TEDESCHI et al v. D.N DESIMONE CONSTRUCTION, INC. et al

Filing 67

OPINION FILED. Signed by Judge Noel L. Hillman on 5/8/17. (js)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

JOHN TEDESCHI and
GERALDINE TEDESCHI,
CIVIL NO. 15-8484 (NLH/JS)
Plaintiffs,
v.

OPINION

D.N. DESIMONE CONSTRUCTION,
INC., DENNIS DESIMONE, ALBERT
DESIMONE, and ANTHONY
DESIMONE,
Defendants.

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 facts
2

sufficient 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 citizenship
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between 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.
248 (1986).

Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

A fact is “material” if, under the governing
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substantive 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.
v. Catrett, 477 U.S. 317, 323 (1986).

Celotex Corp.

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.
57.

Anderson, 477 U.S. at 256-

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 two
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originals 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.)

August 8, 2013.

Plaintiffs signed the contract on

(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 that
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they 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,

1

Plaintiffs argue that defendants performed substantial work
prior to the parties’ signing of the contract. The Court is
unclear of the import of defendants performing work prior to the
singing of the contract. If plaintiffs are arguing that the
pre-contractual work performed by defendants cannot be
arbitrated because it was performed prior to the contract,
plaintiffs have not provided the Court with any argument or
caselaw to support that position.
2

The parties do not point to a contractual choice-of-law
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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:

provision, but it appears that the parties agree New Jersey law
governs the parties’ contract.
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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 appropriate box. If the Owner and Contractor do
not select a method of binding dispute resolution below, or
do not subsequently agree in writing to a binding dispute
resolution method other than litigation, Claims will be
resolved by litigation in a court of competent
jurisdiction.)
[X] Arbitration pursuant to Section 15.4 of AIA
Document A201–2007
[ ] Litigation in a court of competent jurisdiction
[ ] Other (Specify)
. . .
ARTICLE 15 MISCELLANEOUS PROVISIONS
§ 15.1 Where reference is made in this
provision of AIA Document A201–2007 or
Document, the reference refers to that
or supplemented by other provisions of
Documents.

Agreement to a
another Contract
provision as amended
the Contract

. . .
§ 15.6 Other provisions:

None

ARTICLE 16 ENUMERATION OF CONTRACT DOCUMENTS
§ 16.1 The Contract Documents are enumerated in the
sections below:
§ 16.1.1 The Agreement is this executed AIA Document A1039

2007 Standard Form of Agreement Between Owner and
Contractor
§ 16.1.2 The General Conditions are AIA Document A201–2007,
General Conditions of the Contract for Construction.
§ 16.1.3 The Supplementary and other Conditions of the
contract: None
. . .
§ 16.1.6 The Addenda, if any:

None

§ 16.1.7 Additional documents, if any, forming part of the
Contract Documents: No
(Docket No. 57-2 at 9.)
Plaintiffs argue the substance of the arbitration provision
and the arbitration process is contained in the General
Conditions, and because they were not provided with a copy of
the General Conditions, and the Standard Form indicates that
there are no “other provisions,” no “supplementary or other
conditions,” no “addenda,” and no “additional documents,” they
were completely unaware that they agreed to waive their right to
a jury trial in favor of arbitrating any dispute that arose in
the parties’ contractual relationship.
The Court cannot assess plaintiffs’ credibility at summary
judgment, but the Court has no reason to doubt plaintiffs’
surprise that the contract provides for binding arbitration of
any dispute because the Court also has no reason to doubt
plaintiffs’ testimony that they did not read the entire contract
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before signing it.

If they had, the Standard Form makes it

clear in plain and obvious language that the method of binding
dispute resolution is arbitration, and not “litigation in a
court of competent jurisdiction.”

“‘[S]igning a contract

creates a conclusive presumption that the signer read,
understood, and assented to its terms.’”

Giaccone v. Canopius

U.S. Ins. Co., 133 F. Supp. 3d 668, 674 (D.N.J. 2015) (quoting
Raiczyk v. Ocean Cnty. Veterinary Hosp., 377 F.3d 266, 270 (3d
Cir. 2004)) (other citation omitted). “Failing to read a
contract therefore provides no defense to an agreement's binding
terms.”

Id. (citing Modern Security v. Lockett, 143 A. 511

(N.J. 1928); Riverside Chiropractic Grp. v. Mercury Ins. Co.,
404 N.J. Super. 228, 961 A.2d 21 (2008)) (other citation
omitted).
This situation is not one where an unsophisticated consumer
unwittingly agrees to binding arbitration and is uninformed that
arbitration waives her right to go to court.

For example, in

Atalese, the plaintiff entered into a service contract with
defendant USLSG, which promised to provide debt-adjustment
services.

Atalese, 99 A.3d at 309.

Plaintiff filed suit

against USLSG for fraud, and USLSG moved to compel arbitration.
Id.

The arbitration provision was on page nine, paragraph

sixteen, in a 23-page service contract:
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“In the event of any

claim or dispute between Client and the USLSG related to this
Agreement or related to any performance of any services related
to this Agreement, the claim or dispute shall be submitted to
binding arbitration upon the request of either party upon the
service of that request on the other party. . . . .”
310.

Id. at

The plaintiff argued that the arbitration was

unenforceable, and the New Jersey Supreme Court agreed:
Nowhere in the arbitration clause is there any explanation
that plaintiff is waiving her right to seek relief in court
for a breach of her statutory rights. The contract states
that either party may submit any dispute to “binding
arbitration,” that “[t]he parties shall agree on a single
arbitrator to resolve the dispute,” and that the
arbitrator's decision “shall be final and may be entered
into judgment in any court of competent jurisdiction.” The
provision does not explain what arbitration is, nor does it
indicate how arbitration is different from a proceeding in
a court of law. Nor is it written in plain language that
would be clear and understandable to the average consumer
that she is waiving statutory rights. The clause here has
none of the language our courts have found satisfactory in
upholding arbitration provisions - clear and unambiguous
language that the plaintiff is waiving her right to sue or
go to court to secure relief. . . . [T]he clause, at least
in some general and sufficiently broad way, must explain
that the plaintiff is giving up her right to bring her
claims in court or have a jury resolve the dispute.
Id. at 315.
The N.J. Supreme Court emphasized, however, “that no
prescribed set of words must be included in an arbitration
clause to accomplish a waiver of rights.

Whatever words compose

an arbitration agreement, they must be clear and unambiguous
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that a consumer is choosing to arbitrate disputes rather than
have them resolved in a court of law.

In this way, the

agreement will assure reasonable notice to the consumer.”

Id.

at 316.
In contrast to Atalese is Columbus Circle NJ LLC v. Island
Construction Co., LLC, 2017 WL 958489 (N.J. Super. App. Div.
March 13, 2017), which distinguishes Atalese, and concerns a
situation very similar to the one in this case.

In Columbus

Circle, David Kovacs, the LLC plaintiff’s sole member, entered
into a contract with the defendant construction company to build
a $1.96–million-dollar, 10,000–square-foot home in Avalon, New
Jersey on bayfront property owned by the LLC.

Id. at *1.

The

parties signed the Standard AIA Form A101-2007, which was
supplemented with the General Conditions AIA Form A201-2007, and
included Section 13.2 binding dispute resolution where the “X”
was marked next to “Arbitration pursuant to Section 15.4 of AIA
Document A201-2007,” rather than the choice “Litigation in a
court of competent jurisdiction.”

Id.

Disputes over the cost

of the project arose, eventually leading to the contract’s
termination.

Id.

The LLC plaintiff filed suit, and the

construction company moved to dismiss based on the arbitration
provision.

Id.

The trial court granted the defendant’s motion,

and the appellate division affirmed on appeal.
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Id. at *2.

The court analyzed the law on the enforceability of
arbitration provisions, and specifically found that the concerns
in Atalese were not present.

The court observed that the

situation was not “a consumer contract of adhesion where one
party possessed superior bargaining power and was the more
sophisticated party,” but “[r]ather, it was a negotiated
agreement between sophisticated business entities . . . .”

Id.

at *3 (citing Delta Funding Corp. v. Harris, 189 N.J. 28, 40
(2006)) (quotations and alterations omitted) (“Unlike the
plaintiff in Atalese, neither the LLC nor Kovacs was ‘an average
member of the public.’

Kovacs was sophisticated enough to

operate in the form of an LLC, to hire an owners representative,
and to engage in a two-million-dollar transaction.

He

negotiated and changed the terms of the contract with the advice
of counsel, who reviewed and altered the contract before Kovacs
signed it on behalf of the LLC.”).

The court specifically found

that the AIA contract form “clearly informed the LLC it was
making the choice to waive litigation in court in favor or
arbitration,” and in assessing “whether the LLC and Kovacs
understood their choice, it was obviously relevant that they
were sophisticated and represented by counsel and an owners
representative.”

Id. at *6.

Thus, Atalese teaches that a valid arbitration clause must
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“explain in some broad or general way that arbitration is a
substitute for the right to seek relief in our court system.”
Morgan, 137 A.3d at 1179 (discussing Atalese).

“No magical

language is required to accomplish a waiver of rights in an
arbitration agreement.

Our courts have upheld arbitration

clauses that have explained in various simple ways ‘that
arbitration is a waiver of the right to bring suit in a judicial
forum.’”

Id. (quoting Atalese, 99 A.2d at 442).

In this case, the binding dispute resolution provision in
the Standard Form provided to plaintiffs succinctly offered
three choices to resolve disputes: (1) “Arbitration pursuant to
Section 15.4 of AIA Document A201-2007,” (2) “Litigation in a
court of competent jurisdiction,” or (3) “Other.”

The box next

to the first choice – arbitration – was marked with an “X.”

The

boxes next to choice two – litigation – and choice three –
“other” – were left unchecked.

Even under the Atalese standard,

the selection of arbitration over litigation clearly explains in
a simple way that the parties’ disputes must be resolved in
arbitration instead of litigation.
Moreover, the binding dispute resolution provision
specifically explains, “If the Owner and Contractor do not
select a method of binding dispute resolution below, or do not
subsequently agree in writing to a binding dispute resolution
15

method other than litigation, Claims will be resolved by
litigation in a court of competent jurisdiction.”

The contract

is therefore clear that the parties’ right to bring suit in a
judicial forum is the default option, except if arbitration is
selected.

This easily satisfies the Atalese requirement that a

contract must explain in a broad or general way that arbitration
is a substitute for the right to seek relief in the court
system.
Plaintiffs argue that their status as a medical doctor and
successful business owners should not factor in the Court’s
analysis.

Even though New Jersey law would permit the Court to

do so in this case as described in Columbus Circle, the language
in the Standard Form is clear enough to meet even the Atalese
unsophisticated consumer standard.
Plaintiffs also argue that because they were not provided
with the General Conditions which set forth the particulars of
the arbitration process, that failure invalidates the selection
of arbitration over litigation in the Standard Form.
argument is without merit.

This

The General Conditions are

referenced numerous times in the Standard Form, and are
specifically indicated to be part of the parties’ entire
contract.

If plaintiffs were unsure what the General Conditions

provided, they should have contacted defendants for a copy, or
16

heeded the Standard Form’s advice to have an attorney review the
contract.

Nevertheless, the binding dispute resolution in the

Standard Form is sufficient on its own to constitute a valid
waiver of plaintiffs’ right to bring suit in court.
Defendants provided plaintiffs with a 10-page contract for
the reconstruction of their multimillion dollar beachfront home.
If plaintiffs had read page 8 of the contract, they would have
clearly seen that binding arbitration, and not litigation in a
judicial forum, was the selected form of dispute resolution.
Putting aside that plaintiffs trusted defendants because they
are family members, if the manner by which potential disputes
was as important to plaintiffs as they testified to, they could
have discussed with defendants changing the dispute resolution
selection in the contract prior to signing it.

Plaintiffs hired

defendants to reconstruct their home, and plaintiffs were under
no obligation to sign a contract with defendants that they did
not wish to. 3

Plaintiffs’ failure to read the contract and see

the explicit selection of arbitration in the dispute resolution

3

Defendants are just as bound to arbitration as plaintiffs, and
if defendants wished to lodge claims against plaintiffs for
disputes arising from the contract, they would be required
toarbitrate their dispute. Since defendants began
reconstruction of plaintiffs’ home prior to the signing of the
contract, defendants appear to have had less bargaining power
than plaintiffs had the contract, which covered payment terms,
not been signed.
17

section does not invalidate that provision.
CONCLUSION
The arbitration provision in the parties’ contract is valid
and enforceable.

Accordingly, plaintiffs’ action against

defendant in this Court must be dismissed in favor of
arbitration.

An appropriate Order will be entered.

Date:
May 8, 2017
At Camden, New Jersey

s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.

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