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Volpe Construction Corp. v. Scherrer

A-1003-07T1 (N.J. Super. App. Div. 2008) (Unpublished)

HOMEOWNERS WARRANTY — When an arbitrator under the Construction Arbitration Program accepts a homeowner’s proposed remedy for a construction defect, it is implicit that the arbitrator has found that the factual pre-requisites for application of that remedy have been satisfied.

The buyer of a new home believed that the hardwood floors installed by its contractor were defective and sought relief under the Construction Arbitration Program pursuant to its Home Buyers Warranty. “The warranty provisions, as they applied to hardwood floors, provide in pertinent part: For repairable deficiencies, repair crack, chips or dents by filling and refinishing to match the wood surface as closely as possible. For non-repairable deficiencies, replace and finish affected area to match the remaining flooring as closely as possible.” The arbitrator “directed the builder to repair the cracks in the flooring by filling and refinishing to match the wood surfaces as closely as possible.” The homeowner appealed to an arbitration appellate panel. The appellate arbitrator “conducted a site visit and issued a finding that the hardwood floor ‘[was] shifting and/or loose.’” The appellate arbitrator “also found gaps between planks in excess of standards and planks that had lifted,” and ordered both parties to submit a proposal to repair the defects. The builder proposed “to fill and refinish the existing hardwood flooring. The homeowner submitted a proposal to replace the flooring throughout the house with pre-finished flooring.” The arbitrator granted the homeowner’s request. Consequently, the builder appealed to the lower court, arguing “that the arbitrator exceeded his authority to fashion an award” and contended “that the arbitration award exceed[ed] the coverage warranties of the warranty.” Although New Jersey’s Arbitration Act “allows a judge to vacate an award if the arbitrator exceed[s] the arbitrator’s powers,” the lower court refused to do so. Both it and the Appellate Division agreed that when the appellate arbitrator accepted the homeowner’s proposed remedy, it was implicit that the arbitrator had found that the defect was non-repairable. Consequently, the remedy ordered by the appellate arbitrator was consistent with the provisions of the homeowner warranty.

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