NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5977-06T35977-06T3

HERMES REYES and LEONOR REYES,

Plaintiffs-Appellants/

Cross-Respondents,

v.

HARRY C. EGNER, HOLLY EGNER,

and PRUDENTIAL FOX & ROACH

REALTORS,

Defendants-Respondents/

Cross-Appellants,

and

HARRY C. EGNER and HOLLY EGNER,

Third-Party Plaintiffs,

v.

COLOMBIA REYES,

Third-Party Defendant/

Fourth-Party Plaintiff,

v.

PRUDENTIAL FOX & ROACH REALTORS,

Fourth-Party Defendant.

___________________________________

Argued October 6, 2008 - Decided

Before Judges Carchman, R. B. Coleman and Sabatino.

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-3178-05.

John J. Novak argued the cause for appellants/cross-respondents Hermes Reyes and Leonor Reyes (Law Offices of John J. Novak, P.C., attorneys; Mr. Novak, on the briefs).

William S. Bloom argued the cause for respondents/cross-appellants Harry C. Egner and Holly Egner (Methfessel & Werbel, attorneys; Mr. Bloom, on the briefs).

Michael T. Kearns argued the cause for respondent/cross-appellant Prudential Fox & Roach Realtors (Hoagland, Longo, Moran, Dunst & Doukas, LLP, attorneys; Mr. Kearns and Dawn P. Marino, on the brief).

Deborah Plaia, attorney for third-party defendant/fourth party plaintiff Colombia Reyes, has not filed a brief.

The opinion of the court was delivered by

SABATINO, J.A.D.

In this premises liability case, we consider whether the lessors of a beach house had a duty to correct or warn about what are claimed to be dangerous conditions of their property, presenting hazards that allegedly were not reasonably apparent to a short-term tenant and her guests. The tenant's elderly father, who had been vacationing at the house, was injured when he lost his balance while stepping onto an outside wooden platform. The platform was adjacent to the sliding glass door leading from the master bedroom to a rear deck. There was no handrail available to help plaintiff regain his balance, despite building code provisions that appear to mandate one. He and his wife thereafter filed a personal injury action against the lessors and the real estate broker that had facilitated the two-week lease.

Because the trial court erroneously required plaintiffs to prove that the lessors had actively or fraudulently concealed the allegedly dangerous conditions, we vacate summary judgment entered in the lessors' favor. In doing so, we endorse and apply the principles expressed in Section 358 of the Restatement (Second) of Torts (1965), which does not require proof of such concealment by a lessor in order for liability to attach. However, we affirm the grant of summary judgment as to the broker.

I.

Cognizant that the record is unclear and not fully developed in certain respects, we describe the facts in a light most favorable to plaintiffs as the non-moving parties on summary judgment. R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 535 (1995); see also N.J. Div. of Taxation v. Selective Ins., 399 N.J. Super. 315, 322 (App. Div. 2008) (reaffirming the established principle that appellate courts reviewing summary judgment orders, de novo, apply the same standards of Brill and Rule 4:46 that govern trial courts).

In the spring of 2003, Colombia Reyes ("Colombia") decided to rent a summer house at the Jersey Shore. She anticipated occupying the house, along with her parents and guests, during a two-week period straddling the Labor Day holiday. Colombia obtained a brochure in the mail from a Stone Harbor real estate broker, Prudential Fox & Roach ("Prudential"). She telephoned Prudential's office and spoke to a salesperson. After discussing her needs with the salesperson, Colombia decided to lease a three-bedroom, two-bathroom, single-family house in Stone Harbor. The house is located at 249 103rd Street, a few blocks from the beach. Colombia recalls that she did not visit the property before deciding to lease it. She also did not remember seeing photographs of the property or taking a virtual tour of it on the computer. The property was owned by a husband and wife, Harry and Holly Egner, who had listed the rental with Prudential.

Consequently, in March 2003, Colombia and the Egners entered into a one-page lease typed on a Prudential form, entitled "Seasonal Short Term Lease Agreement." The lease specified that Colombia would rent the property from 1:00 p.m. on Saturday, August 23, 2003, through 10:00 a.m. on Saturday, September 6, 2003. The rent was $4,050, payable in three advance installments. Colombia paid the three installments, plus a $500 security deposit. She denies coming to the property in the interim from March 2003 until the lease began in August. For its efforts in procuring the lease, Prudential charged the Egners a commission of twelve percent, or $486.

The house includes an elevated rear deck adjacent to the master bedroom. The deck was built in 1994 by previous owners. It is approximately four feet wide, and leads to a six-step stairway connected to the ground below. The deck is accessible through sliding glass doors in the master bedroom which open to a small wooden platform on the top of the deck. The platform is about seven inches below the bottom of the sliding door. There is another six-and-a-half-inch drop from the platform to the deck, slightly less than the drop from the glass door to the platform.

The wooden boards of the deck and the platform run in the same direction and are essentially the same color. The boards are also similar in color to the wood flooring in the master bedroom, although the boards in the bedroom run in a perpendicular direction. There are no signs cautioning guests about the drop from the sliding door to the platform or from the platform to the deck. In addition, there are no handrails attached to either the platform or the deck. It is undisputed that the municipality did not conduct a final inspection of the deck when it was built and that a building certificate for the deck was not issued.

Colombia and her parents, Hermes Reyes ("plaintiff") and Leonor Reyes, came to the property for the first time on Saturday, August 23. Plaintiff's brief on appeal describes him as "an older Hispanic gentlem[a]n whose primary language is Spanish." Plaintiff and Mrs. Reyes had not participated with Colombia in selecting the house or in arranging the lease.

Upon arriving at the house with her parents, Colombia walked in each of the rooms. Everything appeared to her to be in order, except that the house was very hot because the air conditioning was off. Colombia also looked at the backyard, although she did not specifically recall noticing the rear deck at that time. She did acknowledge becoming aware of the deck at some point before her father's fall, although she was unsure of when. Colombia also recalled observing the steps leading to the deck from the backyard. She was aware that the deck lacked a handrail, although she testified that the omission "didn't concern" her at the time.

Colombia's parents moved their things into the master bedroom, where they stayed through the day of plaintiff's accident. Colombia did not go out on the deck herself because it was only accessible from the interior through the master bedroom that her parents were occupying. According to plaintiff's testimony, he and his wife did not venture out on the deck during their first eight days on the premises.

On the second day of Colombia's tenancy, Mr. Egner came to the house and activated the air conditioning. He did so after Colombia had called Prudential to complain that it was not working. The record contains no indication that Mr. Egner discussed with Colombia the deck or anything else about the house other than the air conditioning. In fact, Colombia incorrectly thought that Mr. Egner was a maintenance worker. Mr. Egner recalled going to the premises a second time to try to adjust the air conditioning, but he could not get it to work. That prompted Mr. Egner to call Prudential, which addressed the problem by calling in the original air conditioning installers.

Meanwhile, other relatives and friends of the Reyes' arrived at the property. The record does not indicate that any of them used the deck.

On August 31, 2003, around 3:30 in the afternoon, plaintiff opened the sliding door to go out to the deck. This was the first time he had done so. Looking straight ahead, plaintiff put his foot out of the door, but he did not feel a step or the ground. As a result, he lost his balance. Trying to find something to hold onto, plaintiff unsuccessfully grabbed for chairs that were on the deck, but he proceeded to fall down the stairs, ending up on the ground.

Plaintiff testified that he had expected the surface of the deck would be level with the sliding door. He did not look down because he did not expect a drop. Plaintiff further stated that the unexpected depth of the step from the door to the platform caused him to fall. He also complained about the absence of a handrail, repeatedly stating at his deposition that he had "nothing to hold" when he started falling, and insisting that if he had been able to grasp a handrail he could have resisted his fall.

Plaintiff injured his back as a result of his fall. Immediately following the accident, he was unable to walk. Plaintiff had to be lifted by his daughter and grandson into a car that transported him to the hospital.

Plaintiff was admitted to the hospital for five days. He then was discharged to a rehabilitation facility, where he was treated for over five weeks. Plaintiff alleges that the injuries to his back are severe and permanent.

The Egners bought the home as a summer rental property in February 2003, about six months before Colombia's two-week stay. After their purchase, the Egners entered into an agreement with Prudential, authorizing Prudential to list the property and collect rent. Prudential also maintained the rental bookkeeping. In addition, the Egners authorized Prudential under their brokerage agreement "to make necessary emergency repairs to [their] property and/or appliances and to provide necessary cleaning not to exceed $100.00."

Shortly after they purchased the property, the Egners had a small porch installed in the front of the house. The porch had handrails and stairs, which were included after their contractor advised them that such features were necessary. They did not, however, make any modifications at that time to the rear deck.

According to Lynn Merkle, Prudential's office and rental manager, she conducted a walk-through of the property at the time the house was listed for rental. Merkle stated that the walk-through consisted of taking photographs and doing inventory, including checking the number of bedrooms, chairs, televisions, and other major contents. She did not notice any "glaring" safety problems. Merkle asserted that Prudential does not conduct property management, a function which it considered to be the owners' responsibility. The Egners themselves did not conduct any inspection of the house prior to advertising it for lease.

Following plaintiff's mishap, Mr. Egner performed certain repairs and improvements. In the spring of 2004, Mr. Egner painted a white strip around the platform of the deck. The strip makes more prominent the edge of the platform before the six-and-a-half-inch drop to the deck. He also installed a railing alongside the steps of the deck.

Plaintiffs filed a complaint in the Law Division against the Egners and Prudential, alleging negligence, breach of the implied warranty of habitability, and violations of the Consumer Fraud Act ("CFA"), N.J.S.A. 56:8-1 to -20. The Egners filed a third-party complaint against Colombia, seeking defense and indemnification. Colombia, in turn, brought a fourth-party complaint against Prudential, seeking contractual indemnification, as well as indemnification based upon alleged breaches of fiduciary duty and CFA violations.

During the course of discovery, plaintiff produced an expert report from a forensic engineer, Alan Meade, P.E. Meade offered the following pertinent opinions:

1. The non-uniformity of the riser heights in the two step stairway [platform] outside the glass sliding door was a hazard to which persons using the stairway were exposed, was a dangerous condition and a cause of [plaintiff's] fall.

2. The lack of conspicuity of the edge of the intermediate step [platform] between the glass sliding door and the deck was a hazard to which persons using the stairway were exposed, was a dangerous condition and a cause of [plaintiff's] fall.

3. The difference between the two riser heights going from the first floor of the house to the rear deck was a violation of the New Jersey Uniform Construction Code.

4. The lack of a handrail along the six step stairway was a dangerous condition and a cause of [plaintiff's] fall.

5. The lack of a handrail along the six step stairway was a violation of the New Jersey Uniform Construction Code.

Meade cited a nationally-recognized study performed by John Templer regarding the hazards caused by the non-uniformity of step dimensions and the safety advantages of handrails. Meade determined that there was a "lack of conspicuity" between the platform and the deck because they were essentially the same color. He opined that this created a dangerous condition. This hazard could have been avoided, according to Meade, had the perimeter of the platform been painted a different color, or had a handrail for the platform been installed.

In his deposition, Meade explained that plaintiff had lost his balance in stepping from the bedroom to the platform, and then had stumbled across the deck, because of the "same coloration of the wood." Meade emphasized that the color of the platform blended into the color of the deck, thereby creating the lack of conspicuity between the platform and the deck. According to Meade, it was not obvious to plaintiff that there was a step down. Nonetheless, Meade indicated that it was "not completely clear from which step [plaintiff] fell."

With respect to the absence of a handrail, Meade referred in his deposition to Templer's research, which showed that a handrail is useful in providing a person with a "fair chance" of aborting a fall and avoiding injury. Meade concluded that the lack of a handrail in this instance denied plaintiff a chance to save himself and that it also constituted a violation of the New Jersey Uniform Construction Code, N.J.S.A. 52:27D-119 to -141 ("the UCC").

To establish Prudential's alleged liability, plaintiffs offered an expert report from Mel Lissner, the owner of a real estate agency and a school for real estate brokers. Lissner opined that Prudential had a duty under N.J.A.C. 11:5-6.4 to conduct a visual inspection of the property. He stated that such an inspection should have included examining whether there was anything materially affecting the property, including any latent defects. Lissner maintained that Prudential had a duty to conduct an inspection in order to assure that the dwelling was safe and habitable and that Prudential breached such a duty here.

The Egners did not retain a liability expert. However, Prudential presented an expert report from Diane Disbrow, the past chairperson of the Ocean County Board of Realtors. Disbrow opined that Prudential did not have an obligation to conduct an inspection and that the Egners' rental agreement imposed no such duty. In addition, Disbrow asserted that Prudential met the requirements of N.J.A.C. 11:5-6.4, in that it had made a reasonable effort to ascertain information about the physical condition of the property.

Following discovery, the Law Division granted Colombia's motion for partial summary judgment with respect to several counts of the Egners' third-party complaint that are not at issue on this appeal. Colombia and Prudential then entered into a stipulation of dismissal with prejudice as to the contractual indemnification count of the fourth-party complaint.

Defendants subsequently filed motions for partial summary judgment addressed to the issue of causation. Plaintiff filed a cross-motion, seeking a determination by the court that the deck platform and the lack of a handrail each constituted dangerous conditions.

Oral argument on those competing motions was presented to a Law Division judge in January 2007. During that oral argument, the first motion judge observed, in colloquy, that:

if you look at that picture out the bedroom door, it appears that you're walking onto a single space, that's the way it appears to this [c]ourt. It could be an optical illusion. Could you argue to the jury that it's not logical? You could. But for a motion for judgment on proximate cause, it just seems to me that this is what the -- the legal discussion of distraction is all about. That there are times when we're distracted from what seems to be the obvious. But in here there's something additional. You can't tell that you have got a step before the deck.

[(Emphasis added).]

The first motion judge granted defendants' motions solely as to plaintiffs' causation claims associated with the height differentials on the steps and risers but otherwise denied the motions.

In particular, the first motion judge found that the lack of consistency in the riser height of the intermediate step leading from the master bedroom to the platform was not a proximate cause of plaintiff's fall. Apart from that discrete claim, the judge found that the issue of proximate causation was for the jury. Additionally, the judge also denied plaintiffs' cross-motion, leaving the presence or absence of dangerous conditions as an issue to be resolved at trial.

Plaintiffs then filed a motion seeking a determination that Prudential had a duty to conduct a reasonable inspection of the property and to warn others of patent defects. On March 16, 2007, the second motion judge issued a written decision denying that motion. The judge instead found, as a matter of law, that Prudential owed no such duty of care to plaintiffs. Consequently, the judge granted summary judgment to Prudential.

In his written decision dismissing Prudential as a defendant, the second motion judge emphasized that Prudential had not contracted with the Egners to make repairs or to reinspect the property. The judge also observed that Prudential received "only a nominal fee" from the lease agreement. Taking into account the nature of the parties' relationship, the attendant risks, and the opportunity and ability of each party to exercise care, the judge concluded that "it would be unjust to impose a duty upon Prudential" to have performed an inspection for plaintiffs' protection.

The Egners likewise moved for summary judgment. In their motion argument, the Egners principally relied upon this court's opinion in Patton v. The Texas Co., 13 N.J. Super. 42, 47 (App. Div.), certif. denied, 7 N.J. 348 (1951), which held that a lessor of a residence is not liable for injuries sustained by a tenant's guest arising from a latent defect on the premises, unless there has been "fraudulent concealment" of that defect. The second motion judge granted the Egners summary judgment in an oral opinion he rendered on May 1, 2007. In essence, the judge adopted the Egners' reliance upon Patton as the basis for precluding the Egners' liability as lessors. The judge further concluded that, as a matter of law, the defects complained of here by plaintiffs were all patent, not latent, and that "there was no concealment of a latent defect." Plaintiffs' ensuing motion for reconsideration was denied.

Plaintiffs appeal the Law Division's orders, respectively granting summary judgment to the Egners and Prudential. Defendants, in turn, cross-appeal the trial court's denial of their motion for partial summary judgment on the remaining issues of proximate cause.

II.

The law of premises liability has markedly evolved over time. The common law traditionally hinged a landowner's legal duty to compensate a person injured on the premises upon whether that person was classified as either a trespasser, a licensee or social guest, or a business invitee. See, e.g., Snyder v. I. Jay Realty, 30 N.J. 303 (1959). These rigid classifications were rooted in "social mores that placed a paramount value on pastoral and agrarian ideals," by which the courts "strove to maximize the protection of [the] rights of landowners to use and enjoy their land." Hopkins v. Fox & Lazo Realtors, 132 N.J. 426, 436 (1993). As society became less agrarian and more complex, these strict legal categories gave way to "a more resilient approach to premises liability." Id. at 436-39. That modern approach is less dependent upon absolute rules in determining matters of legal duty, and instead is informed by multiple factors of fairness and public policy. Ibid.

With particular respect to the responsibilities of a landowner who leases its property, the common law essentially adhered to a "caveat lessee" approach. That approach substantially limited a lessor's duty to maintain safe premises for its tenants.

The tenant, at least where he had the opportunity to inspect the premises before taking them, was held to accept them in their existing condition, and the landlord could not be liable for any defect therein except where he had expressly warranted against it or had been guilty of fraudulent concealment.

[W. E. Shipley, Modern Status of Rule Requiring Actual Knowledge of Latent Defect of Leased Premises as a Prerequisite to Landlord's Liability to Tenant Injured Thereby, 88 A.L.R.2d 586, at