August 4, 2010
ANITA M. KLEIN AND ROBERT A. KLEIN, PLAINTIFFS-APPELLANTS,
BRISTOL GLEN, INC. AND UNITED METHODIST HOMES OF NEW JERSEY, DEFENDANTS-RESPONDENTS, AND NEW IMAGE LANDSCAPE, DEFENDANT.
On appeal from the Superior Court of New Jersey, Law Division, Sussex County, Docket No. L-0198-07.
The opinion of the court was delivered by: R. B. Coleman, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued July 8, 2009
Before Judges R. B. Coleman and Graves.
Plaintiffs Anita and Robert Klein appeal an order of the Law Division dated May 2, 2008 granting summary judgment in favor of defendants Bristol Glen, Inc. (Bristol Glen) and United Methodist Homes of New Jersey (UMH) (referred to collectively as defendants). The trial court concluded that defendants were protected by charitable immunity because defendants were charitable organizations and because Anita Klein (Ms. Klein) was a beneficiary of their charitable works when she was injured on the grounds of Bristol Glen. Because we are convinced that summary judgment was prematurely granted before the completion of discovery, we reverse and remand for further proceedings in the Law Division.
On January 4, 2006, Ms. Klein was seriously injured when she slipped and fell on black ice on the grounds of Bristol Glen, an elder care community in Newton. She was visiting Marjorie Layton, a good friend of her deceased mother. Ms. Klein had visited Layton every week for approximately ten years both before and after Layton moved to Bristol Glen. Prior to Layton's move to Bristol Glen, Ms. Klein would help Layton clean her home, take Layton to appointments, and accompany her to lunch. After Layton moved to Bristol Glen, she no longer needed Ms. Klein's assistance with housekeeping, but Ms. Klein continued to assist Layton by helping her pay bills and by transporting her to appointments. Though the two women are not related, Ms. Klein considers Layton to be "like an aunt" and feels familial affection towards her. Layton has no other family to look after her.
According to the certification of G. Scott Norton, the Executive Director of Operations for Bristol Glen, Bristol Glen is one of ten New Jersey elder care communities operated by UMH. Bristol Glen has a sixty-bed nursing home, a fifty-eight-bed assisted living facility, and eighty-eight independent apartments restricted to residents sixty-five years of age and older. Layton was a resident in the assisted living facility, which rendered services such as home cleaning and bathing assistance depending on the resident's needs. The record does not contain any information about the services actually provided to Layton.
Norton's certification asserts that both Bristol Glen and UMH are organized as non-profit corporations whose stated mission is to "provide quality and caring services to senior men and women in a Christian community," but includes no other information about the religious aspects of the Bristol Glen community or of UMH. Residents must pay for housing and services at Bristol Glen. The rent for independent living apartments ranges from $2,174 to $3,513 per month, plus either a ninety-percent-refundable entrance fee between $199,700 to $319,000, or a non-refundable entrance fee between $126,600 to $227,100.
Norton's certification states that since UMH was founded in 1907, "it has been United Methodist Homes' commitment that once a resident has been accepted into the community that they will never be asked to leave as a result of an inability to pay." It further states that UMH has "stood by that commitment to this day." UMH and Bristol Glen use charitable donations from a "Fellowship Fund" to subsidize shortfalls resulting from a resident's inability to pay. Bristol Glen is accorded tax-exempt status by the Internal Revenue Service.
Norton's certification specified that in 2006, Bristol Glen relied on charitable donations from the Fellowship Fund to subsidize a $114,000 shortfall and had an operating budget of approximately $13,000,000 in the same year. In 2006, UMH relied on charitable donations to subsidize a shortfall of $2,000,000 and had an operating budget of approximately $60,000,000. According to those numbers, charitable donations made up eight tenths of one percent and three and one third percent of the respective operating budgets of Bristol Glen and UMH in 2006.
A certification submitted by Richard Wilson, vice president of finance for UMH, revealed that Bristol Glen is a wholly-owned subsidiary of UMH and that both receive charitable donations from the United Methodist Homes of New Jersey Foundation (the Foundation), another wholly-owned subsidiary of UMH. The Foundation is dedicated entirely to fundraising and distributes charitable contributions "based upon the relative shortfall amounts of the different facilities." The distributions cover three types of costs: residential shortfalls "to cover the shortfall arising out of residents being unable to pay," Medicaid shortfalls "for health care," and capital improvements.
Bristol Glen assesses a potential resident's ability to pay before he or she is accepted into the community. An applicant to Bristol Glen must disclose all income, assets (including real estate), liabilities, life insurance, long-term care insurance, and pharmacy insurance. The applicant must also submit a signed and witnessed statement representing that "the assets and income listed above are available for the cost of my (our) care." Presumably Bristol Glen may also use a resident's substantial refundable entrance fee to subsidize shortfalls resulting from that resident's inability to pay before resorting to the Fellowship Fund.
Wilson's certification stated that Norton's certification did "not represent the total picture regarding reliance on charitable donations." Wilson referred to an attached spreadsheet, which provided information concerning charitable donations and operating expenses from 2004 through 2007.
The spreadsheet discloses that in 2004, Bristol Glen received $983,000 in "Foundation grants for residential Medicaid shortfall" and $46,000 in "Foundation grants for capital improvements"; total operating expenses were $10,996,000. In 2005, Bristol Glen received Medicaid and capital improvement Foundation grants of $819,041 and $99,549, respectively, while total operating expenses were $11,693,000. In 2006, Bristol Glen received Medicaid and capital improvement Foundation grants of $290,830 and $112,050, respectively, with total operating expenses of $12,228,000. In 2007, Bristol Glen received Medicaid and capital improvement Foundation grants of $294,506 and $361,467, respectively, and had total operating expenses of $12,816,000.
The spreadsheet discloses that in 2004, UMH distributed $2,000,000 in Medicaid Foundation grants and $856,666 in capital improvements Foundation grants to all its facilities; UMH's total operating expenses were $52,179,000. In 2005, UMH distributed $290,830 and $112,050 in Medicaid and capital improvements Foundation grants, and had total operating expenses of $57,100,000. In 2006, UMH distributed $2,000,000 and $562,198 in Medicaid and capital improvements Foundation grants, and had operating expenses of $61,665,000. In 2007, UMH distributed $1,789,000 and $1,385,914 in Medicaid and capital improvements Foundation grants, and had operating expenses of $63,603,000.
The Kleins filed suit against Bristol Glen and UMH on March 22, 2007. Defendants answered, denying all allegations and asserting the affirmative defense of charitable immunity. On October 5, 2007, the trial court granted plaintiffs leave to file an amended complaint naming as an additional defendant New Image Landscape (New Image), the company hired to remove snow and ice at Bristol Glen.
Discovery was originally scheduled to end on February 7, 2008, but was extended until April 7, 2008. Before that discovery end date, defendants Bristol Glen and UMH filed their motion for summary judgment on or about February 28, 2008, asserting the defense of charitable immunity. Defendants submitted Norton's certification as an exhibit accompanying their motion.
In a letter dated March 4, 2008, plaintiffs served a notice to depose Norton and demanded the production of additional documents, including "[a]ll records in regard to payments by patients; salaries of employees, including management employees; [and] salaries of the President and Vice-President of Bristol Glen, Inc." Norton was deposed as scheduled, but defendants refused to comply with plaintiffs' request for documents on the ground that the request was "unduly burdensome and not designed to lead to admissible evidence."
Plaintiffs filed their brief in opposition to summary judgment on March 18, 2008, and New Image also filed a letter brief in opposition to defendants' summary judgment motion. Defendants filed a reply brief on April 4, 2008, to which they appended the Wilson certification and the corresponding spreadsheet of charitable donation amounts as supporting exhibits.
Oral arguments were heard on April 11, 2008, at which time counsel for plaintiffs argued that summary judgment was premature because discovery was still outstanding:
Salaries are important. They . . . could pay their trustees, their officers giant salaries, and still be . . . a non-profit organization. We weren't allowed to ask questions about anything about salaries. We would want the financial records, the income tax returns. And we would want to know this connection between passing this money from one of the corporations to the other corporation and what effect that has. . . . And I haven't figured out all the money that it's made, but with 88 beds at [$]200, or $325, [entrance fees] in the independent living, that turns over every time somebody moves to another one . . . [they] get all the money from that. Then the assisted living is 40 beds. Then the nursing is 60 beds. And the money they're making is astronomical on this. This is not a - this is not just a - charitable institution. This is a money making operation. And we're entitled to find that out, and haven't been able to do that. And that's why we asked for the extension of discovery as far as the charitable portion is concerned.
In an order dated May 2, 2008, the trial court granted defendants' motion for summary judgment and issued a memorandum of decision explaining its ruling. Plaintiffs subsequently settled with New Image and within forty-five days of the filing of a stipulation of dismissal, with prejudice, disposing of plaintiffs' claims against New Image, plaintiffs filed their notice of appeal challenging the trial court's earlier grant of summary judgment in favor of Bristol Glen and UMH.
On appeal, plaintiffs argue that the trial court incorrectly granted summary judgment without providing them a full opportunity to pursue discovery of evidence relevant to the determination of whether defendants were charitable organizations entitled to charitable immunity under N.J.S.A. 2A:53A-7, and that the trial court incorrectly ruled that N.J.S.A. 2A:53A-9 provides immunity to all nursing homes, whether or not they are operated for a charitable purpose. They also contend that the trial court improperly found that Ms. Klein was a "beneficiary" of Bristol Glen's good works.*fn1
The motion court determined that Bristol Glen and UMH were "charitable organizations" pursuant to N.J.S.A. 2A:53A-7 and -9 based on the "undisputed facts" that defendants were "formed for non-profit purposes, organized as religious and charitable operations, and were promoting such activities at the time of the injury sustained." The court ruled that the two defendants were charitable institutions under N.J.S.A. 2A:53A-7 because they were non-profit corporations whose mission is to "provide services to seniors in a Christian community[,]" and that "[i]n order to meet operating expenses, both UMH and Bristol Glen rely on substantial charitable donations to make up the shortfall of other income sources, e.g., patient payments." In doing so, the court did not make reference to any specific facts in the record, such as the amount or source of charitable contributions, or the extent to which Bristol Glen advanced Christian spirituality in the community. The court also concluded that N.J.S.A. 2A:53A-9 "specifically enumerates nonprofit nursing homes as qualifying as charitable institutions."
The court further determined that Ms. Klein was a beneficiary of defendants' charitable works when she was injured, making defendants entitled to charitable immunity and summary judgment.
Summary judgment must be granted "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). The motion judge must "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). The non-moving party must be given the benefit of all favorable inferences in support of its claim. Id. at 536.
"Generally, summary judgment is inappropriate prior to the completion of discovery." Wellington v. Estate of Wellington, 359 N.J. Super. 484, 496 (App. Div.), certif. denied, 177 N.J. 493 (2003). Before granting summary judgment, "[a] trial court 'should assure itself that the parties have had a reasonable opportunity to obtain and submit material information to the court[.]'" D.M. v. River Dell Reg'l High Sch., 373 N.J. Super. 639, 648 (App. Div. 2004) (quoting Ziegelheim v. Apollo, 128 N.J. 250, 264 (1992)), certif. denied, 188 N.J. 356 (2006). A party opposing summary judgment upon an assertion of incomplete discovery must specify what discovery is still required. Trinity Church v. Lawson-Bell, 394 N.J. Super. 159, 166 (App. Div. 2007). Our review of a ruling on summary judgment is de novo, applying the same legal standard as the trial court. Chance v. McCann, 405 N.J. Super. 547, 563 (App. Div. 2009).
When the New Jersey Supreme Court abrogated the doctrine of charitable immunity in the late 1950s, the Legislature responded by enacting the Charitable Immunity Act, N.J.S.A. 2A:53A-7 to -11, to restore charitable immunity as it existed at common law. Tonelli v. Bd. of Educ., 185 N.J. 438, 443-44 (2005). While the purpose of charitable immunity at common law was to "avoid diverting charitable trust funds to non-charitable purposes in order to live up to the reasonable expectations of the benefactor," Parker v. St. Stephen's Urban Dev. Corp., 243 N.J. Super. 317, 321 (App. Div. 1990), today our courts recognize that the purpose of the Act is "broader than simply preserving charitable trust funds and include[s] the encouragement of altruistic activity." Ryan v. Holy Trinity Evangelical Lutheran Church, 175 N.J. 333, 341 (2003).
N.J.S.A. 2A:53A-7(a) provides:
No nonprofit corporation, society or association organized exclusively for religious, charitable or educational purposes or its trustees, directors, officers, employees, agents, servants or volunteers shall, except as is hereinafter set forth, be liable to respond in damages to any person who shall suffer damage from the negligence of any agent or servant of such corporation, society or association, where such person is a beneficiary, to whatever degree, of the works of such nonprofit corporation, society or association; provided, however, that such immunity from liability shall not extend to any person who shall suffer damage from the negligence of such corporation, society, or association or of its agents or servants where such person is one unconcerned in and unrelated to and outside of the benefactions of such corporation, society or association.
To gain the protection of the Act, "a statutorily enumerated institution seeking immunity must demonstrate that it '(1) was formed for nonprofit purposes; (2) is organized exclusively for religious, charitable or educational purposes; and (3) was promoting such objectives and purposes at the time of the injury to plaintiff who was then a beneficiary of the charitable works.'" Tonelli, supra, 185 N.J. at 444-45 (quoting Hamel v. State, 321 N.J. Super. 67, 72 (App. Div. 1999)). The Act's grant of immunity is to be applied liberally. N.J.S.A. 2A:53A-10.
An entity automatically satisfies the second prong if it is organized "exclusively for educational or religious purposes," according to the commonly understood meanings of those terms. Ryan, supra, 175 N.J. at 343, 346. Otherwise, where a defendant seeks the protection of the Act based on its status as an entity organized exclusively for charitable purposes, courts must undertake the fact-sensitive analysis set forth in Parker, supra, 243 N.J. Super. at 325, to determine the extent of the entity's commitment to charity. Ryan, supra, 175 N.J. at 346.
The Parker analysis recognizes that an entity's non-profit and/or tax-exempt status is irrelevant to the determination of whether that entity is organized exclusively for a charitable purpose. Parker, supra, 243 N.J. Super. at 324. Even the fact that the entity performs a valuable societal service does not in itself establish that it is organized exclusively for a charitable purpose. Id. at 324-25. The relevant inquiry is whether the non-profit entity's "aims, its origins, and its method of operation" demonstrate that "its dominant motive is charity [and not] some other form of enterprise." Id. at 325. The analysis "'must take into account the organization's source of funds as a critical element of charitable status.'" Ryan, supra, 175 N.J. at 346 (quoting Abdallah v. Occupational Ctr. of Hudson County, Inc., 351 N.J. Super. 280, 284 (App. Div. 2002)).
In Abdallah, the institution seeking charitable immunity protection was a non-profit corporation organized to provide vocational opportunities for physically and mentally disabled people. Supra, 351 N.J. Super. at 286. Judge Pressler, writing for a unanimous panel, found that that the non-profit institution in that case "clearly, by virtue of the nature of its function . . . potentially qualifies as a charitable endeavor." Id. at 287. Ultimately, however, because charitable contributions amounted to only one-and-a-half percent and one-tenth of one percent of the institution's total revenue in 1995 and 1996, respectively, the court held that summary judgment based on charitable immunity should not have been granted. Id. at 288. The amount of charitable donations was simply "too insignificant" to accord charitable immunity upon the institution; its operations were "virtually exclusively funded by government money and compensation paid by the private market for value received." Ibid.
In Presbyterian Homes v. Division of Tax Appeals, an elder care community similar to Bristol Glen was denied a tax exemption granted to non-profit entities organized for "charitable purposes." 55 N.J. 275, 288 (1970). Though defendants contend Presbyterian Homes is limited to the tax context, it was discussed at length by the Court in Ryan and was applied within the framework of the Court's analysis of N.J.S.A. 2A:53A-7. Supra, 175 N.J. at 345; see also Bieker v. Cmty.
House of Moorestown, 169 N.J. 167, 175-76 (2001) (applying the reasoning of Presbyterian Homes in analyzing N.J.S.A. 2A:53A-7). The following discussion, from Ryan, supra, 175 N.J. at 345, is instructive:
Although we recognized care of the elderly as laudable and the aim of the sponsor as altruistic [in Presbyterian Homes], we held that the question of whether it was charitable depended on the manner in which the property was used to achieve that end.
We found that manner wanting. The by-laws of Presbyterian Homes did not obligate it to continue providing a home to seniors who were not financially equipped to pay its fees or who became ill. Seniors who had expended all of their assets could be turned out and potentially could become public charges. Moreover, although rental fees in themselves would not necessarily eliminate charitable status, there was a direct relationship between the size of the rental payment and the desirability of the unit.
In rejecting the charitable characterization, we invoked the reasoning of the Illinois Supreme Court in Methodist Old Peoples Home v. Korzen, 39 Ill.2d 149, 158, 233 N.E.2d 537 (1968), concluding that such circumstances lack "the warmth and spontaneity indicative of charitable impulse." [Ibid. (citations omitted).]
We agree with plaintiffs that in this case the trial court prematurely granted summary judgment in defendants' favor. Like the court in Abdallah, we are constrained to reverse and remand because "the court's findings failed to address critical components of the charitable-status determination[,]" which "must be made based on an adequate and proper record." Supra, 351 N.J. Super. at 283. The record is incomplete because plaintiffs allege they were denied the opportunity to present a clear picture of defendants' financial structure and "source of funds." Id. at 284. Without that opportunity and the discovery of financial information sought, the court could not have been in a position to determine whether defendants' "dominant motive is charity [and not] some other form of enterprise." Parker, supra, 243 N.J. Super. at 325.
The only financial documentation provided by defendants was a spreadsheet listing three figures for the year between 2004 and 2007: (1) "Foundation grants for residential Medicaid shortfall"; (2) "Foundation grants for capital improvements"; and (3) a column entitled "expenses," which Wilson's certification described as "total operating expenses." Because the spreadsheet was provided with defendants' reply brief in support of their summary judgment motion on April 4, 2008, the terms in the spreadsheet were defined only to the extent that defendants' witnesses chose to define them, obscuring the financial significance of the figures. Neither plaintiffs nor the court were provided a way to determine whether the "expenses" figure comprised salaries of upper-level management, capital costs, or compensation paid to board members. What is needed is an examination of the defendants' revenue stream - that is, how much money defendants generate renting housing and selling services to seniors - to gain an understanding of how that revenue is used to further defendants' charitable mission. Only then can the corporation's "source of funds" be truly understood.
In Abdallah, a non-profit entity relied on charitable donations equal to one-and-a-half percent of the institution's total revenue and that was deemed "too insignificant" to accord it charitable status. Supra, 351 N.J. Super. at 288. From the information provided by defendants in the case at bar, we know that charitable donations made up only eight tenths of one percent and three and one third percent of Bristol Glen's and UMH's respective operating budgets in 2006, the year Ms. Klein was injured. Presumably, charitable donations made up even less of Bristol Glen's total revenues, which are likely greater than its operating costs. On remand, plaintiffs must be provided an opportunity to discover information previously requested that will reveal the extent to which Bristol Glen and UMH exist and function as moneymaking operations, and the extent to which they truly rely on charitable donations. That opportunity was not provided in the proceeding below.
We are also convinced that the trial court erroneously concluded that defendants were entitled to charitable immunity because nursing homes are charitably immune per se pursuant to N.J.S.A. 2A:53A-9. Under the trial court's interpretation of N.J.S.A. 2A:53A-9, which is being advanced on appeal by defendants, all nursing homes operated by a non-profit corporation would be entitled to charitable immunity, regardless of whether the non-profit corporation serves a charitable purpose under an N.J.S.A. 2A:53A-7 analysis.
N.J.S.A. 2A:53A-9, titled "Character of Buildings Used," provides:
For the purposes of this act but not in limitation thereof, the buildings and places actually used for colleges, schools, academies, seminaries, historical societies, public libraries, religious worship, charitable or hospital purposes, the moral and mental improvement of men, women and children, nursing homes, rest homes, parish houses, auditoriums, houses of and for prayer and buildings and places, however named or designated, operated and maintained for equivalent uses, when so operated and maintained by any such nonprofit corporation, society or association, shall be deemed to be operated and maintained for a religious, charitable, educational or hospital purpose.
N.J.S.A. 2A:53A-9 has never been interpreted in a Supreme Court or published Appellate Division decision to independently confer per se immunity to the uses enumerated in that section, which include nursing homes, schools, auditoriums, and historical societies.*fn2 In fact, in cases where the plaintiff's injury occurred in places enumerated in N.J.S.A. 2A:53A-9, New Jersey courts have always applied a N.J.S.A. 2A:53A-7 analysis, rather than invoking N.J.S.A. 2A:53A-9 to grant immunity as a per se rule.
For example, in Tonelli, supra, 185 N.J. at 441, a plaintiff sued a municipality's Board of Education after she was injured on the property of a public school. A unanimous Court denied the Board of Education charitable immunity because it was not a "charity" under N.J.S.A. 2A:53A-7. The Court did not suggest that N.J.S.A. 2A:53A-9 affected its analysis even though the injury had occurred on property used for a school. Id. at 450; see also O'Connell v. State, 171 N.J. 484, 486 (2002) (resolving immunity issue by applying N.J.S.A. 2A:53A-7, and not N.J.S.A. 2A:53A-9, where plaintiff was injured in an amphitheater on a college campus); Lax v. Princeton Univ., 343 N.J. Super. 568, 570 (App. Div. 2001) (applying N.J.S.A. 2A:53A-7 where plaintiff was injured in an auditorium on a college campus); Peacock v. Burlington County Historical Soc'y, 95 N.J. Super. 205, 206 (App. Div.), certif. denied, 50 N.J. 290 (1967) (invoking N.J.S.A. 2A:53A-7, not N.J.S.A. 2A:53A-9, where plaintiff was injured in a historical society building).
We disagree with defendants that Gould v. Theresa Grotta Ctr., 83 N.J. Super. 169, 174-76 (Law Div. 1964), aff'd, 89 N.J. Super. 253 (App. Div. 1965), supports their argument that nursing homes obtain per se charitable immunity status pursuant to N.J.S.A. 2A:53A-9. In Gould, the trial court was addressing the plaintiff's argument that nursing homes should be governed by N.J.S.A. 2A:53A-8, which governs charitable immunity for hospitals. Id. at 176. The trial court rejected that argument because N.J.S.A. 2A:53A-9, which specifically mentions nursing homes, "refers back" to the immunity granted to institutions organized exclusively for charitable purposes by N.J.S.A. 2A:53A-7, rather than the immunity granted to hospitals by N.J.S.A. 2A:53A-8. Id. at 174. The court never suggested that N.J.S.A. 2A:53A-9 grants immunity to specifically enumerated places and buildings independently of N.J.S.A. 2A:53A-7.
According to our reading of the plain language of N.J.S.A. 2A:53A-9, it applies only to bring "the buildings and places actually used . . . by any such nonprofit corporation, society or association," under the ambit of N.J.S.A. 2A:53A-7. The Legislature's use of the phrase "any such nonprofit corporation" clearly refers to institutions already determined to be entitled to immunity under N.J.S.A. 2A:53A-7. There is nothing about the statute that evinces a legislative intent to supplant N.J.S.A. 2A:53A-7 with a per se rule granting immunity to certain categories of buildings and places.
Finally, plaintiffs contend the trial court erred in its determination that Ms. Klein was a beneficiary of defendants' charitable works at the time of her injury. Because plaintiffs were denied an opportunity to discover the nature and extent of defendants' charitable works, however, it would be premature to determine whether and how Ms. Klein may have benefited from those charitable works.
Reversed and remanded for further proceedings.