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Maloney v. Ali

A-0950-10T4 (N.J. Super. App. Div. 2011) (Unpublished)

HOMEOWNER WARRANTIES — The initiation of procedures to enforce a remedy under the Home Warranty Act constitutes an election barring the homeowner from all other remedies and, in this context, “initiation” means the filing of a claim even if the claim is subsequently withdrawn.

A homeowner purchased a newly constructed home from building constructors. After living in the home for about a year, the homeowner submitted a claim to the Department of Community Affairs (DCA) under the new home warranty. The homeowner included a copy of a home inspection report and identified certain defects that had not been addressed by the builder. Later, the DCA informed the homeowners that their claim had been closed because they had not submitted a concise list of the defects they were complaining about. Moreover, the DCA stated that the warranty was in its second year, and many of the defects listed were only covered in the first year of the warranty.

The homeowner did not proceed any further with the DCA. Instead, the homeowner filed suit two years later. The homeowner asserted claims for breach of contract, breach of the covenant of good faith and fair dealing, negligence, promissory estoppel, unjust enrichment, and consumer fraud. Soon after, the builders filed a motion for summary judgment, arguing that the homeowner’s lawsuit was barred by the election of remedies provision in the Home Warranty Act. The lower court granted the builder’s motion, holding that regardless of whether the matter had proceeded to an arbitration hearing, the homeowner had submitted the matter to the warranty program and therefore had initiated the procedure to enforce the warranty remedy.

The homeowner appealed, but the Appellate Division affirmed, finding that the act of submitting a claim to the DCA under a new home warranty triggers its election of remedies provision. The Act clearly and boldly states that “initiation of procedures to enforce a remedy shall constitute an election which shall bar the owner from all other remedies.” Thus, because the filing of a claim against the warranty constituted the election of a remedy, the homeowner was statutorily precluded from pursuing any other remedies, such as a lawsuit. Although the lower court erred by failing to explain its reasons when it entered its order, it filed a written opinion after the homeowner filed suit, fully explaining its reasoning.

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