TEDESCHI v. D.N DESIMONE CONSTRUCTION, INC., 1:15-cv-08484

Background

John and Geraldine Tedeschi contracted with D.N. DeSimone Construction for post–Superstorm Sandy reconstruction of their Longport home and signed an AIA A101–2007 Standard Form of Agreement on August 8, 2013.
The Standard Form incorporated by reference the A201–2007 General Conditions and contained a dispute-resolution selection (Article 13.2) with a checked box selecting arbitration.
Plaintiffs withheld payment alleging poor workmanship and false representations; defendants filed a construction lien and pursued and won arbitration requiring plaintiffs to pay.
Plaintiffs sued in federal court seeking to vacate the arbitration award, arguing they never knowingly waived jury trial because the arbitration details were only in the General Conditions (which they say they were not given) and they did not read the full contract.
Court previously denied a motion to dismiss in favor of arbitration and ordered limited discovery on arbitrability; parties conducted depositions and defendants renewed a motion for summary judgment to compel arbitration.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the parties agreed to arbitrate disputes	Plaintiffs contend the arbitration clause was hidden in the General Conditions (not provided) and they did not knowingly waive jury trial	Defendants contend the Standard Form plainly selects arbitration and plaintiffs had opportunity to read before signing; failure to read is no defense	Court held the Standard Form’s dispute-resolution selection plainly and unambiguously elected arbitration; agreement to arbitrate is enforceable
Whether incorporation by reference of A201–2007 without giving plaintiffs the General Conditions invalidates waiver	Plaintiffs argue absence of the General Conditions deprived them of notice of arbitration particulars and thus invalidates waiver	Defendants argue the Standard Form itself clearly selected arbitration and incorporation suffices; plaintiffs could have requested the General Conditions or counsel review	Court found incorporation and the explicit selection in the Standard Form sufficient; absence of the attached General Conditions did not defeat the arbitration waiver
Whether plaintiffs’ alleged failure to read the contract defeats enforcement	Plaintiffs assert they did not read the entire contract and were surprised by arbitration language	Defendants argue that signing presumes assent and failing to read is not a defense	Court ruled signing creates presumption of assent; plaintiffs’ failure to read does not invalidate arbitration selection
Whether plaintiff sophistication or counsel representation affects enforceability	Plaintiffs downplay their sophistication; argue lack of specific notice must be treated under consumer-protection standard	Defendants note plaintiffs’ status and the commercial nature of the transaction support enforceability	Court found the Standard Form wording meets the notice requirement even under the Atalese consumer-protection standard; enforceable regardless of sophistication

Key Cases Cited

Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764 (3d Cir. 2013) (limits pre-arbitration discovery and sets summary-judgment standard for renewed motions to compel arbitration)
Atalese v. U.S. Legal Services Group, L.P., 99 A.3d 306 (N.J. 2014) (arbitration waiver must provide clear, unambiguous notice that court remedies are being relinquished)
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (courts decide arbitrability questions unless parties clearly delegate that question to arbitrators)
Morgan v. Sanford Brown Institute, 137 A.3d 1168 (N.J. 2016) (discusses Atalese standards for clarity in arbitration waivers)
Giaccone v. Canopius U.S. Ins. Co., 133 F. Supp. 3d 668 (D.N.J. 2015) (signing a contract creates presumption that signer read, understood, and assented to its terms)
Par–Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51 (3d Cir. 1980) (before ordering arbitration, an express, unequivocal agreement is required)