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Labinowksi v. Failla

A-0487-09T3 (N.J. Super. App. Div. 2010) (Unpublished)

LEASES; SECURITY DEPOSITS — When a tenant vacates its apartment before the end of the term and the landlord is able to re-rent the apartment before the end of the term, the tenant is entitled to return of the security deposit that a landlord might try to apply to the period after the re-renting.

A tenant entered into a one-year written lease for an apartment unit. The tenant posted a security deposit. When the original lease was set to expire, the landlord sent the tenant a lease renewal letter increasing the monthly rent. The tenant never signed, but the tenant remained and paid the increased rent. Toward the end of the renewal term, the tenant advised the landlord that she would not be renewing the lease, but would remain until the end of the term. The tenant requested that the landlord apply the security deposit toward the last month’s rent, and the landlord agreed.

The tenant moved out with about one month remaining in the lease term. The landlord was able to re-rent the apartment about mid-month. The tenant requested the return of her security deposit, but the landlord refused. The tenant then demanded the return of her security deposit within thirty days pursuant to the Security Deposit Act, N.J.S.A. 46:8-21.1, but the landlord claimed that the security deposit was being applied toward the last month’s rent and would not be returned.

The tenant sued for double damages and interest under the Act, and asked for treble damages and counsel fees for violation of the Consumer Fraud Act. The lower court found the parties entered into an oral agreement to renew the lease for the new rent. It then held that the landlord mitigated its damages when it re-rented the apartment mid-month. Therefore, the tenant was only required to pay one-half of the rent for her final month and the landlord was only entitled to deduct that amount from the security deposit and then return the balance. The lower court then found that the landlord was unjustly enriched by an amount equal to the difference between the security deposit and the rent the tenant owed for one-half of the final month. Based on those findings, the lower court awarded the tenant double that amount, plus interest, as provided for in the Security Deposit Act.

The lower court rejected the tenant’s request for attorney’s fees or treble damages for violating the Consumer Fraud Act. It found that the award of fees is within a court’s discretion and, further, that an award of fees was not appropriate since the landlord offered to return the entire security deposit on several occasions during the course of the litigation. In addition, there was some confusion created by the tenant’s earlier letter asking the landlord to apply the security deposit to the last month’s rent. Based on that confusion, and the landlord’s attempts to return the deposit, the lower court found no unconscionable conduct warranting a remedy under the Consumer Fraud Act.

The tenant appealed, but the Appellate Division affirmed the lower court’s ruling.

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