Frumer v. National Home Ins. Co.
18 A.3d 225
| N.J. Super. Ct. App. Div. | 2011Background
- Plaintiffs purchased a newly-constructed Englewood home in April 2008 for $997,000.
- Home warranty was provided by a private plan administered for NHIC by HBW, with NHIC identified as guarantor on the certificate.
- Warranty Booklet provides arbitration as the exclusive remedy for workmanship/systems and major structural defects; election of remedies allows pursuing other remedies but not the same claim.
- Plaintiffs alleged multiple defects (water intrusion, roof gutters, hardware, HVAC) and elected to file a claim with HBW on July 1, 2008.
- NHIC inspected and initially repaired/paid benefits totaling $350,000, later ceased repairs in 2009, and offered an additional $208,059 in 2010; mediation failed.
- Plaintiffs filed litigation seeking breach of warranty and bad faith; NHIC/HBW moved to compel arbitration; trial court denied; appellate division reversed and remanded for arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is arbitration the exclusive remedy for workmanship/systems defects? | Frumer contends arbitration is not the exclusive remedy for these claims. | NHIC/HBW argue the warranty plan makes arbitration the exclusive remedy for such disputes. | Arbitration is the exclusive remedy for workmanship/systems defects. |
| Is arbitration the exclusive remedy for major structural defect claims? | Frumer argues litigation remains available for major structural defects. | Defendants contend arbitration is the exclusive remedy for such defects under the warranty. | Arbitration is the exclusive remedy for major structural defect disputes as provided by the warranty. |
Key Cases Cited
- Alfano v. BDO Seidman, LLP, 393 N.J. Super. 560 (App.Div. 2007) (de novo review of arbitration denial; no deference to trial court on law)
- Jansen v. Salomon Smith Barney, Inc., 342 N.J. Super. 254 (App.Div. 2001) (arbitration favored; liberal reading of arbitrability)
- Garfinkel v. Morristown Obstetrics & Gynecology Assocs., 168 N.J. 124 (2001) (arbitration should be read in favor of arbitration)
- Marchak v. Claridge Commons, Inc., 134 N.J. 275 (1993) (arbitration clause must be construed to favor arbitrability)
- Lederman v. Prudential Life Ins. Co. of Am., Inc., 385 N.J. Super. 324 (App.Div. 2006) (strong public policy favoring arbitration)
- EPIX Holdings Corp. v. Marsh & McLennan Cos., 410 N.J. Super. 453 (App.Div. 2009) (presumption of arbitrability in arbitration agreements)
- Caldwell v. KFC Corp., 958 F. Supp. 962 (D.N.J. 1997) (federal standard supporting liberal interpretation of arbitration clauses)