April 20, 2011
TYLER MASTERSON, PLAINTIFF-RESPONDENT,
ELIZABETH POST, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Union County, Docket No. SC-1689-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted January 12, 2011
Before Judges Fuentes and Gilroy.
Defendant Elizabeth Post appeals from the November 10, 2009 judgment that was entered against her in the amount of $1,645 together with court costs.*fn1 Defendant also appeals from the January 26, 2010 order that denied her motion for a new trial. We reverse.
This matter arises from a dispute between cotenants of a residential apartment in Hoboken. On September 9, 2009, plaintiff Tyler Masterson filed a complaint against defendant in the Special Civil Part, Small Claims Section, seeking to recover one-half of one month's rent from defendant, together with payment of defendant's share of certain utilities. On November 10, 2009, the parties tried the matter pro se. At the conclusion of the trial, the court rendered an oral decision entering judgment in favor of plaintiff in the amount of $1,645 together with court costs. On November 30, 2009, defendant filed a motion for a new trial. On January 26, 2010, defendant retained counsel, after which the original trial judge recused himself from the motion. On January 26, 2010, another judge treated the motion as one for reconsideration and denied it.
We discern the following facts from the transcript of the trial proceedings. In August 2008, plaintiff and Claudia Fernandez occupied an apartment in Hoboken under a written lease agreement. The apartment contained two bedrooms, two bathrooms, and a common area. The lease was for a one-year term with rent fixed at $2,150 per month, plus utilities.
Shortly after the lease was signed, Fernandez needed to terminate her obligation under the lease. Plaintiff, as the remaining roommate, advertised on Craigslist for someone to take Fernandez's place, and defendant, after viewing the apartment, agreed to substitute for Fernandez on the lease. On August 11, 2008, Fernandez notified the landlord's managing agent of her intent to substitute defendant on the lease for herself. The agent agreed.
Plaintiff and defendant signed a new lease with the landlord for the apartment for the balance of the term from September 15, 2008 to July 31, 2009, at the same rent. The lease contained the following paragraphs relevant to the dispute in controversy.
The Tenant shall pay the rent to the Landlord at the Landlord's address set forth above. If the Apartment is leased to more than one occupant, each such occupant shall remain jointly and severally liable for all rent, additional rent and other costs hereunder.
21. Renewal Lease The Landlord must offer the Tenant a renewal lease to take effect at the end of the term unless the Landlord has good cause as defined by law. The renewal lease may contain reasonable changes, including any changes in the term, rent and surcharges allowed by law.
If the Landlord offers a renewal lease, the Landlord shall notify the Tenant of the renewal lease at least sixty (60) days before the end of the term. The Tenant must notify the Landlord of the Tenant's acceptance or rejection of the renewal lease at least forty-five (45) days before the end of the term. IT IS THE TENANT'S RESPONSIBILITY TO NOTIFY THE LANDLORD, IN WRITING, OF THE TENANT'S ACCEPTANCE OR REJECTION OF THE LEASE RENEWAL AT LEAST FORTY[-]FIVE (45) DAYS BEFORE THE END OF THE TERM. If the Tenant does not accept the renewal lease, the Tenant must vacate the apartment at the end of the Term. In other cases Tenant must give Landlord a minimum of 60 days to vacate. Regardless of 60 days written notice to vacate, termination of any lease will not be permitted for the period of December 31st-January 1st. Tenant must then cooperate with Landlord and Landlord agents to allow unit to be shown to prospective Tenants.
22. Tenant Change Any change of Tenants must be approved by Landlord in writing prior to new Tenant occupying the Apartment. Leases and paperwork must be completed prior to new tenant moving in.
This lease is binding on the Landlord and the Tenant and all parties who lawfully succeed to their rights or take their places. The Tenant(s), if more than one, shall be individually, jointly, and severally liable hereunder, and the term "Tenant", wherever used herein shall mean the Tenant(s) or any one or more of them. Anyone signing this lease shall be bound hereby, individually, jointly and severally whether or not anyone else signs this lease at any time.
Defendant moved her possessions into the apartment in September 2008, and began to pay her share of the rent to the landlord at that time. Pursuant to a verbal agreement between the parties, defendant also paid a one-half share of the utility bills approximated at $95 per month. In January, defendant advised plaintiff that she needed to vacate the apartment for personal reasons. Plaintiff agreed to advertise for a new tenant. Plaintiff advertised on Craigslist for at least five weeks. In mid-April 2009, plaintiff notified defendant that she was not able to obtain a replacement for her on the lease, and that because plaintiff was not sure whether she wanted to re-let the apartment, it did not make sense to advertise any further.
In April 2009, defendant served a sixty-day notice on the landlord seeking to vacate the apartment. The landlord informed defendant that she could not do so without the consent of plaintiff.
Defendant testified that she removed all her belongings from her apartment in mid-May 2009, and paid all rent, up to but not including the last month's rent, July 2009. She testified that she did not do so because when she went to the apartment in May she noticed that plaintiff had taken over what she referred to as her living space by allowing another person to place personal belongings in her bedroom.
Contrary to defendant's version of events, plaintiff testified that neither she nor any third person moved personal belongings into defendant's room in the apartment during May of 2009, or at any other time. According to plaintiff, defendant vacated the apartment without reimbursing her for defendant's share of the utilities for six months. Because defendant refused to pay her share of the last month's rent, plaintiff paid the landlord the full amount of rent due for that month.
At the conclusion of the trial, the court entered judgment in favor of plaintiff for $1,645, representing one-half of the July 2009 rent, and $570 for non-payment of one-half of the utility charges for six months. In so doing, the court reasoned that defendant had taken over the lease from Fernandez with the consent of the landlord, and as such, defendant was responsible as much as plaintiff for the rent. Accordingly, because plaintiff paid the rent to the landlord, the court concluded that defendant was obligated to reimburse plaintiff.
Defendant filed a motion for a new trial, contending that the trial judge had incorrectly interpreted Paragraph 21 of the lease. Defendant contended that that paragraph allowed her to terminate her obligation under the lease on 60 days' notice to the landlord. Because the trial judge felt uncomfortable hearing the motion having been acquainted with defense counsel for a long period of time, he recused himself. Another judge heard argument on the motion, addressed it as one for reconsideration, and denied it the same day. In rejecting defendant's argument concerning paragraph 21 of the lease, the court stated that defendant should have been concentrating on paragraph 2, which provides that "[t]he Tenant shall pay the rent to the Landlord at the Landlord's address set forth above. If the Apartment is leased to more than one occupant, each such occupant shall remain jointly and severally liable for all rent, additional rent and other costs hereunder." The court reasoned: "So unless that's somehow forgiven or changed, I don't think [the first judge] made the mistake at all. I think that [defendant] is responsible for that rent, and if [plaintiff] paid the rent, she becomes a third-party beneficiary for that particular contract. I don't find any problem with [the first judge's] decision, and I'm going to deny your motion."
On appeal, defendant argues the trial court erred as a matter of law in construing Paragraph 21 of the lease; the court erred in determining that she was liable to the landlord for the July 2009 rent; and the court abused its discretion by not permitting her to present e-mails and photographs to support her testimony. We determined that defendant's first two arguments are meritless; however, we agree, in part with defendant's third argument and reverse.
A judgment shall not be overturned except where, after a careful review of the record and weighing of the evidence, the appellate court determines that "'continued viability of the judgment would constitute a manifest denial of justice.'" In re Adoption of a Child by P.F.R., 308 N.J. Super. 250, 255 (App. Div. 1998) (quoting Baxter v. Fairmont Food Co., 74 N.J. 588, 597-98 (1977)). We will not disturb the factual findings and legal conclusions of a trial court unless they are "'so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.'" Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974) (quoting Fagliarone v. Twp. of N. Bergen, 78 N.J. Super. 154, 155 (App. Div. 1963)).
However, the same level of deference is not required when we are reviewing a legal conclusion. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
We agree with the trial court that paragraph 21 of the lease addresses lease renewals. To read that paragraph as to allow a tenant to unilaterally terminate his or her lease obligation on a sixty-day notice completely ignores paragraphs 2 and 25 of the lease agreement. What is more, plaintiff's argument challenging the notice provision in the lease fails as defendant did not join the landlord as a party. See R. 4:28-1(a).
The trial court, while not expressly stating so, determined that plaintiff was entitled to reimbursement for the rent and utility fees based on the principle of equitable subrogation. Subrogation is "'[t]he substitution of one person in the place of another with reference to a lawful claim, demand or right, so that he who is substituted succeeds to the rights of the other in relation to the debt or claim, and its rights, remedies or securities.'" Hanover Ins. Co. v. Borough of Atl. Highlands, 310 N.J. Super. 599, 603 (Law Div. 1997) (quoting Black's Law Dictionary 1279 (5th Ed. 1979)), aff'd, 310 N.J. Super. 568 (App. Div.), certif. denied, 156 N.J. 383 (1998). The principle is an equitable device intended "to compel the ultimate discharge of an obligation by the one who in good conscience ought to pay it." Standard Accident Ins. Co. v. Pellecchia, 15 N.J. 162, 171 (1954). The doctrine "promote[s] 'essential justice' between the parties." Hayes v. Pittsgrove Twp. Bd. of Educ., 269 N.J. Super. 449, 454-55 (App. Div. 1994) (quoting Culver v. Ins. Co. of N. Am., 115 N.J. 451, 456 (1989)).
"[A] subrogee's rights can rise no higher than those of the subrogor." Id. at 455. "As the right of subrogation turns on the obligation or duty that the third party itself owes the subrogor, subrogation is wholly dependent on the merits of the subrogor's claim against the third party." Holloway v. State, 125 N.J. 386, 396 (1991).
Subrogation rights may be "judicially [created] as an equitable device to compel the ultimate discharge of an obligation by the one who should in good conscience pay it." First Union Nat'l Bank v. Nelkin, 354 N.J. Super. 557, 565 (App. Div. 2002). The doctrine may only be imposed "if the cause is just and enforcement is consonant with right and justice." Standard Accident Ins. Co., supra, 15 N.J. at 173.
Here, pursuant to paragraphs 2 and 25 of the lease, plaintiff and defendant were jointly and severally liable to the landlord. Because defendant wrongfully refused to pay her share of the rent to the landlord, plaintiff would generally be entitled to recover defendant's share of the rent after plaintiff paid the entire rent to the landlord. To allow recovery would be "consonant with right and justice." Ibid. Nonetheless, we are constrained to reverse because the trial court failed to address defendant's request to present evidence supporting her contention that plaintiff had permitted a third party to move into her bedroom in May 2009.
Defendant testified that when she visited the premises in May 2009 she observed a third party's personal belongings scattered throughout her bedroom indicating that plaintiff had allowed someone else to take over the room. Defendant offered photographs in support of that contention. However, the court ignored the proffer, denying defendant the right to introduce evidence in support of her testimony. If the photographs supported defendant's contention, they may have very well undercut plaintiff's credibility and rendered the decision inequitable. If plaintiff had allowed someone else to take over defendant's bedroom in the apartment commencing mid-May, then in such event, defendant would not be obligated to pay the July rent based on equitable grounds. Accordingly, we reverse that part of the judgment awarding plaintiff one-half of the July 2009 rent in the amount of $1,075.
For the same reasons, we also reverse the court's award of $570 for non-payment of one-half of the utility charges for six months. Although that part of the judgment would not have been based upon the principle equitable subrogation, but rather upon a finding of a breach of an oral contract between plaintiff and defendant, it is clear that if plaintiff allowed a third party to move into defendant's bedroom, defendant would not be obligated to reimburse plaintiff for utilities that benefited the third party. Additionally, because the utility statements were never introduced into evidence, it is unclear what the utility charges covered. For example, did the cable television bill include movie rentals for the time that defendant was not in occupancy of the apartment and which would only have benefited plaintiff or her guests? Because of the uncertainty of the facts underlying defendant's contractual obligation to reimburse plaintiff for the utility charges, we also reverse that part of the judgment.