Tedeschi v. D.N. Desimone Constr., Inc.

JOHN TEDESCHI and GERALDINE TEDESCHI, Plaintiffs, v. D.N. DESIMONE CONSTRUCTION, INC., DENNIS DESIMONE,ALBERT DESIMONE, and ANTHONY DESIMONE, Defendants.

CIVIL NO. 15-8484 (NLH/JS)

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

May 8, 2017

OPINION

APPEARANCES:

DAVID T. SHULICK

1500 JFK BLVD.

SUITE 1030

PHILADELPHIA, PA 19102

On behalf of plaintiffs

MARK BONGIOVANNI

LEARY BRIDE TINKER & MORAN

7 RIDGEDALE AVENUE

CEDAR KNOLLS, NJ 07927

On behalf of defendants as to Count II of Amended Complaint

THOMAS H. WARD

JOHN H. SHINDLE

WARD LAW FIRM

196 GROVE AVENUE

SUITE A

WEST DEPTFORD, NJ 08086

On behalf of defendants on all other counts

HILLMAN, District Judge

Plaintiffs, John and Geraldine Tedeschi, filed a complaint against defendants, D.N. DeSimone Construction, Inc., Dennis DeSimone, Albert DeSimone, and Anthony DeSimone, relating to the reconstruction of their home in Longport, New Jersey damaged during Superstorm Sandy in October 2012. Plaintiffs' complaint alleges that they withheld payment to defendants because of, inter alia, poor craftsmanship and false representations, and as a result, defendants (1) filed a lien against plaintiffs in the amount of $144,733.36, and (2) instituted an arbitration proceeding against plaintiffs. The arbitration was resolved in defendants' favor, and required that the plaintiffs pay defendants for the work defendants had completed.

One of plaintiffs' claims in their complaint requests that the Court vacate the arbitration proceeding because the parties' contract did not contain a valid arbitration provision. Plaintiffs also claim that defendants' prior counsel falsely commenced a New Jersey Construction Statutory Lien Arbitration proceeding despite the existence of an executed lien waiver.

In the Court's previous Opinion denying defendants' motion to dismiss plaintiffs' complaint in favor of arbitration, the Court found (1) it was unclear from the face of plaintiffs' complaint that they contractually agreed to have their claims against defendants resolved through arbitration, and (2) in response to defendants' motion, plaintiffs provided additional factssufficient to demonstrate that the agreement to arbitrate is in dispute. The Court directed the parties to undertake expedited discovery limited to the issue of the arbitrability of plaintiffs' claims against defendants. (Docket No. 53.)

In accordance with the Court's order, the parties deposed both plaintiffs and defendant Dennis DeSimone. Defendants have now moved, under the standard for summary judgment, to dismiss plaintiffs' complaint in favor of arbitration. See Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764, 771, 776 (3d Cir. 2013) ("[I]f the complaint and its supporting documents are unclear regarding the agreement to arbitrate, or if the plaintiff has responded to a motion to compel arbitration with additional facts sufficient to place the agreement to arbitrate in issue, then 'the parties should be entitled to discovery on the question of arbitrability before a court entertains further briefing on [the] question.' After limited discovery, the court may entertain a renewed motion to compel arbitration, this time judging the motion under a summary judgment standard."). Plaintiffs have opposed defendants' motion.

DISCUSSION

A. Jurisdiction

This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332 because there is complete diversity of citizenshipbetween the parties and the amount in controversy exceeds $75,000. The citizenship of the parties is as follows: Plaintiffs John and Geraldine Tedeschi are citizens of the state of Florida; Defendant D.N. DeSimone Construction, Inc. is a corporation of the state of New Jersey with its principal place of business at 711 A-Mantua Pike, Woodbury, New Jersey; individual defendants Dennis DeSimone, Albert DeSimone, Anthony DeSimone are all adult individuals, corporate officers of D.N. DeSimone Construction, Inc., who are citizens of the state of New Jersey.

B. Summary Judgment Standard

Summary judgment is appropriate where the Court is satisfied that the materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations, admissions, or interrogatory answers, demonstrate that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986); Fed. R. Civ. P. 56(a).

An issue is "genuine" if it is supported by evidence such that a reasonable jury could return a verdict in the nonmoving party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is "material" if, under the governingsubstantive law, a dispute about the fact might affect the outcome of the suit. Id. In considering a motion for summary judgment, a district court may not make credibility determinations or engage in any weighing of the evidence; instead, the non-moving party's evidence "is to be believed and all justifiable inferences are to be drawn in his favor." Marino v. Industrial Crating Co., 358 F.3d 241, 247 (3d Cir. 2004)(quoting Anderson, 477 U.S. at 255).

Initially, the moving party has the burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met this burden, the nonmoving party must identify, by affidavits or otherwise, specific facts showing that there is a genuine issue for trial. Id. Thus, to withstand a properly supported motion for summary judgment, the nonmoving party must identify specific facts and affirmative evidence that contradict those offered by the moving party. Anderson, 477 U.S. at 256-57. A party opposing summary judgment must do more than just rest upon mere allegations, general denials, or vague statements. Saldana v. Kmart Corp., 260 F.3d 228, 232 (3d Cir. 2001).

C. Analysis

On July 31, 2013, defendants mailed to plaintiffs twooriginals of the "Standard Form of Agreement Between Owner and Contractor" created by the American Institute of Architects (AIA), AIA Form A101-2007. (Docket No. 57-2 at 2-23.) The first page of the Standard Form states that the A201-2007 "General Conditions of the Contract for Construction" is adopted in the Standard Form by reference. (Id. at 2.) The first page of the Standard Form also provides, "This document has important legal consequences. Consultation with an attorney is encouraged with respect to its completion or modification." (Id.) Defendants asked plaintiffs to review the documents, and if they met with plaintiffs' approval, sign and return one copy to defendants. (Id. at 23.) Plaintiffs signed the contract on August 8, 2013. (Id. at 14.)

Plaintiffs argue that they did not know they waived their right to a jury trial for disputes arising from their contract with defendants because they did not discuss alternative dispute resolution options with defendants prior to signing the contract. Plaintiffs also argue the arbitration provision was hidden in the General Conditions Form incorporated by reference into the Standard Form contract, and the General Conditions Form was not provided to plaintiffs. Plaintiffs further argue that the contract itself indicated that no other documents or provisions were included, which led plaintiffs to believe thatthey were in possession of all of the contract documents, which did not include an arbitration provision.¹

Defendants counter that the arbitration provision is not buried in the General Conditions Form, but is clearly stated in the Standard Form. Defendants further argue that plaintiffs' admission that they did not read the entire contract renders meaningless their argument regarding what they were and were not provided with. Moreover, defendants argue that a party's failure to read or review a contract is not a defense to a contract term's enforcement.

The Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16, and the nearly identical New Jersey Arbitration Act, N.J.S.A. 2A:23B-1 to -32, enunciate federal and state policies favoring arbitration. Atalese v. U.S. Legal Services Group, L.P., 99 A.3d 306, 311-12 (N.J. 2014), cert. denied, 135 S. Ct. 2804 (2015). An arbitration agreement is subject to state-law contract principles.² First Options of Chicago, Inc. v. Kaplan,514 U.S. 938, 944 (1995) (explaining that although the FAA expresses a national policy favoring arbitration, the law presumes that a court, not an arbitrator, decides any issue concerning arbitrability). An enforceable agreement requires mutual assent - a meeting of the minds based on a common understanding of the contract terms. Morgan v. Sanford Brown Inst., 137 A.3d 1168, 1180 (N.J. 2016) (citing Atalese, 99 A.3d at 313). The right to a civil jury trial is guaranteed by the New Jersey Constitution. Id. (citing N.J. Const. art. I, ¶ 9). "[W]hen a contract contains a waiver of rights - whether in an arbitration or other clause - the waiver must be clearly and unmistakably established." Id. (citing Atalese, 99 A.3d at 314); see also Guidotti, 716 F.3d at 773 (quoting Par-Knit Mills, 636 F.2d at 54) ("Before a party to a lawsuit can be ordered to arbitrate and thus be deprived of a day in court, there should be an express, unequivocal agreement to that effect.").

Plaintiffs do not dispute that they had the opportunity to read and review the 10-page Standard Form contract that they signed, which included the following provisions on pages 8 and 9:

ARTICLE 13 DISPUTE RESOLUTION

§ 13.1 INITIAL DECISION MAKER

The Owner will serve as Initial Decision Maker pursuant to Section 15.2 of AIA Document A201-2007.

(If the parties mutually agree, insert the name, address, and other contact information of the Initial Decision Maker, if different than the Owner.)

§ 13.2 BINDING DISPUTE RESOLUTION

For any Claim subject to, but not resolved by mediation pursuant to Section 15.3 of AIA Document A201-2007, the method of binding dispute resolution shall be as follows:

(Check the

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