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Winrow v. Marriott Corp.
Citations: 553 A.2d 59; 230 N.J. Super. 189
Court: New Jersey Superior Court; February 2, 1989; New Jersey; State Appellate Court
Charles M. Winrow and Rosemarie Winrow, along with Richard Mets and Maryann Mets, appealed a decision from the Superior Court of New Jersey against Marriott Corporation regarding a lease dispute. The plaintiffs, as owners of a commercial building leased to Marriott, claimed Marriott breached lease covenants by failing to maintain the premises in good repair. The trial judge acknowledged that Winrow established a cause of action but dismissed the case, stating that Winrow's evidence of repair costs was irrelevant because the measure of damages should focus on the injury to the reversion, which was not proven. The lease, signed on April 10, 1975, required Marriott to keep the building in good condition and return it in satisfactory order at the lease's end. After subletting the premises to Horn's, Inc., which operated a restaurant until September 1984, the building was left vacant and boarded up. Winrow sent multiple letters to Marriott asserting lease violations and filed for damages on December 13, 1984, claiming Marriott allowed the building to deteriorate. During the case, Winrow also pursued a separate action for possession due to these breaches, resulting in a judgment for possession and re-letting the property in October 1985. At trial in October 1987, Winrow demonstrated significant damage to the building, including issues with the roof, interior fixtures, and essential systems. However, the court found that Winrow failed to provide evidence to quantify the diminished value of his reversionary interest due to Marriott's neglect. The trial judge relied on a general rule from other jurisdictions, stating that damages for breach of a repair covenant during the lease term are limited to the injury to the reversion, while post-lease claims could utilize repair costs as damages. This principle aims to prevent overcompensating the lessor while leaving the lessee without the benefits of repairs paid for. In Pennsylvania Cement Co. v. Bradley Contracting Co., 11 F.2d 687 (2d Cir.1926), Judge Learned Hand analyzed the implications of a lease's duration on the lessor's rights to recover repair costs. He noted that as long as the lease is active, the lessor cannot claim repair costs since they would receive improvements only after they have depreciated over the lease term, which complicates proving their current value. The general rule disallowing recovery during the lease term is rooted in the uncertainty of the lessor's losses while the lessee remains in possession. Awarding damages based only on the diminished value of the reversion attempts to quantify these uncertainties, but this approach is inherently problematic due to divergent assessments of value. The court in Corbett deviated from this general rule, allowing repair costs as evidence of damages when it was evident the lessors would not be overcompensated. In the present case, after Marriott was ousted and the lease terminated, the court found no uncertainty regarding the failure to repair, thus justifying the consideration of repair costs in assessing damages. The ruling indicated that, post-lease, the lessors could be treated similarly to those bringing claims after the lease has expired. The judgment was reversed concerning Winrow's breach of the covenant to repair and Marriott's counterclaims, which were allowed to be reinstated upon appeal. However, the dismissal of Winrow's other claims, including negligence and lost profits, was affirmed. The case was remanded for a new trial on the reversed issues, with the trial judge's earlier rationale upheld.