DAVID PERLMAN v. EDWARD S. LEE, M.D.

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

DAVID PERLMAN,

Plaintiff-Appellant,

v.

EDWARD S. LEE, M.D.,

Defendant-Respondent.

__________________________________________________

October 2, 2014

Submitted September 2, 2014 Decided

Before Judges Hayden and Leone.

On appeal from Superior Court of New Jersey, Law Division, Special Civil Part, Middlesex County, Docket No. DC-16447-12.

David Perlman, appellant pro se.

Norman Kline, attorney for respondent.

PER CURIAM

This appeal arises from a commercial landlord-tenant dispute. Plaintiff David Perlman, the landlord, appeals the April 15, 2013 Special Civil Part order awarding defendant Edward S. Lee, M.D., the tenant, double the amount of his net security deposit pursuant to the Security Deposit Act, N.J.S.A. 46:8-19 to -26 (the SDA). Plaintiff contends on appeal that the trial judge erred (1) in doubling the security deposit because the SDA does not apply to commercial leases and (2) in not deducting rent and additional damages from the security deposit. We affirm in part and reverse in part.

The record reveals that the parties entered into a commercial lease agreement for a medical office suite in Bergen County for a term from July 11, 2008 to September 30, 2010. The rent was $1541.66 per month with a security deposit of two months, and rent was to increase by three percent after the two-year term. Defendant was also to pay a Common Area Management (CAM) fee, estimated at $500 per month, subject to adjustment for actual expenses. The lease also provided that if the tenant remained in the premises after the end of the lease term, the tenant would be deemed a month-to-month tenant subject to the provisions of the lease.

On September 13, 2010, defendant mailed plaintiff a proposal to renew the lease term for one year. Defendant proposed to pay a three percent rent increase for a total of $1587.91 per month, and he also proposed a clause stating, "[i]f the tenant does not continue to operate as a business in Bergen County, then tenant reserves the right to terminate this agreement with written notice [of] 90 days prior to vacating." Upon receipt of the letter, plaintiff crossed out the proposed rent and wrote in the sum of $1635.55. He also crossed out the escape clause and wrote "one year starts Oct. 1, 2010 [to] Sept. 31, 2011." Plaintiff returned the modified letter to defendant, but defendant did not return a signed copy to him. According to defendant, he did not sign and return the letter because he did not agree to plaintiff's changes and he told plaintiff over the phone that the changes were not agreeable. Thereafter, defendant paid the original rent plus the three percent increase specified in the 2008 lease. Defendant testified he understood that from September 2010, he had a month-to-month tenancy in the premises.

On May 26, 2011, defendant mailed a letter to plaintiff stating that he would not be renewing the lease. They also discussed the notice over the phone with plaintiff taking the position that the new lease was in effect and defendant taking the opposite position. According to defendant, he vacated the premises on August 31, 2011, three months after giving notice.

Several months after defendant vacated, plaintiff sent defendant a letter alleging he owed $2676.99 for damage that occurred to the premises in December 2011. Subsequently, plaintiff filed a pro se complaint in the Special Civil Part alleging that "[w]hen [defendant's] lease expired, his staff shut off the breaker that controlled the sump pump in his fuse box. Both sump pump[s] failed causing damage to the building." Plaintiff sought damages of $12,000. Defendant filed a counterclaim alleging plaintiff willfully refused to return his security deposit. Thereafter, plaintiff sought to amend his complaint alleging that the parties had a binding lease from October 1, 2010 to September 30, 2011, and defendant owed rent after vacating early. However, the court staff returned the unfiled amended complaint as "nonconforming," and advised him to make certain changes and refile. Plaintiff never refiled it.

At the April 15, 2013 bench trial, the judge determined that plaintiff's case was limited to the original complaint because he never refiled the amended complaint as he was instructed. Plaintiff informed the judge that he no longer wished to pursue his claim for damages from the non-working sump pump, and the judge dismissed the complaint. The judge then proceeded to defendant's counterclaim for the return of the security deposit.

Plaintiff admitted that he did not return defendant's security deposit. Plaintiff also acknowledged he received written notice on May 26, 2011 of defendant's plan to vacate the premises. Plaintiff also testified that he sent the letter back to defendant "saying we're not accepting it," and that he called defendant "many times" to discuss defendant's termination of the tenancy. Plaintiff testified that he received checks from defendant dated June 24 and July 22, 2011, but was unsure whether the checks correlated to rents due on July 1 and August 1 respectively. Plaintiff also presented photos and estimates for damage to the walls and the carpets. He also presented business records indicating that defendant owed additional CAM expenses.

Defendant testified that after he gave three months' notice at the end of May 2011, he paid his rent through the end of August 2011 and vacated on August 31. He stated he was never behind on rent for the duration of his tenancy as he had automatic bill-pay on his checking account which sent a check to plaintiff around the 22nd of each month for the following month's rent. He testified that the June 24 and July 22, 2011 checks were for rents due in July and August respectively. He testified he did not recall there being any damage to the carpets when he left. He acknowledged hanging various decorations, but stated the walls were in reasonable condition when he left, and any small nail holes could easily be spackled.

In his oral decision, the judge found that the parties entered into a two-year lease agreement in 2008. The judge found that in September 2010, defendant made an offer to renew with certain material changes to the terms of the lease, that plaintiff sent the proposal back to defendant with changes, and that defendant did not sign or return it.

The judge determined that defendant's silence could not be construed to be an agreement to plaintiff's terms. The judge explained, "[i]n basic contract law, [defendant] had made an offer, and [plaintiff] had made a counteroffer[]. And [defendant] didn't respond to the counteroffer, therefore the [modified letter proposal] cannot be regarded as the agreement between the parties." Thus, the judge determined, the parties were bound by the terms of the original lease on a month-to-month basis.

The judge found that defendant sent plaintiff notice on May 26, 2011, that he would be terminating the month-to-month lease, and paid the appropriate rent and CAM charges due until he vacated. The judge also found that plaintiff's records showed that $469.30 was due to plaintiff from defendant for additional CAM charges. The judge decided no offset was due for the alleged holes in the wall because the damages to the walls constituted normal wear and tear. However, the judge determined plaintiff was entitled to $856 in damages for the carpet as the damage went beyond normal wear and tear. After subtracting the CAM charges and carpet damages from defendant's security deposit, a net total of $1674.70 was due to defendant. Pursuant to the SDA, the judge doubled this amount for a total of $3349.40. The judge also awarded $115 in court costs and $81.99 in attorney's fees in favor of defendant. This appeal followed.

Plaintiff first argues that the SDA does not apply to commercial tenants, and therefore, the trial court erred in doubling the net security deposit. We agree.

"'The scope of appellate review of a trial court's fact-finding function is limited.'" Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011) (quoting Cesare v. Cesare, 154 N.J. 394, 411-12 (1998)). Ordinarily, the trial court's findings "'are binding on appeal when supported by adequate, substantial, credible evidence.'" Ibid. (quoting Cesare, supra, 154 N.J. at 411-12). Such deference "'is especially appropriate when the evidence is largely testimonial and involves questions of credibility.'" Ibid. (quoting Cesare, supra, 154 N.J. at 411-12). "The trial court's legal determinations, in contrast, are reviewed de novo." Sipko v. Koger, Inc., 214 N.J. 364, 379 (2013) (citing Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).

The SDA requires a landlord to return the tenant's security deposit and interest accrued "[w]ithin 30 days after the termination of the tenant's lease . . . less any charges expended in accordance with the terms of [the] lease[.]" N.J.S.A. 46:8-21.1. If a landlord violates this requirement, the tenant may sue the landlord, and "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." Ibid.

We begin our interpretation of a statute "by examining the actual words of the statute, giving them their ordinary and commonsense meaning." State v. Gelman, 195 N.J. 475, 482 (2008) (citing DiProspero v. Penn, 183 N.J. 477, 492 (2005)). In defining the coverage of the SDA, the statute specifies that it "shall apply to all rental premises or units used for dwelling purposes[.]" N.J.S.A. 46:8-26 (emphasis added). It is apparent from the statute's plain language that the SDA does not apply to commercial leases such as the one at issue here. See Presberg v. Chelton Realty, Inc., 136 N.J. Super. 78, 84 (Passaic Cnty. Ct. 1975) (holding that the provisions of the SDA are not applicable to commercial leases).

Further, the SDA's legislative history amply demonstrates that its provisions only apply to residential housing. Ibid. See also Rogers v. Donovan, 213 N.J. Super. 309, 313-15 (Law Div. 1986) (finding the SDA does not apply to vacation housing). "In 1969, the crisis affecting rental housing in New Jersey prompted the Assembly to pass a resolution creating the New Jersey Landlord-Tenant Relations Study Commission." Maglies v. Estate of Guy, 193 N.J. 108, 135 (2007). The Commission was tasked with "suggest[ing] legislation to correct the inequities existing between landlords and tenants in residential housing." Rogers, supra, 213 N.J. Super. at 312 (citing Presberg, supra, 136 N.J. Super. at 84). In response to the Commission's findings of extremely inadequate rental housing, the legislature "chose to change the common law rights and remedies of landlords and tenants through the promulgation of the [SDA] and other related laws." Rogers, supra, 213 N.J. Super. at 312 (citing Presberg, supra, 136 N.J. Super. at 84).

In this case, there is no dispute that the parties entered into a commercial lease. As the SDA clearly applies only to residential leases, the trial judge erred in utilizing it to award defendant double the net security deposit. Accordingly, we reverse that part of the order and remand to the Special Civil Part for the entry of an order consistent with this opinion.

Next, plaintiff argues that there was a binding lease between the parties from October 1, 2010, to September 30, 2011. He asserts that defendant's silence in response to plaintiff's changes to defendant's proposed lease terms, combined with defendant's payment of rent after receiving those changes, constituted an acceptance of plaintiff's counteroffer. He also contends that the records show defendant did not pay August rent before vacating. We find these arguments unpersuasive.

As the trial judge found in holding there was no renewal of the yearly lease, defendant made an offer in his letter and plaintiff made a counteroffer by sending the marked up proposal back, but defendant did not agree to plaintiff's counteroffer. Contrary to plaintiff's contention, defendant's silence cannot be deemed to be an acceptance under the circumstances here. See Weichert Co. Realtors v. Ryan, 128 N.J. 427, 436 (1992) (stating that silence is usually not considered as consent to a contract unless the parties have some relationship or course of conduct where the other party can rely on the other to object if they do not accept); Gamble v. Connolly, 399 N.J. Super. 130, 141 (Law Div. 2007) ("Silence alone does not ordinarily manifest acceptance.").

Thus, the trial judge properly determined that as the parties did not reach agreement on the terms of a new lease, they had a month-to-month tenancy, not a yearly lease. When a written lease expires, it is converted to a month-to-month tenancy, absent "any agreement to the contrary." N.J.S.A. 46:8-10. By the very terms of the parties' original lease, when defendant held over past the termination date, defendant was deemed to be occupying the premises as a month-to-month tenant.

Furthermore, the judge did not err in finding that defendant had paid the July and August rent. Plaintiff's records of what defendant allegedly owed were incomplete and ambiguous and his recollection on the rent issue was vague. On the other hand, defendant provided a reasonable explanation and supporting documents showing that he paid the rent due for July and August. Thus, we are satisfied that the judge's finding that plaintiff was not entitled to any rent due to the lease still being in effect in September was proper and supported by the record. See Seidman, supra, 205 N.J. at 169.

Finally, plaintiff argues that the trial judge's finding that the damage to the walls constituted "normal wear and tear" was erroneous. We find this contention to be without sufficient merit for extended discussion. R. 2:11-3(e)(1)(E). We note only that the judge appropriately reasoned that after a long-term tenant vacates a leased premises, a landlord cannot expect the property to be returned in mint condition, and that it is customary for landlords to paint and spackle nail holes after a long-term tenant leaves. We defer, as we must, to the judge's fact-findings and credibility determinations, which were supported by substantial, credible evidence. See Seidman, supra, 205 N.J. at 169.

Affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.