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Joseph M. Maloney and Griselda Maloney v. Khawaja A. Ali and Shamin A. Ali

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


October 17, 2011

JOSEPH M. MALONEY AND GRISELDA MALONEY, PLAINTIFFS-APPELLANTS,
v.
KHAWAJA A. ALI AND SHAMIN A. ALI, T/A GULBERG BUILDERS, DEFENDANTS-RESPONDENTS.

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-2121-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued telephonically September 30, 2011

Before Judges Messano and Yannotti.

Plaintiffs Joseph M. Maloney and Griselda Maloney appeal from an order entered by the Law Division on October 8, 2010, granting summary judgment in favor of defendants Khawaja A. Ali and Shamin A. Ali, t/a Guldberg Builders. We affirm.

This appeal arises from the following facts. Plaintiffs entered into a contract with defendants for the purchase of a single-family dwelling that was then under construction. The closing took place on February 2, 2006, at which time defendants provided plaintiffs with a certificate of participation in the new home warranty security fund, which is administered by the New Jersey Department of Community Affairs (DCA).

On October 3, 2007, plaintiffs submitted a claim to the DCA under the warranty. In support of the claim, plaintiffs provided the DCA with a copy of a home inspection report. In their cover letter, plaintiffs identified certain defects discussed in the report that defendants had not addressed.

Plaintiffs also submitted to the DCA a completed Appendix D to the claim, which included the following statement:

I/We the above named homeowners(s) do hereby request the New Home Warranty Program to begin the Dispute Settlement Process. I/We understand that I/we will first submit to conciliation our disputes with the above named Builder prior to the election of either arbitration or Bureau Decision. I/We also understand that arbitration shall follow conciliation in the event the Builder and I/we fail to resolve our differences, unless we elect a Bureau Decision. I/we have previously contacted the Builder concerning the defect(s) described above and the Builder has failed to correct such defect(s). I/we are attaching a copy of the list of defect(s) that I/we forwarded to the Builder. I/we also certify that the information provided in the Disclosure Statement above is truthful and accurate, and [I/we] understand that failure to disclose will result in the Program closing the claim and not being liable for further payments, reimbursements, and/or repairs.

By letter dated October 11, 2007, the DCA informed plaintiffs that their claim had been "closed[.]" The DCA stated that plaintiffs had not submitted "a concise list of [the] defects" they were claiming. In addition, the DCA stated that the warranty was in its second year, and many of the defects which were listed in the claim were covered only in the first year of the warranty. The DCA noted that the commencement date of the warranty was February 1, 2006.

The DCA additionally stated that nothing in its letter should be construed as extending the filing deadline for a notice of claim under the warranty. The DCA said that in order to maintain the claim date, the information it had requested must be received and the claim "perfected" within ten days of the date of the letter. The DCA added, "Failure to submit the requested information and perfect the claim within this time period could result in the [DCA] assigning a new claim date to your claim."

Plaintiffs did not submit any further information to the DCA. Instead, on March 12, 2009, plaintiffs filed this action in the Law Division. In their complaint, plaintiffs alleged that defendants had constructed their home in a defective and negligent manner. Plaintiffs asserted claims for breach of contract, breach of the covenant of good faith and fair dealing, negligence, promissory estoppel, unjust enrichment and consumer fraud.

In August 2010, defendants filed a motion for summary judgment, arguing that plaintiffs' lawsuit was barred by the election of remedies provision in The New Home Warranty and Builders' Registration Act, N.J.S.A. 46:3B-1 to -20 (the Act), and specifically N.J.S.A. 46:3B-9. Plaintiffs opposed the motion. Neither party requested oral argument on the motion, and the court considered the motion on the papers. The court entered an order dated October 8, 2010, granting defendants' motion and dismissing plaintiffs' complaint with prejudice.

Plaintiffs filed a notice of appeal on October 25, 2010. On October 29, 2010, the trial court filed a written opinion with this court setting forth the reasons it granted defendants' motion, citing Rule 2:5-1(b). In the opinion, the court noted that, under N.J.S.A. 46:3B-9, a homeowner has the opportunity to pursue any remedy available to it; however, the statute provides that "initiation of procedures to enforce a remedy shall constitute an election which shall bar the owner from all other remedies." The court found that, by submitting their claim to the DCA on October 3, 2007, plaintiffs made an election of remedies that precluded them from pursuing their lawsuit for defects to the newly-constructed home.

On appeal, plaintiffs first argue that the trial court's October 8, 2010 order should be reversed because the court failed to make findings of fact and conclusions of law as required by Rule 1:7-4(a) when it entered the order. We disagree.

We recognize that the trial court erred by failing to explain its reasons when it entered the order. Instead, after plaintiffs filed their notice of appeal, the trial court filed a written opinion, citing Rule 2:5-1(b). That rule permits a trial court or agency to file and mail to the parties "an amplification of a prior statement, opinion or memorandum made either in writing or orally . . . ."

We note that the trial court's reliance upon Rule 2:5-1(b) was misplaced because the rule allows a trial court or agency to file a Rule 2:5-1(b) statement to amplify findings of fact and conclusions of law previously made. Here, there were no such findings or conclusions to amplify. Even so, we are not convinced that the court's error warrants reversal of the order at issue on this appeal.

Although the trial court's order was not accompanied by any findings of fact or conclusions of law, it should have been readily apparent to the parties that the court agreed with defendants' contention that the claim constituted an election of remedies under N.J.S.A. 46:3B-9, which barred plaintiffs' lawsuit. Indeed, that was the only issue raised by defendants' motion. Furthermore, the trial court fully explained its reasoning in the subsequently filed opinion.

Next, plaintiffs argue that the trial court erred by finding that they made an election of remedies when they filed a claim with the DCA which barred them from pursuing the claims in this case. Again, we disagree.

The Act authorizes the Commissioner of the DCA to establish by rule or regulation a warranty for new home construction. N.J.S.A. 46:3B-3(a). The Act established a new home warranty security fund to pay claims by owners against builders who participate in the fund. N.J.S.A. 46:3B-7(a). Owners may submit claims for defects covered by the warranty if the builder fails to make required repairs within a reasonable time. N.J.S.A. 46:3B-7(c). The Commissioner is required to investigate the claim and determine the validity thereof, after affording the parties an opportunity for a hearing. Ibid. The Act provides, "All claims submitted by an owner shall first be reviewed through a conciliation or arbitration procedure by the department[.]" Ibid.

The Act further provides that nothing therein "shall affect other rights and remedies available to the owner." N.J.S.A. 46:3B-9. Indeed, the Act makes plain that the owner may pursue any remedy that is available. Ibid. The Act states, however, that "initiation of procedures to enforce a remedy shall constitute an election which shall bar the owner from all other remedies." Ibid.

Here, the trial court correctly determined that, because plaintiffs filed a claim with the DCA's new home warranty program, N.J.S.A. 46:3B-9 barred them from pursuing "all other remedies." Plaintiffs submitted a claim to the DCA under the new home warranty, as permitted by N.J.S.A. 46:3B-7(c). By doing so, plaintiffs initiated "procedures to enforce a remedy" which precluded them from pursuing a lawsuit based on any alleged defects in their newly-constructed home. See also N.J.S.A. 46:3B-9; N.J.A.C. 5:25-3.10 (filing of new home warranty claim with the DCA "shall constitute the election of a remedy and shall bar the owner from all other remedies.")

Plaintiffs argue that they did not make an election of remedies because the matter never proceeded to binding arbitration or an agency decision. However, as we stated previously, when plaintiffs submitted their claim to the DCA, they signed Appendix D, which stated that they understood the claim would first be submitted to conciliation. Appendix D also indicated that binding arbitration would follow if the parties could not resolve their differences, unless plaintiffs elected to have the agency render a decision on the claim. By submitting a claim and executing Appendix D, plaintiffs clearly initiated "procedures to enforce a remedy" for purposes of N.J.S.A. 46:3B-9.

Plaintiffs further argue that the submission of the claim does not constitute the "initiation of procedures to enforce a remedy" because the DCA dismissed the claim. Again, we disagree. Here, the DCA informed plaintiffs that their claim was "closed" because plaintiffs failed to specify the defects they wanted remedied, and because some of the defects were not covered by the warranty. Although plaintiffs elected not to pursue the matter and ultimately obtained no relief from the DCA on the claim, plaintiffs nevertheless made an election of remedies for purposes of N.J.S.A. 46:3B-9, which precluded them from pursuing this action in the Law Division.

In support of their appeal, plaintiffs rely upon Konieczny v. Micciche, 305 N.J. Super. 375 (App. Div. 1997). In that case, the plaintiffs purchased a newly-constructed home from the defendants. Id. at 378. The plaintiffs alleged that there were certain defects in the home and they submitted a claim to the DCA under the warranty. Ibid. The parties executed a "Consent to Formal Dispute Settlement" form and agreed to binding arbitration. Ibid. An arbitrator inspected the home and rendered a report on the claim. Id. at 379. Thereafter, the plaintiffs attempted to withdraw from the arbitration proceedings but the DCA determined that they had made an election of remedies under N.J.S.A. 46:3B-9. Ibid.

The plaintiffs then commenced an action in the Law Division, asserting various causes of action arising from the alleged defective construction of the home. Ibid. The trial court ruled that the lawsuit was barred by N.J.S.A. 46:3B-9. Id. at 380. We agreed. Ibid. We held that when a homeowner files a claim with the DCA under the new home warranty program and participates in binding arbitration, the owner has initiated "a procedure to enforce a remedy" for purposes of N.J.S.A. 46:3B-9. Id. at 381. We noted that, under N.J.A.C. 5.25-3.10, the filing of a claim against the warranty constitutes the election of a remedy.

In our view, plaintiffs reliance upon Konieczny is misplaced. In this matter, plaintiffs filed a claim with the DCA under their new home warranty. The DCA rendered a decision on the claim finding that the claim lacked specificity and some of the defects were not covered by the warranty. The matter never proceeded to binding arbitration. Nevertheless, plaintiffs signed Appendix D to the claim stating they understood that unless the matter was resolved in "conciliation," the claim would be submitted to binding arbitration or for agency decision. Here, as in Konieczny, plaintiffs had made an election of remedies pursuant to N.J.S.A. 46:3B-9, which precluded them from pursuing the claims in this case.

Affirmed.

20111017

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