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Court Decision on Earthquake Liability is of “Profound Importance” to California Landlords – By Gideon Kramer, SPOSFI News Editor

Posted on 01. Aug, 2014 by in all, Magazine Articles

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In our September 2013 issue, Southern California attorney Lee Kanon Alpert wrote about the 1994 Northridge Earthquake and the lessons he learned from that devastating experience, in particular with regard to a residential rental property owner’s potential legal exposure in the event of a major temblor.

 “Act of God” or Preventable Tragedy?

Nine years after the Northridge temblor, a magnitude 6.5 earthquake rocked the centralCaliforniacoast. In Paso Robles’s historic downtown, two women working at a clothing store were killed by falling bricks and plaster as they fled the old building. The families of the women sued the property owners, claiming that they were negligent by failing to make the building safe.

The owners countered that they had complied with all city codes at the time and still had three years to retrofit the property. Many of the lawyers with whom the family consulted warned they would lose the case – it was an “act of God,” and was simply not winnable.

They were wrong. The victims’ families pursued the case, prevailed, and were awarded nearly $2 million.

In 2010, a state appeals court upheld the judgment, finding that the owners’ compliance with city law at the time “did not insulate them from negligence in failing to retrofit their building to current standards.” 

Implications for Owners of Older Buildings

The Paso Robles case is more straightforward than ones in which the owner was unaware that the building was seismically below par, or had taken all reasonable steps to seismically strengthen it. In this case, the owners were aware of the city’s retrofit requirements, and knew that the building was unsafe, even though they were in technical compliance at the time.

Despite this difference, the Paso Robles case has major implications for all owners of older, pre-earthquake standards multi-unit rental buildings, especially inSan Francisco, where so many of them have yet to be seismically upgraded. As Loyola Law School Professor John Nockleby remarked, “the Paso Robles decision is profoundly important.”

The court decision is important because it leads to the question: “how safe is safe enough?” Owners of older buildings, who have taken all reasonable measures to seismically strengthen their buildings—bolting mudsill to foundation, sheerwalling exposed walls, tying posts to beams, etc.—might well ask: “I’ve done everything I can afford to do, but is that enough? Do I need to hire an engineer and spend potentially hundreds of thousands of dollars to make my building lawsuit-proof?” As a result of decisions like Paso Robles, property owners will be looking increasingly for ways to

insulate themselves from liability because, in the event of a damaging earthquake, you can be sure that San Francisco will be overrun with attorneys looking to “help” tenants sue their landlords for having “knowingly” failed to make their buildings seismically safe.

Identifying At-Risk Buildings

The question of whether property owners can be held liable for earthquake losses bears heavily on Los Angeles, where officials are considering a plan to publicly identify and require retrofits of at-risk buildings. Some property owners fear that assessing the seismic risks of their buildings will create legal liability in the event of a destructive quake. As we’ve discussed previouslySan   Franciscotoo has begun the process of identifying its most at-risk residential buildings.

A preview of the impact that decisions like the Paso Robles case may have for San Franciscoproperty owners can be seen in legislation recently passed by the Board of Supervisors requiring retrofit of soft-story buildings of five units or more. The city has identified about 4,800 buildings with potentially weak ground floors, and is requiring that they be retrofitted by 2018.

It is likely that in the coming years, the city will go further, and identify many more smaller at-risk buildings, and require that they too be retrofitted. The message is clear: although most of us would rather not think about it, earthquake liability is a very real concern. So we should all be doing our utmost to make our buildings as safe as we possibly can.

Reprinted with permission of the Small Property Owners of San Francisco Institute (SPOSFI) News.  For more information on becoming a member of SPOSFI or to send a tax-deductible donation, please visit their website at www.smallprop.org or call (415) 647-2419.