Gunning vs. Regina Metropolitan Co. LLC

Although this case involved a rental building, the issue here, storage of property by a landlord, is equally applicable whether the building is a co-op or a condominium. The entity in whose care the property was left has some responsibility for its return. Even when the standard of care for a gratuitous bailment is relaxed to gross negligence, there may still be liability for lost property. Co-op and condo boards should insure some measure of security and control over goods stored by building occupants outside over their units and should insure that any disposition of stored property is properly documented and recorded to protect the landlord from later claims.

May a landlord be liable for the failure to return stored property to a tenant even when the landlord did not receive payment for the storage? The answer was “yes” in Gunning vs. Regina Metropolitan Co. LLC, although the aggrieved tenant here received only nominal damages.

Kenneth Gunning lived in a rental building at 155 Riverside Drive in Manhattan for 15 years. He had stored certain items, one being a wrought-iron bed, in a storage space the landlord had made available to tenants. The storage space was under lock and key, and the key was in possession of the building’s superintendent. The bed had been placed in the storage space by a building employee, now unknown to Gunning because there were frequent personnel changes, although the bed was labeled with Gunning’s name. Sometime in March 2007, Gunning discovered the item was missing and brought this action against the landlord.

The landlord’s witness stated that there was a storage space in the building where the tenants store their property. This basement room is a dirty and dank space that is not kept well. The room was locked and the key is in possession of the superintendent. On May 2, 2005, written notice was sent to all tenants to label all items belonging to them in storage. Anything not labeled would be considered abandoned and discarded. A second notice was sent on June 6, 2005. These notices were slipped under each tenant’s apartment door.

The lease notice provision called for notice, for anything other than rent, to be sent by certified mail. The notice gave tenants until June 30, 2005, to label their property. Gunning stated he did not receive any notice because he was not residing in the building at the time it was given, and because it was not sent by certified mail, in accordance with the lease’s notice provision. In any event, Gunning stated that the notice had no effect because his property was labeled at the time he deposited it in the storage room.

In analyzing the legal issues, the court stated that a “bailment” is the possession or the retention of property by one person under circumstances obligating him to deliver that property to another upon demand or at a given time. A bailment can be for mutual benefit, for the benefit of the bailor, or for the benefit of the bailee. The standard of care required of the bailee varies with the type of bailment. When a bailment is solely for the benefit of the bailor, it is a gratuitous bailment and the bailee’s liability is limited to its gross negligence or conversion of the property. One who stores another’s property without compensation is not liable for destruction of the property unless because of his gross negligence.

The court noted that the landlord stored Gunning’s property without a fee thereby establishing a gratuitous bailment subjecting the landlord to liability only upon a showing of gross negligence. The burden of proving bailee’s negligence is upon the bailor.

However, there was a presumption of gross negligence, which arises from proof of bailment and failure to deliver the bailed property. This presumption shifts the burden of proof to the bailee who must then come forward with an explanation of the loss and how it occurred. It is not enough to show that the bailee used reasonable care in its custody of the bailed property if “mysterious disappearance” is the only explanation. The bailee must produce admissible evidence demonstrating that the loss or destruction of the property resulted from some cause other than the bailee’s negligence. The bailee must actually demonstrate the specific cause of the disappearance of the property; a mere showing that the bailee exercised due care is insufficient. If the bailee fails to produce such evidence, then the bailor has established negligence as a matter of law, said the court.

When the landlord could not produce Gunning’s bed, a presumption of gross negligence arose requiring the landlord to come forward with a legally sufficient explanation to rebut this presumption. The burden of proof shifted to the landlord. The landlord had not provided the court with an explanation for the loss of Gunning’s property, and thus the court felt compelled to find as a matter of law that the landlord was grossly negligent.

Liability having been established, the court said that Gunning needed to establish damages. In attempting to prove damages, Gunning submitted a sheet of paper with a photograph of a bed and a one-line statement from an “appraiser” which stated that the value of the bed was $5,000. There was nothing on the record as to the identity or credentials of this “appraiser” or how he arrived at the value he assigned this property.

The court said that it must be taken into account that the bed was placed in what Gunning described as a dingy, dirty, dark old room and was kept there for at least four years before Gunning noticed its disappearance. Gunning did not produce evidence of the cost of the bed, its age, and condition at the time of the loss or its replacement value. Accordingly, the court refused to grant any evidentiary weight to the appraisers’ submission. However, the court held that substantial justice consistent with the rules of substantive law would best be achieved by awarding Gunning nominal damages in the amount of $100 for the loss of the bed. The court granted judgment for Gunning against the landlord in the amount of $100 plus interest from March 14, 2007, plus costs and disbursements.