WHAT IS A BAILMENT STORAGE CONTRACT OR BAILMENT DISPUTE?

A storage contract often results in a “bailment”, which may provide stronger protections that a standard contract to store goods.  Whether a bailment exists is normally a question of fairness.  A bailment involves the delivery of personal property by one person to another in trust for a specific purpose and such delivery is accompanied by an express or implied contract that the trust will be faithfully executed and the property returned or properly accounted for once the special purpose is accomplished.  Parties to a bailment storage contract contract are called the bailor and bailee.  The bailor is the party who surrenders the property – the consumer or business storing the goods.  The bailee is the party who receives the property – the storage company or warehouseman. 

A bailment storage contract (bailment) is a contractual arrangement resulting either from an express or an implied contract.  For, the bailment storage contract (bailment) may either be expressly agreed upon, in writing or verbally or it may be implied from the circumstances of the transaction and the parties’ conduct.  A storage (bailment) contract is governed by the same rules of law regulating all other contracts. 

The following are storage agreements that may result in a bailment:

·         airplane stored in a hanger.

·         jewelry checked with a swimming pool attendant.

·         trailer stored in warehouse without its tractor.

·         automobile stripped while kept by bailee in a large cyclone fence enclosure.

·         an agreement to store or repair a boat. 

WHAT MUST A STORAGE COMPANY DO IN A BAILMENT STORAGE AGREEMENT?

Generally speaking the storage company has a duty to:   (1) must provide a reasonably fit and safe place to store the goods; and (2) exercise reasonable care to keep the goods safe.  If, during storage, the property is lost or damaged because of its failure to exercise reasonable care, the storage company is liable for the damage.  Reasonable care means such care for the safety of the property as a person of ordinary prudence would exercise in the same or similar circumstances.  However, unless the storage company specifically agrees to the contrary, they are not responsible for damages unavoidable by the exercise of reasonable care.

For example, in one case, a storage company was held liable for injury to peaches caused by negligent failure to keep them in reasonably cool warehouse.  

If the consumer proves that the goods stored were damaged or lost while in stored by the storage company, it is presumed that the storage company is responsible for the damage or loss.  At that point, the burden of proof shifts to the storage company to prove that it exercised reasonable care to protect the goods or that the damage or loss didn’t occur while the goods were in the storage company’s possession.    

For example, where it was not disputed that goods had been delivered to the storage company and had not been returned because they were destroyed by fire in the warehouse, the storage company’s negligence is presumed the cause of the damage and the storage company had the burden of showing otherwise.  Also, where furniture was in good condition when shipped and was delivered by a carrier to a storage company and when later returned to the owner, was damaged, the presumption is, in the absence of evidence to the contrary, that it was damaged while in the storage company’s possession.

In a bailment, the presumption of negligence is imposed on the storage company as a matter of policy, to compel persons in a position of special responsibility to disclose evidence within their control and under penalty of a procedural disadvantage if they do not.  Otherwise, the consumer would face a near impossible burden of proof against the storage company. 

WHAT IF THE STORAGE COMPANY HAS A CLAUSE IN THE STORAGE CONTRACT LIMITING ITS RESPONSIBILITY FOR DAMAGE?

Many storage companies attempt to limit their responsibility for paying for any damage that might occur to the goods they store for consumers.  A contract is promissory in nature and the result of a “bargain,” an “exchange of equivalents.” An enforceable bilateral agreement requires an offer, an acceptance, consideration, and a meeting of the minds upon all the essential terms of the agreement.  To have a valid contract, there must be a meeting of the minds, as a contract does not come into being unless the parties agree to the same terms.    Thus, an enforceable contract only results from the parties’ agreeing upon essential terms and expressing the intention to be bound by those terms and where the parties do not agree to one or more essential terms, the agreement is very likely unenforceable.  Indeed, the essential element to the valid consummation of a contract is a meeting of the minds of the contracting parties.  Thus, “’doubt or difference’ is incompatible with agreement.”  If a storage company’s contract contains ambiguous or doubtful terms, the contract is interpreted against the storage company as its drafter. 

For over forty (40) years, New Jersey Courts have taken the position that limitations on liability contained in consumer contracts are frowned upon.  New Jersey Courts are reluctant to enforce a limitation of liability clause against a consumer as opposed to a more sophisticated businessman.   Members of the public who are not business people possessing knowledge of the storage company and bailment industry are often considered by New Jersey courts to be in an inferior bargaining position compared to storage companies.  A storage company involved in a bailment contract with a consumer (as opposed to a business) cannot completely exempt itself from liability for losses directly resulting from its negligence.  Nevertheless, in the context of bailment agreements, in certain circumstances, it is acceptable for a defendant to limit a party’s liability to a certain dollar figure.

The storage company may limit its damages by:

·         including a term in the warehouse receipt or storage agreement;

·         limiting the amount of liability in case of loss or damage; and

·         setting forth a specific liability per article or item, or value per unit of weight, beyond which the warehouseman shall not be liable;

·         provided, however, that the consumer making a written request to the storage company made at the time of signing such storage agreement or within a reasonable time after receipt of the warehouse receipt, increase the value recoverable for losses, in which event the storage company may increase its rates based on such increased valuation, but no such increase shall be permitted contrary to a lawful limitation of liability contained in the storage company’s tariff, if any. Further, no such limitation is effective with respect to the liability for the storage company’s conversion of the goods to his own use.

The storage company may also include reasonable provisions as to the time and manner of presenting claims and instituting actions based on the bailment may be included in the storage company receipt or tariff.  Therefore, a storage company

Since the amount of liability is to be set according to a ‘per article or item, or value per unit of weight’ basis,” a storage company may not simply create a lump sum limit of liability, such as the amount the consumer paid to the storage company.  For, since such a sum would not account for the stored goods’ intrinsic market value or their value per unit of weight, such a limitation clause cannot possibly satisfy the requirements of the law.

For example, in one case, the Superior Court of New Jersey ruled that a storage company was responsible for the consumer’s losses despite a contract that attempted to limit the storage company’s liability.  In that case, the customer’s personal items were damaged or destroyed by water entering into rented storage unit. The storage company claimed it was not responsible for the consumer’s damages because of two clauses in its contract – one titled “Non-liability of the owner and insurance obligations of occupant” and a second titled “Release of owner's liability,” the language of which were as follows:

10.NON-LIABILITY OF THE OWNER AND INSURANCE OBLIGATIONS OF OCCUPANT. [ ] Occupant, at occupant's expense, shall maintain a policy of fire and extended coverage insurance with burglary, vandalism and malicious mischief endorsement for at least 100% of actual cash value of such stored property. [ ] Occupant expressly agrees that the carrier of such insurance shall not be subrogated to any claim of occupant against owner, owner's agents or employees. [ ] The Owner shall not be liable for personal injury or property damage.... [ ] The Occupant hereby agrees to indemnify and hold the owner harmless from and against any and all claims for damages to property or personal injury, including attorney's fees or costs ....

* * *

11.RELEASE OF OWNER'S LIABILITY. Any and all personal property stored within or on the leased premises by Occupant shall be at Occupant's sole risk and no bailment is created hereunder. Owner shall have no liability for loss or damage to any property of Occupant stored in the space, or otherwise, arising from any cause whatsoever .... Owner shall not be liable to Occupant for any loss or damage that may be occasioned by or through Owner's acts, omissions to act, or negligence, or by acts of negligence of Owner's or other Occupants on the premises .... [ ] The Occupant does hereby waive and release any rights of recovery against Owner that it may have hereunder. [ ] Owner's liability shall not exceed the sum of $50.00 and Occupant's sole remedy at law or in equity shall be the right to recover a sum within such limit.

The Superior Court of New Jersey concluded that “these paragraphs, together with the rest of the contract, so pervert the ideals of good faith and fair dealing that the contract as a whole is rendered unconscionable.”  For, the clauses of defendant's boilerplate contract were so one-sided as to be unconscionable under the circumstances.

In another case, a consumer sued a fur storage company (furrier) to recover the value of her furs destroyed in a fire as result of fur storage company (furrier's) alleged negligence in failing to unplug a hot iron and for violation of the New Jersey Consumer Fraud Act.  The fur storage company tried to limit its damages to only $1 per piece of clothing.  The Superior Court of New Jersey decided that: (1) the limitation of liability clause in the fur storage bailment agreement, limiting the liability of the furrier to $1 per garment, was unconscionable and thus, the limitation provision was unenforceable; and (2) the provision in the Uniform Commercial Code limiting a warehouseman's liability by term in the warehouse receipt or storage agreement did not permit warehousemen to limit liability for their own negligence.  The Superior Court of New Jersey reasoned that the storage company’s limitation on the dollar amount of the defendant’s liability ($1 per garment) bore no relation to the value of the goods being stored by the storage company and such a limitation on liability, if permitted to stand, would be unconscionable.  The Superior Court of New Jersey also concluded that the law did not permit storage companies to limit their liability in all possible ways, insulated from court review but instead, forced storage companies to follow the limitations imposed by the law and prevented them from limiting their liability for their own negligence.  The Superior Court of New Jersey found that in the case before it the law specifically invalidated any storage company receipt which prevents a finding that the storage company had a duty of care to the consumer. 

IN APPROPRIATE SITUATIONS, STORAGE COMPANIES MIGHT BE HELD LIABLE FOR CONVERSION

Conversion occurs where someone wrongfully exercises dominion and control over the property of another in a manner inconsistent with that other's rights.   Normally, before proceeding with a conversion claim, the consumer claiming conversion must make a demand for the return of their property and the merchant must refuse to return the property.  For instance, in one case, a federal court decided that, under New Jersey law, the owner of a terminal in which lost cargo had been stored at the time of loss was a storage company (warehouseman) and its failure to account for goods was a conversion and thus no limitation of liability for lost cargo was effective.   However, in certain cases against storage companies, it is possible that conversion would not apply.  For, a party’s failure of a party to honor its obligations under a contract may only be a breach of contract, and not a conversion of property of the other party to the contract.  Therefore, if you believe you have a conversion claim against a storage company, consult with an attorney to discuss the issue before taking any action.

CAN I HANDLE A NEW JERSEY STORAGE OR BAILMENT LAW DISPUTE BY MYSELF?

Some people can and do successfully handle cases themselves, from filing the first paperwork to the collection of a judgment.  However, many other people also make mistakes that lead to the dismissal of their cases or that result in the entry of a money judgment against them.  The greater the money at stake, the greater the reason to consider using the services of a competent attorney licensed to practice law in New Jersey to handle part or all of the case.  The following are reasons to use an attorney to handle part or all of your case:

·         court fees often change

·         court rules often change

·         court employees cannot give you “free” legal advice and a judge may refuse to let you claim that you were right in taking an action (or in deciding not to take action) because you relied on advice from such employees

·         court forms available on websites may not cover every situation you may face in court

·         each case has its own particular legal issues and therefore, its own challenges

·         it is very common for people to file inadequate or incorrect complaints that result in the complaints or answers to complaints being rejected by the Superior Court of New Jersey or being dismissed by the Superior Court of New Jersey after filing and before or after trial because of procedural deficiencies  

·         it is not uncommon for judges to get very frustrated by an unrepresented party’s lack of preparation or ignorance of the facts or law of the case. 

·         a court has the power to punish unprepared parties or parties who make mistakes, such as by throwing their case out of court or limiting what they can present at trial. 

·         New Jersey has many published cases, laws, regulations, court rules and rules of evidence that are very tricky and that can be used to prevent you from doing much of what you want to do at trial. 

·         it is very common for courts to refuse to allow a party to use or refer to documents or items at trial that the person themselves never prepared.  Often parties stumble into court with a video, photograph, bill or affidavit or other form of written statement, thinking they are going to use it as proof that they lost money or that they are not responsible for someone else’s damages, only to have a judge tell the parties that it is not going to even consider such items or documents. 

·         without the proper preparation, items and documents may never be considered by the Superior Court of New Jersey.  Also, if there are any legal issues to be dealt with at trial, you must be prepared to argue them, which may require you to refer to court rules, evidence rules, laws, regulations or published cases. 

·         you cannot show up at court expecting the judge hearing your case to explain court rules, evidence rules, court procedure or the details of the law that applies to your case.  The judge hearing your case is not permitted to give you legal advice.

It is important to remember that even if you have an attorney, you could lose your case.  No attorney can guarantee results in civil disputes.  Hiring an attorney to handle part or all of your case does not guarantee your success.  However, it may provide the assistance you need to win your case, to settle your case or to avoid certain mistakes.

DOES THE LAW OFFICE OF PAUL DEPETRIS HAVE EXPERIENCE HANDLING NEW JERSEY STORAGE OR BAILMENT LAW DISPUTES?

Yes.  Paul DePetris has performed the following tasks:

·         represented consumers, home buyers, home sellers, home repair customers, home repair contractors, home inspectors, real estate brokers, real estate agents, junk yard dealers, automobile purchasers and owners, new and used car dealers, banks and automotive lenders, boat purchasers and owners, watercraft purchasers and owners and marinas in New Jersey Storage or bailment Law disputes.

·         appeared in court in cases involving New Jersey Storage or bailment Law disputes.

·         mediated, arbitrated and tried New Jersey Storage or bailment Law cases.

·         settled New Jersey Storage or bailment Law cases.

·         won court awards in New Jersey Storage or bailment Law cases

·         won judgments in New Jersey Storage or bailment Law cases

Mr. DePetris has appeared before the Superior Court of New Jersey in the following counties:

Mr. DePetris has also appeared in federal courts - the District of New Jersey in Camden, Trenton and Newark and in the Eastern District of Pennsylvania.

Mr. DePetris is also the author of the following publications:  New Jersey Consumer Fraud Act & Forms (New Jersey Law Journal Books, 2007); Learned Professionals, Licensed Semiprofessionals and the Consumer Fraud Act:  The Origins of the Licensed Professionals’ Doctrine (New Jersey Lawyer, Oct. 2008); and Liability For Consumer Fraud In Real Estate Transactions (New Jersey Law Journal, March 18, 2009).   Mr. DePetris also gives seminars on the New Jersey Storage or bailment Law.

WHAT IF I DON’T HAVE ENOUGH MONEY TO HIRE AN ATTORNEY TO HANDLE MY CASE FROM BEGINNING TO END?

In many situations, the Law Office of Paul DePetris offers alternatives to handling cases for an hourly fee, such as by offering to prepare the Superior Court of New Jersey paperwork for you or helping you handle your claim by yourself.  Such flexible methods may allow you to keep the amount legal fees you spend on your case to a fixed sum, while providing you the help you need to handle your case.  For a no cost phone consultation about what the Firm might be able to do for you, call or write an email to Mr. DePetris at:  609-714-2020 or consumerlaw@newjerseylemon.com.