MARIANA PINEDA v. MARK ROZSANSKY

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-6080-04T16080-04T1

MARIANA PINEDA,

Plaintiff-Respondent,

v.

MARK ROZSANSKY,

Defendant-Appellant.

_________________________________________________

 

Submitted March 28, 2006 - Decided April 17, 2006

Before Judges Skillman and Payne.

On appeal from Superior Court of New Jersey,

Law Division, Special Civil Part, Ocean

County, SC-1977-05.

Mark Rozsansky, appellant, pro se.

Respondent did not filed a brief.

PER CURIAM

Defendant landlord, Mark Rozsansky, appeals a judgment entered against him by a judge of the Special Civil Part, following a bench trial, in the amount of $1,145.10, constituting approximately two-thirds of an allegedly "non-refundable" deposit of $1,500 given by Rozsansky's prospective tenant, plaintiff Mariana Pineda. We reverse.

The record discloses that an application for a one-year lease commencing on May 15, 2005 was signed by Pineda on May 8, 2005. The application required the payment of a deposit, which Pineda paid, receiving in return a receipt for $1,500. The application provided:

A non refundable deposit in the sum of $ ____ is made herewith to be held by Landlord, with clear understanding that this application, including each prospective occupant, is subject to approval and acceptance. If this application is not approved and accepted by the owner or agent, the deposit will be refunded. . . . IF THIS APPLICATION IS APPROVED, A DEED OF LEASE MUST BE EXECUTED WITHIN FIVE DAYS OTHERWISE APPLICANT WILL BE LIABLE FOR LIQUIDATED DAMAGES, including but not limited to broker's fee and/or additional repairs required. THE DEPOSIT IS NOT REFUNDABLE.

The receipt confirmed the nonrefundability of the deposit.

On May 15, Pineda determined not to sign a lease or occupy the apartment, claiming it was "not livable." She demanded a return of her $1,500, which Rozansky, in reliance upon the language of the application and receipt, declined to provide. A complaint seeking the return of the deposit was filed by Pineda on May 24, 2005, and trial occurred on June 8, 2005, less than one month after the projected inception of the lease.

According to Pineda's trial testimony, the windows of the apartment were taped shut, some of those in the back were broken, there were rats on the premises, and the place was filthy. Rozsansky claimed that Pineda sought to avoid her agreement for reasons unrelated to the condition of the apartment, denied any defect in its condition, asserted the non-refundability of the deposit, and argued that he was entitled to compensation for his lost rental.

Upon conclusion of the parties' testimony, the court found that the agreement between the parties to sign a lease was valid and that Pineda, whose native language was Spanish, had knowingly entered into it. While denying recovery on the basis of the liquidated damage clause, the judge recognized as valid Rozsansky's claim of lost rent, but imposed upon him the duty to mitigate his damages. The judge found that the provision of the application that was at issue "must bear some relationship to the period of time when the property was taken off the rental [market] and should not be interpreted as a per se entitlement to the entire amount of the deposit monies." The judge then ruled:

If one were to factor in, in terms of the one-third, two-third division of what the property might realize in terms of income, which is close to the $1500, and deduct a reasonable amount therefrom, that formula would result in the plaintiff being entitled to a refund of $1000, which is two-thirds of the monies paid the landlord in terms of the property being taken off the market . . . .

The judge provided no factual foundation for the "one-third, two-third" division that he imposed. Further, he made no finding of fact as to the condition of the property, stating:

The Court does not have to get to the issues of whether or not the property was, as the plaintiff suggests, unlivable, and as the defendant denies. The plaintiff does not offer photographs or other witnesses. She says they're available, but they're not here.

It is unclear to us whether this statement constituted a finding that Pineda's proofs were inadequate or a determination that the condition of the apartment was not relevant.

We agree with the court that in the particular circumstances of this non-commercial case, the liquidated damage clause contained in the agreement constituted an unenforceable penalty. Wasserman's Inc. v. Tp. of Middletown, 137 N.J. 238, 248-53 (1994). We decline to disturb the court's determination to enforce the parties' agreement to the extent that it required payment of damages measured by profits from lost rental income, subject to Rozsanski's duty to mitigate, in the absence of a cross-appeal challenging that ruling. But see Campi v. Seven Haven Realty Co., 294 N.J. Super. 37 (Law Div. 1996) (holding unenforceable a provision of an application for a lease requiring the forfeiture of the first month's rent upon tenant's subsequent failure to enter into the anticipated lease). In this regard, we note that Pineda obtained a benefit, essentially in the form of an option to rent, as the result of the execution of the agreement, and Rozsanski suffered a detriment by the requirement that he remove the apartment from the rental market until a lease was signed or the agreement to sign the lease was abrogated.

Nonetheless, we find that the existing award in Pineda's favor must be reversed and the matter remanded for a new trial since, as the result of the speed with which trial was scheduled, less than a month after the alleged breach of contract, Rozsanski was deprived of the right accorded to him by the court to establish the amount of his actual damages for temporary removal of the apartment from the rental market, and the figure set by the court lacked any evidential foundation. Further, we find the condition of the apartment to be relevant to the damage calculation, since Rozsanski would not be entitled to rents from any tenant if at the time possession were to occur he was in fact in breach of his warranty of habitability. Cf. Marini v. Ireland, 56 N.J. 130 (1970) (discussing breach of the landlord's warranty of habitability in the context of an action for possession).

 
Reversed and remanded for further proceedings in accordance with this opinion.

Rozsansky's notice of appeal lists this amount as the judgment. The transcript of trial discloses a judgment of $1,000. No order of judgment appears in the record.

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A-6080-04T1

April 17, 2006