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Labinowski v. Failla

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


May 14, 2010

LORRAINE LABINOWSKI, PLAINTIFF-APPELLANT,
v.
CHARLENE FAILLA AND 20 HALSEY AVENUE CORPORATION, DEFENDANTS-RESPONDENTS.

On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. DC-8663-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted April 13, 2010

Before Judges Parrillo and Ashrafi.

Plaintiff Lorraine Labinowski appeals from a judgment of the Special Civil Part awarding her damages of double her security deposit less an amount applied to unpaid rent, and denying her requests for treble damages under the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -20, and for attorneys' fees. We affirm.

The facts are not materially in dispute. Defendant Charlene Failla is the sole owner of defendant 20 Halsey Corp., Inc., which in turn owns an apartment building located in Haledon. Plaintiff rented an apartment in this building pursuant to an initial one-year written lease executed by plaintiff on June 1, 2006, commencing July 1, 2006, with monthly rent of $1000 and a security deposit of $900. A lease renewal letter was thereafter sent to plaintiff, increasing monthly rent to $1025, but was never signed nor returned by plaintiff, who nevertheless remained a tenant and paid the increased rent.

On April 7, 2008, plaintiff sent defendant a letter informing that she would not be renewing her "yearly lease" on June 1, 2008, and would be vacating the premises on May 29, 2008. Plaintiff also advised defendant in that letter that her daughter, Linda Avino, "will be available as my representative on this matter," and requested that the $900 security deposit be returned. Less than a month later, on May 2, 2008, Avino sent a letter to defendant as "a follow-up to my mother's letter[,]" correcting a mistake in the letter and acknowledging that the current lease expires on June 30, 2008, rather than May 31, 2008, as her mother had apparently believed. Consequently, Avino requested that the $900 security deposit be applied to plaintiff's rent for the month of June. Defendant complied with Avino's request.

Plaintiff vacated the premises on May 29, 2008, and had no further contact with defendant until weeks later when she called defendant inquiring about her security deposit. Plaintiff was informed in that conversation that she was not entitled to the security deposit and that it would not be returned. On November 11, 2008, plaintiff's counsel wrote defendant requesting a return of the $900 security deposit with interest within thirty days. In his November 14, 2008 response, defendant's counsel reiterated that as per Avino's request, plaintiff's security deposit had been applied to June's rent and that defendants were not liable for return of the $900. Meanwhile, defendant had re- let the apartment beginning mid-June.

Plaintiff sued defendants in the Special Civil Part, seeking double damages plus interest pursuant to the Security Deposit Act, N.J.S.A. 46:8-21.1; treble damages pursuant to N.J.S.A. 56:8-19; and attorney's fees. Following defendants' answer, the matter was tried before Judge Mahlon Fast on July 21, 2009. At the conclusion of evidence, the court, in a letter opinion of July 30, 2009, entered judgment against the corporate defendant in the amount of $802.13, denied plaintiff's request for attorney's fees, dismissed the consumer fraud count, and dismissed the complaint against the individual defendant. Judge Fast reasoned:

Although there is no signed written lease renewal, plaintiff's course of conduct supports the finding that she implicitly assented to a 1 year lease term. A year to year lease need not be in writing so long as there is a meeting of the minds with regards to the material terms. The credible evidence at trial supports the finding that plaintiff and defendant understood their agreement to be for 1 year with a rental amount of $1,025.00 per month. The plaintiff's confusion regarding the expiration date of the lease does not refute the finding that plaintiff and defendant conducted their affairs pursuant to a year-long lease.

As a result of the 1 year lease, which commenced July 1, 2007 and expired June 30, 2008, plaintiff was responsible for June rent even though she vacated the premises on May 29, 2008. Following the directive of plaintiff's daughter/representative, defendant was within its rights to apply plaintiff's $900.00 security deposit toward the rental amount due for June 2008.

....

In fact plaintiff had surrendered her lease, but would have been liable for June rent until defendant was able to re-let the apartment. The landlord, defendant, is required to make good faith efforts to relet the surrendered apartment in order to mitigate the amount due by plaintiff as a result of prematurely vacating the apartment.

The credible evidence deduced at trial demonstrated that defendant made a good faith effort to re-let plaintiff's apartment and in fact did re-let the apartment beginning mid June 2008. The court in Mitchell v. First Real Estate Equities, Inc., 287 N.J. Super. 546 (App. Div. 1996) stated that "the date of the re-letting determines the date of the 'termination' of the breached lease under N.J.S.A. 46:8-21.1." Defendant re-let the apartment... in mid June 2008, thus effectively terminating the lease between plaintiff and defendant and relieving plaintiff of any further obligation to pay rent.

Defendant testified at trial that she applied plaintiff's $900 security deposit toward rent due for June 2008. The monthly rental rate at that time was $1,025.00. Defendant also re-let the apartment to a new tenant beginning mid June 2008, which terminated the lease between plaintiff and defendant. As a result, plaintiff was only liable to defendant for $512.50 as rent for the first half of June 2008. Defendant was unjustly enriched by $387.50 ($1,025.00 less an assumed re-let of $512.00 less the $900.00 security deposit) for the latter half of June, when she retained rent from the plaintiff and collected rent from the new tenant.

Defendant was required to return $387.50 of the security deposit to plaintiff within 30 days of the termination of the lease. Defendant failed to return said portion of the security deposit to plaintiff in a timely manner contrary to N.J.S.A. 46:8-21.1.

The Rental Security Deposit Act prescribes double the recovery from a landlord who improperly fails to return a tenant's security deposit within the statutory period. In the instant case the defendant was required, by law, to return $387.50 plus interest to plaintiff, which did not occur. As a result defendant is liable to plaintiff for double that amount, $775.00, plus $27.13 interest (7% interest for the period beginning July 1, 2008 ending on July 27, 2009 on the $387.50 wrongfully withheld).

Plaintiff's attorney has requested fees pursuant to N.J.S.A. 46:8-21.1, which permits fees in the judge's discretion. Due to defendant's good faith efforts to re-let plaintiff's apartment, defendant's testimony that they offered to return the entire security deposit multiple times, and the confusion created by plaintiff's letter to apply the deposit to the June rent, plaintiff's request for fees is DENIED.

Defendant 20 Halsey Street Corp. (the landlord, according to the lease) is therefore liable to plaintiff for $802.13 for violating N.J.S.A. 46:8-21.1. The complaint is dismissed as to the individual defendant.

Based on the efforts of the defendant to return the security deposit and the confusion resulting from plaintiff's letters, I find that there was no unconscionable conduct by the defendant and therefore the consumer fraud count is Dismissed.

On appeal, plaintiff raises the following issues:

I. THE TRIAL COURT ERRED IN HOLDING THAT "MUTUAL MISTAKE" RESULTED IN AN "IMPLIED ONE-YEAR LEASE" BECAUSE NEW JERSEY STATUTORY LAW MANDATES THAT A LANDLORD GIVE TIMELY WRITTEN NOTICE OF BOTH RENEWAL AND CHANGE IN RENT OF A YEARLY LEASE PURSUANT TO N.J.S.A. 2A:18-61.2 & N.J.S.A. 2A:18-56.

A. Respondents failed to meet express statutory notice requirements and, therefore, failed to renew appellant's lease on a yearly basis.

B. Ignoring current statutory law and contract law, the trial court found an implied one-year lease; despite the lack of any meeting of the minds between Appellant and Respondents. Restatement, Contracts (2d) Section 152 (1979).

C. Even if there were an implied one-year lease, the resulting landlord-tenant relationship was terminable ONLY by the parties to the lease; and could not have been extended by Appellant's daughter as she did not have a valid power of attorney pursuant to Restatement, Contracts (2d) Section 1152 (1979).

II. THE NEW JERSEY LEGISLATURE ENACTED THE RENTAL SECURITY DEPOSIT ACT [RSDA] FOR THE SPECIFIC PURPOSE OF PROTECTING TENANTS BY AFFORDING THEM A MANDATORY REMEDY AND EXPRESSLY DEFINING LANDLORD OBLIGATIONS.

A. The RSDA is part of a statutory scheme to protect tenants.

B. Good faith on the part of the landlord does not result in lesser penalty nor avoid the award of counsel fees.

C. The trial court abused its discretion in denying Appellant's request for counsel fees because not only does the RSDA expressly authorize an award of fees but, an award of counsel fees furthers the overall statutory goal of protecting tenants by providing access to their statutory rights.

III. THE TRIAL COURT ERRED IN DISMISSING THE CONSUMER FRAUD ACT COUNT OF THE COMPLAINT AND IN DISMISSING THE ENTIRE COMPLAINT AGAINST RESPONDENT CHARLENE FAILLA.

A. The trial court erred in dismissing [C]ount Two of the Complaint that alleged violation s of the New Jersey Consumer Fraud [A]ct, N.J.S.A. 56:8-1 et seq. [CFA], because all the elements of violations of the CFA were proven by Appellant.

B. The CFA imposes strict liability (no mitigation defense) and does not require proof of intent.

C. At all times relevant to this litigation, Respondent Charlene Failla owned the subject premises and was the alter ego of 20 Halsey Avenue Corporation.

We have considered each of these issue in light of the record, the applicable law, and the arguments of counsel, and we are satisfied that none of them is of sufficient merit to warrant discussion in a written opinion. R. 2:11- 3(e)(1)(A),(E). Accordingly, we affirm substantially for the reasons stated by Judge Fast in his letter opinion of July 30, 2009. Suffice it to say, a landlord is required, within thirty days of the termination of a lease, to return to the tenant the security deposit, plus the accrued interest, "less any charges expended in accordance with the terms of a... lease...." N.J.S.A. 46:8-21.1. The statute further provides that "any such deductions shall be itemized and the tenant... notified thereof...." Ibid. Accordingly, the statute authorizes a landlord to deduct from the security deposit any sums due and owing as a result of unpaid rent. Ibid.; see also Lorril Co. v. La Corte, 352 N.J. Super. 433, 442 (App. Div. 2002). The statute further provides that if the court finds a landlord violated the statute by not sending the required itemization within thirty days or by not returning to the tenant any remaining portion of the security deposit, "the court... shall award recovery of double the amount of said moneys[.]" N.J.S.A. 46:8-21.1.

Here, there is sufficient credible evidence from which to infer the parties' agreement to a one-year lease renewal, and the trial court therefore properly awarded plaintiff recovery of double the amount of the remaining portion of the security deposit not applied to plaintiff's June rent. We discern no reason to interfere with the court's fact finding, calculation of damages, including its denial of treble damages, or with the exercise of its inherent discretion in denying plaintiff's request for counsel fees, given the good faith efforts of defendants in this matter.

Affirmed.

20100514

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