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West Haverstraw Improvement Corp. v. Refcon


March 29, 2007


On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. BER-L-014412-04.

Per curiam.


Argued March 14, 2007

Before Judges Wefing, Parker and Yannotti.

Plaintiff West Haverstraw Improvement Corporation (WHIC) appeals from a judgment entered on December 12, 2005, awarding $4,817.17 to defendants Refcon, Inc. (Refcon) and Refcon of New Jersey, Inc. (Refcon NJ) on their counterclaim. For the reasons that follow, we affirm.

In December 1991, WHIC and Refcon*fn1 entered into a written agreement under which WHIC leased to Refcon space in a building in West Haverstraw, New York, for a term of three years beginning on February 1, 1992, and ending January 31, 1995. The parties thereafter agreed to several extensions of the lease. The last such extension was dated August 15, 2002. It provided that the lease would be extended to November 30, 2004; however, Refcon could terminate the lease "as of November 30, 2003, provided that [Refcon] gives written notice of its intention to do so to [WHIC] on or before August 1, 2003." The parties subsequently agreed that Refcon could provide notice of early termination on or before September 10, 2003.

In a letter dated September 10, 2003, Refcon's President Herman Jakubowski (Jakubowski) advised that Refcon was terminating the lease as of December 30, 2003. WHIC's President Lawrence W. Lipman (Lipman) responded in a letter dated September 25, 2003. Lipman stated that he did not receive the notice to terminate the lease until September 22, 2003. According to Lipman, the notice was ineffective because: 1) it had not been provided on or before September 10, 2003; 2) the notice had not even been mailed until September 11, 2003; and 3) the notice sought to terminate the lease term as of December 30 rather than November 30, 2003. Lipman asserted that Refcon was obligated for an additional year of occupancy through November 30, 2004. Refcon vacated the premises on or about December 30, 2003.

In December 2004, WHIC brought this action against Refcon seeking accrued rent, real estate taxes, late charges, excess premiums for property and liability insurance, and certain gas and electric expenses, for the period from January 1, 2004 through November 30, 2004. Refcon filed an answer denying that any amounts were due to WHIC and asserted a counterclaim seeking, among other things, the return of its security deposit.*fn2

The matter was tried to a judge, sitting without a jury. On November 18, 2005, the trial judge placed her decision on the record. The judge determined that Refcon had properly terminated the lease as of December 30, 2003. The judge found that Refcon had substantially complied with the provision of the lease allowing early termination and WHIC had not been prejudiced by any delay in receiving notice. The judge additionally found that WHIC had not mitigated its damages because it failed to take sufficient steps to re-let the premises, which remained vacant through November 30, 2004.

The judge determined that WHIC was not entitled to any monetary relief, with the exception of $1,500 for a compressor that Refcon had removed from the premises, and $2,000 for certain electrical renovations required when Refcon vacated the leased space. The judge found that Refcon was entitled to the return of its security deposit in the amount of $8,317.17. The judge accordingly awarded defendants $4,817.17, which represented the amount of the security deposit, less the monies due to WHIC. The judge also awarded defendants prejudgment interest. Judgment was entered in accordance with the judge's findings and this appeal followed.

WHIC first argues that the judge erred because Refcon's letter-notice was not received by WHIC on or before September 10, 2003. WHIC points out that the letter was dated on September 10, 2003, and metered in Refcon's offices on that date, but it was not postmarked at the post office until September 11, 2003, and not received by Lipman until September 22, 2003. Nevertheless, there is sufficient credible evidence to support the judge's finding that Refcon substantially complied with the parties' agreement when it exercised its right to early termination.

Elizabeth Zulinski (Zulinski), Refcon's controller, testified that on September 10, 2003, she asked Lipman to agree to terminate the lease on April 30, 2004, and Lipman refused. Zulinski stated that after this conversation, Refcon's secretary typed the September 10 letter notifying WHIC that Refcon was terminating the lease as of December 30, 2003. According to Zulinski, Jakubowski signed the letter that day and it was placed in an envelope.

Zulinski additionally testified that all of Refcon's mail is handled by the secretary, and each day, before the secretary leaves work, she takes the mail and places it in the mailbox. Zulinski asserted that on September 10, 2003, she told the secretary that it was "very important" that the letter go out that day and "[t]hat's what she did."

WHIC argues that notification by mail in this matter was not permitted by the lease and, even if it were, the agreement required that the notice be delivered to WHIC on or before September 10, 2003. We disagree. The lease agreement and the amendment allowing early termination did not specify the manner by which Refcon had to provide notice. Thus, the parties must have intended that notice could be provided by any reasonable means, including mail. Because mail was an acceptable manner by which to provide notice, notice was complete when the letter was placed in the mailbox. See 809-811 Washington St. Assoc. v. Grego, 253 N.J. Super. 34, 45 (App. Div. 1992) (holding that a landlord's notice to tenants that he intended to convert the premises to a condominium was effective as of the date it was mailed). Here, there was sufficient credible evidence to support the judge's finding that Refcon's letter-notice was timely because it had been properly addressed, with sufficient postage, and deposited in the mailbox on September 10, 2003.

WHIC argues, however, that the judge erred in applying the Mailbox Rule. "Generally speaking, the MailBox Rule sanctions the formation or completion of a contractual undertaking upon the act of mailing where the use of the mail is authorized by the other party as the medium for response." Okosa v. Hall, 315 N.J. Super. 437, 440 (App. Div. 1998). The rule may be summarized as follows:

Where parties are at [a] distance from one another, and an offer is sent by mail, it is universally held in this country that the reply accepting the offer may be sent through the same medium, and, if it is so sent, the contract will be complete when the acceptance is mailed, . . . and beyond the acceptor's control; the theory being that, when one make an offer through the mail, he authorizes the acceptance to be made through the same medium, and constitutes that medium as his agent to receive his acceptance; that the acceptance, when mailed, is then constructively communicated to the offeror. [Ibid. (quoting Dickey v. Hurd, 33 F.2d 415, 417 (1st Cir.), cert. denied, 280 U.S. 601, 50 S.Ct. 82, 74 L.Ed. 646 (1929).]

WHIC contends that the rule does not apply in this case because the parties were not at a distance from one another and the "offer" permitting Refcon to terminate the lease by November 30, 2003, was not communicated by mail.

We note that in her decision the trial judge did not expressly invoke the Mailbox Rule. Assuming that the rule can be applied to exercise of a right to early termination under a lease, there is a factual basis for its application in this case.

Although WHIC had an office in West Haverstraw which was in close proximity to the space leased to Refcon, Zulinski testified that "[m]ost of the time, nobody was there." In addition, Zulinski dealt with Lipman with regard to the early termination of the lease. Lipman worked part-time as a lawyer in New Jersey and he testified that he was not in WHIC's West Haverstraw office every day. Furthermore, the date by which Refcon had to provide notice of early termination was twice extended by verbal agreements, which were confirmed in letters dated July 24, 2003, and August 25, 2003, from Zulinksi to Lipman. Because the parties had communicated by mail, they could reasonably have expected that the notice could be mailed.

WHIC also contends that the notice was invalid because Refcon elected to terminate as of December 30, 2003, rather than November 30, 2003. Again, we disagree. WHIC was not prejudiced because the lease was terminated as of the end of December rather than the end of November 2003. No other tenant was waiting to lease the space. In fact, the premises remained vacant through November 30, 2004. Therefore, WHIC had the benefit of an additional month's rent that it would not otherwise have received if Refcon had vacated the premises on November 30, 2003.

WHIC additionally argues that New York law applies to this controversy because the leased space is located in New York. WHIC asserts under New York law, a commercial landlord does not have a duty to mitigate damages. WHIC argues that even if mitigation is required, the judge erred in finding that it failed to take sufficient steps to mitigate its damages. Because we are convinced that Refcon validly terminated the lease as of December 30, 2003, there is no need to address these issues.


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