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Florence Tollgate Condominium Association, Inc. v. Joe Ordini’s Pools & Spas, Inc.

A-5833-04T5 (N.J. Super. App. Div. 2006) (Unpublished)

CONSUMER FRAUD; ARBITRATION—Where an agreement gives an arbitrator wide-ranging jurisdiction to rule on any controversy, the arbitrator may resolve consumer fraud claims.

A condominium association entered into a contract with a pool contractor to construct a new swimming pool. It paid an initial deposit. After the contractor failed to get the required permits or begin construction within a time period the association deemed to be reasonable, the association terminated the contract and demanded return of its deposit. The contractor refused. The association sued for breach of contract and violation of the Consumer Fraud Act. The contractor filed a motion to dismiss the complaint on the ground that the contract provided that the matter be submitted to arbitration. The lower court agreed and ordered the parties to submit to arbitration. The contract’s arbitration clause authorized the arbitrator to rule on “any controversy or claim between the contractor and owner arising out of or relating to this contract” and provided that the arbitrator’s ruling would be final and that a judgment could be entered upon that ruling.

The arbitrator held a hearing and directed the parties to submit briefs. Nearly six months after the deadline for submission of the briefs, the arbitrator found that the contractor breached the contract and also violated the Consumer Fraud Act. The arbitrator awarded damages, then trebled the damages pursuant to the Consumer Fraud Act, and awarded attorney’s fees. The lower court entered judgment in favor of the association in accordance with the arbitration award, and the contractor appealed, claiming that the arbitration was invalid because the arbitrator failed to comply with Rule 42 of the Construction Industry Arbitration Rules (Rules) by failing to render a decision no later than thirty days after the hearing was concluded. The contractor also claimed that Rule 39, which permitted the arbitrator to extend certain deadlines, did not permit the arbitrator to extend the time for making a decision. The association claimed that the contractor waived the right to complain about the arbitrator’s failure to rule within thirty days since it failed to send a written objection pursuant to Rule 38. Rule 38 provides that a party that proceeds with arbitration knowing a rule was violated but who has failed to object is deemed to waive it. The Appellate Division agreed with the association.

The contractor also argued that the arbitrator was not authorized to issue a ruling on the consumer fraud claims. The Court disagreed, holding that the contract gave the arbitrator wide-ranging jurisdiction to rule on any controversy that arose from the contract, which included the association’s claims that the contractors’ actions with respect to the contract violated the Consumer Fraud Act.

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