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D.R. Horton Inc., New Jersey v. J.J.Deluca Company

October 6, 2008

D.R. HORTON INC., NEW JERSEY, PLAINTIFF,
v.
J.J.DELUCA COMPANY, INC., DEFENDANTS.



The opinion of the court was delivered by: Hogan, P.J.Ch.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE COMMITTEE ON OPINIONS

OPINION

APPROVED FOR PUBLICATION

The resolution of this matter requires a discussion of the applicability of N.J.S.A. 2A:23B-10, "Consolidation of separate arbitration proceedings."

The plaintiff, D.R. Horton, Inc., New Jersey ("Horton"), is the owner of a condominium community in Cherry Hill, New Jersey. The plaintiff's office is located in Mount Laurel, New Jersey.

The defendant, J.J. DeLuca, ("DeLuca"), is in the business of general contracting and construction management.

HISTORY

A brief history of this matter is appropriate. Deluca and Horton are parties to a contract wherein Deluca would perform construction work for Horton. The contract was entered into June 9, 2005. As a result of a dispute between the parties, Horton terminated the contract with Deluca on June 20, 2006. Deluca initiated a claim with the American Arbitration Association ("AAA"), and Horton filed a counterclaim. During the arbitration, the issue arose as to whether to consolidate the proceeding with a separate arbitration proceeding between DeLuca and one of DeLuca's subcontractors on the project. Horton objected to the AAA making that determination and filed the present verified complaint and order to show cause seeking injunctive relief, in principle part enjoining DeLuca from pursuing consolidation under the AAA Rules of Construction, arguing that the New Jersey Arbitration Act, specifically N.J.S.A. 2A:23B-10, required such application for consolidation to be submitted only to the Superior Court.

The contract between the parties provided for arbitration in the event of a dispute, in lieu of a lawsuit. As part of the Horton project, DeLuca had subcontracted a part of its contract work. The record reflects that on May 22, 2007, in Case Management Order No. 3, the AAA arbitrator required that DeLuca file any additional demands for arbitration against its subcontractors and make any required application for consolidation of those demands for arbitration with the AAA by July 9, 2007.

One year later, on May 31, 2008, DeLuca initiated arbitration against three of its subcontractors for contribution and indemnity arising from Horton's counterclaim in the first arbitration.*fn1 On August 8, 2008, a Rule 7 arbitrator was appointed by the AAA.*fn2 The Rule 7 arbitrator gave the parties until August 29, 2008, to provide their arguments for or against consolidation of the two arbitrations. On August 28, 2008, the plaintiff filed this action alleging that DeLuca's motion for consolidation before the AAA cannot proceed because DeLuca failed to comply with N.J.S.A. 2A:23B-10, which provides:

a. Except as otherwise provided in subsection (c.) of this section, upon application of a party to an agreement to arbitrate or to an arbitration proceeding, the Court may order consolidation of separate arbitration proceedings as to all or some of the claims if:

(1) there are separate agreements to arbitrate or separate arbitration proceedings between the same persons or one of them is a party to a separate agreement to arbitrate or a separate arbitration proceeding with a third person;

(2) the claims subject to the agreements to arbitrate arise in substantial part from the same transaction or series of related transactions;

(3) the existence of a common issue of law or fact creates the possibility of conflicting decisions in the separate arbitration proceedings; and

(4) prejudice resulting from a failure to consolidate is not outweighed by the risk of undue delay or prejudice to the rights of or hardship to parties opposing consolidation.

b. The Court may order consolidation of separate arbitration proceedings as to some claims and allow other claims to be resolved in separate arbitration proceedings.

c. The Court may not order consolidation of the claims of a party to an agreement to arbitrate if the ...


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