Plаintiff appeals from an April 13, 2012 order granting summary judgment to Maria Floro and Jose Martins (defendants) and dismissing his personal injury slip and fall complaint. Under the unique facts of this case, we remand for further proceedings.
In reviewing a grant of summary judgment, we apply the same standard under Rule 4:46-2(c) that governs the trial court. Wilson ex rel. Manzano v. City of Jersey City, 209 N.J. 558, 564,
Plaintiff asserts that Floro converted her owner-occupied two-family-zonеd house into a basement-owner-occupied three-family house. He contends that Floro did so to generate additional rental income. The question is whether the property is considered “commercial” or
I.
Floro owned a two-family house.
Plaintiff walked on a sidewalk abutting Floro’s property, slipped and fell on ice, and sustained a bimalleolar fracture оf his right ankle. His permanent injury required two open reduction surgeries with internal fixation. He sued defendants seeking compensation for the injuries he sustained that were caused by the icy condition.
Defendants moved for summary judgment. They contended that in Smith v. Young, 300 N.J.Super. 82, 100,
On appeal, plaintiff argues that the judge misapplied the governing law on sidewalk liability. He contends that Smith did not establish a bright-line rule that all owner-occupied two- and three-family houses are considered “residential,” thereby obviating any tort duty owed to innocent third parties to clear abutting sidewalks from ice and snow. He asserts that, at a minimum, the judge should have conducted a hearing applying the predominant use analysis that we employed in Avallone v. Mortimer, 252 N.J.Super. 434, 438,
We start by addressing the law governing sidewalk liability. From 1981 to the present, the New Jersey Supreme Court has rendered several opinions requiring classification between residential and commercial property owners. For three decades the courts have embraced the fundamental notion that residential property owners are not liable for sidewalk injuries. The Court’s dеcisions have consistently reflected that residential property owners differ from commercial property owners who have the ability to spread the cost of loss that an innocent third party may suffer.
In Stewart, supra, 87 N.J. at 157,
The Stewart Court explained that “[a]s for the determination of which properties will be covered by the rule we adopt today, commonly accepted definitions of ‘commercial’ and ‘residential’ property should apply, with difficult cases to be decided as they arise.” Id. at 160,
In 1988, the Court repeated its statement that commonly accepted definitions of “commercial” and “residential” apply when classifying whether property is covered by the Stewart rule. See Brown v. St. Venantius Sch., 111 N.J. 325, 332, 338,
[t|he objective in creating the commercial property exception to the no-liability rule was to impose liability upon the party in a better position to bear the costs associated with that imposition.[5 ] [Stewart, supra, 87 N.J.] at 158 [432 A.2d 881 ]. Commercial landowners have that ability as well as the ability to distribute those costs. Ibid. Thus, when determining abutting sidewalk liability, courts focus on whether a property is commercial or residential.
Ordinarily, to determine whether a property is commercial or residential, our courts аddress the nature of the ownership of the property. Restive v. Church of Saint Joseph of the Palisades, 306 N.J.Super. 456, 463-64 [703 A.2d 997 ], certif. denied, 153 N.J. 402 [709 A.2d 796 ] (1998). For example, if the property is owned for investment or business purposes the property is classified as commercial. Compare Wilson v. Jacobs, 334 N.J.Super. 640, 645-46 [760 A.2d 818 ] (App.Div.2000) (one-family residence classified as “commercial” where owners did not occupy that property but, instead, rented it to their adult daughter and did not intend to retain the property at the expiration of the lease), and Hambright v. Yglesias, 200 N.J.Super. 392, 395 [491 A.2d 768 ] (App.Div.1985) (two-family residence classified as “commercial” where neither apartment was owner-occupied), with Smith v. Young, 300 N.J.Super. 82 [692 A.2d 76 ] (App.Div.1997) (property classified as “residential” even though co-owner rented an apartment unit to a tenant where the other co-owner occupied another apartment), and Borges v. Named, 247 N.J.Super. 295 [589 A.2d 169 ] (App.Div.1991) (property classified as “residential” where owners of a three-family residence resided in one apartment and other family members resided in the other apartments where there was no evidence that the rent yielded a profit).
Courts have redirected their attention when property is owned by a religious, charitable[,J or other nonprofit organization. In that instance, courts look to the nature of the use of the property and not the nature of the ownership. Restivo, supra, 306 N.J.Super. at 467 [703 A.2d 997 ]. The status of a nonprofit organization аs religious or charitable is not crucial to a determination of whether the property is commercial or residential. Brown [supra, 111 N.J. at 333-36,544 A.2d 842 ]. Instead, it is the use of the property that determines its classification for the purposes of abutting sidewalk liability.
We believe that the Court in Brown [supra,] impliedly adopted a rule derived from both cases; namely, where property abutting the offending sidewalk isowned by religious or other nonprofit organizations, courts are directed to focus on the use of that property to determine whether to impose liability. If the use is exclusively religious, e.g., if the organization uses the property solely as a parish оr rectory, then the organization will not be considered a “commercial” landowner, and, liability will not be imposed. If the organization’s use of the property is partially or completely “commercial,” e.g., if the property is used as a parish and for commercial purposes or solely used for commercial purposes, liability attaches despite the nonprofit status of the owners. In that event, the organization is under a duty to maintain the entire sidewalk abutting its property and is liable for injuries to the public caused by unrepaired defects.
[Dupree, supra, 351 N.J.Super. at 242-46,798 A.2d 105 (emphasis added).]
Finally, in Luchejko, supra, 207 N.J. at 201-07,
[t]he opinion by the Appellate Division, adopted by this Court, reaffirmed that the central inquiry is whether the property is commercial or residential, noting that such a determination normally “addressfes] the nature of the ownership of the property.” [Dupree, supra, 351 N.J.Super.] at 242 [798 A.2d 105 ], In the case of nonprofit owners, however, the Appellate Division properly recognized that the examination must focus on "the nature of the use of the property and not the nature of the ownership.” Id. at 242-43 [798 A.2d 105 ].
[Id. at 205,23 A.3d 912 (emphasis added).]
Acknowledging that “apartment buildings” are considered commercial property for sidеwalk liability under the Stewart rule, the Luchejko majority looked at our history of parsing through “various uses of the premises” when we determined whether certain non-owner and owner-occupied single- and two-family structures are “residential.” Id. at 206 n. 5,
Wilson [supra, 334 N.J.Super. at 642-43, 646-47,760 A.2d 818 ] (holding that non-owner-oceupied house entirely rented to tenant was “commercial” notwithstanding that tenant was family member whose rent consisted of cost of mortgage, taxes, and performing small repairs); Briglia v. Mondrian Mortg. Corp., 304 N.J.Super. 77, 79 [698 A.2d 28 ] (App.Div.) (holding that residential home was not commercial merely because mortgagee had foreclosed and held it at time of accident), certif. denied, 152 N.J. 13 [702 A.2d 352 ] (1997); Wasserman v. W.R. Grace & Co., 281 N.J.Super. 34, 37, 39 [656 A.2d 453 ] (App.Div.1995) (determining that residential owner who used one room as telecommuting office was not “commercial” owner); Avallone [supra, 252 N.J.Super. at 438,599 A.2d 1304 ] (stating that where residential property is partially owner-occupied and partially rented, the “applicable considerations of balance and ability to pass along cost require that the residential sidewalk exception be continued for owner-occupants whose residency is established to be the predominant use”); Borges [supra, 247 N.J.Super. at 296,589 A.2d 169 ] (holding that multi-family home partially occupied by owner and partially rented to relatives was not “commercial”); Hambright [supra, 200 N.J.Super.at 394-95, 491 A.2d 768 ] (holding that two-family house entirely rented out by owner for profit was “commercial”); cf. Abraham v. Gupta, 281 N.J.Super. 81, 85 [656 A.2d 850 ] (App.Div.) (determining that vacant lot unrelated to business enterprise was not “commercial,” explaining that “[i]t is the capacity to generate income which is the key”), certif. denied, 142 N.J. 455 [663 A.2d 1362 ] (1995).
[T6id.]
The cases that the Luchejko majority cited focused on either the nature of the ownership or the property use. Wilson (non-owner occupied) focused on the nature of the ownership; Wasserman (owner-occupied) focused on use; Avallone (owner-occupied) focused on use; Borges (owner-occupied) focused on use; Ham-bright (non-owner occupied) focused on profit; and Abraham (non-owner occupied) focused on nature of ownership. Normally, the nature of the ownership is considered, but with mixed-use property, such as an owner-occupied two- or three-family home, use has generally been a relevant consideration when resolving the residential-commercial distinction. The Court therefore stated that the theme emerging from our decisions in such matters is “whether a property’s predominant use has the capacity to generate income, regardless of whether an actual profit is obtained through the use.” Luchejko, supra, 207 N.J. at 206,
In addressing the question of “sidewalk liability of residential or hybrid forms of property ownership and use,” Justice Long remarked in her dissent that the Court in Stewart recognized there would be “difficult” determinations in the future. Id. at 213,
the one thing that is constant throughout the decisions is the recognition that in Stewart we did not establish a bright-line rule; rather we engaged in a balancing of the relevant tort law considerations with an eye toward determining whether the imposition of a duty on landowners was rational and fair.
[Id. at 219-20,23 A.3d 912 (Long, J., dissenting).]
The majority was also unwilling to employ a bright-line rule regarding condominium complexes. Id. at 210,
although a handful of difficult cases have probed the gray area of the commercial/residential distinction, [6 ] the framework continues to provide guidance and predictability for the overwhelming majority of property owners. Residential homeowners can safely rely on the fact that they will not be liable unless they create or exacerbate a dangerous sidewalk condition; commercial owners, defined in reference to their use of the property and its capacity to generate income, know that clearing their abutting sidewalks is a cost of doing business and that failure to do so can lead to liability.
[Id. at 209-10,23 A.3d 912 .]
We have extrapolated the following themes from these cases regarding
III.
We now apply these well-settled themes to the facts of this case. In resolving the residential-commercial distinction, we are guided by the Court’s directive that “commonly accepted definitions of ‘commercial’ and ‘rеsidential’ property should apply.” Luchejko, supra, 207 N.J. at 211,
“Residential” has been defined as “designed for people to live in” and “concerning or relating to residence,” Residential, Oxford Dictionaries Online, http://oxforddictionaries.com/us (last visited Apr. 25, 2013); and “used as a residence or by residents,” Merriamr-Webster’s Dictionary 1060 (11th ed.2012). “Residence” has been defined as “the act or fact of dwelling in a place for some time,” and “[t]he place where one lives,” Merriam-Webster’s Dictionary 1335 (11th ed.2012); “[t]he act or fact of living in a given place for some time,” and “[t]he place where one actually lives,” Black’s Law Dictionary 1335 (8th ed.2004); and “the place in which one lives or resides.” Hambright, supra, 200 N.J.Super. at 395 n. 1,
a structure used, in whole or in substantial part, as a home or place of residence by any natural person, whether or not a single or multi-unit structure, and that part of the lot or site on which it is situated and which is devoted to the residential use of the structure, and includes all appurtenant structures.
[ (Emphasis added).]
“Commercial” has been defined as “concerned with or engaged in commerce” and “making or intended to make a profit,” Commercial, Oxford Dictionaries Online, http://oxforddictionaries. com/us (last visited Apr. 25, 2013); and “occupied with or engaged in commerce work intended for commerce” and “viewed with regard to profit,” Merriam-Webster’s Dictionary 249 (11th ed.2012). “Commerce is defined as business.” Hambright, supra, 200 N.J.Super. at 395 n. 1,
Relying on Smith, supra, defendants contend that the judge granted their summary judgment motion by applying a bright-line rule that all owner-occupied two- and three-family homes are automatically considered residential for sidewalk liability purposes. We agree with plaintiff
In Smith, supra, we addressed whether a co-owner-occupied two-family house was residential or commercial. Id. at 97-98,
Would the rental income of the tenanted flat be balanced against the whole of the carrying costs even though half of those costs are borne by a residing owner who receives none of the rental income? Is only half of the rental income to be balanced against the half of the carrying charges borne by the owner who receives all of the rent? Would either approach, or any other, be a real basis of decision, or would it be one artificially created to deal with the apparent equities of the particular situation in the light of a dictated need to classify the property?
mm
Rather, we resolved the residential-commercial dispute by using the common definition of “residential” and by focusing on the nature of the ownership and use of the property. We noted that the record was silent on the amount of rent and upkeep costs, but stated that the maintenance and repair expenses were divided equally between the co-owners. Ibid. We then concluded that the property, in which one co-owner lived in one unit of the two-family house and the remaining co-owner rented out the other unit, was “unquestionably residential in use.” Id. at 97,
We concluded, therefore, that “[t]he property at issue [in Smith ], being a [co-]owner-oceupied, two-family home” is residential and exempt from the duty to maintain abutting sidewalks. We agree with the proposition expressed in Smith that typical owner-occupied two-family homes are generally in a category of their own and that an exploration of the predominant use of that type of property is usually unwarranted.
Here, however, the parties have disputed not only the nature of the ownership of the property, but also the use to which that proрerty has been put. Unlike Smith, the complicated nature of a remand is non-existent because Floro’s property is not eo-owned. Moreover, Smith did not involve an allegation, like here, that the property owner converted her two-family home into a basement-owner-occupied three-family home for business purposes.
Although we stated that owner-occupied two-family homes are in a category of their own, and are usually deemed residential, we remarked that our holding in Smith did not resolve classification issues in “owner-occupied [properties that] accommodatе more than two or three families.” Id. at 100,
In Smith, we also addressed the ability, in non-multiple-dwelling housing situations, of spreading the risk of loss to innocent third parties. We questioned the viability of cost-spreading opportunity in the context of a
non-residential owner to a single tenant of rental premises, as, for example, in the rental of a one-family home or, as here, in the rental of one flat in an owner-occupied, two-family home in the peculiar circumstances depicted.
[Id. at 93,692 A.2d 76 .]
Here, however, the record is silent on the issue of cost spreading. As a result, we do not know whether Floro could have obtained appropriate insurance to cover loss suffered by innocent third parties due to dangerous sidewalk conditions, especially if the predominant use of her property is commercial in nature. In Stewart, supra, 87 N.J. at 160,
recognize[d] that the rule adopted today will increase the expenses of many businesses, and will be proportionately more burdensome to small firms than to large ones. However, we anticipate that appropriate insurance will become available and that the cost of such insurance will be treated as one of the necessary costs of doing business.
The Luchejko majority indicated that the extra premiums for commercial owners are “ ‘the necessary costs of doing business,’ regardless of the size of the business.” Luchejko, supra, 207 N.J. at 203,
When the Court issued its decision in Stewart and addressed the residential-commercial distinction, it recognized that “difficult cases [would] be decided as they arise.” Stewart, supra, 87 N.J. at 160,
To be sure, the Luchejko Court applied the doctrine of stare decisis and stated that
[t]he commercial/residential dichotomy represents a fundamental choice not to impose sidewalk liability on homeowners that was established nearly three decades ago. Stare decisis thus casts a long shadow over these proceedings. We should not lightly break with a line of decisions that has promotedsettled expectations on the part of residential property owners.
The rationale of Stewart and Mirza remains sound and there are no changed circumstances such that reovaluation is necessary. Although the sidewalk liability line of cases has contained spirited concurrences and dissents arguing for broader liability, those separate opinions registered simple disagreements with the majorities’ point of view and did not foretell difficulties that have come to pass in administering the commercial/residential distinction. See Stewart, supra, 87 N.J. at 160-62 [432 A.2d 881 ] (Schreiber, J., concurring) (listing policy reasons why all landowners should be liable for negligent maintenance of sidewalks, but not criticizing residential/commereial distinction as unworkable or otherwise problematic); see also Brown, supra, 111 N.J. at 341-44 [544 A.2d 842 ] (Pollock, J., concurring) (arguing for adoption of Justice Schreiber’s Stewart concurrence).
[Id- at 208-09,23 A.3d 912 .]
In our view, the handful of cases to which the Luchejko Court referred that have “probed the gray area,” including owner-occupied two- and three-family structures, have been analyzed, as expected, as they arise on a case-by-case, fact-sensitive basis. This is so because
our case law has followed that paradigm in the three decades since Stewart, clearly eschewing a bright-line analysis in favor of equitably balancing the duty factors. As a result, some residential owners have been held liable for accidents on their sidewalks and some non-residential owners have been spared such liability. See Restivo [supra, 306 N.J.Super. at] 468 [703 A.2d 997 ]....[8 ] [Id. at 213,23 A.3d 912 (Long, J., dissenting).]
As we have seen since we rendered the Smith opinion, although there may be “many variables ... at play,” we have addressed the residential-commercial distinction in the difficult cases while advancing the “balancing of the tort duty” enunciated in Stewart and Mirza.
Here, the record must be more fully developed to resolve the residential-commercial distinction. For example, regarding the nature of the ownership, we cannot tell whether Floro used the property for business purposes, such as to yield a profit, and if so, when and for how long thаt use occurred. Although we do not use profit alone to resolve the residential-commercial distinction, profit is a factor to weigh in evaluating the commercial nature of the property. See Borges, supra, 247 N.J.Super. at 296,
Likewisе, on this record, we are unable to determine whether Floro used the property during the relevant timeframe “in whole or in substantial part” as a place of residence. For instance, the record is silent regarding the size of the house and the amount of space that Floro occupied on the date of the accident. It is unclear whether Floro lived in the basement when the accident occurred, and if so, whether that occupancy was temporary or long term. Resolution of these unanswered questions, in the context of this case, would be helpful to determine whether Floro usеd the property “in whole or in substantial part” as a place of residence.
IV.
Therefore, on remand, we direct that the judge consider, at a minimum, the following factors when classifying Floro’s property as either “commercial” or “residential”: (1) the nature of the ownership of the property, including whether the property is owned for investment or business purposes; (2) the predominant use of the property, including the amount of space occupied by the owner on a steady or temporary basis to determine whether the property is utilized in whole or in substantial part as a placе of residence; (3) whether the property has the capacity to generate income, including a comparison between the carrying costs with the amount of rent charged to determine if the owner is realizing a profit; and (4) any other relevant factor when applying “commonly accepted definitions of ‘commercial’ and ‘residential’ property.” Applying such a totality of the circumstances test, on a case-by-case fact-sensitive basis, where the parties have disputed the general nature of the ownership of the property and the use to which it is put, follows the Cоurt’s repeated approach for the last three decades of resolving “difficult cases ... as they arise.” We express no opinion regarding whether the premises is considered residential or commercial. That determination will more appropriately be made after the record is more fully developed.
We reverse and remand for proceedings consistent with this opinion. We do not retain jurisdiction.
Notes
She sold the property in question in 2010.
Plaintiff also argues that the judge failed to apply the Multiple Dwellings Act, NJ.S.A. 55:13A-1 to -28, which he asserts imposes a duty on landowners of hotels and multiple dwellings to maintain their properties in a reasonably safe condition. We conclude that this argument is without sufficient merit to warrant further discussion in a written opinion. R. 2:1 l-3(e)(l)(E).
In Justice Schreiber's concurring opinion, he listed policy reasons in support of all landowners being liable for negligent maintenance of sidewalks, but he did not criticize the residential-commercial distinction as unworkable or otherwise problematic. Stewart, supra, 87 N.J. at 160-62,
The Stewart Court also commented that “the law of sidewalk liability is an appropriate subject for reconsideration by the Legislature." Stewart, supra, 87 NJ. at 159 n. 6,
The record is silent on whether a property owner, such as Floro, is capable of bearing thе costs associated with such an imposition.
The Court cited Avallone, supra, 252 N.J.Super. at 438,
Regarding administrative rules of the Division of Consumer Affairs addressing home improvement practices.
For example, in the context of sidewalk liability for churches, equitably balancing the duty factors yielded different results depending on the church's use of the property. Dupree, supra, 175 N.J. at 449,