The “Gray Area” of Sidewalk Liability

Grijalba v. Floro, 431 N.J. Super. 57 (App. Div. 2013).  As Judge Fasciale’s opinion in this case shows in detail, issues of whether and when a property owner is liable for injuries that occur on a sidewalk abutting the property have been with the courts for decades.  The issue often comes down to whether the property is residential or commercial.  In general, owners of residential property are not liable for injuries on abutting sidewalks, while owners of commercial property can be so liable.  The most recent Supreme Court decision, Luchejko v. City of Hoboken, 207 N.J. 191 (2011), discussed here, still left some “gray area” in the commercial/residential distinction, especially where owner-occupied two- or three-family houses are concerned.  Judge Fasciale’s decision recognized that and reversed summary judgment for the property owner, “[u]nder the unique facts of this case.”

Plaintiff fell on ice on a sidewalk that abutted defendant’s property and sustained injury.  On the abutting property was a two-family house.  Defendant originally lived on the second floor and rented the first floor to a tenant.  The basement was unoccupied.  Thereafter, due to “financial difficulties,” defendant moved into the basement, thereby freeing the second floor to be rented to another tenant.  Though the original arrangement “would typically be considered an owner-occupied two-family house,” a residential property whose owner would not have sidewalk liability, plaintiff contended that the new arrangement turned the property into a commercial one for which there could be liability, since by moving into the basement, defendant “changed the nature of her ownership of the property and used it essentially like a business.”

After exhaustively recounting the history of sidewalk liability cases, Judge Fasciale concluded that the summary judgment that defendant had won below had to be reversed.  First of all, it was not clear when defendant moved into the basement.  That move might well have changed the previously residential nature of the property, since there is no “bright line rule” that all owner-occupied two- or three-family houses are residential for purposes of sidewalk liability.  There was also nothing in the record as to whether defendant could have obtained insurance to protect against claims for injuries on unsafe sidewalks.   

For these and other reasons, the Appellate Division remanded the case for consideration of such things as “(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 place 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.” 

Judge Fasciale’s opinion is very fact-specific.  Its importance lies in its broader recognition that a “totality of the circumstances test, on a case-by-case, fact-sensitive basis,” is more in keeping with Supreme Court precedents than the supposed bright line rule advocated by defendant:  that all owner-occupied premises are inevitably residential for sidewalk liability purposes.  This decision will not solve the residential/commercial conundrum.  But it will help trial level courts to perform an appropriate analysis of the particular facts as more “gray area” cases arise.