On certification to the Superior Court, Appellate Division, whose opinion is reported at 252 N.J. Super. 295 (1991).
Handler, Wilentz, Pollock, O'Hern, Stein, Clifford, Garibaldi
The opinion of the court was delivered by
This appeal requires the Court to determine whether a real-estate broker who holds an "open house" for the purpose of attracting potential buyers has a duty of care with respect to their safety, including a duty to warn of dangerous conditions in the home. The case arose when such a visitor, a relative of prospective purchasers, fell down during an open-house tour sponsored by the broker. The fall occurred when she proceeded down from one level of the house to another and missed a step, which she claimed constituted a dangerous condition because the connecting step was camouflaged by the similar floor that covered both levels.
The basic question to be answered by this appeal implicates a broader issue: whether a broker's duty of care in these circumstances is to be determined by the traditional common-law doctrine that defines the duty of care imposed on owners and possessors of land or, instead, by more general principles that govern tort liability.
On April 26, 1987, plaintiff, Emily Hopkins, accompanied her son and daughter-in-law to an open house in Plainsboro, New Jersey. The party had been invited by a salesperson employed by defendant broker, Fox & Lazo Realtors. The threesome entered the house. Initially, they were not greeted by a realtor. Consequently, they started to tour the premises on their own.
On entering the kitchen, Mrs. Hopkins and her family were greeted by a broker's representative. The realtor left them free to inspect the house unaccompanied. The kitchen of the house led up to a family room that was slightly elevated from the front portion of the house. On the same level as the family room were a powder room and laundry room. Mrs. Hopkins waited on the upper level in the family room, while her family viewed the patio and grounds.
When Mrs. Hopkins heard her son and daughter-in-law reenter, she attempted to join them in the foyer, where the staircase to the second floor was located. She proceeded down the hallway from the laundry room towards the foyer. She was unaware that a step led down from the hallway into the foyer. The floors on both levels and the step were covered with the same pattern vinyl. According to Mrs. Hopkins, the use of the same floor covering on both levels camouflaged the presence of a step. Not anticipating the presence of a step, she lost her footing and fell, fracturing her right ankle.
Mrs. Hopkins filed a complaint against defendant Fox & Lazo Realtors. She asserted that defendant broker had a legal duty to warn her of any known risks inside the house or any risks that a reasonable inspection of the house would have revealed. The trial court, although satisfied that plaintiff was not required to produce the testimony of an expert to establish negligence, determined that the broker did not have any duty with respect to dangerous conditions of the property, and dismissed plaintiff's complaint. On appeal, the Appellate Division concluded that the broker had such a duty of care, and it reversed the trial court's judgment. 252 N.J. Super. 295 (1991). We granted defendant's petition for certification, 127 N.J. 567 (1992).
The traditional common law approach to landowner or occupier tort liability toward a person who has been injured because of a dangerous condition on private property is predicated on the status of the person on the property at the time of the injury. Historically, the duty of the owner or occupier to such a person is gauged by the right of that person to be on the land. That status is determined by which of three classifications applies to the entrant, namely, that of a business invitee, licensee, or trespasser. E.g., Snyder v. I. Jay Realty, 30 N.J. 303, 153 A.2d 1 (1959).
An owner or possessor of property owes a higher degree of care to the business invitee because that person has been invited on the premises for purposes of the owner that often are commercial or business related. A lesser degree of care is owed to a social guest or licensee, whose purposes for being on the land may be personal as well as for the owner's benefit. The owner owes a minimal degree of care to a trespasser, who has no privilege to be on the land. See, e.g. Snyder, supra, 30 N.J. at 303, 311; Taneian v. Meghrigian, 15 N.J. 267, 271, 104 A.2d 689 (1954); Russell v. Merck & Co., 211 N.J. Super., 413, 417, 511 A.2d 1247 (App. Div. 1986); Caroff v. Liberty Lumber Co., 146 N.J. Super. 353, 357-58, 369 A.2d 983 (App. Div. 1977).
The duty owed to a trespasser is relatively slight. A landowner, under most circumstances, has a duty to warn trespassers only of artificial conditions on the property that pose a risk of death or serious bodily harm to a trespasser. Renz v. Penn Cent. Corp., 87 N.J. 437, 435 A.2d 540 (1981); Restatement (Second) of Torts § 337 (1969). To the social guest or licensee, the landowner owes a greater degree of care. Although the owner does not have a duty actually to discover latent defects when dealing with licensees, the owner must warn a social guest of any dangerous conditions of which the owner had actual knowledge and of which the guest is unaware. Berger v. Shapiro, 30 N.J. 89, 97-98, 152 A.2d 20 (1959); Benedict v. Podwats, 109 N.J. Super., 402, 406-07, 263 A.2d 486 (App. Div.), aff'd o.b., 57 N.J. 219 (1970); Restatement (Second) of Torts § 343 (1969); Prosser and Keeton on the Law of Torts § 60. (5th ed. 1984)
Only to the invitee or business guest does a landowner owe a duty of reasonable care to guard against any dangerous conditions on his or her property that the owner either knows about or should have discovered. That standard of care encompasses the duty to conduct a reasonable inspection to discover latent dangerous conditions. Handleman v. Cox, 39 N.J. 95, 111, 187 A.2d 708 (1963); Restatement (Second) of Torts § 343 (1969); see Butler v. Acme Markets, Inc., 89 N.J. 270, 275, 445 A.2d 1141 (1982).
In this case, the parties have attempted to fit themselves into those traditional categories. Plaintiff contends that she was an invitee of defendant broker. The premises during an open-house tour, plaintiff asserts, temporarily becomes the "place of business" for the realtor, who has a duty as the "proprietor" of the premises to exercise reasonable care to see that its place of business is safe for its business invitees. Because a broker invites potential customers onto residential property to advance the broker's economic interest, those persons are business invitees. Defendant contends that because a real-estate broker is not an actual owner or occupier of land but merely the agent of a homeowner, the broker has no duty when holding an open house to inspect the premises and to warn invitees of potentially-dangerous conditions on the premises.
The Appellate Division determined that a broker who holds an open house is functionally equivalent to an occupier of land. "It is evident that in taking possession of the house, the broker is in effect, using his principal's property as a place of business," and, further, that plaintiff in attending the open-house tour had the status of both an invitee and a licensee. 252 N.J. Super. at 301.
Initially, we are impelled to question whether we should resort to the common law doctrine of premises liability to determine if in these circumstances a real-estate broker owes a duty of care to prospective potential purchasers who are inspecting the owner's home on an open-house tour conducted by the broker. We have long acknowledged that the legal rules expressive of the common law embody underlying principles of public policy and perceptions of social values. Because public policy and social values evolve over time, so does the common law. "The power of growth is inherent in the common law." State v. Culver, 23 N.J. 493, 506 (1957). For that reason, the common law cannot be immutable or inflexible. "One of the great virtues of the common law is its dynamic nature that makes it adaptable to the requirements of society at the time of its application in court." Id. at 505.
The traditional common law doctrine governing premises liability is no exception. "The historical classifications of the degrees of care owing to visitors upon land," we have observed, "are undergoing gradual change in the law in favor of a broadening application of a general tort obligation to exercise reasonable care against foreseeable harm to others." Butler, supra, 89 N.J. at 277; Renz, supra, 87 N.J. at 462; see also Snyder, supra, 30 N.J. at 311 (applying the traditional doctrine, Court nevertheless stated "these common law classifications are sufficiently flexible to fulfill the purposes of our legal system in serving the needs of present day society").
The evolution toward a more resilient approach to premises liability has been gradual but perceptible. The common law doctrine with its rigid classifications prescribing premises liability is rooted in early nineteenth century notions of private property interests. Adhering to social mores that placed a paramount value on pastoral and agrarian ideals, courts strove to maximize the protection of rights of landowners to use and enjoy their land. Marsh, The History and Comparative Law of Invitees, Licensees and Trespassers, 69 L.Q. Rev. 182, 184 (April 1953); 2 Harper & James § 27.2 at 1432; Smith v. Arbaugh's Restaurant, Inc., 152 U.S. App. D.C. 86, 469 F.2d 97, 101 (D.C.Ct. 1972), cert. denied, 412 U.S. 939, 93 S. Ct. 2774, 37 L. Ed. 2d 399 (1973). As England and later the United States became increasingly industrialized, and the regime of capitalism promoted economic growth, property rights became less absolute. Morton Horwitz, The Transformation of American Law 31-62 (1977). Thus, with the development of a more urbanized, heterogenous, destabilized, and complex society, the status of persons in relation to the use of property could no longer be adequately accommodated by the strict traditional classifications of the common law. "The trespasser who steps from a public sidewalk onto a private parking lot today is not the 'outlaw' or 'poacher' whose entry was both unanticipated and resented in the nineteenth century." Smith, supra, 469 F.2d at 102-03; see Renz, supra, 87 N.J. at 462.
California was the first jurisdiction to eliminate the common-law boundaries between premises-liability classifications in its landmark decision, Rowland v. Christian, 69 Cal. 2d 108, 443 P.2d 561, 70 Cal. Rptr. 97 (1971), which observed that "to focus upon the status of an injured party as a trespasser, licensee or invitee in order to determine the question of whether a landowner had a duty of care, is contrary to our modern social mores and humanitarian values." Id. at 565-68. Approximately fourteen jurisdictions have completely abrogated the various categories of entrants, and thus have also eliminated the hierarchical scheme defining a landowner's duty toward persons who came on to their land. E.g., Smith, supra, 469 F.2d 97; Webb v. Sitka, 561 P.2d 731 (Ak. 1977); Rowland, supra, 443 P.2d 561; Mile High Fence Co v. Radovich, 175 Colo. 537, 489 P.2d 308 (Colo. 1971), aff'g 474 P.2d 796 (1970); Pickard v. Honolulu, 51 Haw. 134, 452 P.2d 445 (Haw. 1969); Keller v. Mols, 129 Ill. App. 3d 208, 472 N.E.2d 161, 84 Ill. Dec. 411 (Ill. App. Ct. 1984); Cates v. Beauregard Electric Cooperative, Inc, 328 So. 2d 367 (La. 1976), certif. denied, 429 U.S. 833 (1976); Singleton v. Charlebois Constr. Co., 690 S.W.2d 845 (Mo. App. 1985); Limberhand v. Big Ditch Co., 218 Mont. 132, 706 P.2d 491 (Mont. 1985); Ouellette v. Blanchard, 116 N.H. 552, 364 A.2d 631 (N.H. 1976); Basso v. Miller, 40 N.Y.2d 233, 352 N.E.2d 868, 386 N.Y.S.2d 564 (N.Y. 1976), modifying 47 A.D.2d 812, 366 N.Y.S.2d; Mariorenzi v. Joseph Di Ponte, Inc., 114 R.I. 294, 333 A.2d 127 (R.I. 1975). Many other jurisdictions have eliminated the distinction between licensees and business invitees. Wood v. Camp, 284 So. 2d 691 (Fla. 1973); Hardin v. Harris, 507 S.W.2d 172 (Ky. 1974); Poulin v. Colby College, 402 A.2d 846 (Me. 1979); Mounsey v. Ellard 363 Mass. 693, 297 N.E.2d 43 (Mass. 1973); Peterson v. Balach, 199 N.W.2d (Minn. 1972); O'Leary v. Coenen, 251 N.W.2d 746 (N.D. 1977); Hudson v. Gaitan, 675 S.W.2d 699 (Tenn. 1984); Antoniewicz v. Reszcynski, 236 N.W.2d (Wis. 1975). England, the birthplace of premises liability, also abolished the distinction between licensees and invitees with the passage of the Occupier's Liability Act of 1957. Towards both of these entrants, a landowner owes a "common duty of care".
Clearly, it is becoming increasingly difficult to define our modern circumstances by resort to the rigid constructs of the early common law. In a case such as this in which the legal relationships are not precisely defined, the attempt to pigeonhole the parties within the traditional categories of the common law is both strained and awkward. Moreover, to analogize the status of the parties to the common law classifications holds no great comfort that the analysis will center on factors that will lead to a sound principle of tort liability. In determining premises liability "the common law rules obscure rather than illuminate the proper considerations which should govern determination of the question of duty." Rowland, supra, 443 P.2d at 568.
Resort to the common law methodology with its insistence on traditional classifications in this setting is not especially instructive and does not necessarily provide reliable guidance in determining the existence and scope of the duty of care that should be ascribed to a broker. The Appellate Division itself was unable easily to characterize or analogize the status of the parties in relation to the common law doctrine. It concluded that the broker's status was to be equated with that of the owner, but also found that plaintiff's status was that of both a business invitee and a social guest. 252 N.J. Super. at 301. The court then reasoned from those classifications that the broker's duty combined elements of the "duty of a social host and of the occupier-invitor." Id. at 302.
The inquiry should be not what common law classification or amalgam of classifications most closely characterizes the relationship of the parties, but, as exemplified by our decision in Butler, supra, whether in light of the actual relationship between the parties under all of the surrounding circumstances the imposition on the broker of a general duty to exercise reasonable care in preventing foreseeable harm to its open-house customers is fair and just. That approach is itself rooted in the philosophy of the common law. See Palsgraf v. Long Island R.R. Co., 248 N.Y. 339, 162 N.E. 99 (N.Y. 1928); Heaven v. Pender, 11 Q.B.D. 503, 509 (C.A. 1883) (Brett, M.R.).
Determining the scope of tort liability has traditionally been the responsibility of the courts. Kelly v. Gwinnell, 96 N.J. 538, 552, 476 A.2d 1219 (1984). The actual imposition of a duty of care and the formulation of standards defining such a duty derive from considerations of public policy and fairness. Ibid. "This Court has carefully refrained from treating questions of duty in a conclusory fashion, recognizing that 'whether a duty exists is ultimately a question of fairness.'" Weinberg ...