Daily Development for Wednesday, January 24, 2007
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri

LANDLORD/TENANT; LANDLORD’S REMEDIES; DAMAGES; MITIGATION: Although landlord’s failure to mitigate is an affirmative defense that tenant must allege and prove, once tenant shows that landlord has not fully mitigated damages, landlord has burden to show that it was reasonable in its efforts to mitigate. 

Manor Park Apts. L.L.C. v. Delfosse, 2006 Westlaw 3772214 (Ohio App. 12/22/06)

This is a residential case, but there is no reason to believe that the Ohio appeals court won’t work the same magic with a commercial landlord.

Tenant failed to pay rent, received a notice to vacate, and complied.  Landlord proceeded to advertise the apartment for rent, but did not relet the apartment, and sued tenant for damages for the balance of her one year lease term, a period of about 7 months.  A magistrate recommended to the trial court that the landlord recover only for two months rent.  Upon request by the trial court, the magistrate wrote an opinion explaining the magistrate’s conclusion.  The opinion stated that “it was unclear” to the magistrate whether the landlord had made reasonable efforts to relet the apartment for the entire term.

The gist of the factual finding was that the landlord did not provide evidence as to how it had dealt with this apartment in its stock of empty apartments.  Further, the magistrate stated, the landlord had a significant number of vacancies for the period of tenant’s lease, but few thereafter. 

Not surprisingly, the appeals court accepted the view that the trier of fact was the best party to judge the actual facts of the reasonableness of landlord’s efforts.  But there were still significant issues of law to discuss.

First, there was the question of whether the conclusion that whether a landlord reasonably mitigated damages was “uncertain” justified a finding against the landlord.  The landlord noted that prior Ohio authority had suggested, at least, that the tenant, and not the landlord, has to duty to allege and prove that the landlord did not mitigate damages. 

The court, however, affirmed the trial court’s conclusion of law that the landlord had the duty to prove that it had taken reasonable steps to mitigate damages. 

The court first had to deal with the fact that the tenant hadn’t even raised the issue of mitigation at trial.  But the court held that the landlord’s introduction of evidence going to show that it had taken steps to relet the apartment put the question at issue. 

As to whether the landlord had the burden of proof, the court disregarded language from another Ohio appeals circuit that stated expressly that the tenant had to show that the landlord had not used reasonable efforts to mitigate.

The court stated that general rules of allocating the burden of proof support the notion that the burden ought to be borne by the party asserting the affirmative and the party with peculiar knowledge of the facts and circumstances.  Here, the court concluded that was the landlord all the way. 

The court took the view that showing the landlord had not been reasonable was the “proving of a negative.”  Rather, it held the landlord should show that it *was*  reasonable.  And, the court continued, the landlord’s agents were the ones attempting to relet, and the landlord had all books and records supporting the reletting effort.  So the landlord, not the tenant, has  unique access to critical information.

A strong dissenting opinion accused the majority of “judicial activism.”  The dissent argued that this was not the typical case that might arise in which the issue of burden of proof was somewhat neutral and balanced.  Rather, the tenant was a wrongdoer - she had breached the lease.  In such cases, the appropriate and widespread public policy conclusion, according to the dissent, was that the tenant should have the burden of proof to show that the injured party failed to mitigate.

Contrary to the majority, the dissent argued that no other Ohio case supported the conclusion that the landlord had any original burden with respect to the showing of mitigation.  The dissent scoffed at the argument that the tenant would be forced to prove a negative.  Parties in litigation have to do as much all the time, the dissent maintained.  As to the “unique access to critical information,” the dissent commented, that’s what discovery is all about.  Through discovery, the tenant has the same access to the landlord’s business records as the landlord has. 

Comment: Of course, the dissent overstates things a bit when it maintains that the landlord and tenant are on equal footing with respect to their knowledge of the landlord’s mitigation efforts.  Nevertheless, the dissent’s point that it is appropriate for the tenant to bear the burden of demonstrating that the landlord’s claimed damages cannot be legally justified. 

This is a very good case to illustrate the point.  The magistrate made a big deal of the fact that the records did not show specifically whether the landlord showed tenant’s apartment to prospective tenants.  Although the court does not tell us the size of Manor Park’s complex, the suggestion is that there are quite a few units.  Should landlord really be held to a duty of punctilious record keeping as to how many times any individual unit is shown?  The likely only benefit that would be derived from this exercise is to show satisfaction of  landlord’s mitigation burden in court.  But landlord cannot charge the tenant for the cost of this additional record keeping. 

In any event, is it likely that the landlord would not show a prospective tenant the old tenant’s apartment if it were likely that the prospective tenant would be thereby influenced to rent from the landlord?  The landlord has little motive to build up a claim against tenant in this case.  The claim may not be collectible, and the landlord is certainly better off with cash flow than with a lawsuit against a defaulting tenant. 

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