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Pleasant Run, LLC, v. Goldstein

A-2192-03T2 (N.J. Super. App. Div. 2004) (Unpublished)

LEASES; AMBIGUITIES—Where a landlord drafts a lease, ambiguities will be resolved in favor of the tenant.

A lease’s term began March 1, 2003. The section of the lease discussing utilities contained two columns. Under the column headed “Landlord Pays,” trash and water were checked off as the landlord’s responsibilities and the remaining items, including “oil,” were checked off under the other column, headed “Tenant Pays.” The landlord had the oil measured on March 12, 2003, at which time the tank contained 611 gallons. The landlord then estimated that the tenants had used 7.5 gallons of oil for each day of occupancy before March 12, and it concluded that the value of the oil in the tank as of the date the tenants began their occupancy was $2,187.69. When the landlord demanded that the tenants pay that amount, the tenant refused. The landlord then sued.

The tenants argued that they were not liable for paying up front for the oil in the tank, contending instead that the lease instead required them to pay for oil expenses incurred after March 1, 2003. The lower court concluded that the parties’ conflicting lease interpretations reflected an ambiguity in the terms of the lease. It noted that where there is an ambiguity in a contract, it should be interpreted against the party who prepared it. Therefore, the court held that the tenants were only liable for the oil expenses incurred after March 1, 2003.

On appeal, the landlord argued that a court should rewrite an agreement or make a better agreement for the parties then they prepared themselves. The Appellate Division agreed in principle, but held that not to be the case here. The landlord had merely presented an ambiguity that the lower court properly read in favor of the tenant’s interpretation. An ambiguity in a contract exists when a provision can be reasonably interpreted in two or more alternative ways. Since this was the case there, the Court affirmed the lower court’s decision to read the contract in favor of the tenants.

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