Opinion
Index No. SC-000851-22/NY
04-18-2023
Emily Pickens, Claimant, v. Terry Lane, Defendant.
Emily Pickens, claimant pro se. Terry Lane, defendant pro se.
Unpublished Opinion
Emily Pickens, claimant pro se.
Terry Lane, defendant pro se.
Richard Tsai, J.
On May 4, 2022, claimant Emily Pickens commenced this small claims action against defendant Terry Lane. Claimant essentially seeks return of a security deposit in the amount of $2,825 on a market-rate, residential apartment that she leased from defendant after vacating the premises about a year before the expiration of her two-year lease.
Defendant asserts a counterclaim against claimant for the rent due between the time when claimant vacated the apartment and when defendant was able to re-rent the apartment, plus the expenses incurred to re-rent the apartment.
This court held a nonjury trial of this small claims matter on December 6, 2022 and April 17, 2023.
On December 6, 2022, the trial was held on the digital record (FTR) in Courtroom 353 at 111 Centre Street, New York, New York. The trial started at 2:43 p.m. and concluded around 4:37 p.m. On April 17, 2023, the continued trial was held on the digital record (FTR) in Courtroom 419 at 111 Centre Street, New York, New York. Claimant requested permission to appear virtually, and defendant consented to allow claimant to proceed virtually. The continued trial started at 2:39 p.m. and ended around 2:59 p.m.
On the first day of the trial, defendant wanted to assert a counterclaim against claimant for $9,500, for lost rent/income and damage to the apartment, which had not been filed with the court within five days of receiving the notice of claim. Claimant did not ask for an adjournment (see 22 NYCRR 208.41 [j]), but instead consented on the record to proceed with a trial of both the claim and counterclaim (FTR, 12/6/22, 3:13 p.m.).
Claimant testified at the trial, and four exhibits were accepted into evidence, marked as Plaintiff's Exhibits 1, 3a, 3b, and 4. Defendant testified and submitted five exhibits that were accepted into evidence, marked as Defendant's Exhibits A, B, C, D, and E.
FINDINGS OF FACT
Recitation, as required by CPLR 4213 (b), of the findings of essential facts relied upon by the court:
Claimant and her husband John Bayard Pickens entered into a written lease with defendant for a non-rent stabilized apartment located at 231 Lenox Avenue No.2, New York, NY 10027 (Plaintiff's Exhibit 1). The lease was for two years, beginning April 1, 2021 and ending March 31, 2023, with a monthly rent of $2,825 in the first year, and $2,925 in the second year (id.). The lease required a security deposit in the amount of $2,825 (id.). Defendant stipulated at trial that he received a security deposit in the full amount.
Defendant credibly testified that he had paid a broker's commission of $5,085.00 for the rental of the apartment to claimant, which was corroborated by an invoice and a receipt from a broker (Defendant's Exhibits B and C).
Claimant credibly testified that, in January 2022, she and her husband informed defendant that they were moving out of the apartment because they had bought an apartment of their own. Claimant credibly testified that she and her husband moved out of the apartment and surrendered the keys on March 11, 2022.
By letter dated March 22, 2022, defendant wrote to claimant:
"Dear Mr. and Mrs. John Bayard Pickens,
This letter is to formally inform you that you have broken your lease at 231 Lenox Avenue, New York, NY 10027. You signed a lease for two years.... You texted me on March 14, 2022, informing that you have moved out of the apartment.
Given that you broke the lease (with more than one year remaining), left the apartment with holes in several walls, broken electrical plates, and because I must repair the apartment and pay real estate broker to re-rent the apartment, I will not return you a security deposit"(Plaintiff's Exhibit 3a). Defendant's credible testimony and a certificate of mailing establish that defendant mailed the March 22, 2022 letter on March 24, 2022, to 231 Lenox Avenue Apt 2, New York, NY 10027 (Defendant's Exhibit A).
Claimant credibly testified that she received the March 22, 2022 letter by email on April 12, 2022 (see Plaintiff's Exhibit 3b). Claimant testified on recross that, when she moved out of the apartment, she did not give defendant a forwarding mailing address, but claimant testified that defendant had claimant's email and phone numbers. However, claimant stated that she later texted defendant with a forwarding address on April 11, 2022.
The parties offered conflicting testimony as to whether defendant agreed to let claimant terminate the lease early. Claimant testified that defendant agreed to let claimant out of the lease and submitted text messages between them; defendant testified that he did not agree to let claimant break the lease.
On March 8, 2022, claimant texted defendant, "Hi Terry, we'd ask that you consider pro-rating for the month of March as we would be able to vacate the premises by this weekend and don't know if we'll be able to cover paying for both places. Do you think there's a way we can come to an agreement?" (Plaintiff's Exhibit 4). Defendant responded, "Good morning, I cannot prorate the rent for this month. As you know, you signed a two-year lease and you were breaking the lease" (id.). Claimant then texted, "Hi Terry, we understand that and appreciate you letting us out of our lease early..." (id.).
Defendant then texted back,
"Hi. As you know, legally, you're responsible for the rent until the end of the lease.
The caveat is, if I am able to rent it prior to the end of the lease term, you would only be responsible for the period that is unrented.
If I were you, I would move out prior to the end of the month, allowing me time to refreshments [sic] the unit so that I can get it ready by April 1. The longer you extend, [ ] the more you are responsible for covering the rent and the longer it takes me to re-let the apartment.
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I've never had any intent holding you responsible for the balance of the lease, as I know that you are a young family purchasing a new home. I have been agreeable, even in accepting the monthly rent in two installments.
If you remain until the end of the month, that will delay getting the place rented, and I will have to hold you accountable. Please advise me if and when you plan to move out.
You still have almost a year remaining on your lease. Please know that I will be delighted if you remain until the end of your lease"(Plaintiff's Exhibit 4 [emphasis supplied]).
"When there is conflicting evidence, a credibility determination is necessary" (Lattingtown Harbor Prop. Owners Assn., v Agostino, 34 A.D.3d 536, 538 [2d Dept 2006]).
Having observed the parties' demeanor during their testimony and reviewed the documentary evidence, the court credits defendant's testimony over claimant's testimony and evidence, and the court finds that defendant did not agree to terminate the lease early.
First, there is no evidence that claimant offered defendant any valid consideration for an early termination of the lease.
Defendant texted to claimant, "if I am able to rent it prior to the end of the lease term, you would only be responsible for the period that is unrented" and that he never intended to hold claimant "responsible for the balance of the lease, as I know that you are a young family purchasing a new home" (Plaintiff's Exhibit 4). When these two statements in the text message are read as part of the whole text message, the court finds that defendant did agree not to hold claimant liable for one year's worth of rent that might have been due under the remaining term of the lease. At the same time, defendant also texted that claimant would only be responsible for the period that is unrented. Such language would be meaningless if defendant had agreed to let claimant go rent-free for breaking the lease early. Thus, the court disagrees with claimant's interpretation that defendant had agreed to waive all rent altogether.
Defendant credibly testified that he tried to show the apartment in the last 2-3 weeks before claimant and her husband vacated the apartment, which claimant also corroborated during her testimony on redirect. Defendant testified that the damage to the apartment was not significant; the repairs consisted of painting the apartment and fixing holes, which defendant testified was "standard stuff" when tenants move out. Defendant credibly testified that it "took a little time" to repaint and do repairs to apartment.
Defendant credibly testified that the he re-rented that apartment on May 15, 2022. Defendant credibly testified that he paid a broker's commission of $5,040, which was corroborated by an invoice and receipt from a broker (Defendant's Exhibits D and E).
CONCLUSIONS OF LAW
Even in the relatively relaxed and informal atmosphere of a small claims action, the claimant has the prima facie burden of proof at trial to establish, by preponderance of the evidence, a basis for the defendant's liability (see Parker v Nolan, 42 Misc.3d 144 [A], 2014 NY Slip Op 50275[U] [App Term, 1st Dept 2014]; De Meo v Consolidated Edison Co. of NY, Inc., 32 Misc.3d 131 [A], 2011 NY Slip Op 51319[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2011]). ]). "A judicial award, even one issued in the context of a small claims action, must rest upon competent evidence, and not mere inference or surmise" (Rollock v Modell, Inc., 169 Misc.2d 663, 665 [App Term, 1st Dept 1996]).
"Under General Obligations Law § 7-103 (1), it is black letter law that money deposited or advanced by a tenant on a lease agreement 'shall continue' to be tenant's money and 'shall' be held in trust for the benefit of tenant until the lease is terminated and it is repaid or applied. The deposit is meant to cover the costs of repairing damages to the apartment"(14 E. 4th St. Unit 509 LLC v Toporek, 203 A.D.3d 17 [1st Dept 2022] lv dismissed, 38 N.Y.3d 1019 [2022]).
The security deposit "must be returned at the conclusion of the tenancy, absent proof, for example, that the tenant caused damage beyond that attributable to ordinary wear and tear" (Gable v Cahill, 69 Misc.3d 128 [A], 2020 NY Slip Op 51135[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2020]). "Where a landlord establishes that the tenant caused such damage, it is the landlord's further burden to establish the reasonable value of any of the repairs allegedly made to the premises" (id. [internal citations and quotation marks omitted]).
General Obligations Law § 7-108 (1-a) states, in pertinent part:
"(b) The entire amount of the deposit or advance shall be refundable to the tenant upon the tenant's vacating of the premises except for an amount lawfully retained for the reasonable and itemized costs due to non-payment of rent, damage caused by the tenant beyond normal wear and tear, non-payment of utility charges payable directly to the landlord under the terms of the lease or tenancy, and moving and storage of the tenant's belongings. The landlord may not retain any amount of the deposit for costs relating to ordinary wear and tear of occupancy or damage caused by a prior tenant.
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(e) Within fourteen days after the tenant has vacated the premises, the landlord shall provide the tenant with an itemized statement indicating the basis for the amount of the deposit retained, if any, and shall return any remaining portion of the deposit to the tenant. If a landlord fails to provide the tenant with the statement and deposit within fourteen days, the landlord shall forfeit any right to retain any portion of the deposit"(General Obligations Law § 7-108 [1-a] [b], [e]). "[B]y the plain terms of the statute only the obligations in subdivision (e) are subject to a penalty of forfeiture if they are not complied with" (14 E. 4th St. Unit 509 LLC, 203 A.D.3d 17).
Here, claimant vacated the premises on March 11, 2022. Thus, defendant was required to provide claimant with an itemized statement and any remaining portion of the deposit by March 25, 2022.
Defendant mailed a letter to defendant on March 24, 2022, but the letter was sent to apartment that claimant had vacated. Although claimant had testified that she did not provide defendant with a mailing address when she vacated the apartment, claimant testified that defendant had claimant's email. General Obligations Law § 7-108 (1-a) (e) requires the landlord to "provide" the tenant with an itemized statement, which includes, but is not limited to mailing the itemized statement. Here, the letter was not emailed to claimant until April 12, 2022, which was more than 14 days after claimant had vacated the apartment. Under those circumstances, defendant did not comply with General Obligations Law § 7-108 [1-a] [e]).
Because defendant neither timely returned claimant's entire security deposit nor timely provided her with an itemized statement indicating the basis for retaining the deposit, defendant has forfeited any right to retain any portion of claimant's deposit.
Therefore, claimant is entitled to recover from defendant the full amount of the security deposit from defendant, i.e., $2,825.
Claimant is entitled to prejudgment interest on $2,825.00 at the rate of 9% per annum, from April 13, 2022, the earliest ascertainable date that the cause of action existed-i.e., the date when claimant was entitled to the full amount of the deposit and could therefore sue defendant for not returning the deposit (see Gihon, LLC v 501 Second St., LLC, 103 A.D.3d 840, 842-43 [2d Dept 2013]; see also 23 E. 39th St. Mgt. Corp. v 23 E. 39th St. Dev., LLC, 134 A.D.3d 629, 632 [1st Dept 2015] [tenant was entitled to interest on the full security deposit from the date of its conversion]; 56 Bogart St., LLC v Vandyke, 60 Misc.3d 135 [A], 2018 NY Slip Op 51063[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2018]).
Defendant's Counterclaim
Defendant seeks to recover from claimant the amount of rent that defendant would have received from claimant from the time that she vacated the apartment until the time the apartment was re-rented, about 1.5 months. Defendant also seeks to recover the amount of the broker's fee that was paid not only for re-rental of the apartment to a new tenant ($5040), but also the broker's fee that was paid for claimant's rental ($5,085).
As discussed above, this court found that defendant did not agree to terminate the lease early. Where, as here, a tenant vacates the premises before the end of the lease, Real Property Law § 227-e states:
"landlord shall, in good faith and according to landlord's resources and abilities, take reasonable and customary actions to rent the premises at fair market value or at the rate agreed to during the term of the tenancy, whichever is lower. If landlord rents the premises at fair market value or at the rate agreed to during the term of the tenancy, the new tenant's lease shall, once in effect, terminate the previous tenant's lease and mitigate damages otherwise recoverable against the previous tenant because of such tenant's vacating the premises. The burden of proof shall be on the party seeking to recover damages."
The statute "clarifies that the doctrine of mitigation of damages is not an affirmative defense to be asserted by a tenant, but rather the burden is on landlord to establish it took reasonable and customary actions to 'render the injury as light as possible'" (14 E. 4th St. Unit 509 LLC, 203 A.D.3d at 23 [citation omitted]).
Here, the unrebutted evidence at trial established that the apartment was re-rented on May 15, 2022. Thus, claimant's lease was terminated effective May 15, 2022.
The evidence that defendant submitted at trial and trial testimony of both parties established that defendant took reasonable and customary actions to mitigate his damages. Defendant testified that he paid a real estate broker to find a new a tenant, and the apartment was shown to prospective tenants two to three weeks before claimant vacated the apartment. Therefore, defendant is entitled to recover from claimant the rent due in April 2022 and pro-rated for May 2022, i.e., $4,237.50 (1.5 months at $2,825/month).
Defendant is also entitled to recover the broker's fee that he incurred to re-rent the apartment (see Restatement [Second] of Property, [Landlord & Tenant] § 12.1 Comment i ["The cost to the landlord of mitigation is chargeable to the original tenant"]; see also 24 Richard A. Lord, Williston on Contracts § 64:33 [4th ed.]["If the attempt is reasonable, whether it proves successful or not, the injured party can recover for the expense or for the loss caused by lack of success]). Therefore, defendant is entitled to recover from claimant $5,040 that defendant paid to a broker.
Under CPLR 5001 and CPLR 5004, defendant is entitled to prejudgment interest on $4,237.50 and $5,040 at the rate of 9% per annum, from May 15, 2022, the earliest ascertainable date that the cause of action existed (see Music Sales Corp. v Mark Music Serv., Ltd., 194 A.D.2d 470, 471 [1st Dept 1993]).
However, there is no basis for recovery of the broker's fee that defendant incurred to rent the apartment to claimant, as it was apparently defendant's choice to engage a broker to find a tenant for the apartment.
Contrary to claimant's argument, defendant's failure to comply with General Obligations Law § 7-108 (1-a) (e) does not bar defendant from asserting a claim against claimant for the rent due under claimant's lease before defendant was able to re-rent the apartment. The forfeiture triggered upon by the landlord's noncompliance is the right to retain the security deposit; it is not a forfeiture of all claims against the tenant. Defendant would not have been entitled to withhold from claimant's security deposit any of the damages asserted in defendant's counterclaim.
VERDICT
As to claimant's claim against defendant, the court finds in favor of claimant. Claimant is awarded compensatory damages in the amount of $2,825.00 with prejudgment interest at the rate of 9% per annum, from April 13, 2022.
As to defendant's counterclaim against claimant, the court finds in favor of defendant. Defendant is awarded compensatory damages in the amount of $9,227.50 with prejudgment interest at the rate of 9% per annum, from May 15, 2022.
ORDER
Because there are awards on the claim and counterclaim in the same action, this court must offset claimant's smaller recovery against defendant's larger recovery, and then award a net judgment in defendant's favor for the balance, plus interest (Sloan v Pinafore Homes, Inc., 38 A.D.2d 718, 719 [2d Dept 1972]; Binghamton Precast & Supply v A. Servidone Inc./B. Anthony Const. Corp., 257 A.D.2d 731, 732 [3d Dept 1999]; see also 8B Carmody-Wait 2d § 63:64 ["prejudgment interest is calculated by subtracting the smaller award from the larger one and adding predecision interest to the resulting sum"]).
Defendant is therefore entitled to a net judgment against claimant in the amount of $6,452.50 ($9,277.50-$2,825.00).
Accordingly, it is hereby
ORDERED that the Clerk is directed to enter judgment in favor of defendant Terry Lane against claimant Emily Pickens in the amount of $6,452.50, with prejudgment interest at the rate of 9% per annum, from May 15, 2022.
This constitutes the decision, verdict, and order of the court.