November 16, 2012
HABSEE HADDAD, PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
HANNE KASSAS, F/K/A HANNE TALJ, DEFENDANT-RESPONDENT/ CROSS-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. DC-31532-10.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: October 24, 2012
Before Judges Axelrad and Sapp-Peterson.
In this landlord-tenant appeal, following a bench trial in Special Civil Part, Judge Melvin L. Gelade found there was no settlement agreement, the tenant was not responsible for the full cost of replacing the cost of the carpet, the landlord was not responsible for double damages, and the tenant was entitled to seven percent interest on the security deposit that the landlord had not placed in an interest-bearing escrow account for the one-year period of the lease. Accordingly, the court entered judgment in the tenant's favor for $804.56, plus costs of suit, and dismissed the landlord's counterclaim. The tenant appeals, arguing she was entitled to statutory double damages for wrongful withholding of her security deposit with seven percent interest calculated up until the date she received payment of her security deposit. The landlord filed a cross-appeal, challenging the court's preliminary ruling that no settlement was reached as against the weight of the evidence, and asserting as arbitrary and erroneous the court's decision not to award her the entire amount of the itemized damages. We affirm on the appeal and cross-appeal.
On or about December 15, 2010, the tenant filed a complaint to recover double her security deposit, seeking $4708. The landlord answered the complaint, asserting affirmative defenses of accord and satisfaction and settlement, and filed a counterclaim for $234.65 for damages in excess of the retained security deposit. Following a three-day trial, on May 10, 2011, the court entered judgment for the tenant in the amount of $804.56, plus costs of suit, and dismissed the landlord's counterclaim. Both parties filed motions to reconsider, which the court denied by order of June 24, 2011.
On the first day of trial, the court heard the testimony of both parties' attorneys with respect to a disputed settlement agreement. On June 16, 2010, through counsel, the parties entered into an agreement in a prior eviction case, which allowed the tenant to remain in the apartment until August 31, 2010, conditioned on the payment of rent. It is undisputed the move occurred on schedule. On September 3, 2010, the tenant's attorney sent the landlord a letter requesting the return of the tenant's $1650 security deposit. On September l6, 2010, the landlord's attorney responded by fax that the repairs to the apartment, itemized with attached receipts, exceeded the amount of the security deposit. The expenses totaled $1899.65 as follows: painting, spackling, replacing a broken mirror in the bathroom, replacing broken wood on the swing set and repairing the swing, replacing ceiling panels on the basement ceiling from water damage ($350); cost of new mirror ($49.99); cost of drop ceiling panels ($35.27); excessive soiling of kitchen cabinets and stove beyond the normal cleaning of the apartment ($157.50); and repairing the wood floor and replacing the carpeting due to heavy soiling and burn marks ($1306.89). After crediting one percent interest to the security deposit ($16.50), the excess due was $234.65, which the landlord's attorney requested be remitted. The tenant's attorney ignored the letter.
Both attorneys testified about a phone conversation they had on or about October 4, 2010. The landlord's attorney testified she said her client would be willing to forego collection of the $234.65 if the tenant would be willing to accept the security deposit as payment for the repairs. According to the landlord's attorney, her adversary responded, "it sounds good to me. And he - he agreed to that settlement."
The tenant's attorney, however, testified he viewed the call as an "invitation for  further negotiations." He commented that he thought it might be beneficial for his client to settle, but said he had no opportunity to consult with her. He testified that "[i]t [was] simply not with [her] consent."
The landlord's attorney faxed a letter confirming the phone conversation "in which we agreed that the security deposit . . . of $1665.00 will satisfy any and all repairs . . . as the result of your client's tenancy . . . [and] your client will not challenge the legitimacy of the expenditures . . . . With this letter, our respective clients' relationship . . . is concluded." The tenant's attorney confirmed receiving the letter and not responding in writing. He testified that "[b]y that time [he] had spoken to [his] clients" who "were not interested in settling" and "wanted to contest the security deposit and damages." He felt the parties "were still in negotiations."
In November, the tenant's attorney phoned the landlord's attorney again demanding the security deposit, and received the written response that the case had been settled as reflected in the October 4 letter. The tenant's attorney called and said he had spoken with his client, who was "not interested in settling." This lawsuit followed.
The judge was not convinced the facts demonstrated the case had been settled. Although the judge found the tenant's attorney told his adversary during their phone call that the proposed settlement sounded good to him, he did not represent that he had his client's authority to settle. The judge commented that the tenant' attorney was remiss in not following through after receipt of the October 4 letter, and while his actions "could have been clearer,  they were not an equivocal acceptance of the settlement on the 4th of October[,]" presumably because he did not have his client's authorization to settle. As the judge was not satisfied there was a sufficient semblance of an agreement to enforce an offset of the damages against the security deposit, he denied the landlord's motion to dismiss based on accord and satisfaction.
Trial resumed, during which both the landlord and tenant presented witnesses and photographs, and testified about the condition of the apartment. The tenant testified that when she moved into the first floor apartment of the two-family house on September 1, 2009, there were at least ten cracked floor tiles, the apartment was dirty, had not been painted, the carpet had not been cleaned, and there was a leak in a bathroom damaging the basement. She further testified that she never had a dog in the apartment, but there were six dogs that lived on either side of the apartment, which her children played with, and of a rumor that four of the dogs were killed. She also claimed she spent at least eight hours cleaning the apartment when she moved out on August 31, and the cabinets, mirror, carpet, stove, and walls "look[ed] good" or were in "excellent clean condition."
The tenant's friend testified that the apartment was dirty when the tenant moved in, and she and others helped clean it. She also helped her clean it before she moved out. She and another witness authenticated the tenant's photographs that were entered into evidence as accurate depictions of the apartment on the day the tenant vacated.*fn1
The landlord and two witnesses testified that the tenant had a dog in the apartment, which defecated all over the exterior of the property, and that the carpet smelled of urine. They described and authenticated the landlord's photographs that were entered into evidence as accurate depictions of the apartment after the tenant vacated.
The landlord's son-in-law, a professional painter, testified at length about the condition of the apartment and the work he performed to the apartment after the tenant left. He testified he saw the dog in the apartment twice, and the "carpet smelled bad from soiled dog." He rented a carpet cleaning machine and tried to clean the carpet, but it still smelled of urine so they had to replace it. There was a burn spot on the wood floor. There were fifteen big holes in the wall that had to be repaired with tape. He also reported that when his mother-in-law (the landlord) lived in the apartment prior to renting it to the tenant, nobody used the stove because she wanted to keep it clean, which she corroborated. Instead, they used the stove in the basement apartment for cooking, where his brother-in-law lived. He also testified that the ceiling in the basement apartment was not stained before the tenant moved in but was stained afterwards, presumably from a leak from the tenant's apartment, and he had to change the ceiling tiles.
The landlord testified that when visiting her son in the basement apartment, she heard barking from upstairs and saw a dog tied to the steps outside the apartment. She also testified that after the tenant vacated, she observed a broken mirror, excessive soiling of the cabinets and stove, urine-stained carpet in the apartment, and damaged drop ceiling panels in the basement apartment.
Judge Gelade found the tenant's testimony "inconsistent with reality and normalcy." Specifically, the judge did not believe that the landlord, a friend of the tenant who attended the same church, had rented her a filthy, uninhabitable apartment. The judge further found that although the tenant cleaned the cabinets and stove, there were sticky remnants of food in the cabinets and cooked food on the stove, which was in terrible shape, so the $157.50 cleaning cost was properly charged to the tenant. He also found the mirror was broken, so the $49.99 replacement cost was properly charged to the tenant.
The judge found incredulous the tenant's testimony that all the dog waste was from the neighbors' dogs and that four of those dogs had died. He credited the testimony of the landlord and her witnesses that the tenant had a dog who soiled the carpet, which left a recognizable urine smell, and that the carpet was unfit, could not be repaired, and had to be replaced. The judge concluded the carpet was otherwise in very good condition and the $1306.89 replacement cost was reasonable. He allowed one-half of the cost ($653.45) to be deducted from the security deposit, explaining:
Generally, I would need to see when the carpeting was installed and what's the life of the carpeting to see what it had left. But the [tenant] testified that, when she left, the photos that she showed, show very good carpeting that could be useable by another tenant. So, obviously it wasn't carpeting that was about to be discarded. How much life was left on it, I can't tell, again because I don't have the original invoice. And that's more often than not  landlords don't have the original invoice, particularly because this was the [landlord's] home and she wouldn't keep the invoice of the installation of a carpet.
The judge also allowed $100 for the cost of repairing the walls, but found no conclusive evidence that the tenant had damaged the swing or caused the leak necessitating the ceiling tile replacement. Thus, the judge found the allowable deductions totaled $960.94.
Judge Gelade also found a "good faith basis for the landlord's deductions and her claim for the total forfeiture of the security deposit to cure the defects caused by the tenant."
He also found "there was no unlawful or prolonged withholding of the security deposit." As it was undisputed the landlord did not deposit the security deposit into a separate interest-bearing account as required by N.J.S.A. 46:8-19, the tenant was entitled to seven percent interest. The judge calculated the interest on the security deposit for the one year of the tenant's lease, arriving at a total security deposit of $1765.50, and leaving a balance of $804.56 due to the tenant. The judge did not award counsel fees to either party because there was a reasonable dispute and no breach by either party. After entering judgment for the tenant, the judge dismissed the landlord's counterclaim. The reconsideration motions and cross-appeals ensued.
On appeal, the tenant argues that: (1) where a landlord is found to have violated the Security Deposit Act, N.J.S.A. 46:8-21.1, the tenant is mandatorily entitled to double the amount wrongfully withheld, and the court erred in considering the alleged good faith of the landlord in the calculation of the damages due, and (2) the court erred in calculating interest that accumulated on the security deposit only until the date of the termination of the lease and should have calculated it up through the date the funds are returned to her. On her cross-appeal, the landlord argues the court's finding that no settlement was effectuated on or about October 4, 2010 was against the weight of the evidence, and the court's decision to award fifty percent of the cost of replacing the carpet and $100 for the repair work was arbitrary and contrary to precedent.
Our review of the factual findings made by the trial judge in a non-jury trial is quite limited. Estate of Ostlund v. Ostlund, 391 N.J. Super. 390, 400 (App. Div. 2007). "'[W]e do not weigh the evidence, assess the credibility of witnesses, or make conclusions about the evidence.'" Mountain Hill, L.L.C. v. Twp. of Middletown, 399 N.J. Super. 486, 498 (App. Div. 2008) (quoting State v. Barone, 147 N.J. 599, 615 (1997)). In general, the judge's factual "findings . . . should not be disturbed unless they are so wholly insupportable as to result in a denial of justice[.]" Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 483-84 (1974) (internal quotation marks and citation omitted). However, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm., 140 N.J. 366, 378 (1995).
Based on our review of the record and applicable law, we are satisfied the record amply supports Judge Gelade's factual findings, based heavily upon his assessment of the parties' and witnesses' credibility, as well as his legal conclusions. Accordingly, we affirm both the appeal and cross-appeal.
We preliminarily address the first issue raised in the landlord's cross-appeal. We discern no basis to second-guess the judge's ruling with respect to the accord and satisfaction defense. He heard the testimony of both attorneys and clearly had a sense of the case. Judge Gelade pointed out that the tenant's attorney never represented to his adversary that he had his client's authority to settle the case and never expressly accepted the settlement. His silence after receipt of the October 4 letter was a factor to consider, but in and of itself was insufficient to bind the tenant to a settlement she never authorized.
We turn now to the tenant's appeal and to the remaining issue of the landlord's cross-appeal. N.J.S.A. 46:8-21.1 provides, in pertinent part:
Within 30 days after the termination of the tenant's lease . . . the owner . . . shall return . . . the sum so deposited plus the tenant's portion of the interest or earnings accumulated thereon, less any charges expended in accordance with the terms of a contract, lease, or agreement, to the tenant[.]
In any action by a tenant . . . for the return of moneys due under this section, the court upon finding for the tenant . . . shall award recovery of double the amount of said moneys, together with full costs of any action and, in the court's discretion, reasonable attorney's fees.
The tenant argues that whenever a landlord withholds a portion of the security deposit and the court finds for the tenant, that amount had been "wrongfully withheld" under the statute and must be doubled. The tenant emphasizes the use of the word "shall" in the statute. She also cites as precedent our opinion in Yi v. Re/Max Fortune Properties, Inc., 338 N.J. Super. 534 (App. Div.), certif. denied, 169 N.J. 610 (2001). We disagree.
Yi is factually inapposite. There, we remanded for application of the double damages provision when the tenant vacated the property on August 31, 1999, and the landlord's check for net of security deposit plus interest less an uncontested charge for damage beyond normal wear and tear dated October 6, 1999, was received by the tenant's attorney on October 11, 1999. Yi, supra, 338 N.J. Super. at 536-37. The trial court had held that since the tenant had received the appropriate net balance by the time suit was instituted, there was nothing left to double under N.J.S.A. 46:8-21.1. Id. at 537. We disagreed and held that "[t]he statute establishes the landlord's obligations in unmistakable and definite terms, and clearly provides a mandatory remedy for default"; thus, "once a court determines that the thirty-day period prescribed by the statute expired without a return of the balance due, a tenant is entitled to the remedy provided by the statute, i.e., 'twice the amount wrongfully withheld.'" Id. at 538 (quoting Gibson v. 1013 N. Broad Assocs., 172 N.J. Super. 191, 194 (App. Div. 1980)).
In Gibson, we affirmed the trial court's ruling that double damages were appropriate based on a finding that the landlord "had wrongfully withheld [the] entire security deposit and had failed to give  the notice of disposition required by the statute" even when the complaint failed to demand such damages. Supra, 172 N.J. Super. at 193-94. We explained, "[t]he statute was enacted to protect tenants from overreaching landlords who require security deposits and then divert them to their own use. As indicated by the express language of the statute, upon finding for the tenant the judge must award twice the amount wrongfully withheld." Id. at 194 (internal citations omitted).
Here, we clearly do not have a case of an "overreaching landlord." A security deposit is intended to cover damages caused by a tenant to an apartment beyond normal wear and tear when a tenant vacates. Here, the landlord viewed the apartment, assessed the damage caused by the tenant, and made the repairs. She made a significant attempt to promptly and fairly resolve the matter through counsel. Her counsel promptly notified in writing two separate attorneys who were representing the tenant about the damage to the unit, well within the thirty-day statutory period, and provided not only an itemized list of the expenses, but substantiating receipts. She followed up with a settlement proposal in a telephone conversation with the tenant's attorney, and based on her understanding of the discussion and her adversary's silence after receipt of the confirming letter, she believed the case had been resolved.
The judge gave the tenant the benefit of the doubt in several respects. He did not hold her to the settlement and, after trial, was not entirely convinced she had damaged the swing or caused the leak necessitating the replacement of the basement ceiling tiles. Ultimately, the judge allowed the tenant a refund of some portion of her security deposit. We are not convinced, however, that mere fact equates to a wrongful retention by the landlord, entitling the tenant to double damages under the statute.
Judge Gelade found much of the tenant's testimony to be incredulous, particularly with regard to the landlord's primary expenditure. Contrary to the tenant's testimony, the judge found she had a dog and the dog soiled the carpet to such an extent that it had to be replaced when she vacated the apartment. He also found the landlord's replacement cost was reasonable. We most likely would have affirmed the judge had he allowed the full replacement cost of the pet urine stained carpet, see Reilly v. Weiss, 406 N.J. Super. 71, 76-77 (App. Div. 2009). The judge was also well within his discretion to depreciate the carpet, generally considering the lack of testimony or invoice by the landlord as to the date or price of the original carpet and the undisputed fact that the carpet was not new when the tenant moved into the apartment.
The judge heard the witnesses and assessed their credibility, and reviewed the photographs and receipts. Accordingly, we defer to his factual findings with respect to the appropriate deductions from the tenant's security deposit, as we are certain he was fair to both parties. The required seven percent interest calculation is undisputed. The tenant presents no legal support for her argument that the judge erred in calculating it over the one-year period of her lease rather than extending it to the date of her actual receipt of the refund. The landlord sent the notice shortly after the tenant vacated and the matter then proceeded expeditiously to judicial resolution.