Marchak v. Claridge Commons, Inc.

Citations: 261 N.J. Super. 126; 617 A.2d 1256; 1992 N.J. Super. LEXIS 453

Court: New Jersey Superior Court Appellate Division; December 24, 1992; New Jersey; State Appellate Court

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The court opinion, delivered by Judge Petrella, addresses an appeal concerning the interpretation of an arbitration provision in a construction contract for a house. Plaintiff Ronald Marchak appealed the Law Division's summary judgment in favor of the defendants, Claridge Commons, Inc. The appeal revolves around the Homeowners Warranty Act and its relationship to the contract's terms.

Marchak entered into a contract with Claridge on October 11, 1986, for constructing a house in Parkside Manor, New Jersey, while represented by an attorney. The contract's "Homeowner’s Warranty" section stated that the warranty and insurance remedies provided by the seller were the exclusive remedies for the buyer. Both parties acknowledged that the arbitration procedures under the Homeowner’s Warranty Act were preferred over legal remedies, and Marchak confirmed he had consulted legal counsel regarding this election of remedies.

Following the closing of the title on July 13, 1987, Marchak submitted a "punch list" of necessary corrections. However, Claridge failed to address several issues. Marchak filed a lawsuit on March 7, 1990, after an engineering inspection revealed construction deficiencies and missing components, including an improperly installed wood column in place of a required steel column, resulting in structural issues.

Marchak later amended his complaint to allege that Claridge’s actions violated the New Jersey Consumer Fraud Act. Claridge sought summary judgment, arguing that the contract's arbitration clause limited Marchak to arbitration under the Act, which he was now barred from due to a two-year statute of limitations for such disputes. The trial judge agreed, granting summary judgment.

On appeal, Marchak contends that he should be allowed to pursue remedies under both the Home Warranty Act and the homeowner's warranty, argues his right to legal remedies under the Consumer Fraud Act, claims ambiguity in the contract's limitation of remedies, asserts that the limitation is unconscionable, and states that the summary judgment denied him any remedy. The appellate court determined that the appeal could be resolved based on legal principles despite the limited record, indicating a potential reversal of the summary judgment decision.

Section twelve of the contract addresses the homeowner's warranty to be provided by the seller at closing. It stipulates that homeowners can pursue remedies beyond conciliation and arbitration, but choosing one remedy precludes pursuing others for the same claim. The record lacks evidence that Marchak received or reviewed the warranty document prior to signing the contract. Under the Act, new home purchasers are entitled to a builder's warranty, which has been previously analyzed in the case of Oak Trail Road Homeowners’ Assoc. v. Royal Mile Corp. This analysis detailed the Homeowners’ Warranty Corporation's role in administering warranty insurance, which includes a two-year warranty for defects and a ten-year structural defect coverage. The contract language incorporates both the warranty and the Act and is subject to relevant laws, suggesting ambiguity in section twelve. Even with clarity, an agreement on arbitration doesn't negate statutory provisions or public policy. The language in section twelve refers to statutory procedures, and the warranty and Act outline various remedies. Claridge's assertion that the Act allows for contractual election of remedies is challenged, as the cited case regarding arbitration does not apply when a statute provides specific rights. Importantly, N.J.S.A. 46:3B-9 states that nothing affects other available remedies, allowing homeowners to pursue any legal remedy without being barred by initiating arbitration or filing a court complaint, both of which are seen as choices of forum rather than remedies. The motion judge did not consider whether this statute indicates a nonwaivable public policy, and the provision in the contract does not constitute initiation of remedy enforcement, especially given that no house was built and no dispute existed at the time of signing.

The attempt to waive statutory remedies in the contract is deemed a violation of public policy, rendering the provision unenforceable. Legislative intent clearly supports the availability of statutory remedies to buyers at the time of signing a home purchase contract. The court finds it unnecessary to address the applicability of the Consumer Fraud Act or issues related to contracts of adhesion, leaving those matters for the trial court's consideration. The ruling reverses the previous decision and remands the case for trial. Defendants Ronald Racioppi, Frank Racioppi, and Zygmunt Wilf, associated with Claridge Commons, Inc., are the focal parties, while Salvatore Mauro, a building inspector, is not part of the appeal. The motion judge had ruled on the case as a matter of law without clarity on the buyer's negotiation options regarding the contract terms. The trial record lacked necessary documentation for a thorough decision, and a motion to supplement the record was denied as the materials were not initially presented to the trial court. Claridge's proposal to address a missing structural element was rejected due to the ongoing appeal.