Matter of Gabriel v Van Vleck Homes Inc.
Annotate this CaseDecided on March 3, 2010
Supreme Court, Rensselaer County
In the Matter of the Application of the Arbitration of Certain Controversies Between Joseph Gabriel and Lisa Gabriel, Petitioners,
against
Van Vleck Homes, Inc., Respondent.
231523
Dreyer Boyajian LLP
Attorneys For Petitioners
John J. Dowd, Esq., of counsel
75 Columbia Street
Albany, New York 12210
Whiteman Osterman & Hanna LLP
Attorneys For Respondent
Christopher M. McDonald, Esq., of counsel
One Commerce Plaza
Albany, New York 12260
Henry F. Zwack, J.
In this CPLR article 75 proceeding, petitioners seek an order and judgment designating an arbitrator to arbitrate a dispute between the parties relating to an agreement between the parties dated March 29, 2006. Respondent cross moves for an order staying arbitration between the parties.
Petitioners contend that they entered into an agreement with respondent to construct a home in East Greenbush. Petitioners contend that respondent has breached the portions of the agreement separate from warranty provisions and petitioners seek to submit these claims, which they argue sound in breach of contract, to arbitration but have been unable to. Petitioners affirm that the arbitration service designated in the parties' agreement stopped providing arbitration services and respondent has failed and refused to select an alternative arbitration provider. Petitioners seek an order appointing an arbitration provider and directing respondent to pay petitioners' costs and expenses of this proceeding, including reasonable attorney's fees.
Respondent cross moves to stay arbitration between petitioners and respondent. Respondent submits an answer and objections in point of law, contending that petitioners are barred from commencing additional arbitration pursuant to the terms of the limited warranty in the agreement between the parties, among other defenses. Respondent argues that petitioners have already arbitrated their claims against respondent and should not be permitted to compel respondent to attend additional arbitration. Respondent argues that petitioners took title to the property on December 16, 2006 and a limited warranty administered by Residential Warranty Corporation went into effect. Respondent notes that petitioners made a claim under the limited warranty on December 17, 2007, alleging defects in construction, and that all but one of the multiple alleged defects were determined to be outside of the limited warranty by Residential Warranty Corporation. An issue regarding problems with drainage of petitioners' lot was arbitrated under the limited warranty and an award was issued on June 26, 2009 finding that the lot drainage issues were covered by the limited warranty, and a remedial plan was thereafter developed, according to respondent. Respondent argues that petitioners have already arbitrated their arbitrable claims under the limited warranty, which is their exclusive remedy pursuant to the terms of the limited warranty.
In reply, petitioners argue that respondent has conceded that it has failed to select an alternative arbitration provider and therefore the Court should grant petitioner's request to appoint an alternative arbitration provider. Petitioners also argue that their breach of contract damages are separate from the limited warranty because respondent failed to construct petitioners' residence in accordance with plans filed with municipal offices. Specifically, petitioners claim that the elevation of their residence differs from the plans and also violates building codes, in addition to the finish grading, and the construction of the septic system petitioners also claim that respondent failed to provide specific items as required by the parties' agreement, including landscaping, seeding, and a paved driveway. Petitioners therefore argue that respondent breached contractual obligations to petitioners [*2]which are separate from breach of warranty claims and therefore are not barred by the limited warranty.
In reply and in sur-reply, as consented to by the parties, respondent argues that petitioners incorrectly believe that the parties' agreement survived after the Residential Warranty Corporation limited warranty was validated. Respondent contends that the arbitration clause found in the parties' agreement was only effective until petitioners validated the limited warranty. Respondent argues that by validating the limited warranty, petitioners were no longer entitled to any remedy under the parties' agreement, and the limited warranty became petitioners' exclusive remedy.
Respondent also argues that, contrary to petitioners' claims, respondent was not required to build petitioners' home in accordance with filed plans, but that in any event petitioners' home does comply with filed plans. Respondent contends that the parties' contract allowed respondent to deviate from the plans in respondent's discretion and that the dimensions of the house may differ from the dimensions shown on the plans, and this was expressly disclosed in the parties' contract. Respondent affirms that the Town of East Greenbush and the Rensselaer County Department of Health issued their respective final permits for petitioners' home, which includes approval of the septic system.
The Court finds that petitioners' claims may proceed to arbitration under the arbitration clause contained in the parties' contract dated March 29, 2006. The Court finds that petitioners' claims are not barred by the implied warranty based upon the nature of the claims (see, e.g., Hamlet on Olde Oyster Bay Home Owners Assoc., Inc. v Holiday Organization, Inc., 65 AD3d 1284 [2d Dept 2009]; Tiffany at Westbury Condominium v Marelli Dev. Corp., 40 AD3d 1073 [2d Dept 2007]; Biancone v Bossi, 24 AD3d 582 [2d Dept 2005]). Petitioners contend that the house as constructed violates certain state and local building codes and that the residence was not constructed in accordance with approved plans and specifications, as required by the contract between the parties. Petitioners also claim that respondent has failed to furnish certain items required under the parties' contract.
While respondent argues that it was not required to construct the house in strict accordance
with the plans and specifications, the Court finds that the paragraph in the parties' contract that
permitted respondent a right of substitution and to vary the dimensions of the finished dwelling
"in certain respects" cannot reasonably be interpreted as permitting respondent to vary the plans
and specifications to such an extent that they no longer comply with state or local building
codes. The paragraph in question provides as follows:
2. HOME TO BE CONSTRUCTED: Builder shall furnish all of the labor and
materials and perform all of the work for the construction of the home shown and described in
the plans and/or specifications hereto attached as [*3]Addenda
"A" and made part of this agreement. The Builder in its sole discretion, reserves the right to
substitute products and materials of equal or similar value and/or building specifications. NOTE:
any illustrations or drawings attached to this contract are for illustrative purposes only. The
actual dimension of the finished dwelling may vary in certain respects, due to the actual
construction layout and design.
Petitioners are claiming that their
residence was not constructed at the required elevation per the subdivision plan; that finished
grading did not match the approved grading plan, resulting in the need for a guard rail; that the
driveway grade violates town rules; and that the septic system failed because the lot was not in
compliance with the original plans; and that respondent failed to furnish multiple items required
under the contract, including professional grading, landscaping, seeding and a paved driveway.
Respondent disputes the merits of these claims of petitioners. However, on the present motion
the Court is deciding only whether petitioners have presented arbitrable claims. The Court
concurs with petitioners that they have presented breach of contract claims based upon violations
of specific provisions of the purchase contract and these claims are distinct from the limited
warranty (Holiday Organization, supra; Tiffany, supra; Biancone, supra). In light
of this, the arbitration clause in the parties' contract is applicable to the claims presented.
Based upon the foregoing, the Court orders respondent to select an arbitration service, in accordance with paragraph 19 of the parties' contract, and advise petitioners' counsel within twenty (20) days of the date of this Decision/Order.
Accordingly, it is
ORDERED, that the petition is granted as set forth above; and it is further
ORDERED, that the cross-motion of respondent is denied.
This constitutes the Decision and Order of the Court. This Decision and Order is returned to
the attorneys for the petitioners. All other papers are delivered to the Supreme Court Clerk for
transmission to the County Clerk. The signing of this Decision and Order shall not constitute
entry or filing under CPLR 2220. Counsel is not relieved from the applicable provisions of this
rule with regard to filing, entry and Notice of Entry.
Dated:March, 2010
Troy, New York
________________________________________
Henry F. Zwack
Acting Supreme Court Justice
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