Landlord’s Duty to Mitigate Damages

Ohio’s Tenth District Court of Appeals has held that a landlord has a duty to employ reasonable efforts to mitigate damages caused by the breach of a residential lease agreement. Dennis v. Morgan (2000), 89 Ohio St.3d 417, 419, 2000 Ohio 211, 732 N.E.2d 391; Zunshine v. Wallace F. Ackley Co. (Mar. 30, 2000), Franklin App. No. 99AP-531, 2000 Ohio App. LEXIS 1302.

“Landlords mitigate by attempting to rerent the property. Their efforts to do so must be reasonable, and the reasonableness should be determined at the trial level. If the lessor has acted reasonably in attempting to secure a new tenant, the lessee is liable for the rent up to the point of the lessor’s finding a new tenant, or the expiration of the lease, whichever is earlier.” Dennis, at 419.

However, a landlord is not required to use extraordinary efforts to find a new tenant or attempt the unreasonable or impracticable. Zunshine, citing Foust v. Valleybrook Realty Co. (1981), 4 Ohio App.3d 164, 168, 4 Ohio B. 264, 446 N.E.2d 1122; [**8] Endersby v. Schneppe (1994), 73 Ohio App.3d 212, 596 N.E.2d 1081. The failure to mitigate damages is an affirmative defense. Zunshine, citing Young v. Frank’s Nursery & Crafts, Inc. (1991), 58 Ohio St.3d 242, 244, 569 N.E.2d 1034. Whether a landlord made reasonable efforts to mitigate damages is a question of fact to be resolved by the trier of fact.

In the case of Beatley v. Schwarz, 2004 Ohio 2945, Eugene W. Schwartz (“Geno”) and Zach Webb (“Zach”) entered into a residential lease agreement with plaintiff for a three-bedroom apartment located at 195 East 16th Street, Apartment C, Columbus, Ohio. The lease was to commence on September 23, 2002, and end on August 29, 2003. Defendants, who are the parents of Geno, signed as guarantors with respect to the lessees’ liabilities under the lease.

The lease required a security deposit in the amount of $ 1,125, which was equivalent to one month’s rent. Geno paid [**2] part of the security deposit, $ 150, in April 2002. The balance of the security deposit was submitted to plaintiff in July 2002. (Defendant’s Exhibit 1.) Subsequently, Geno and Zach sent a letter to plaintiff informing plaintiff that they would be unable to financially afford to meet their obligations under the lease. (Plaintiff’s Exhibit H.) Plaintiff replied to Geno and Zach, asserting that they remained “responsible for all terms and conditions of the lease.” (Plaintiff’s Exhibit D.)

In September 2002, information about the apartment was placed on a listing of available apartments. According to plaintiff, this listing was posted on the door of his office and was distributed on campus. (Tr. 14-15.) Plaintiff advertised the apartment’s availability in The Lantern, a student newspaper at The Ohio State University. (Tr. 16; Plaintiff’s Exhibit K.) A sign was placed on the subject apartment building. Plaintiff testified as to the difficulty of renting apartments to students during September, October, and November. “The market demand is vastly diminished” in those months. (Tr. 16.) Plaintiff testified that his subletting policy requires sublessees to provide a security [**3] deposit. (Tr. 21.)

Regarding the search for potential tenants after the anticipatory breach, Geno testified as follows: “I asked [plaintiff] if he could rent the place out – not rent the place out, but help advertise it or do something. And he said that he needed to get rid of all the apartments that he had before that one could go on the market, and he said that he really didn’t need to do anything because he had his co-signers and he wasn’t worried about it.” (Tr. 89.)

According to Geno, plaintiff gave him the impression that plaintiff “wasn’t worried about anything besides having the signers, which pretty much put all the pressure on me to go find people to move in because it was very threatening.” (Tr. 90.) Geno posted flyers, which provided information about the apartment, around The Ohio State University campus.
On September 23, 2002, Geno, after receiving a key to the apartment, showed the apartment to Kain Waggoner and David Burkhart. According to Geno, these individuals “were very interested” in the apartment. (Tr. 94.) Geno accompanied Mr. Waggoner and Mr. Burkhart to plaintiff’s office. According to Geno, Mr. Waggoner and Mr. Burkhart “signed the lease, filled out the applications, and they were writing out their checks.” (Tr. 95.) Plaintiff was unwilling to transfer the security deposit. Neither Mr. Waggoner nor Mr. Burkhart entered a lease agreement with plaintiff with respect to the subject apartment. When asked by the court to discuss his understanding of why he was not permitted to lease the apartment, Mr. Burkhart testified as follows:

“Well, the first one was that the other roommate, he was being required to have a co-signer, which he could not do, which I had no problem with myself. But without having a roommate, I didn’t want to get into someplace with just me and having Geno taking up whatever slack there was. And then just the fact there was a second payment that I needed to make immediately for the 1,125. The girl had told me that I needed that within a matter of a couple weeks.” (Tr. 134.)

In March 2003, the apartment was rented to two individuals, for $ 300 per month per person, for the remainder of the lease term. Plaintiff testified at trial that he was owed $ 9,474.44 under the lease after the $ 1,125 had been applied to the account balance. (Tr. 28-29.)

On December 20, 2002, plaintiff filed a complaint in the Franklin County Municipal Court against defendants, as guarantors, for breach of contract. Defendants filed a counterclaim, asserting their right to the security deposit. In a judgment entry dated June 27, 2003, the trial court granted summary judgment in favor of plaintiff on the issue of breach of contract, but assigned the matter to trial on the issue of damages. The court also overruled plaintiff’s motion to strike defendants’ counterclaim concerning the security deposit.
[*P8] After the trial on August 27, 2003, the court issued a judgment entry and decision, which was filed on September 8, 2003. The trial court found that even though defendants breached, “plaintiff did not employ a reasonable effort to mitigate,” and accordingly found plaintiff entitled to only $ 5 nominal damages. (Sept. 8, 2003 Judgment Entry and Decision, at 3.) Regarding defendants’ security deposit counterclaim, the court found that “defendants are entitled to the return of their security deposit less nominal damages for the breach of the lease.” Id. The court did not award double damages “because the court finds that there is a breach of the lease agreement.” Id. The court awarded $ 1,120 to defendants.

After the Plaintiff appealed, the Defendants cross appealed. The court also that “some degree of deference [is] appropriate in reviewing a trial court’s factual determinations; accordingly, we will not disturb a trial court’s findings of fact where the record contains competent, credible evidence to support such findings.” Wiltberger v. Davis (1996), 110 Ohio App.3d 46, 52, 673 N.E.2d 628 (“This standard of review of factual determinations is akin to that employed in a review of the manifest weight of the evidence in civil cases generally, as approved in C.E. Morris Co. v. Foley Constr. Co. [1978], 54 Ohio St.2d 279, 376 N.E.2d 578”).

“Judgments supported by some competent, credible evidence going to all the essential elements of the case will not be reversed by a reviewing court as being against the manifest weight of the evidence.” C.E. Morris, at syllabus. Furthermore, “a reviewing court must be guided by the presumption that the findings of the trial court are correct, as the trial judge is best able to view the witnesses, observe their demeanor, gestures, voice inflections, and use these observations in weighing the credibility of the proffered testimony.” Whiting v. Ohio Dept. of Mental Health (2001), 141 Ohio App.3d 198, 202, 750 N.E.2d 644, citing Seasons Coal Co. v. Cleveland (1984), 10 Ohio St.3d 77, 80, 10 Ohio B. 408, 461 N.E.2d 1273. We find that competent, credible evidence supports the trial court’s finding that plaintiff did not make reasonable efforts to mitigate damages caused by the breach. Moreover, the judgment is not against the manifest weight of the evidence.

This case is distinguishable from Hines v. Riley (1998), 129 Ohio App.3d 378, 129 Ohio App. 3d 379, 717 N.E.2d 1133 (Kline, J., with two judges concurring in judgment only), which found that the tenants had not carried their burden in proving that the landlord had failed to mitigate damages. Unlike the case at bar, in Hines, the court found no evidence that the landlord had failed to make reasonable efforts to mitigate her damages. Here, some competent, credible evidence supports the trial court’s finding that plaintiff failed to make reasonable efforts to mitigate his damages.

The trial court found plaintiff’s conduct to be unreasonable because “plaintiff entered into a lease agreement with Webb and Schwartz on April 26, 2002 with only $ 150.00 being deposited toward the security deposit. Ohio’s Tenth District Court of Appeals quoted the Trial Court’s Decision:

“It appears to the court that plaintiff was being obstinate in the mitigation of damages in this instance.” (Sept. 8, 2003 Judgment Entry and Decision, at 2.) Furthermore, the trial court stated: “The court finds from the testimony and the credibility of the witnesses that plaintiff more or less seemed blinded from mitigating the damages because there were guarantors on the rental agreement.” Id. The Tenth District Court of Appeals noted that “These findings are supported by such evidence as Geno’s testimony that plaintiff seemed disinterested in re-renting the apartment because of the guarantors (defendants) as well as evidence indicating plaintiff’s apparent unwillingness to transfer the security deposit.”

A trial court’s resolution of the issue of whether a landlord has demonstrated reasonable efforts to mitigate damages is fact-specific, and does not lend itself to bright-line rules. For example, the fact that plaintiff advertised the apartment does not, in itself, necessarily preclude a finding that plaintiff was unreasonable in his mitigation efforts. In this case, some competent, credible evidence supports a contrary conclusion, and therefore the trial court’s decision must not be reversed by this appellate court on this basis. See C.E. Morris, supra, at syllabus.