A. 2A:23B-23a(4) allows a judge to vacate an award if the arbitrator exceeded the arbitrator's powers. Plaintiff argues that the arbitrator lacked the authority to order a complete replacement of the flooring. To the contrary, the warranty provision provides for replacement if the defect is not repairable. By accepting the homeowner's proposed remedy, the Appellate Arbitrator found the defect was non-repairable. The review function of a court remains extremely limited. It is not a function of the court to alter or set aside the findings of fact that form the premise for an authorized remedy. The October 18, 2007 order confirming the August 17, 2007 arbitration award is affirmed.



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