No individual liability for an owner in an arbitration, despite the fact he failed to raise a timely objection to his inclusion in the arbitration, because the arbitrator did not set forth a legal basis for individual liability.

In this case, the homeowner was alleging a breach of contract for the repair and remodeling of a home. The homeowner’s arbitration demand named both the contracting company as well as its owner individually. The owner never objected to his personal inclusion in the arbitration until his pre-hearing brief was filed, and the arbitrator issued an award against both the company and the owner. When the owner challenged the award as to him personally, the law division judge ordered the arbitrator to provide additional details as to why the award was entered against the owner as well as the company. In response, the arbitrator stated little more than the fact that the owner had been a party to the arbitration all along. The court found this to be insufficient to impose liability upon the owner individually. The Appellate Division affirmed, adding that, although the owner failed to raise a timely objection to his inclusion in the arbitration the Rules of the American Arbitration Association, the arbitrator did not set forth a legal basis for individual liability and, therefore, no such liability would attach.

Case Law Alert - 1st Qtr 2011