PIN LAN ZHENG v. ABELARDO R. SANTOS

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

PIN LAN ZHENG,

Plaintiff-Appellant,

v.

ABELARDO R. SANTOS AND

PRESCILLA L. SANTOS,

Defendants-Respondents.

___________________________________

February 23, 2015

Argued December 3, 2014 Decided

Before Judges Fuentes, Ashrafi, and Kennedy.

On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No.

L-4472-11.

Richard J. Villanova argued the cause for appellant (Blume, Donnelly, Fried, Forte, Zerres & Molinari, P.C., attorneys; Mr. Villanova, on the brief).

Robert J. Kovacs argued the cause for respondents (Gregory P. Helfrich & Associates, attorneys; Mr. Kovacs, on the brief).

PER CURIAM

Plaintiff Pin Lan Zheng appeals from summary judgment dismissing her personal injury claims in this sidewalk slip-and-fall case. The issue is whether defendant-homeowners, Abelardo and Prescilla Santos, had a legal duty under tort law to remove snow and ice from the public sidewalk in front of their three-family home in Jersey City. We conclude that the trial court did not err in finding they did not owe such a duty to plaintiff in the circumstances of this case. We affirm.

The law in New Jersey is well-settled that a residential property owner is generally immune from liability for accidents resulting from naturally-caused conditions of public sidewalks abutting the property. Luchejko v. City of Hoboken, 207 N.J. 191, 195, 211 (2011); Wasserman v. W.R. Grace & Co., 281 N.J. Super. 34, 38 (App. Div. 1995). Historically, no property owner in New Jersey had a duty under the common law to maintain the sidewalks on their lands that abutted public streets. Yanhko v. Fane, 70 N.J. 528, 537 (1976). Similarly, property owners had no duty at common law to clear the snow and ice from public sidewalks. See Davis v. Pecorino, 69 N.J. 1, 4 (1975).

In 1981, the State Supreme Court revised the common law and imposed a duty only on commercial property owners or occupants to maintain public sidewalks adjacent to the property. Stewart v. 104 Wallace St., Inc., 87 N.J. 146, 157 (1981). Two years later, the Court held this common law duty of commercial property owners applies to snow and ice removal. Mirza v. Filmore Corp., 92 N.J. 390, 395 (1983). Later, the Court extended the duty to a non-profit private school. Brown v. St. Venantius Sch., 111 N.J. 325, 338 (1988). In 2011, however, the Court declined to extend the duty to a condominium association. It held in Luchejko, supra, 207 N.J. at 201-11, that the distinction between residential and commercial properties was engrained in our tort law and would not be abrogated so that a duty to maintain sidewalks would apply to residential condominium owners.

However, from the time that the common law duty was first imposed on commercial properties, our courts have placed residential rental properties in the category of commercial properties if they are not owner-occupied. Stewart, supra, 87 N.J. at 160 n.7 (apartment buildings are considered "commercial" properties); Wilson v. Jacobs, 334 N.J. Super. 640, 642-43, 646-47 (App. Div. 2000) (house entirely rented to tenant was "commercial"); Hambright v. Yglesias, 200 N.J. Super. 392, 394-95 (App. Div. 1985) (two-family house entirely rented out for profit was "commercial").

The "gray area of the commercial/residential distinction," Luchejko, supra, 207 N.J. at 210, is whether an owner-occupied property with a small number of dwelling units should be considered residential or commercial if the property is also used to generate income for the owner. See Smith v. Young, 300 N.J. Super. 82, 97 (App. Div. 1997) (two-family home, one unit of which was owner-occupied and the other rented to a tenant by the estate of a deceased sister, was "unquestionably residential in use"); Avallone v. Mortimer, 252 N.J. Super. 434, 438 (App. Div. 1991) (where residential property is partially owner-occupied and partially rented, the issue is its "predominant use"); Borges v. Hamed, 247 N.J. Super. 295, 296 (App. Div. 1991) (multi-family home partially occupied by owner and partially rented to relatives was not "commercial"); see also Briglia v. Mondrian Mortg. Corp., 304 N.J. Super. 77, 79 (App. Div.) (home was not commercial property merely because the mortgagee had taken possession at the time of the accident), certif. denied, 152 N.J. 13 (1997); Wasserman, supra, 281 N.J. Super. at 37, 39 (owner who used one room in his home as a telecommuting office was not a commercial owner).

Most recently in Grijalba v. Floro, 431 N.J. Super. 57 (App. Div. 2013), we grappled again with determining whether an owner-occupied home with three units was residential or commercial. We confirmed that "commonly accepted definitions of 'commercial' and 'residential' property should apply, with difficult cases to be decided as they arise." Id. at 62 (quoting Stewart, supra, 87 N.J. at 160). We stated that courts must "employ a case-by-case, fact-sensitive analysis to resolve the commercial-residential distinction." Ibid.

In Grijalba, the defendant had converted her owner-occupied two-family home into a three-family home and moved into the basement apartment in order to generate income from the other, larger apartments. Id. at 59-60. We reversed the trial court s grant of summary judgment to the defendant and remanded the case for a more-detailed factual determination of the use of the property and the nature of the ownership. Id. at 59. We listed the following factors as relevant in determining whether the property was primarily residential or commercial

(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 [29] determine if the owner is realizing a profit; and (4) any other relevant factor when applying "commonly accepted definitions of 'commercial' and 'residential' property."

[Id. at 73.]1

In this case, plaintiff challenges the trial court's ruling that defendants' property was primarily residential. She argues that the property had the capacity to generate significant income and therefore should be designated as commercial property for purposes of her personal injury claim.

Because plaintiff's complaint was dismissed by summary judgment, we must view the pertinent facts favorably to plaintiff. See R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). The facts we recite were essentially undisputed.

Plaintiff allegedly sustained injuries on February 3, 2010, when she slipped and fell on the ice-or-snow-covered sidewalk in front of defendants' home in Jersey City. The trial court originally denied summary judgment to defendants, who had argued that their property is residential.

The case was subsequently assigned for trial before a different judge, Judge Francis Schultz, and plaintiff filed a motion in limine to have the property declared commercial and to instruct the jury regarding defendants' duty to maintain the safety of the sidewalk. In response, defendants renewed their motion for summary judgment determining that the property is residential. Both sides agreed that the question of whether the property was commercial or residential was for the judge to decide, and both sides sought a ruling before the case proceeded to trial before a jury.

Judge Schultz reviewed the record and concluded that, in accordance with our decision in Grijalba, supra, 431 N.J. Super. at 72-73, the matter should be determined by the court but that further evidence was required to determine whether the property should be viewed as commercial or residential. Both parties were granted the right to present evidence to supplement their written submissions. At a hearing before the trial commenced, the only witnesses who testified were the two defendants. Judge Schultz found that both gave credible testimony.

Defendants bought the three-story home in 1975 and have lived in the first-floor apartment ever since. They owned other property, but the home that is the subject of this appeal was their only residence for more than thirty-five years. Defendants and an adult daughter lived on the first floor a three-bedroom, two-bathroom apartment with a kitchen, living room, and dining room. Apartments on the ground and second floors were rented at the time of plaintiff's accident to non-relative tenants. The second-floor apartment had three bedrooms, one bathroom, a kitchen, a living room, and a dining room. The ground-floor apartment was smaller one bedroom, one bathroom, a kitchen, and a small living room.

In the distant past, relatives lived in the two other apartments, at times without paying any rent and at other times "paying what they could." Also in the distant past, defendants used the ground-floor unit for storage, but beginning in the 1980s, it was rented to tenants. When searching for tenants, defendants did not use a realtor, opting most recently to advertise on Craigslist. Neither defendants nor the tenants used their apartments as offices or for business purposes.

Defendants were able to pay off the mortgage on the property by 1990, twenty years before plaintiff's accident. Their current expenses for the property were approximately $12,000 per year in property taxes, and about $14,000 per year for insurance, utilities, repairs, and other periodic expenses of maintaining the property. These annual expenses of about $26,000 for 2010 through 2012 did not include $20,000 that defendants had spent for capital improvements in 2010, which the trial court stated might reasonably be spread over a number of years as an additional expense of the property.

From 2010 through 2012, defendants received rental income ranging from $22,800 to about $30,000 per year, thus indicating a loss in 2010 and 2011 of at least $3,000 to $4,000 and a profit of about $4,000 in 2012. Overall, the judge viewed the rental income and expenses of maintaining the property as either resulting in a loss or no better than equal when averaged during the period considered.

After making these findings, the judge considered the factors we listed in Grijalba, supra, 431 N.J. Super. at 73, and concluded that the totality of the circumstances demonstrated the property was primarily residential and not owned by defendants for investment or income-generating purposes.

We see no ground on this record to reverse Judge Schultz's carefully considered decision. His findings are supported by substantial credible evidence and his conclusions of law are sustainable on the basis of those findings and our prior decision in Grijalba.

Plaintiff argues it is the capacity of the property to generate income that is the most relevant consideration. See Abraham v. Gupta, 281 N.J. Super. 81, 85 (App. Div.), certif. denied, 142 N.J. 455 (1995). Plaintiff calculates the gross rents defendants collected in the past twenty-one years to total between $478,000 and $642,000. Plaintiff contends a mortgage-free property utilized to generate such substantial rental income should be designated a commercial property, especially because the cost of insuring the public against losses is simply an expense of owning the property and using it for income.

In our view, the question should not be decided by whether the property owner must make mortgage payments or not. The relevant question is the primary use of the property. As we stated in Smith, supra, 300 N.J. Super. at 99-100

[W]hile the Supreme Court may have intended to include property solely held for investment purposes within the Stewart rationale, it had no intention to subsume small owner-occupied dwellings, such as two-or three-family homes, within the classifi-cation of commercial property. Such uses are clearly in a category of their own, for they are residential both "in the nature of their ownership" as well as in "the use to which the property is put."

[(quoting Hambright, supra, 200 N.J. Super. at 395).]

Here, defendants used the property as their long-time residence. The trial court correctly determined the nature and purpose of their ownership to be primarily residential, not commercial.

We agree with the reasons stated in Judge Schultz's oral opinion of October 9, 2013, for dismissing plaintiff's complaint under the applicable law.

Affirmed.

1 The law would be more predictable if either the Legislature or the Supreme Court specified which owner-occupied residential properties are immune from sidewalk tort liability. By analogy, the Legislature provided such a specification in designating rental properties that are not subject to the Anti-Eviction Act. See N.J.S.A. 2A:18-61.1 (Anti-Eviction Act applies to rental properties "other than . . . owner-occupied premises with not more than two rental units . . . "). We have in the past commented on the difficulty of applying the commercial/ residential distinction. See Smith, supra, 300 N.J. Super. at 92 ("The quest for definition reveals how unedifying the Stewart/Mirza commercial-residential classification distinction is.").