|
Newsletter -
Fall 2010
|
New Jersey courts have long held that commercial propertyowners and tenants have a non-delegable duty to maintainthe public sidewalks in front of their property. As a matterof first impression, the Appellate Division in Luchejkov. City of Hoboken, A-5702-07 held that a primarily nonprofit,residential condominium association was not liablefor its alleged failure to remove ice from a public sidewalkabutting its property. The Appellate Division found that thecondominium was not a commercial property because itdid not generate a profit, could not spread its risk of loss inthe same manner as a commercial entity, and was mostlyowner-occupied.
On February 14, 2006, plaintiff Richard Luchejko was walkingon a sidewalk in Hoboken abutting a residential condominiumcomplex when he slipped on ice. Defendant SkylineCondominium Association ("Skyline"), the non-profit entitywhich controlled the complex, was responsible for maintainingthe common elements of the community. Skylinehired defendant CM3 Management Company ("CM3") tomanage the complex. CM3, in turn, hired defendant D&DSnow Plowing Company ("D&D") to remove snow and icefrom the common areas of the complex and the adjoiningsidewalks. Two days prior to the accident, nearly two andone half feet of snow fell in Hoboken, during which D&Dremoved snow from the sidewalks. Allegedly, some of thesnow had melted then re-froze on the sidewalk, creating theicy condition on which the Plaintiff asserts he fell.
The Plaintiff filed a Complaint against the above-mentionedentities and the City of Hoboken for negligence.With respect to the City, the Plaintiff alleged that it failed toenforce its own snow removal ordinance and was ineligiblefor municipal immunity due to its palpably unreasonableconduct. All parties successfully moved for summary judgmentexcept D&D which eventually settled with the Plaintiff.The trial court determined that Hoboken was immune fromliability for the accident and that Skyline was not a commercialentity, and therefore was not liable for the allegedlydangerous sidewalk condition. The trial court rejected thePlaintiff's subsequent motion for reconsideration and thePlaintiff filed an appeal.
On appeal, Plaintiff argued that the trial court erred by:(1) finding that Skyline was not a commercial entity andwas free from liability for the alleged sidewalk condition;(2) finding that Hoboken was immune even though it failedto enforce its own ordinance regarding sidewalk inspection;(3) concluding that Hoboken's lack of action was notpalpably unreasonable; and (4) failing to find that Skylineand CM3 assumed the duty to maintain the sidewalk. TheAppellate Division affirmed the trial court's decision andrejected all of the Plaintiff's arguments.
Of particular importance is the Appellate Division's decisionregarding the commercial status and liability of the condominiumassociation. In New Jersey, it has been long settledthat commercial property owners have a duty to maintainthe sidewalks abutting their property, primarily based upona concern for the safety of patrons encouraged to visit theirplaces of business. The New Jersey Supreme Court hasstated that a key finding in assigning liability is determiningwhether a property is commercial or residential.
The Appellate Division discussed a series of past decisionswhich have supplied guidance in distinguishing commercialfrom residential properties. In determining whether propertyis commercial, courts must consider whether an entityhas the capacity to generate income and the capacity tospread the risk of loss. Examples of commercial propertiesinclude non-owner occupied two-family houses, a parochialschool, and a fraternity house used as a social club.However, the Appellate Division has found that an owner-occupiedmulti-family residence is not commercial, eventhough the owner derived an income from the property. Inthat situation, the Court reasoned that the property was notcommercial because it was mostly owner-occupied.
In the present matter, the Appellate Division recognized thatSkyline was a non-profit corporation, the membership ofwhich could only consist of residents of the condominiumitself. While Skyline collected fees from the residents, thefees were applied to the maintenance of the complex anddid not constitute a profit. Therefore, the Appellate Divisionconcluded that Skyline did not have the capacity to generateincome in a commercial manner.
The Appellate Division reasoned that while Skyline had thecapacity to spread the risk of loss, its ability to do so wasnot in the traditional commercial sense. The Court recognizedthat commercial entities often increase charges fortheir goods and services in order to spread their risk ofloss, an option Skyline did not have as a non-profit entity.While Skyline's bylaws demanded that it maintain publicliability insurance, the insurance was to protect its facilitiesand common elements. The sidewalk did not fall under thispolicy and Skyline had no reason to seek additional moneyfrom its residents to procure insurance to pay for same.Therefore, Skyline did not have the capacity to spread itsrisk of loss in covering the public sidewalk.
Finally, the Appellate Division recognized that the condominiumcommunity was predominately owner-occupied andtherefore should not be considered commercial.
The Appellate Division's decision raises some importantquestions for insurers of condominiums. For example, willa condominium community be "commercial" in nature if itsproperty contains stores or restaurants? If a condominium association has undertaken the duty to care for abuttingsidewalks in its bylaws, is it then capable of adequatelyspreading the risk of loss by increasing associationdues? Does a non-profit condominium associationbecome "commercial" if the majority of unit ownerslive off premises and lease their residences? Insurers ofcondominiums are well advised to review the scope ofthe association's maintenance responsibilities under its bylaws and inquire as to whether any commercial spaceexists on the property. If a condominium can be viewedas "commercial," it may acquire the duty of maintainingabutting public sidewalks, a risk for which it should beinsured.
Kurt J. Trinter, Esq.
|
