This should not come as a surprise to any experienced construction attorney, that a New Jersey appellate court has held the AIA form dispute election terms to represent a proper waiver of the right to a jury trial.

The project was to build a new home. A rather nice home, probably, with a cost around $1.9 million. The owner’s construction representative proposed AIA contract forms, and the dispute clause was marked for arbitration and not litigation. A dispute arose, the homeowner filed suit, and the contractor sought to dismiss the lawsuit in favor of arbitration. The homeowner argued, in response, that the AIA form did not adequately put the homeowner on notice of the waiver of a right to a jury trial.

But the court did not agree. “This was not ‘a consumer contract of adhesion where [one party] . . . possessed superior bargaining power and was the more sophisticated party.’ [citations omitted]. Rather, it was a negotiated agreement between sophisticated business entities where the [homeowner] LLC, its owner’s representative, Kovacs [the individual homeowner], and his attorney selected the contract forms, altered them, and made the choice of arbitration.” The court distinguished this situation from other cases where a consumer had failed to understand the scope and meaning of an arbitration clause. Further, “we reject the LLC's claim that the contract's arbitration provisions clearly advising that the parties are giving up their right to pursue relief in court are invalid because they did not also advise about one of the component rights involved in seeking relief in court, namely a jury trial. Neither the LLC nor Kovacs claims to be ignorant that waiver of the right to seek relief in court would waive that component right.” This is nothing more than common sense.

The case is Columbus Circle NJ LLC v. Island Constr. Co., 2017 N.J. Super. Unpub. LEXIS 606 (Jan. 24, 2017).