On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-605-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Fuentes, Gilroy and Nugent.
Defendants, Christine St. Peter and Adam Levinsohn, appeal from several Law Division orders that entered judgment on a residential construction lien arbitration award validating plaintiff, Seavey Construction, Inc.'s, residential construction lien; entered partial summary judgment on liability against defendants on plaintiff's breach of contract and unjust enrichment claims; dismissed defendants' counterclaims; entered a partial money judgment against defendants; and denied defendants' motion for reconsideration.
This action arose out of a home-improvement contract and a residential construction lien claim filed under the Construction Lien Law, N.J.S.A. 2A:44A-1 to -38 (the CLL).*fn1 Here, a CLL arbitrator determined that a residential lien claimant had a valid lien that attached to the improvement, and rejected the setoffs asserted by the homeowner. In this light, we must decide whether these determinations: (1) entitle the contractor to a money judgment on its substantive claims against the homeowner; and (2) bar litigation of the homeowner's counterclaims. We conclude that the arbitrator's determination establishes only a prejudgment lien that must be confirmed in litigation. The arbitrator's award does not entitle the contractor to a money judgment on the merits nor dismissal of defendants' affirmative counterclaims. Because the trial court decided otherwise, we reverse and remand.
On November 28, 2007, the parties signed a "Cost Plus Percentage" agreement for construction of renovations to defendants' residence in Morris Township, New Jersey. The agreement included a "pre-construction estimate" or "target price" of $1,140,000, and the following arbitration clause:
Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by binding arbitration administered by the American Arbitration Association under its Construction Industry Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. This shall only be resolved in this manner if first the owner and contractor consult with a non-biased third party (Kahn Architects) or other NJ licensed architect and cannot agree to terms negotiated between the parties.
Plaintiff performed work at defendants' residence from November 2007 through October 24, 2008. The parties disagree on the reason plaintiff stopped working, but they had become involved in various disputes, including changes in the scope of the work, cost overruns, and defendants' refusal to pay plaintiff's outstanding invoices.
After stopping work, plaintiff filed on December 8, 2008, a "Notice of Unpaid Balance and Right to File Lien" (NUB) under the CLL. Plaintiff also filed a demand for arbitration to confirm its lien "in accordance with the [CLL] and the [American Arbitration Association (AAA)] [N]ew Jersey Residential Construction Lien Arbitration Rules." Plaintiff's demand for arbitration was received by the AAA on December 10, 2008.
Defendants filed an answering statement and counterclaim on December 31, 2008, and asserted that the contract between the parties was "governed by the New Jersey Consumer Fraud Act and the Home Improvement Practices Regulations." Defendants also alleged that plaintiff calculated the lien claim by taking the "target price" of $1,140,000 and deducting $940,264.13, the money already paid, resulting in the lien claim of $199,735.87, which ignored cost overruns. Plaintiff filed a reply on January 8, 2009.
On January 9, 2009, the arbitrator rendered his decision. He checked off lines on a form indicating that the NUB was filed and served in compliance with the CLL, that the lien claim was valid in the amount of $199,735.87, and that no liquidated or unliquidated setoffs or counterclaims to the lien claim were submitted for determination.
On January 13, 2009, defendants submitted an amended answering statement and counterclaim asserting a $340,000 claim representing the difference between the $1,140,000 target contract price and plaintiff's estimated cost to complete the work. On ...