Shipman v SwiftAnnotate this Case
Decided on December 14, 2018
City Court of Norwich, Chenango County
Jessica Shipman and Justin Fazio, Plaintiff,
Brian Swift and Ruth Swift, Defendants.
Plaintiff by Jessica Shipman, Pro Se
Defendants, by Peter Charnetsky, Esq.
Michael J. Genute, J.
In their complaint, dated August 30, 2018, the plaintiffs seek $1,000.00 for the full amount of their security deposit emanating from a rental arrangement with the defendants, along with $400.00 for payments of $200.00 to each of Ms. Shipman's father and brother for helping the plaintiffs move out of the premises. The hearing was held on November 13, 2018.
Plaintiff, Justin Fazio, was not present for the hearing. Plaintiff, Jessica Shipman, testified for the plaintiffs, introducing several pictures representing the condition of the rental property when the plaintiffs made arrangements to move into the property, as well as after they moved out. She also introduced a long thread of text messages between the parties, an application for the rental, and a letter from the defendants' attorney. All of the exhibits were received.
Both defendants testified, though Brian Swift presented a great majority of their case. The defendants offered a number of exhibits, including the Lease Agreement between the parties, a letter seeking reimbursement from the plaintiffs for damages to and missing items from the property, which also served as an explanation for not returning the plaintiffs' security deposit, along with four receipts, all of which were received.
Ms. Shipman and Ms. Swift had previously appeared on the morning of October 24, 2018, but Ms. Swift requested an adjournment due to health concerns involving Mr. Swift, as well as to procure counsel. The adjournment was granted. The defendants made a motion to dismiss the case at the commencement of the trial based upon the absence of plaintiff, Justin Fazio. Jessica explained that Mr. Fazio was at work and could not afford to lose the time, advising the Court that she would present their case. As Ms. Shipman was able to present the case and testify for the plaintiffs, the defendants' motion was denied.
Testimony and Evidence
According to Jessica, the plaintiffs signed a one-year lease agreement with the defendants, to begin on April 1, 2018. As part of the agreement, the plaintiffs paid a $1,000.00 security deposit, along with the first and last month's rent prior to the start of the lease. The premises to be rented was a house located on Dan Main Rd., in Norwich, which had belonged to Brian's mother, who had recently passed away. As explained by Jessica, the plaintiffs made arrangements with the defendants to move into the premises a few days prior to the start of the lease. Part of the arrangements were premised upon the plaintiffs helping to move furniture belonging to Brian's mother into the basement, which would be subsequently moved by a moving company. Ultimately, the plaintiffs moved into the premises 3-5 days prior to the April 1 start date, but had been involved in moving items from the premises approximately one week prior thereto, at which time Jessica documented the condition of the premises through several photographs she had taken of the premises. P-1. Based upon the photographs, there was much that needed to be moved, thrown out, and otherwise done for the plaintiffs to be able to effectively move into the home.
Jessica explained that the defendants had approved of the plaintiffs having two dogs at the premises (see, Application for Rental, marked and received as P-5), but that the breed of the dogs had later caused problems for the defendants to obtain insurance. This led to the defendants making a demand that the plaintiffs vacate the premises by the end of July. This request was memorialized via a string of text messages admitted into evidence. P-3. The plaintiffs moved out per the defendants' request, at which point in time Jessica took a number of pictures to document the condition of the premises. See, P-2. Based upon the photographs, the home was in rather pristine condition, with no observable debris or damages throughout. Jessica inquired about the plaintiffs' security deposit following the defendants' demand that the premises be vacated, as well as after the plaintiffs had vacated the premises, but never received a confirmation one way or another, which led to their filing this claim on August 30, 2018, one month after they had vacated the premises.
Jessica otherwise testified to an episode where a contractor came to the premises to complete some work, but had left upon learning that the plaintiffs' two children were home from school due to illness. She also testified to contractors coming to the premises unannounced for various repairs or improvements planned by the defendants, and to another episode where the defendant wanted to show the bathroom for prospective improvements, but she refused entry because her children were asleep in a room through which the defendant and contractors would have to walk to gain entry to the bathroom. To address the defendants' concerns, Jessica took pictures of the bathroom and sent them to Brian, which, to her, seemed to quell any problems with the defendants.
Jessica denied receiving anything in writing or otherwise regarding a financial institution or account information concerning the plaintiffs' security deposit. Almost two months after filing their small claims complaint, the plaintiff received a letter from the defendants in response to their request for return of their security deposit. D-G. The letter lists several "deficiencies" concerning the condition of the premises when the plaintiffs moved out and requests payment in the amount of $4032.56 for those listed items, along with an itemization of the cost of each listed item. Jessica otherwise explained that the house was in as good of a condition — if not, better — than when they moved in.
On cross, Jessica denied stealing any items that the defendants listed as missing, such as a log splitter, string trimmer, or lamps, denied breaking any items, such as the refrigerator [*2]handle, explained that her father fixed the lawnmower, which was regularly used by the plaintiffs to mow their lawn, and that the locks were changed on the premises when they went to remove a few last bags of garbage after vacating. Although it was not part of any payment sought by the defendants, Jessica otherwise denied that anyone smoked in the premises and denied that the plaintiffs used any oil to heat the premises from April through July. She acknowledged that they used propane for hot water and to cook and that the shower head was replaced, but that the original one was left in the bathroom.
George Shipman, Jessica's father, testified for the plaintiffs. George testified to helping the plaintiffs move into the property, which also involved moving items belonging to Brian's mother, and to helping the plaintiffs move out of it. The crux of his brief testimony was that the property was in the same condition when he helped the plaintiffs move out as it was when he helped them move in. While he was initially called to support the plaintiffs' moving expenses claim, Jessica withdrew that claim after George explained that he does not typically charge his daughter to move her belongings when changing residences.
Ruth Swift testified briefly and primarily to her communications with the plaintiffs about moving out due to the defendants' concerns with insuring the premises. She was not present or involved when the plaintiffs were making arrangements to move into the home, and she did not inspect the premises after they moved out.
Brian Swift testified as to the list of items he found damaged or missing. In this regard, he explained that the Sheriff's Department is investigating the missing items he included on his list, but had no paperwork, such as a supporting deposition or property loss statement, to verify such a loss or alleged larceny. He explained that the lawn mower repair person charged $475.00 to repair the John Deere lawn tractor, even though it was already fixed when he arrived at the property. Interestingly, he had a receipt dated October 23, from a small engine repair shop, but testified that he was only seeking the pickup and delivery cost of $36.00 associated with this repair. D-D. Brian also testified that the refrigerator handle had been broken and was propped up in a fashion to disguise the break.
He proceeded to testify that the contractor who arrived and decided to reschedule upon learning of the plaintiffs' sick children charged $200.00 for the time he set aside to complete work at the property. He explained that the plaintiffs failed to keep up with the lawn mowing, requiring him to pay $70.00 to have the lawn mowed with a brush hog attachment, but his receipt for the job reflected that it was completed on August 24, 2018, over three weeks after the plaintiffs moved out. D-F. He also testified to paying a moving company $1,600.00 to move his mother's furniture and other items from the premises, introducing a receipt reflecting the same. D-E. In this regard, he explained that he sought reimbursement because he hired the company on short notice to accommodate the plaintiffs' move, telling the Court that he had another company that was scheduled to do the move for $400. Nevertheless, the defendants sought $1,600.00 from the plaintiffs for moving his mother's belongings from the premises.
While Ruth had already testified, Brian explained that she used measurements he provided from examining the fuel oil tank to calculate the $512.00 figure they requested from the plaintiffs for fuel oil they claimed was used and not re-filled by the plaintiffs. In this regard, he presented a receipt for $574.64, which was for 221.10 gallons delivered on February 10, 2018 (Brian testified that the house was winterized before the plaintiffs moved in, with the heat set at 40 degrees). D-C. Brian and Ruth calculated the propane use in a similar fashion, except that the [*3]propane tank had a gauge on it. Brian also testified to spending $70.00 to dispose of the garbage bags left behind by the plaintiffs at Bert Adams Disposal which Brian acknowledged was done in one trip/load. When I explained having recently dumped over 500 lbs. of garbage at Bert Adams Disposal for $17.00, Brian thought maybe he was mistaken about the dump site.
As for the late fees, Brian explained that the late fees should have read $50 per day, but the lease otherwise provided for $5.00 per day. In this regard, he testified to the plaintiffs being 7 days late with their June rent. Lastly, Brian testified to thoroughly videoing the condition of the property about a week after the plaintiffs moved out. He explained that he had not used the video camera for several years and it took some time for him to locate it. Ironically, he did not want to introduce the video into evidence, because he did not want to be without the camera while waiting for a decision from the Court. Therefore, the video was never introduced. Likewise, there was little introduced to document the cost of repairs or replacement in most of the circumstances described by Brian.
Regarding the security deposit, Brian testified that he told the plaintiffs where it was deposited, but never documented in writing. He also failed to provide any proof that the funds were in an account segregated from personal funds. While defendants requested a continuance to provide such proof, this request was denied, as this was the second scheduled date for the trial, the first one having been adjourned by the defendants, and the defendants were certainly otherwise prepared to proceed.
In small claims cases, the plaintiff bears the burden of proving a claim by a preponderance of the evidence. The court has the obligation to apply the facts to the relevant law, keeping in mind the statutory mandate of substantial justice (UCCA §1804).
The plaintiffs' claim involves issues of contract law, along with landlord/tenant related law. A contractual agreement is simply a manifestation of mutual assent, by two or more legally competent persons, to one another (Restatement Second, Contracts §3). To establish the existence of a contract, there must be an offer, an acceptance of the offer, consideration, mutual assent, and an intent to be bound (22 NYJur Contracts §9).In a security deposit case, a tenant must prove the following elements: (1) the tenant paid a security deposit to the landlord, (2) the tenant caused no damage to the apartment beyond ordinary wear and tear, (3) the tenant made a demand for the return of the security deposit and (4) the landlord refused to return the security deposit. Hamilton v. Bosko, 54 Misc 3d 386, 388 (NY City Ct. 2016)Once those elements are met, the tenant has established that the security deposit is her property. At this point, the burden shifts to the landlord. For the landlord to retain a security deposit he must prove two things: (1) the landlord must show that the tenant caused damaged to the property beyond ordinary wear and tear and (2) the landlord must prove what cost was incurred (or is estimated to incur) in order to remediate the extraordinary damage caused by the tenant. Id.
"General Obligations Law § 7-103(1) provides that a security deposit with respect to the use or rental of real property shall continue to be the money of the person making such deposit and shall be held in trust by the person with whom such deposit or advance shall be made and shall not be mingled with the personal moneys or become an asset of the person receiving the same." Solomon v. Ness, 118 AD3d 773, 773 (2d Dept. 2014) (internal quotations and ellipses omitted), citing General Obligations Law § 7-103(3). "When a landlord commingles the security [*4]deposit with his or her personal funds in violation of General Obligations Law § 7-103(1), the tenant has an immediate right to the return of the funds, even if the tenant had breached the lease." Id. at 773-4, (internal quotations, brackets, and citations omitted).
Where . . . a plaintiff alleges that a landlord failed to provide written notice of the banking institution that holds the security deposit, an inference that the security deposit funds were commingled in violation of section 7—103(1) is permitted . . ." Rubman v. Osuchowski, 163 AD3d 1471, 1473-1474 (4th Dept 2018) (citations and internal quotations and brackets omitted). "It is (then) the landlord's burden to prove that it did not commingle the security deposit with other funds." Harlem Capital Ctr., LLC v. Rosen & Gordon, LLC, 145 AD3d 579, 580 (1st Dept. 2016) (citation omitted). Ultimately . . . if (a) landlord cannot prove that the security deposit was segregated prior to the termination of the lease, it will be required to repay those monies to tenant, with interest." Id. (citation omitted).
And finally, while "small claims matters are not bound by the rules of evidence, a determination may not be based solely on hearsay." Rowe v. Silver & Gold Expressions, 107 AD3d 1090, 1091 (2013) (citation omitted). "Even at Small Claims, with its relaxed rules of procedure and evidence, the fundamental right to confront a witness by cross-examination must be preserved. Falker v. Chrysler Corp., 119 Misc 2d 375, 378 (Civ. Ct. 1983) (citation omitted).
First and foremost, the parties in this litigation had a contract in the form of a lease agreement. That agreement provided for a one-year lease term to commence on April 1, 2018, and to end on April 1, 2019. Part of the lease agreement provided for the payment of a security deposit, though the agreement did not provide any account information concerning the security deposit. Ultimately, the parties mutually parted ways—the plaintiffs did not contest the defendants' request for them to move out—and any potential right for the defendants to charge the plaintiffs for costs incurred at the premises would be dictated by the lease agreement. Before the alleged costs and damages are considered, however, there is a clear issue concerning the security deposit.
In the matter at bar, "(the plaintiffs') showing that (the defendants) failed to give them written notice of the banking institution that held the deposit, in violation of General Obligations Law § 7-103, permitted an inference that (the defendants) violated General Obligations Law § 7-103 by commingling security deposit moneys with (their) own personal funds, and (defendants) failed to rebut this inference." Paterno v. Carroll, 75 AD3d 625, 628 (2 Dept. 2010) (citations omitted); see also, Solomon v. Ness, 118 AD3d 773, 774 (2 Dept. 2014). As a result of such commingling, (the defendants) forfeited (their) right to avail (themselves) of the deposit for any purpose, and the (plaintiffs) have an immediate right to return of the funds notwithstanding that they may have breached the lease."75 AD3d at 628 (citations omitted); see also, Milkie v. Guzzone, 143 AD3d 863, 864 (2 Dept. 2016).
Even if the defendants provided some proof that the security deposit was not commingled, aside from Brian's self-serving testimony, I would also find for the plaintiff based upon the unreasonable time it took the defendants to respond to the plaintiffs' requests and inquiries concerning their security deposit. The plaintiffs moved out of the premises on July 31, at the behest of the defendants' alleged concerns with insuring the premises in light of the plaintiffs' two dogs, despite their prior knowledge of this. P-5. The plaintiffs did not leave on their own volition, and nor were they evicted or told to move due to any allegations that they were violating the terms of the lease agreement.
The plaintiffs clearly did a walk through, leaving the premises in, at the very least, broom [*5]clean condition, and had already been making inquiries about their security deposit. In response, they were put on hold by the defendants for just shy of 3 months. Ironically, the letter from the defendants concerning the security deposit and requesting payment for damages to the premises was sent four days and delivered two days prior to the original court date, the plaintiffs having originally filed their claim on August 30. While I did not come across any specific precedent requiring a security deposit be returned within a specified period of time (despite exhaustive research on the issue), I do find that here, where there is no agreement to the contrary, that an explanation for retaining the security deposit should have been provided within a reasonable time of the plaintiffs moving out of the premises, or the end of the lease agreement, whichever is later. As the lease agreement was mutually terminated by the parties on July 31, which was the same date that the plaintiffs vacated the premises, the defendants should have provided some written notice to the plaintiff by the date of their filing the present claim (i.e., 30 days), unless exceptional circumstances warranted otherwise . As the defendants failed to itemize their retention of the plaintiffs' security deposit within a reasonable time, I also find that the plaintiffs were entitled to the full amount on these grounds.
Finally, I find unpersuasive the defendants' explanations for withholding the security deposit, not to mention their requests for additional payments from the plaintiffs. For one, the lease agreement merely provides that the tenants "provide fuel oil for sufficient heat . . ."; it includes no requirement that they refill it prior to the end of their lease agreement and makes no mention of propane. Even if it could be inferred that they were to provide for their own propane, there is likewise nothing requiring them to re-fill the tank prior to vacating the premises. Nevertheless, the defendants' method of determining the amount of oil used by the plaintiffs was flawed. For one, there was no measurement of either tank when they moved into the residence. For two, Brian's explanation of how Ruth figured out the amount that they owed was questionable, at best, especially considering that Ruth had previously testified and never mentioned this. Brian's testimony in this regard was significantly grounded upon hearsay.
Similarly, defendants' claims suggesting that the plaintiffs stole items from the premises were lacking in credibility and proof to verify such claims. The claim for alleged payments to a contractor and service person for coming to the property and leaving were unsubstantiated and lacking in credibility, if not more. The claim for rent in March is contrary to an obvious agreement made between the parties for the plaintiffs to help move out items belonging to Brian's mother in exchange for moving in a few days earlier. Likewise is the claim for paying the moving company, especially considering the testimony by Brian that he needed someone to move into the house as soon as possible in order to cover the mortgage remaining on the property. And the claim for late fees lacks merit, as the $5.00 per day late is simply unreasonable and excessive (incredibly, Brian testified that it should have been $50.00 per day late, but for a clerical error). See, 943 Lexington Ave., Inc. v. Niarchos, 83 Misc 2d 803, 803 (1 Dept. 1975); see also, Rock v. Klepper, 885 NYS2d 713 (City Ct. 2009) (unreported).
Ultimately, all of the claims for damages made by the defendants were lacking in appropriate paid receipts, verification, solely based upon hearsay, or were otherwise simply not credible. See, Strenio v. Grunstein, 18 NYS3d 581 (NY App. Term. 2015); Camacho v. Paduch, 60 Misc 3d 837, 842 (NY City Ct. 2018)
For all of these reasons, the plaintiffs are entitled to a return of the total amount of their security deposit.
Plaintiffs are awarded Judgment in the amount of $1000.00, with interest from July 31, 2018 in the amount of $33.54, along with court costs. The foregoing constitutes the Decision and Order of the Court.
Dated: December 14, 2018
Hon. Michael J. Genute
Norwich City Court Judge