Posted On: November 30, 2011 by Gene Markin

Why the Homeowner Warranty Program Remedy is no Remedy At All – Part 4

This blog is the second in a series of blogs discussing the New Jersey Home Warranty and Builders’ Registration Act. This blog will discuss when the election of remedies provision is triggered. You can access previous installments of this series online here.

Recently, the Appellate Division had the occasion to decide whether simply submitting a claim to the DCA, in accordance with the Act, barred plaintiffs from pursing a lawsuit against the builder. The Appellate Division found that it did, stating that by submitting their claim to the DCA, plaintiffs made an election of remedies that precluded them from pursuing a lawsuit for defects to their newly-constructed home. See Maloney, et al. v. Ali, et al., A-0950-10T4 (October 17, 2011).

In Maloney, the plaintiffs contracted with the defendants for the construction and purchase of a single-family home. After living in the home for about a year, plaintiffs submitted a claim to the DCA under their new home warranty. Plaintiffs included a copy of a home inspection report as well as identified certain defects that had not been addressed by the builder. Thereafter, the DCA informed plaintiffs 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 because the warranty was in its second year many of the defects listed were only covered in the first year of the warranty.

Plaintiffs did not proceed any further with the DCA and instead filed an action in Superior Court two years later. Plaintiffs 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, defendants filed a motion for summary judgment, arguing that plaintiffs’ lawsuit was barred by the election of remedies provision in the Act. The trial court granted defendants’ motion. The Appellate Division affirmed finding that the act of submitting a claim to the DCA under their new home warranty triggered the election of remedies provision. Thus, because the filing of a claim against the warranty constituted the election of a remedy, plaintiffs were statutorily precluded from pursuing any other remedies, such as a lawsuit.

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