October 1, 2010
STEPHEN GREGORY, PLAINTIFF-APPELLANT,
KENNETH PULASKY, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Burlington County, Special Civil Part, Docket No. DC-7427-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 20, 2010
Before Judges Lisa and Sabatino.
Plaintiff, a residential landlord, sued defendant, his tenant, for rent due and other expenses resulting from defendant's premature vacation of the premises. Defendant did not respond to the action and default was entered. After a proof hearing, the court entered judgment in plaintiff's favor for $10,514.86, plus costs and interest. The court did not allow additional expenses claimed by plaintiff in the total amount of $3773. Plaintiff appeals, arguing that the court erred in disallowing the additional expenses. We agree with plaintiff as to one item, advertising costs of $1383, but not the others. We therefore modify the judgment, increasing the amount by $1383, and affirm in all other respects.
The parties entered into the lease agreement for a single family home in Pitman on June 23, 2005. It was for a five-year term from July 2, 2005 to June 30, 2010. The initial monthly rent was $1450. The lease provided that defendant would be responsible for increases in real estate taxes and insurance as additional rent. As a result, the monthly rent was increased on July 1, 2006 to $1475, and on September 1, 2007 to $1510. At the end of April 2008, defendant vacated the premises, providing plaintiff only one day of notice.
The lease contained the following provision for mitigation of damages in the event of default by the tenant:
In the event of default by the resident, which would require the owner to relet the premises for the remainder of the term of the lease, the resident shall be responsible for and pay for all costs incurred by the owner during the process of re-renting including, but not limited to: costs of advertisement, an agent's rental commission not to exceed one months rent in the event that the owner should elect (at it's option) to employ an agent to show the apartment to prospective residents, or a milage [sic] expense reimbursement (not to exceed 32 cents per mile) in the event that the owner should elect to show the apartment to prospective residents, all of which shall be as rent due and owing under the lease agreement.
At the commencement of the lease, plaintiff had collected a security deposit of $2175. At the time of the proof hearing, plaintiff continued to hold the deposit, which, with accrued interest, equaled $2,182.24. Defendant left the property in an undamaged state except for normal wear and tear. On May 9, 2008, plaintiff wrote to defendant advising that he intended to retain the security deposit as an offset against rent to become due. Defendant had paid the rent through April 2008.
Immediately after defendant moved out, plaintiff took two steps to try to find a new tenant. He began placing advertisements in the local newspapers and he engaged the services of a realtor, who listed the property on the multiple listing service (MLS). The commission would be equal to one month's rent. The property was advertised for a monthly rental of $1510. Plaintiff's arrangement with the realtor was that plaintiff would pay for the newspaper advertisements, which would list the realtor's telephone number for responses. In this way, the realtor would engage in all contacts with prospective tenants and would show the property. Plaintiff deemed this arrangement fair and necessary because in this adverse economic climate he anticipated that finding a qualified tenant would be difficult and time-consuming. Thus, the costs of advertising would not justify the commission and the realtor was not willing to pay for advertising. Plaintiff took an aggressive twofold approach through newspaper advertising and the MLS to maximize his effort to quickly find a tenant and mitigate defendant's damages. Moreover, plaintiff considered this twofold approach authorized by the mitigation of damages provision in the lease that we have quoted.
Although the property was shown to a number of prospects, a new tenant did not move in until December 2008. As an added incentive, plaintiff allowed the new tenant to live in the property rent-free in December, and the new tenant agreed to monthly rent of $1550 rather than the $1510 listing price. The new tenant began paying rent January 1, 2009.
The judge allowed plaintiff only seven months rent, from May through November 2008. He rejected plaintiff's claim for the rent-free month of December 2008, finding that plaintiff entered into that arrangement with the new tenant "for whatever reason to entice or induce the new tenant but I don't find that would be properly the responsibility of the defendant." Therefore, the judge awarded plaintiff $10,570 for seven months rent at $1510 per month.
The judge also allowed reimbursement for the following expenses, which he found reasonable: water and sewer charges of $149.31; electric charges of $215.79; lawn care expenses of $195; and the realtor's commission of $1510. From the total allowances of $12,640.10, the judge deducted the security deposit plus interest of $2182.24, resulting in a judgment of $10,457.86.
Besides the disallowance of $1510 for the rent-free month, the judge also disallowed plaintiff's claims for his newspaper advertising expenses of $1383, painting expense of $800, and $80 for a skip trace to locate defendant in order to serve him with process in this action. The judge found that defendant should bear no responsibility for painting because plaintiff acknowledged that the premises were left in a good state of repair, normal wear and tear excepted. Although the judge did not expressly comment on the $80 claim, we infer that he found no basis on which to impose that litigation-related expense to defendant. The judge found the advertising expenses unreasonable because he felt the realtor should have been responsible to pay them out of her commission. The judge reasoned that plaintiff unreasonably chose to incur advertising costs in addition to hiring a realtor.
Our standard of review of a judge's findings of fact are very limited. Those findings are "binding on appeal when supported by adequate, substantial and credible evidence." Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974). Applying that standard, we have no occasion to interfere with the judge's findings regarding the paint, the rent-free month, and the skip trace.
Defendant left the leased premises in good condition, except for normal wear and tear. Accordingly, the judge's finding that painting it to make it attractive to a new tenant was an expense plaintiff would have had to incur had defendant not defaulted, and was therefore not caused by the default, was supported by the evidence. Finding the rent-free month not properly assessable to defendant was also supported by the record. After the property was vacant for many months, a circumstance that might be expected to lead to a downward negotiation from the listing price, the negotiation resulted in a monthly premium, spread out over the new lease term. The judge did not err in finding that the exchange of consideration between plaintiff and the new tenant should not be assessed against defendant. Plaintiff has made no argument as to why he should have been awarded $80 for the skip trace. For that reason, we need not address it. State v. Hild, 148 N.J. Super. 294, 296 (App. Div. 1977). Nevertheless, we note that the skip trace expense is not an item covered by the lease in the event of default. Further, plaintiff was awarded statutory costs in this Special Civil Part action of $57.
We view the evidence regarding the advertising costs differently from the trial judge. We agree with plaintiff that the mitigation of damages provision quoted earlier in this opinion authorized plaintiff, under all of the circumstances of this case, to hire a realtor for a commission equal to one month of rent and also pay to advertise the property.
Plaintiff advertised in two newspapers, more frequently in the Gloucester County Times and less frequently in the Courier-Post. The former is less expensive and has a lower circulation, but circulates primarily in the county in which the property is located. The latter is more expensive and has a larger circulation, but circulates primarily in neighboring Camden County. The advertisements plaintiff placed were modest in size. The overall cost incurred was reasonable.
The testimony established that the realtor was unwilling to pay for advertising costs for such a modest commission. This is understandable. As it turned out, it took seven months of advertising, multiple contacts with prospective tenants, and multiple showings to rent the property. The reasonable advertising costs would have negated the commission. This conclusion is not merely based on hindsight. The outcome was consistent with what plaintiff and the realtor expected at the outset and with what formed the basis of their negotiated arrangement.
That arrangement was reasonable in light of the amount of the commission, the anticipated cost to advertise for an extended period of time in a bad economy, and the terms of the mitigation of damages provision. We are constrained to conclude that the finding of unreasonableness as to this item was not supported by the evidence. Accordingly, we direct that the judgment be increased by $1383.
Affirmed as modified.
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