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Feinstein v. BDS Remodeling Services, L.L.C.

2005 WL 704290 (N.J. Super. App. Div. 2005) (Unpublished)

CONTRACTS; ARBITRATION; CONSUMER FRAUD—A determination of whether a person has waived a statutory right does not hinge on the sophistication or lack of sophistication of the contracting parties, but rather on the intent of the contract’s waiver provision as manifested in the language used.

Homeowners filed a complaint with the Law Division in which they asserted “claims of breach of contract, breach of warranty, negligence” and statutory violations against its contractor. The contractor contended that the homeowners signed a contract with an arbitration clause which provided that “all claims or disputes between [it] and the [homeowners] ... shall be decided by arbitration.” The homeowners argued that the clause was unenforceable since it did not “clearly state that [the homeowners] were waiving their right to litigate statutory claims.”

The Appellate Division held that “in determining whether a person voluntarily waived statutory rights pursuant to an arbitration provision in a contract [] [courts] should not focus predominately on the person’s status, education or profession or quality of his counsel.” The Court thus held that although one of the homeowners was a lawyer, “what is essential to finding such a waiver is an unambiguous writing.”

In response to the contractor’s claim that one of the homeowners “knew or should have known what he was signing” because he was an attorney, the Court held that that fact was “not substantial or sufficient evidence to establish a waiver of statutory rights.” The Court held that a determination of waiver does not hinge on “the sophistication or lack of sophistication of the contracting parties, but rather on the intent of the clause as manifested in the language used.” The Court additionally held that “a waiver of the right to litigate statutory claims will not be found” unless the writing itself or the arbitration agreement “was clear and explicit.” Thus, held the Court, “a reasonable reader” would believe “that the arbitration clause” contained in the contract between the contractor and the homeowners “only applie[d] to claims arising from the contract itself and not to statutory claim or claims stemming from the relationship and conduct of all the parties involved.” The Court additionally pointed out that the New Jersey Supreme Court found that “virtually the same [contractual] language” was ambiguous. Thus, the Court concluded, “that the interests of judicial economy dictate that the trial court should decide all [of the homeowners’] claims.”

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