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Calco Hotel Management Group, Inc. v. Gike

420 N.J. Super. 495, 22 A.3d 60 (App. Div. 2011)

HOTELS — A person who pays for a room in a hotel is deemed to be its “occupant,” but this does not necessarily render that person liable for damages to the room caused by the actual occupant of the room.

An elderly woman had occasionally hired a certain handyman to perform work on her home. One day, while performing such work in the yard, the man began to have a seizure. After hospital treatment, the man told the woman that he had no place to go but needed to remain in the area for a follow-up medical appointment. The woman agreed to rent him a room at a nearby hotel for a two-night stay. After both arrived at the hotel, the woman paid for the room with her credit card and signed a reservation form that listed one room, one adult, for two nights, in which she agreed to personally pay all charges incurred during her stay and abide by house rules. The form further stated, in pertinent part, that the hotel was not responsible for property damage or loss, and that the signing party assumed all risks of personal injury unless caused by the hotel’s sole negligence.

A fire destroyed much of the motel. It was caused by the handyman.

The man, who predeceased the suit, testified in a deposition that the room was not ready when he was dropped off. So, he walked to a nearby liquor store, purchased beer, and to began drinking. He then encountered a friend and the two of them took a bus. After a short visit with his uncle, the man purchased a gas can, filled it with gasoline, and rode a bus back to the hotel. Already intoxicated, the man bought more beer before returning with his friend to the hotel. The woman was unaware of the man’s conduct after she left him at the hotel. The man retrieved the room key from the front desk and, once inside the room, lit a cigarette and prepared to recreationally ingest the gasoline’s vapors. Prior to doing so, he accidentally kicked the gas can over and spilled some gasoline onto the floor. The tip of his cigarette ignited the gasoline and a blaze ensued, significantly damaging the hotel.

On a motion for summary judgment, the hotel argued that the woman was an “occupant,” as defined by law, because she was the renter of the room. According to the hotel, the “actual physical possession” component of the state regulation was satisfied, because the use of the room was exclusively within the control of the woman or her guest, and upon her payment of the two-day rental, the designated room was denied to the whole world, with the exception of her and her guest. The hotel further argued that, as an occupant, the woman was responsible for the activities of her guest in the hotel room pursuant to state law. The woman’s argument was that the plain meaning of the term “occupant” as defined in the regulation mandates that the person have actual physical possession of the hotel room. The woman reasoned that she could not be an occupant within the meaning of the regulations because she never set foot in the room, never obtained a key to the room, and never took any other actions consistent with establishing occupancy. Consequently, she argued she could not be subject to the duties imposed.

The lower court rejected the woman’s argument, finding that the purpose of the regulation was to prevent renters of hotel rooms from escaping liability for damages to a room caused by their guests simply by stating they did not cause the damage or that they did not know who caused the damage, or claiming they were not present when the damage was done, and thus they were not in actual physical possession of the room. The court reasoned that since the woman paid for the room, she was the one who assumed basic responsibility for its continued renting. Because the man was the woman’s guest, and his behavior was at least negligent, the lower court found the woman to be responsible as a matter of law. On reconsideration, the woman argued for the first time that because state law did not expressly set forth a civil remedy, any alleged violation by her only should be something the court could charge the jury as evidence of negligence in a common law action for property damage, and was not proof of negligence per se. Declining to address this issue on the merits, the lower court held the woman had not demonstrated the necessary factors for reconsideration. On appeal, the woman renewed the arguments she made in connection with her summary judgment motion and in her motion for reconsideration. Specifically, she asserted error by the lower court in interpreting state law to include her within the definition of an “occupant” and in denying her motion for reconsideration.

The Appellate Division found that, had the adopting agency intended the word “occupant” to be confined to a person physically occupying the space, there would have been no reason to have included a second sentence in the definition expanding duties to an adult assuming basic responsibility for the continued renting or occupancy of the dwelling space.

However, the Court also noted that just because the woman was an occupant did not automatically impose civil liability on her as a matter of law for damages sustained to the hotel room as a result of the man’s activity. Rather, New Jersey law does not necessarily render an occupant liable for civil damages. However, the hotel’s basis for summary judgment on the second count of its complaint was that the woman was responsible for the man’s actions under the regulatory provisions and, accordingly, she was liable for the damages sustained by plaintiffs as a matter of law. In her cross-motion for summary judgment, the woman only argued the regulatory language required an occupant to have physical possession of the room. Accordingly, the lower court had solely addressed that issue and had found in the hotel’s favor as a matter of law.

Moreover, on appeal, the woman did not brief the merits of this new argument. The Appellate Division noted that it clearly would have been preferable for the woman to have raised the potential dichotomy of the regulatory penalty and private cause of action for compensatory damages at the initial summary judgment stage, not upon reconsideration. This was not a situation, however, where the issue had never been brought up in the lower court or on appeal. It was raised, though late, before the lower court, and the woman appealed both the order granting summary judgment and the order denying reconsideration. The Court observed that its duty upon review of a summary judgment to the motel motion is to independently canvass the record and determine whether the lower court’s grant of summary judgment was correct as a matter of law. Here, based on the framing of the issue and relief sought, the lower court’s grant of summary judgment in favor of the hotel rendered the woman liable as a matter of law for compensatory damages for the man’s actions at the hotel. The Court was not convinced that merely finding the woman was an “occupant” under the regulatory scheme in, and of itself, mandated this result. Accordingly, the Court affirmed the grant of summary judgment to the hotel solely as to this finding. The Court concluded, however, that summary judgment principles required denial of the hotel’s motion for summary judgment regarding the woman’s liability for compensatory damages.


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