Estate of James G. Bender v. Bq Basements and Concrete

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the

internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0078-24

ESTATE OF JAMES G. BENDER,

KRISTA D. BENDER, individually

and as executor for the ESTATE OF

JAMES G. BENDER, deceased.

Plaintiffs-Appellants,

v.

BQ BASEMENTS AND CONCRETE,

BQ BASEMENT SYSTEMS, INC.,

BQ BASEMENT SYSTEMS, INC.,

d/b/a BQ BASEMENTS AND

CONCRETE, JES CONSTRUCTION,

LLC, JES CONSTRUCTION, LLC,

d/b/a BQ BASEMENTS AND

CONCRETE, GROUNDWORKS

OPERATIONS, LLC,

GROUNDWORKS OPERATIONS,

LLC, d/b/a GROUNDWORKS, and

GROUNDWORKS OPERATIONS,

LLC, d/b/a BQ BASEMENTS

AND CONCRETE,

Defendants-Respondents.

________________________________

Submitted May 12, 2025 – Decided July 29, 2025

Before Judges Sabatino and Jacobs.

On appeal from the Superior Court of New Jersey, Law

Division, Camden County, Docket No. L-0604-24.

Michael W. Oto, attorney for appellant.

Riker Danzig LLP, attorneys for respondents (Michael

R. O'Donnell and Ronald Z. Ahrens, of counsel and on

the brief; Kori L. Pruett, on the brief).

PER CURIAM

Plaintiffs the Estate of James G. Bender and Krista Bender appeal from

an August 2, 2024 Law Division order granting defendant's motion to compel

arbitration and dismissing their ten-count complaint with prejudice. Because

the Alternative Dispute Resolution ("ADR") clause at issue includes a one-sided

reservation of rights provision, we affirm in part, reverse in part to vacate that

provision, and remand for further proceedings in arbitration.

I.

In early 2023, James Bender ("Bender") hired defendant BQ Basement

and Concrete ("BQ") to evaluate whether his basement required repairs for water

infiltration. BQ determined that waterproofing was necessary and presented

Bender with a service agreement. Before signing the agreement, Bender

informed BQ that he had a pulmonary condition necessitating adequate control

of the debris and particulates resulting from the construction. BQ assured

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2

Bender it would maintain a dust-free environment by performing the work in a

controlled and guarded manner so as not to present risk to Bender’s health. With

this assurance, Bender entered into a $12,000 written contract with BQ for

basement waterproofing. The contract included three signature blocks and

required initials in five additional locations. It also included a dispute resolution

clause printed in approximately 6-point font, which read in pertinent part:

5. Dispute Resolution. Dispute Resolution . . . . Except

for instances of failure to pay the full amount of the

Contract, any claim, dispute, or other matter in

controversy arising out of or related to this Contract or

breach thereof shall be settled by arbitration

administered by the American Arbitration Association

(“AAA”) . . . .

[(Emphasis added).]

The clause also contained a reservation of rights provision and waiver provision:

If payment in full is not made when due, Contractor is

entitled to proceed with litigation and may recover all

expenses of collection, including attorneys’ fees, court

costs, court reporter fees, and expert witness fees, in

such amount as the court may adjudge reasonable . . . .

EACH PARTY TO THIS CONTRACT FOR ITSELF,

ITS SUCCESSORS AND ASSIGNS, WAIVES ALL

RIGHTS TO TRIAL BY JURY FOR ANY CLAIM,

DISPUTE, OR OTHER MATTER IN

CONTROVERSY ARISING OUT OF OR RELATED

TO THIS CONTRACT.

[(Emphases added).]

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Following BQ's completion of the services, Bender's health deteriorated,

and he passed away.

In February 2024, plaintiffs filed a complaint alleging that BQ's faulty

repairs caused property damage, which led to financial hardship and exposed

Bender to unnecessary and unreasonable health risks that they contend

ultimately resulted in his death. From this premise, plaintiffs alleged ten causes

of action against defendants: breach of contract, negligence, gross negligence,

fraud, consumer fraud, fraudulent misrepresentation, fraudulent inducement,

negligent misrepresentation, negligent infliction of emotional distress, and

wrongful death. In June 2024, defendants filed a motion to compel arbitration

and dismiss the complaint with prejudice, citing the ADR clause within the

contract.

At a subsequent hearing, defendants argued the ADR clause to be valid

and enforceable because it contains clear language indicating that "all claims of

a certain type are to be arbitrated" and a provision for waiver of right to a jury

trial. Defendants also maintained the clause did not violate the Plain Language

Act (PLA), N.J.S.A. 56:12-1 to -13, because there was no evidence that the

language of the ADR clause was confusing. Further, the 6.86 font size, which

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4

was uniformly used throughout the contract, did not render the ADR clause

unenforceable.

Plaintiffs challenged the procedural and substantive fairness of the ADR

clause. They maintained that the contract contained legal provisions that were

literally buried in the third page of a four-page boilerplate form contract in

confusingly titled paragraphs. Second, the arbitration clause was

unconscionable and void as against public policy in that it failed to meet the

pertinent statutory provisions and required Bender to arbitrate all his claims

while carving out an exception for defendants to pursue court action for unpaid

services. Third, a provision that each party "waives all rights to trial by jury"

was insufficient, in that it did not reasonably inform Bender that he was waiving

his right "to pursue any action in any other forum such as a court action or

administrative proceeding." Finally, except for the breach of contract claim, the

remaining claims neither arise from nor relate to the contract, and therefore

would not be subject to mandatory arbitration.

In its August 2, 2024 decision, delivered orally and reduced to writing the

same day, the court granted defendant's motion to compel arbitration and

dismissed the matter with prejudice. The court reasoned that the ADR clause

complied with Atalese v. U.S. Legal Services Group, L.P., 219 N.J. 430, 440

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5

(2014) because it contained a valid waiver provision and specified the claims

subject to arbitration. The court deemed the font size inconsequential because

"no case . . . says the font has to be bigger" and the title of the clause was in

bold font. And the court concluded that the reservation of rights provision was

not "a problem" because "it's for a simple collection matter, if it's not paid" and

does not address "the work performed or any rights of the parties or allegations

as to the contract."

On September 17, 2024, plaintiffs filed an amended notice of appeal. On

February 24, 2025, defendants submitted a Rule 2:6-11(d) letter advising of this

court's recent decision in Lahoud v. Anthony & Sylvan Corp., 481 N.J. Super.

29 (App. Div. 2025) and distinguishing it from the case at hand. On April 2,

2025, plaintiffs submitted a response letter arguing that the Lahoud case

provides additional support for their arguments. On April 10, 2025, we granted

plaintiff’s motion to file a letter in response as within time.

On appeal, plaintiffs argue that the court erred in failing to properly

interpret and apply the Atalese standard. Plaintiffs also contend the arbitration

clause does not bar the filing of claims that are beyond the four corners of the

complaint.

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6

II.

We review de novo the motion court's dismissal order. Kennedy v.

Weichert Co., 257 N.J. 290, 302 (2024). "The existence of a valid and

enforceable arbitration agreement poses a question of law, and as such,

our standard of review of an order denying a motion to compel arbitration is de

novo." Barr v. Bishop Rosen & Co., 442 N.J. Super. 599, 605 (App. Div. 2015)

(citing Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 186 (2013); Frumer v.

Nat'l Home Ins. Co., 420 N.J. Super. 7, 13 (App. Div. 2011)). "In reviewing

such orders, we are mindful of the strong preference to enforce arbi tration

agreements, both at the state and federal level." Hirsch, 215 N.J. at 174.

"Under both the Federal Arbitration Act (FAA) and New Jersey law,

arbitration is fundamentally a matter of contract." Lahoud, 481 N.J. Super. at

41. "Consequently, to be enforceable, the terms of an arbitration agreement

must be clear, and any legal rights being waived must be identified." Ibid.

Further, the agreement must be conscionable and may not be secured through

fraud, duress, coercion, or mistake. Pace v. Hamilton Cove, 258 N.J. 82, 102

(2024). "When a party asserts unconscionability as a defense, we conduct a fact-

sensitive analysis and assess both procedural and substantive

unconscionability." Ibid.

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Plaintiffs assert the ADR clause is unenforceable because: (1) it is placed

"deep into the contract, under an unrelated heading, in a wordy, single-spaced,

small font paragraph" and is therefore violative of the PLA; and (2) it contains

a provision for waiver of "trial by jury" that does not amount to a waiver of the

"statutory right to seek relief in a court of law" as spelled out in Atalese.

Further, plaintiffs argue that the contract is unconscionable because there was

an imbalance of bargaining power between Bender—an eighty-year-old man

with health issues—and defendants, who are experienced in commercial

business. This, according to the plaintiffs, renders the service agreement a

contract of adhesion. Additionally, they observe that the arbitration clause

contains a one-way reservation of rights provision that benefits only the

defendants. Alternatively, plaintiffs argue that, except for the breach of contract

claim, all of their other claims in the complaint fall outside the scope of the

agreement and are not covered by the arbitration clause, even if that clause is

found to be valid. We address each argument in turn.

The Plain Language Act

Pursuant to the PLA, "[a] consumer contract entered into on or after the

effective date of this amendatory and supplementary act shall be written in a

simple, clear, understandable and easily readable way." N.J.S.A. 56:12-2. The

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8

PLA provides "guidelines" and "examples" that a court "may consider in

determining whether a consumer contract as a whole complies with this act."

N.J.S.A. 56:12-10(a) to (b). A court may consider whether a contract uses

lengthy or confusing sentences, sections placed in illogical order, or complex

words. N.J.S.A. 56:12-10(a). A court may also consider whether "conditions

or exceptions to the main promise of the agreement" are "in at least 10 point

type." N.J.S.A. 56:12-10(b)(3). Thus, the PLA does not require any specific

language, font size, or format, but rather lists factors that a court "may" consider

when determining whether a consumer contract is compliant with the Act.

N.J.S.A. 56:12-10(a) to (b).

As applied, the PLA may render "[a]n arbitration provision that purports

to utilize mediation procedures . . . unenforceable because the parties cannot be

said to have reached a meeting of the minds on whether the proceeding will

result in a binding award." Kernahan v. Home Warranty Adm'r of Fla., Inc., 236

N.J. 301, 325 (2019). That is because "a lay reader [would perceive] that there

are two procedures being proposed through this confusing alternative dispute

resolution provision" which is labeled "mediation" but contained language

requiring the parties to arbitrate their claims. Ibid. On the other hand, an

arbitration clause that contains language specifically referring to the claims

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9

subject to arbitration and alerts the consumer "in uppercase type" of the waiver

provision is sufficiently clear and noticeable. Gras v. Assocs. First Cap. Corp.,

346 N.J. Super. 42 (App. Div. 2001), certif. denied, 171 N.J. 445 (2002).

Here, the ADR clause concerned is labeled "Dispute Resolution" in bold

font, unmistakably signifying its import. Unlike the misleading ADR clause in

Kernahan, the subject clause does not reference nor discuss other dispute

resolution methods. 236 N.J. at 325-26. Instead, the title of the section is

consistent with the purposes of arbitration. In addition, the clause is listed in

paragraph five of the contract under a section titled "Terms and Conditions."

Defendants acknowledge that the font size of the provision in question is

approximately 6.86 points. However, the PLA does not mandate that

agreements must use at least 10-point font. Instead, font size serves as a

guideline for courts to consider. See N.J.S.A. 56:12-10(b)(3).

The terms of the ADR clause are clear, specifying that "any claim, dispute,

or other matter in controversy arising out of or related to this Contract or breach

thereof" is subject to arbitration settled by the American Arbitration Association

in accordance with its relevant industry rules. In compliance with Gras, 346

N.J. Super. at 42, the clause at issue also contains a waiver provision in

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uppercase letters, distinguishable from the remainder of the clause and the

contract, which reads:

EACH PARTY TO THIS CONTRACT FOR ITSELF,

ITS SUCCESSORS AND ASSIGNS, WAIVES ALL

RIGHTS TO TRIAL BY JURY FOR ANY CLAIM,

DISPUTE, OR OTHER MATTER IN

CONTROVERSY ARISING OUT OF OR RELATED

TO THIS CONTRACT.

Thus, considering all relevant factors, the ADR clause concerned was

"simple, clear, understandable, and easily readable." N.J.S.A. 56:12-10(a). In

summary, although we do not condone use of a 6.86 font size, plaintiffs have

not presented any evidence showing that Bender was "substantially confused

about any of the rights, obligations or remedies of the contract," or that

participating in arbitration "has caused or is likely to cause financial detriment"

to plaintiffs in violation of the PLA. N.J.S.A. 56:12-4.1(b) to (c).

Waiver Provision

In Atalese, plaintiff contracted with defendant for debt-adjustment

services. 219 N.J. at 435. The contract included an ADR clause requiring the

parties to resolve their claims through arbitration, but it did not specifically state

they were waiving their right to seek judicial relief. Ibid. The Atalese Court

held that "[t]he absence of any language in the arbitration provision that plaintiff

was waiving her statutory right to seek relief in a court of law renders the

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provision unenforceable." Id. at 436 (emphasis in original). In so holding, the

Court clarified that "[t]he point is to assure that the parties know that in electing

arbitration as the exclusive remedy, they are waiving their time-honored right to

sue." Id. at 444 (alteration in original). However, "[n]o particular form of words

is necessary to accomplish a clear and unambiguous waiver of rights" so long as

the terms in a consumer contract are written in simple and clear terms. Ibid.

(emphasis added) (citing N.J.S.A. 56:12-2). Accordingly, "[o]ur courts have

upheld arbitration clauses phrased in various ways when those clauses have

explained that arbitration is a waiver of the right to bring suit in a judicial

forum." Ibid.

As an example of an acceptable arbitration clause, the Atalese court

suggested language stating that "all disputes relating to . . . employment . . .

shall be decided by an arbitrator" and included a provision for waiver of "right

to a jury trial." Ibid. (quoting Martindale v. Sandvik, Inc., 173 N.J. 76, 81-82

(2002)). Therefore, an arbitration clause is enforceable if it clearly identifies

the claims subject to arbitration and includes a waiver that is "sufficiently

broad." Id. at 445 (quoting Martindale, 173 N.J. at 81-82).

In this case, the trial court correctly found that the ADR clause complied

with the requirements set out in Atalese; the clause clearly specified which

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claims would be arbitrated and included a waiver of the right to a jury trial. To

be clear, the Atalese court did not mandate that an arbitration clause explicitly

"state that the matter may not be presented or heard in a court of law," as

plaintiffs contend. On the contrary, the Court in Atalese clarified that no

talismanic or "particular form of words is necessary to accomplish a clear and

unambiguous waiver of rights." Id., 219 N.J. at 444. Nor did the Court

distinguish between a waiver to the "right to a jury trial", a waiver of the right

"to maintain other available resolution processes, such as a court action or

administrative proceeding", or a provision explaining that parties would settle

disputes "only by arbitration" without the benefit of having the claim settled in

court by a "judge or jury." Id. at 444-45. Rather, it placed all three variations

of valid waiver provisions on an equal footing. Id. at 445. Indeed, "without

difficulty and in different ways, the point can be made that by choosing

arbitration one gives up the" right to bring suit. Ibid.

In addition, plaintiff's contention that a valid ADR clause must "explain

to the consumer that he is waiving his statutory right to seek relief in a Court of

Law," is without merit. In its assessment of whether the arbitration clause in

Atalese passed muster, the Court noted that the clause "has none of the language

our courts have found satisfactory in upholding arbitration provisions," such as

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an "explanation that plaintiff is waiving her right to seek relief in court for a

breach of her statutory rights." 219 N.J. at 446. However, that an ADR clause

does not have a statement distinguishing between arbitration and other judicial

forums does not automatically render the clause invalid. See ibid. Rather, the

inquiry is and has always been whether the clause contains "clear and

unambiguous language that the plaintiff is waiving her right to sue or go to court

to secure relief." Ibid. So long as "the clause, at least in some general and

sufficiently broad way, . . . explain[s] that the plaintiff is giving up her right to

bring her claims in court or have a jury resolve the dispute," the court must

enforce it. Id. at 447 (emphasis added).

In sum, the subject ADR clause which requires the parties to arbitrate "any

claim, dispute, or other matter in controversy arising out of or related to this

Contract or breach thereof" and includes a waiver of "all rights to trial by jury

for any claim, dispute, or other matter in controversy arising out of or related to

this contract" is substantially similar to other clauses consistently upheld by our

Supreme Court. See id. 444-45 (quoting Martindale, 173 N.J. at 81-82) (citing

examples of ADR clauses "phrased in various ways" that have been upheld by

our courts). To that end, the ADR clause in question—excluding the reservation

of rights provision, which will be addressed later—is valid and enforceable.

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Contract of adhesion

A contract of adhesion, or a contract "presented on a take-it-or-leave-it

basis, commonly in a standardized printed form, without opportunity for the

adhering party to negotiate except perhaps on a few particulars," entails some

procedural unconscionability. Rudbart v. N.J. Dist. Water Supply Comm'n, 127

N.J. 344, 353 (1992) (citations omitted) (internal quotation marks omitted).

Here, the record regarding contract formation and execution is sparse.

Plaintiffs allege the service agreement was an adhesion contract because there

"was no negotiation or bargaining possible," and defendants left Bender with no

meaningful option but to "sign here" if he wanted the repairs completed. Despite

the foregoing contention, plaintiffs in their brief to this court effectively concede

that Bender negotiated with defendants before executing the agreement:

Prior to executing said agreement, Mr. Bender made

Defendants aware that he had a pulmonary condition

and that under no exception could any amount of dust,

debris or particulate be allowed to enter the living areas

of the home, due to the severe health risks of same.

Defendants assured Mr. Bender that they would

perform the work in a controlled and meticulously

guarded manner so as not to present any risk to Mr.

Bender’s health or his most prized possession, his train

system.

[(Emphases added).]

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Defendants dispute plaintiffs' narrative, observing that the while defendants

used their "form of contract . . . , it was clearly customized for Bender's specific

needs."

Evidently, the second page of the contract spelled out the duties of both

parties, which were tailored to accommodate Bender's request for adequate

control of the debris resulting from the construction. Specifically, the second

page of the contract provided that "[c]ontractor [a]grees to ...

[s]pray/clean/wirebrush all walls prior to install. Wrap entire trainset in

plastic/tape to make sure nothing gets dust/debris and leave broom clean when

finished." Considering the negotiations prior to the execution of the contract

and the incorporation of language tailored to Bender's needs, the service

agreement signed here was not presented in a "take-it-or-leave-it" manner and,

therefore, did not constitute a contract of adhesion. Rudbart, 127 N.J. at 354;

see also Lahoud, 481 N.J. Super. at 45 (holding that a consumer contract for

pool installation is not an adhesion contract because it was not presented to

plaintiff on a "take-it-or-leave-it" basis and plaintiff selected defendant to install

the pool and had the opportunity to negotiate terms and retain counsel).

Even if the service agreement were an adhesion contract, it would not

instantaneously render the agreement unconscionable. "[T]hat a contract is a

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contract of adhesion imbued with some procedural unconscionability marks only

'the beginning, not the end of the inquiry' regarding its enforceability." Pace,

258 N.J. at 103 (quoting Rudbart, 127 N.J. at 354). In addition to its "take-or-

leave-it nature, to determine whether a contract of adhesion is enforceable,

courts have considered the following factors: (1) the subject matter of the

contract; (2) the parties' relative bargaining positions; (3) the degree of

economic compulsion motivating the adhering party; and (4) the public interests

at stake. Rudbart, 127 N.J. at 356.

In this case, the subject matter of the contract was a consumer contract for

home improvement, specifically for waterproofing services in Bender's

basement. The subject matter is arguably "a fundamental aspect" of Bender's

life because the repairs were performed at his primary residence. See Lahoud,

481 N.J. Super. at 44. On the other hand, a primary purpose of the contracted

work was to protect Bender's "treasured train system," not to maintain "a

necessity of everyday life." See ibid.

In assessing the parties' relative bargaining positions, courts consider

"lack of sophistication, . . . bargaining tactics, and the particular setting existing

during the contract formation process." Muhammad v. Cnty. Bank of Rehoboth

Beach, 189 N.J. 1, 15 (2006) (citation omitted) (internal quotation marks

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omitted). In this case, Bender was a consumer—an 86-year-old man with

pulmonary conditions—at the time he signed the contract, while the defendants

are established corporations with significant experience in basement

waterproofing and related repairs. However, this alone is insufficient to prove

that defendants had a bargaining advantage over Bender. Plaintiffs did not

provide any evidence in the record suggesting Bender was "unsophisticated,

confused or even had questions about the [a]greement’s terms." Curtis v. Cellco

P'ship, 413 N.J. Super. 26, 40 (App. Div. 2010); see also Lahoud, 481 N.J.

Super. at 44 ("[P]laintiff has failed to present any facts that would show he had

an unfair bargaining disadvantage or was manipulated in some way by the

bargaining process.").

Regarding the third factor, the record is devoid of any evidence that

Bender was under economic pressure to accept defendants' services or that he

had no other meaningful option but to accept defendants' services. See Pace,

258 N.J. at 108 (holding that plaintiffs were not under economic pressure

because they did not face "a monopolistic market," and did not put forth

evidence showing that the subject apartment complex was the only one available

to them).

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The fourth, or "public interest factor[,] is the most important in

determining whether a contract of adhesion is unconscionable." Lahoud, 481

N.J. Super. at 45 (citing Rudbart, 127 N.J. at 356; Muhammad, 189 N.J. at 19).

This factor requires the court "to determine whether the effect of the arbitration

clause provisions that significantly restrict discovery, limit compensatory

damages, and prohibit punitive damages 'shield defendants from compliance

with the laws of this State.'" Est. of Ruszala ex rel. Mizerak v. Brookdale Living

Cmtys., Inc., 415 N.J. Super 272, 298 (App. Div. 2010) (quoting Muhammad,

189 N.J. at 19). Here, the ADR clause neither restricts discovery nor limits

damages.

Accordingly, the balance of the factors weighs in support of a conclusion

that the service agreement, and subsequently the ADR clause, were

conscionable.

Unilateral Reservation of Rights Provision

This court has recently struck down a reservation of rights provision that

exclusively benefited one party while depriving the other of same. Lahoud, 481

N.J. Super. 29. In Lahoud, plaintiff contracted with a construction company to

build a swimming pool at his beachfront home. Id. at 36. The contract contained

an ADR clause that required the parties to resolve any claims arising from or

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related to the agreement through arbitration, except that the company was

allowed to seek monetary damages through a court of law. Ibid. The reservation

of rights provision read:

NOTWITHSTANDING THE FOREGOING, WE

RESERVE THE RIGHT AND MAY AT OUR

DISCRETION EXERCISE THE RIGHT TO

COMMENCE LEGAL ACTION IN ANY COURT OF

COMPETENT JURISDICTION TO COLLECT

MONIES YOU OWE UNDER THIS AGREEMENT,

IN WHICH YOU AGREE TO WAIVE THE RIGHT

TO MEDIATION OR ARBITRATION."

[Id. at 37.]

This court concluded that the reservation of rights provision was

unconscionable because the company "created an exception to arbitration only

for itself the power to pursue a claim for money damages—and potentially other

claims—in court if plaintiff failed to pay [the company] under the contract while

plaintiff may not seek relief in court under any circumstances." Id. at 46. That

provision provided the company with an exclusive advantage because plaintiff

was required to bring "all" of his claims in arbitration and could not assert a

counterclaim or defense. Ibid. Because the provision constituted a "grossly

unbalanced approach" and "a harsh and unfair one-sided term that lacks

mutuality," it was held to be unconscionable and therefore unenforceable. Ibid.

The Lahoud court concluded that the provision is severable because the terms

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and conditions section of the contract contained a severability clause and the

remainder of the contract would be capable of enforcement without the violative

provision. Id. at 47-48.

Here, defendants maintain the provision is conscionable because "Bender

would be able to assert any defenses to such claims in that litigation," whereas

the Lahoud agreement provided that "all of plaintiffs' claims must be brought in

arbitration if mediation is unsuccessful." Plaintiffs submit that Lahoud supports

the conclusion that the ADR provision, in its entirety, is unenforceable.

Our analysis of the ADR clause renders the reservation provision

unconscionable and severable. First, the ADR clause provided that "any claim,

dispute, or other matter in controversy arising out of or related to this [c]ontract

or breach thereof shall be settled by arbitration" but "[i]f payment in full is not

made when due, [c]ontractor is entitled to proceed with litigation and may

recover all expenses of collection, including attorneys’ fees, court costs, court

reporter fees, and expert witness fees, in such amount as the court may adjudge

reasonable." (Emphases added). As it stands, this provision entitles only the

contractor to seek judicial relief on certain claims while requiring plaintiffs to

arbitrate "any" claim, including counterclaims or defenses. This is precisely the

kind of "grossly unbalanced approach" invalidated by the Lahoud court. Ibid.

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Second, the "Terms and Conditions" section of the contract contains a

"Miscellaneous" provision, which reads: "If any term, condition, or provision of

this [c]ontract is found unenforceable by a court of law or equity, this [c]ontract

shall be construed as though that term, condition, or provision did not exist, and

its unenforceability shall have no effect whatsoever on the rest of this

[c]ontract." Thus, the provision is severable and "[s]triking the reservation of

rights provision would leave behind a 'clear residue that is manifestly consistent

with the central purpose of the contracting parties, and that is capable of

enforcement.'" Id. at 48 (quoting NAACP of Camden Cnty. E. v. Foulke Mgmt.

Corp., 421 N.J. Super. 404, 424 (App. Div. 2011)).

In sum, the ADR provision is enforceable, except for the invalid

reservation provision that is severable. Because defendants did not invoke the

reservation provision, the arbitration may proceed.

Arbitrable claims

"An agreement relating to arbitration should . . . be read liberally to find

arbitrability if reasonably possible" and "[a]ny doubts concerning the scope of

arbitrable issues should be resolved in favor of arbitration." Jansen v. Salomon

Smith Barney, Inc., 342 N.J. Super. 254, 258 (App. Div. 2001) (citations

omitted). "Arbitrability of a particular claim depends not upon the

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characterization of the claim, but upon the relationship of the claim to the subject

matter of the arbitration clause." Ibid. (citations omitted) (internal quotation

marks omitted).

Plaintiffs assert that our Court's holding in Garfinkel v. Morristown

Obstetrics & Gynecology Assocs., P.A., 168 N.J. 124, 132 (2001) supports their

position that their contractually-related claims are not subject to mandatory

arbitration. Their reliance on Garfinkel is misplaced. In Garfinkel, our Supreme

Court held that a party may not be compelled to arbitrate a statutory claim where

that claim is unrelated to the subject matter of the contract and the arbitration

clause does not reference statutory claims. 168 N.J. at 134. Here, all of

plaintiffs' claims are related to the subject matter of the contract, namely

waterproofing services.

The contract and tort claims, including breach of contract, negligence,

gross negligence, and wrongful death are not immune from arbitration.

"[C]ourts have construed broadly worded arbitration clauses to encompass tort

[and] contract claims." Alfano v. BDO Seidman, LLP, 393 N.J. Super. 560, 575

(App. Div. 2007); see Wasserstein v. Kovatch, 261 N.J. Super. 277, 286 (App.

Div. 1993) (holding that common law claims "have been held arbitrable when

they relate to the making or performance of a contract with an arbitration

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clause"). The claims of fraud, fraudulent misrepresentation, fraudulent

inducement, and negligent misrepresentation are also arbitrable. Grandvue

Manor, LLC v. Cornerstone Contracting Corp., 471 N.J. Super. 135, 146 (App.

Div. 2022) (holding that a clear and unambiguous arbitration clause covers

claims of fraud and negligent misrepresentation); Van Syoc v. Walter, 259 N.J.

Super. 337, 339 (App. Div. 1992) ("[A]bsent a claim of fraud directed at the

arbitration clause itself, a claim of fraud in the inducement of the contract is a

matter for the arbitrators.").

The more nuanced question is whether the Consumer Fraud Act ("CFA")

claim, a statutory claim, is covered by the ADR clause. While waivers of

"statutory rights 'must be clear and explicit,' such waivers need not specifically

refer to every imaginable statute." Curtis, 413 N.J. Super. at 37 (quoting Gras,

346 N.J. Super. at 54, 56); see also Atalese, 219 N.J. at 447 (holding that an

arbitration clause need not identify "the specific constitutional or statutory right

guaranteeing a citizen access to the courts that is waived by agreeing to

arbitration").

However, an ADR provision that requires arbitration of "any controversy

arising out of, or relating to, this Agreement or the breach thereof" does not

definitively indicate the parties intended to waive statutory rights. Garfinkel,

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168 N.J. at 135. "To pass muster, . . . a waiver-of-rights provision should at

least provide that the [parties] agree[] to arbitrate all statutory claims arising out

of the" agreement. Ibid. (emphasis added); see also Gras, 346 N.J. Super. at 47,

57 (holding that an arbitration agreement specifically requiring arbitration of

"any claim or dispute based on a federal or state statute" is enforceable).

Alternatively, statutory claims that "are founded on facts no different than the

breach of contract claims" are subject to arbitration, even if the ADR provision

does not explicitly reference a waiver of "statutory claims" or "statutory rights."

Caruso v. Ravenswood Devs., Inc., 337 N.J. Super. 499, 508 (App. Div. 2001)

(holding that the consumer fraud and RICO claims are subject to arbitration

because "plaintiffs rely on the same facts to support the breach of contract,

consumer fraud and RICO claims").

As evidenced in plaintiffs' complaint, the CFA claim is based on the very

same alleged conduct that supports the claims of fraud, fraudulent

misrepresentation, fraudulent inducement, and negligent misrepresentation , all

of which are arbitrable claims. More specifically, defendants' purported

misrepresentations regarding their licensure and the conditions of the property

that were recited in the consumer fraud claim also formed the basis of the

aforementioned claims. "Although plaintiffs couch the claims in the relevant

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statutory language, it is apparent that the claims are subsumed in the subject

matter of the arbitration agreement between the parties." Ibid.

Overall, this court has consistently held that the objectives of the CFA in

rooting out fraud and compensating victims can be vindicated in the arbitration

forum. Gras, 346 N.J. Super. at 52 ("There is no inherent conflict between

arbitration and the underlying purposes of the CFA."); Curtis, 413 N.J. Super.

at 37 ([I]t is well-established that CFA claims may be the subject of arbitration

and need not be exclusively presented in a judicial forum.); Rockel v. Cherry

Hill Dodge, 368 N.J. Super. 577, 580 (App. Div.), certif. denied, 181 N.J. 545

(2004). Thus, all of plaintiffs' claims are typically subject to arbitration.

In sum, we conclude: (1) the ADR clause clearly waived plaintiff's right

to bring suit on all ten causes of action; (2) the reservation of rights provision is

unconscionable and unenforceable; and (3) the reservation of rights provision is

severed from the contract, but the arbitration can nonetheless proceed.

Affirmed in part, reversed in part, and remanded for entry of an order

consistent with this opinion. We do not retain jurisdiction.

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