Summary of Sommer v. Kridel, Suprme Ct. of NJ (1977)
Parties: This is actually two cases: the one above and Riverview Realty Co. v. Perosio
DF – Kridel T entered into two year lease, never took possession, and surrendered the apt.
PL – Sommer LL claims DF owes him $5K for back rent.
PL Riverview Realty Co. LL – wants back rent from DF who abandoned apt.
DF – Perisio – Abandoned one year early on his lease, owes PL back rent
Cause of action/remedy sought: The following is an action at law for damages.
Procedural History: Case #1: Trial court found LL’s failure to mitigate his losses, and his failure to respond to DF’s surrender letter, terminated the tenancy and the right to pay rent. Appellate court reversed.
Case #2: Court granted PL summary judgment, fixing damages at $4050 plus $182.25 interest. Appellate division affirmed.
Case #1: This court reverses and creates new law in the process.
Case #2: This court remands to see if LL actually made a reasonable effort.
Facts: Case 1: DF entered into a two year lease with PL, never took possession and bailed out a couple of days into the lease by a letter to PL, who did not respond. A third party was ready, willing and able to take possession of and lease that same apt., but PL refused. PL did not show apt. to anyone from 5-1-72 until 8-1-73, and took in a new T 9-1-73. PL brought this suit 8-72, prior to re-letting.
Case 2: PL Riverview entered into lease with DF 12/27/72 for two years from 2-1-73 till 1-31-75. DF paid rent through 1-31-74, and vacated in 2-74. PL filed complaint for back rent 10-31-74 for rent from 2-74 through 10-31-74.
Issue(s): Under NJ property law, is a landlord bound to mitigate damages much like standard contract law, by making reasonable efforts to re-let an apartment wrongfully vacated by a tenant when the tenant also defaults?
Holding: Yes. LL’s do have an obligation to make a reasonable effort to mitigate damages when a tenant abandons.
Court’s Rationale/Reasoning: The tenant here received a present possessory estate. The LL had the future interest.
What was the traditional rule when the tenant abandoned? The LL had no duty to mitigate. As soon as the tenant abandoned, he was in debt to the LL. Now a modern modification was rather than make the entire rent due and owing upon entering the lease, the rent is spread out over the term (typically payable monthly).
An acceleration clause takes away delayed payments, so the amount is payable all immediately. It was due and owing to the LL immediately so the LL was able to enforce the lease. The LL might not want to take possession, because then he would be in the position of accepting surrender. LL was still entitled to rent.
LL’s in this case relied on the traditional doctrine and sued for the entire rent.
The court said that an ordinary residential lease (particularly where it is for an apt) is more of a lease for goods and service than a lease for land and so should be treated more like a K and so the K doctrine of mitigation applies to it. LL thus had the obligation of showing that he mitigated before he could recover damages. LL had an inventory of apts so he could establish he was a lost volume seller, but LL here had to show that they were not unique to do so.
Rule: LL’s must make a reasonable attempt to mitigate their losses when a T surrenders or abandons their leased property.
Did court avoid issues?: No.