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June 17, 2024

Insurers of commercial property owners take note: in a 4-3 decision, the New Jersey Supreme Court significantly expanded sidewalk liability law. Owners of vacant commercial lots in the Garden State now have a duty to maintain the public sidewalks abutting their lots in reasonably good condition and are liable to pedestrians injured as a result of their negligent failure to do so.

Under the facts in Padilla v. Young Il An (A-43-22) (June 13, 2024), the plaintiff tripped and fell on a sidewalk abutting a vacant lot in Camden, New Jersey, later suing the property owners for negligence. The trial judge and Appellate Division ruled that the owners did not owe the pedestrian a duty of care under Abraham v. Gupta, 281 N.J. Super. 81 (App. Div. 1995), which held that commercial property owners are not responsible for maintaining sidewalks abutting non-revenue-generating vacant lots.

The Supreme Court granted certification and reversed the Appellate Division decision, holding that as a matter of fairness, all owners of vacant commercial lots have a duty to maintain abutting sidewalks. In doing so, the Court expanded the legal duty first espoused in Stewart v. 104 Wallace Street, Inc., 87 N.J. 146 (1981), which held that commercial landowners are obligated to maintain sidewalks abutting their active business properties or properties with structures on the lot.

Three justices dissented, observing that long-standing common law provided courts with a common thread of factors to evaluate whether a commercial property has the capacity to generate income. The minority also wrote that the decision infringes on legislative authority to impose and enforce sidewalk laws.

In overruling the nearly three-decade-old Abraham decision, the Supreme Court established a bright-line rule that eliminates the need for courts – and, for that matter, insurers – to assess a property’s potential profitability or usage for liability purposes and creates consistency and predictability for evaluating risk at the time of underwriting.

For more information, please contact Michael Savett.