On appeal from the Superior Court, Law Division, Passaic County.
Gaulkin, R. S. Cohen and Arnold M. Stein. The opinion of the court was delivered by Gaulkin, P.J.A.D.
[230 NJSuper Page 190] Plaintiffs (Winrow), owners of a commercial building leased to defendant Marriott Corporation (Marriott), sued Marriott for its breach of lease covenants requiring it to maintain the
premises in good repair. On Marriott's motion at the conclusion of Winrow's proofs, the trial judge found that Winrow had made out a cause of action, but ruled that Winrow's evidence as to the costs of repair was "not relevant" because "the applicable measure of damages is injury to the reversion." Since Winrow had offered no proof as to such injury, the judge dismissed the claim. Winrow appeals.
Winrow leased the building to Marriott on April 10, 1975 for a 20 year term. The lease, which contemplated operation of a fast-food restaurant, required Marriott to maintain the building "in good condition and repair" and to deliver it at the end of the lease term "in good order and condition except for reasonable wear and tear. . . ."
Sometime in late 1983 or early 1984, Marriott sublet the premises, as authorized by the lease, to Horn's, Inc., which operated a restaurant until about September 1984. Upon seeing the building vacant and boarded up, Winrow addressed a number of letters to Marriott between September and December 1984, asserting violations of the lease covenants, including the covenant to maintain and repair. On December 13, 1984, Winrow filed this action for damages, alleging among other matters that Marriott was "permitting the deterioration of the inside of [the] building."
While the suit was pending, Winrow brought a separate action to dispossess Marriott because of its alleged breaches of the lease. Judgment for possession was granted.*fn1 Marriott was removed from the premises and Winrow relet the building to a new tenant as of October 1, 1985.
This matter went to trial more than two years later, in October 1987. Winrow presented proofs that when the new tenant was given access to the building, there was "quite a bit of destruction," including damage to the brickface, asphalt, roofing, interior counters, ceiling, chandeliers, pipes, sinks, toilets, sprinklers, ventilation hoods, electric wiring and heating, ventilating and air conditioning systems. Winrow also presented testimony as to the cost of repairs, but no evidence from which a factfinder could determine a reduced value of Winrow's reversionary interest resulting from Marriott's failure to repair and maintain. Winrow's claim was dismissed because of that purported flaw in the damage proofs.
Finding "no clear exposition" of law in New Jersey, the trial judge relied on what he found to be the "general rule" adopted in other jurisdictions that, where an action for breach of a covenant to repair is brought during the term of the lease, the measure of damages is the injury to the lessor's reversion. If the action is brought after the expiration of the lease, the authorities agree, the measure of damages is the cost of repair. See generally Annotation, "Measure and items of damage for lessee's breach of covenant as to repairs," 80 A.L.R. 2d 983 (1961); see also S.D.G. v. Inventory Control Co., 178 N.J. Super. 411 (App.Div.1981).
The rationale for that rule has been variously stated. In Corbett v. Derman Shoe Co., 338 Mass. 405, 155 N.E. 2d 423 (1959), the court said that to award the cost of repairs to a lessor who has only a reversionary interest "may overcompensate him and leave the lessee without the benefit of repairs he has paid for." Id. at 414, 155 N.E. 2d at 428. In Pennsylvania Cement Co. v. Bradley ...