Frumer v. Nat’l Home Ins. Co., 420 N.J. Super. 7 (App. Div. 2011). This short opinion by Judge Simonelli, which involved claims under a new home warranty, reverses a lower court’s refusal to compel arbitration despite the seemingly plain language of an arbitration clause in the warranty documents. The opinion reaffirms the strong state policy in favor of arbitration where, as here, parties agree to it. Judge Simonelli also noted that the standard of review on review of a denial of a demand for arbitration is de novo.
There was one interesting wrinkle. One of the defendants had paid to perform repairs on the home, but then stopped the repair work and offered plaintiffs a sum of money on account of the remaining repair work and plaintiffs’ expenses for temporary lodging. Plaintiffs declined that offer, and the parties then engaged in non-binding mediation. That mediation failed. In opposing arbitration once the case got to court and defendant sought to compel arbitration, plaintiffs argued that defendants had waived any right to invoke the arbitration clause because they had entered into mediation. In a footnote, Judge Simonelli emphatically rejected that contention.
That result is sound. Parties should not be found to have given up rights merely because they entered into mediation in an attempt to resolve their dispute. Using mediation, another alternative dispute resolution mechanism, is not inconsistent with a right to arbitrate. In contrast, opting for judicial proceedings instead of arbitration has rightly been held to constitute a waiver of an arbitration clause in certain circumstances.