Broken Buildings: Legal Rights and Remedies in the Wake of a Collapse

David J. Pfeffer | Construction Executive

A tragedy transpired on June 24 in Surfside, Florida, when the Champlain Towers South suddenly fell, becoming one of the country’s most deadly unintentional building collapses. It is imperative that construction industry professionals be aware of the legal issues that are raised by such ill-fated events.


Who can be held responsible for such disasters lies among several possible parties: 

  • The building’s design professionals, particularly its architects and structural engineers. They are charged with ensuring that the building’s design is safe. They must take many factors into account, including, but not limited to, the materials that are used, the foundation, the weight and the height.
  • General contractors and the subcontractors. General contractors implement the design created by the architects and engineers and are responsible for appropriate materials. The general contractor also supervises the subcontractors aiding with multiple areas of the building’s construction and which also share the responsibility of executing the design and maintaining the building’s structural integrity.
  • The owner of the building may be held liable. Property owners have a duty to examine their properties to discover and fix any hazardous conditions that are present, and they must do so with reasonable care. Property managers might also share the burden of responsibility and could very well be held responsible for failing to perform proper maintenance.
  • Building inspectors can be blamed if they do not report a dangerous condition that threatens the safety of the structure.
  • Equipment and material suppliers. Undetected defects in equipment or materials can cause a structure to fail.

Construction professionals need to be aware of whether the damages that result from a collapse will be covered by insurance.

Collapse language is usually found in the additional coverage section of a property’s insurance policy and typically includes an independent insuring clause, an independent list of exclusions and an independent list of exceptions to exclusions. Often, insurance policies that permit coverage for abrupt collapse will require various conditions to be met in order to warrant coverage. 

Regarding the collapse in Surfside, the primary questions are: What caused the collapse? Was the cause previously known to, or at least reasonably discoverable by, the insured? 

If the cause was unknown, or not reasonably discoverable to the insured, the insured might be able to secure coverage. However, if it was due to one of various excluded causes, such as normal wear and tear, bad repairs, deterioration or neglect, and the parties were aware of such conditions, they may be barred from coverage. If there are multiple causes for the collapse, professionals should check their policies for any anti-concurrent causation language, which is used to disqualify coverage for losses that are partly induced by both an excluded cause and an included cause. Also, pursuant to Florida law, false information in an insurance application, intentionally or unintentionally, can void the policy. 


After determining which parties can be sued to remedy the harms of a collapse, it is crucial that the action is brought in a timely manner, and time restrictions vary by state. In New York, the statute of limitations for malpractice claims, other than medical, dental or podiatric, is three years from the completion of the project. There is currently no statute of repose in New York to act as an absolute cutoff on construction claims; however, there is a bill moving through the state’s legislature, proposing to institute a 10-year statute of repose, which is common among many states. 

Florida’s statute of limitations for negligence cases is four years. The general rule in Florida’s construction cases is that the statute of limitations begins to accrue at the completion of the project, but if the defect is latent, then it begins to accrue at the time that the defect was, or should have been, discovered with reasonable due diligence. Florida also has a statute of repose for construction claims, which is 10 years from the date of completion; counterclaims, cross-claims and third-party claims that arise out of the same controversy may be brought within one year from the commencement of the action, regardless of whether they fall within that 10-year restraint.


Construction professionals should consistently strive to prevent such accidents from happening. Learning about environmental factors that can lead to a building’s collapse is an essential consideration. The collapse in Surfside made many people ask whether climate change played a part and whether South Florida’s extreme exposure to rising sea levels could lead to the destabilization of other structures. 

In South Florida, the sea level is about eight inches higher than it was 100 years ago, and it is expected to increase—with an additional 17 inches predicted by 2040. To make things worse, the region sits on a bedrock of porous limestone, which allows saltwater to rise through, causing flooding without rain. Although the role of the sea level in this particular collapse is not entirely clear, it certainly poses a threat to other buildings. Saltwater, which corrodes both steel and concrete, can rise through the porous bedrock and weaken foundations. The idea of building a large sea wall to prevent ocean flooding in Miami is no defense against underground water. 

At present, construction professionals must be extremely vigilant when examining foundations and immediately fix cracks or defects.

As technology and education advance, the construction of buildings ideally will reach a point of quality and durability that will avoid such tragedies in the future. However, with the knowledge that non-deliberate structural collapses can still happen, it is in the best interest of construction professionals to be aware of the many issues that these kinds of catastrophes raise.  

Yet ANOTHER Reason not to Contract without a License

Christopher G. Hill | Construction Law Musings

Remember when I stated that you cannot lawfully perform construction work in Virginia without a contractor’s license? Remember when I said that you risk non-payment if you do so?  If you needed another reason, a relatively recent Virginia Court of Appeals decision upholding a criminal conviction for performing construction work without a license should be that reason.

In Riddel v. Commonwealth, the Court took up an appeal from the conviction of Jeff Riddel where Mr. Riddel was verbally asked by homeowners to inspect and then repair their septic system.  Mr. Riddel then contracted with Fairfax Suburban Septic to pump out and repair the system.  Mr. Riddel then delivered the homeowners an invoice from Fairfax Suburban Septic and instructed the homeowners to pay Fairfax Suburban Septic directly.  After payment, the homeowners became aware that the work was not completed and that neither Mr. Riddel nor his subcontractor was licensed to perform septic work in Virginia. 

During the trial, Mr. Riddel argued on a Motion to Strike the Commonwealth’s evidence that (1) he merely arranged for licensed contractors to perform the repairs to the septic system, arguing that Virginia Code §§
54.2-801 to 802 permitted Riddel to arrange the work without a contractor’s license and (2) no written contract to perform a septic inspection or repairs existed.  The Circuit Court denied the motion and Mr. Riddel was convicted under Va. Code 54.1-111 for performing the work without a license.  Needless to say, he appealed.

The Court of Appeals affirmed the conviction.  It first restated the reasons that the Circuit Court properly denied the motion to strike.  These included the necessity for a Class C license for Riddel pursuant to Va. Code 54.1-1100 because he provided an estimate and entered into an agreement to provide the septic repair services with the homeowners (written or otherwise).  Because Mr. Riddel did not hold such a license at the time of contracting, he did so in violation of Virginia statute.  The Court then went on to state that Mr. Riddel’s separate argument under a different set of code sections had been brought up for the first time on appeal and was therefore not properly before the Court.  Be sure to read the opinion (linked above) to get a flavor for these arguments.

In short, contracting without a license can and will get you into trouble civilly and criminally so don’t do it.  If you have questions about whether what you are doing is “contracting” or if you require a license for your work, be sure to contact an experienced Virginia construction attorney for assistance.

Update on International Arbitration Law in United States

Matthew H. Kirtland, Katie Connolly, Esha Kamboj and Ernesto M. Hernandez | Norton Rose Fulbright

This past year, most in-house counsel have wrestled with significant disruption, distractions and lack of time. It has proved difficult for many to stay on top of legal developments. This article offers summaries of the most significant recent international arbitration law developments in the United States.

Impact of corruption on enforceability of awards

In Vantage Deepwater Company v Petrobras America Inc, the Supreme Court denied Petrobras’s petition for certiorari concerning a Fifth Circuit decision confirming Vantage’s arbitral award over Petrobras’s objection that the award had been procured by bribery and contrary to US public policy. Petrobras had asked the Supreme Court to clarify whether US courts should:

review de novo an arbitrator’s conclusions on issues of law or mixed questions of law and fact bearing on the ultimate question of whether United States public policy should prevent enforcement of an arbitral award.

In the now-final decision, the Fifth Circuit deferred to the arbitral tribunal’s conclusion that Petrobras had “ratified” the parties’ allegedly corrupt contract because it had notice of alleged bribery and nonetheless performed.(1)

Foreign sovereign immunity

In Bolivarian Republic of Venezuela v Crystallex International Corp, Venezuela, PDVSA, CITGO Petroleum and PDV Holding appealed to the Third Circuit a 14 January 2021 Delaware district court order denying their respective post-judgment motions challenging the court’s grant of Crystallex’s writ of attachment fieri facias and directing the sale of the CITGO shares to proceed.(2) The January order followed the Supreme Court’s May 2020 denial of Venezuela’s and PDVSA’s joint petition for certiorari in which they sought review of a now-final Third Circuit decision holding, among other things, that:

  • jurisdiction under the Foreign Sovereign Immunities Act (FSIA) from a recognition proceeding carried over to post-judgment enforcement and did not require an independent basis for subject matter jurisdiction; and
  • the Bancec alter ego extensive control analysis did not require proof that PDVSA was extensively controlled by Venezuela and that its control was connected to Crystallex’s injury.(3)

In Process & Industrial Developments Ltd v Federal Republic of Nigeria, Nigeria appealed to the DC Circuit a district court decision holding that signatories to the New York Convention relinquish their ability to claim sovereign immunity in other convention signatories’ courts.(4) In June 2020, the DC Circuit reversed a different district court decision in the same case, holding that Nigeria’s immunity defence – that a confirmable “award” under the FSIA arbitration exception cannot include an award set aside by a court with supervisory jurisdiction – was colourable and that it could not be forced to brief the merits before resolution of this immunity defence, because the FSIA provides immunity from litigation as well as from entry of adverse judgments.(5)

Service on foreign parties

In Compañía de Inversiones Mercantiles (CIMSA) v Grupo Cementos de Chihuahua (GCC), the Tenth Circuit affirmed a Colorado District Court’s decision that:

  • alternative service of process on a foreign party is appropriate under Federal Rule of Civil Procedure 4(f)(3) where the alternative method is not “prohibited” by the Hague Service Convention;
  • the district court has personal jurisdiction over GCC; and
  • the district court did not err by confirming CIMSA’s arbitral award against GCC.(6)

The Supreme Court denied GCC’s petition for writ of certiorari. Following the Supreme Court’s denial, the Colorado District Court denied GCC’s subsequent motion to vacate judgment.(7)

Contracting out to retain right to seek court interim injunctive relief

In Henry Schein, Inc v Archer & White Sales, Inc, the Supreme Court reversed itself and dismissed Schein’s petition for certiorari, leaving as final a Fifth Circuit decision that a carve-out of injunctive relief disputes from an arbitration clause meant that such actions do not first have to go to an arbitrator to determine whether the carve-out applies to the dispute.(8) In 2019, on a prior appeal in this same case, the Supreme Court had held that when a contract delegates the question of arbitrability to an arbitrator, a court may not override the delegation, even if it thinks that the argument that the arbitration clause applies to a dispute is “wholly groundless”.(9)

Evidence for use in private commercial arbitrations

In Servotronics, Inc v Rolls-Royce PLC, the parties moved to dismiss their appeal to the Supreme Court after the Court had granted Servotronics’ petition for certiorari seeking a decision on whether:

the discretion granted to district courts in 28 U.S.C. § 1782(a) to render assistance in gathering evidence for use in ‘a foreign or international tribunal’ encompasses private commercial arbitral tribunals, as the Fourth and Sixth Circuits have held, or excludes such tribunals without expressing an exclusionary intent, as the Second, Fifth, and, in the case below, the Seventh Circuit, have held.(10)

The Seventh Circuit ruled that private commercial arbitrations cannot be “proceedings before foreign or international tribunals” under 28 US Code section 1782 and denied Servotronics’s petition for discovery in support of an anticipated commercial rules arbitration in England.(11) There are at least three pending cases in which this same question is currently being argued before circuit courts.(12)

Challenge to arbitrator

In Monster Energy Co v City Beverages, LLC, the Supreme Court denied Monster Energy’s petition for certiorari, leaving as final a Ninth Circuit decision vacating an arbitral award because of evidence that the arbitrator had failed to disclose certain facts, including that the arbitrator had had an ownership interest in the arbitral institution, creating a reasonable impression of partiality. There continues to be a circuit split on the standard, with the Eleventh Circuit endorsing the “evident partiality” standard adopted by the Ninth Circuit, while the First, Second, Third, Fourth, Fifth and Sixth Circuits require a showing that “a reasonable person would have to conclude that an arbitrator was partial to one party to the arbitration”.(13)

Non-signatories to arbitration

In GE Energy Power Conversion France SAS, Corp v Outokumpu Stainless USA, LLC, the Supreme Court analysed the New York Convention’s text, its negotiation and drafting history, and the post-ratification conduct of its signatories to hold that the New York Convention does not prohibit US courts from applying the equitable estoppel doctrine to determine whether an international arbitration clause can be enforced by a non-signatory to compel arbitration. The Supreme Court reversed and remanded the Eleventh Circuit’s decision for consideration of whether GE Energy, on the facts of this case, could enforce the arbitration clauses and compel arbitration (for more details please see “New York Convention does not prohibit enforcement by non-signatory under doctrine of equitable estoppel”.(14)

Impact of Achmea on enforcement

In Micula v Romania, the DC Circuit affirmed the district court’s decision that Slovak Republic v Achmea BV (Case C-284/16) (Achmea) – in which the European Court of Justice ruled that an investor-state arbitration clause in a bilateral investment treaty between two EU member states was incompatible with EU law – did not apply to invalidate an arbitral award against Romania, because the key events leading to the award occurred before Romania’s accession to the European Union, and because the dispute did not relate to the application of EU law.(15) There are several other enforcement actions pending in DC against Spain and Italy in which the states have argued, at least in part, that the courts lack jurisdiction because of Achmea.(16)


(1) 966 F3d 361 (5th Cir 16 July 2020), cert denied, No. 20-1032, 141 S Ct 1395 (22 February 2021).

(2) Nos. 21-1276, 21-1277, and 21-1289 (3d Cir 12 February 2021).

(3) 932 F3d 126 (3d Cir 29 July 2019), cert denied, 140 S Ct 2762 (18 May 2020).

(4) No. 21-7003 (DC Cir 31 December 2020) (appealing No. 18-CV-594 (CRC), 2020 WL 7122896 (DDC 4 December 2020).

(5) 962 F3d 576, 580 (DC Cir 19 June 2020).

(6) 970 F3d 1269 (10th Cir 17 August 2020).

(7) No. 1:15-CV-02120-JLK, 2021 WL 2213193 (D Colo 30 April 2021).

(8) 935 F3d 274 (5th Cir 14 August 2019), cert granted, 141 S Ct 107 (15 June 2020), and cert denied, 141 S Ct 113 (15 June 2020), and cert dismissed as improvidently granted sub nom Henry Schein, Inc v Archer & White Sales, Inc, 141 S Ct 656 (25 January 2021).

(9) 139 S Ct 524, 529 (8 January 2019).

(10) No. 20-794 (22 March 2021).

(11) 975 F3d 689 (7th Cir 22 September 2020).

(12) Luxshare, Ltd v ZF Automotive US, Inc, Case No. 21-2736 (6th Cir. 2021); HRC-Hainan Holding Co, LLC v Yihan Hu, Case No. 20-15371 (9th Cir 2020); In re: Application of EWE Gass, Case No. 20-1830 (3d Cir. 2020). Defendants have filed a petition for certiorari to the Supreme Court before judgment. ZF Automotive US, Inc, v Luxshare, Ltd, Case No. 21-401 (2021).

(13) 940 F3d 1130 (9th Cir 22 October 2019), cert denied, 141 S Ct 164 (29 June 2020).

(14) 140 S Ct 1637 (1 June 2020).

(15) 404 F Supp 3d 265 (DDC 11 September 2019) affd, 805 F Appx 1 (DC Cir 19 May 2020).

(16) NextEra Energy Global Holdings BV v Kingdom of Spain, 19-cv-1618 (DDC 3 June 2019); 9ren Holding SARL v Kingdom of Spain, 19-cv-1871 (DDC 25 June 2019); Infrastructure Servs Luxembourg SARL v Spain, No. 18-cv-1753 (DDC 28 August 2019); E v Kingdom of Spain, 18-cv-1148 (DDC 16 May 2018), which was consolidated with Foresight Luxembourg Solar 1 SARL v Kingdom of Spain, 20-cv-0925 (DDC, transferred 7 April 2020) on 9 September 2020; Rreef Infrastructure (GP) Ltd v Kingdom of Spain, 19-cv-3783 (DDC 19 December 2019); Cef Energia, BV v Italian Republic, 19-cv-3443 (DDC 2 October 2019) and Greentech Energy Systems A/S v Italian Republic, 19-cv-3444 (DDC 14 May 2019), which have been consolidated in the Columbia District Court.

Tenth Circuit Rules Against Insurer and Decides That Appraisers Can Decide Causation

Karl Schulz | Cozen O’Connor

In the continuing saga of what can and cannot be appraised in a property insurance appraisal, the Tenth Circuit, in contrast to many other courts, has ruled appraisers can determine coverage issues.

In Bonbeck Parker, LLC v. Travelers Indem. Co. of Am., 2021 U.S. App. LEXIS 29607 (10th Cir. October 1, 2021), a hailstorm damaged three buildings covered under a commercial property insurance policy.  A dispute between the insured and insurer arose over whether the hailstorm caused all of the damage claimed.  The insurer paid some of the claimed damage, but denied coverage for other claimed damage, asserting that it was caused by non-covered causes such as wear and tear.  The insured invoked appraisal. 

The insurer asserted that it would only participate in appraisal under certain conditions.  The insurer wanted to limit the appraisal only to undisputed hail damages.  Thus, the appraisal panel would be limited to deciding how much repairs would cost but not what caused the roofs to require repairs in the first place.  The insured objected. 

The insurer filed a declaratory judgment action.  On summary judgment, the district court sided with the insured and agreed that the appraisal clause allows appraiser to determine causation.  The parties had other disputes, but this blog entry focuses on the causation issue within appraisal.

The Tenth Circuit made an “Erie Guess” as to how the Colorado Supreme Court would rule on the issue.  The district court and Tenth Circuit focused on the appraisal clause’s statement that, if there is a disagreement as to the “amount of loss,” either party can demand appraisal of the loss.  The Tenth Circuit observed that “amount of loss” was not defined in the policy and consulted dictionary definitions.  The Tenth Circuit cited various definitions of “loss,” such as “the amount of an insured’s financial detriment by… damage that the insurer is liable for.”  The Tenth Circuit concluded that all of the definitions included a causation component.  Further, the Tenth Circuit surveyed case law from Minnesota, Iowa, and Delaware.  Perhaps the most emphatic citation was from an Iowa intermediate appellate court that held: “causation is an integral part of the definition of loss, without consideration of which appraisers cannot perform their assigned function.”

The Tenth Circuit rejected various arguments by the insurer.  For example, the insurer noted that the appraisal clause gives the insurer the right to deny coverage even after the appraisal is complete.  The insurer argued that denial could be based on any ground available in the policy, including that the damage resulted from an excluded cause of loss.  The insurer argued that the court could not give effect to the plain meaning of the sentence if the appraisal panel determines causation. 

The Tenth Circuit reasoned that the insurer’s argument could not be reconciled with the plain meaning of “amount of loss.”  The Tenth Circuit opined that “amount of loss” explained subjects on which the parties may request appraisal, while the “right to deny” concerns the insurer’s options after an appraisal on one of those subjects. 

Also for example, the Tenth Circuit rejected an argument by the insurer that the term “appraiser” reflected an intent to limit that person to making monetary determinations, thus precluding causation determinations.  The Tenth Circuit opined that determining the value of something includes a causation element because that “something” is the “amount of loss.”     

In conclusion, the Tenth Circuit cited the leading case from the Texas Supreme Court, State Farm Lloyds v. Johnson, 290 S.W.3d 886, 892 (Tex. 2009):

As the Texas Supreme Court observed, that kind of causation issue arises “in every case,” and if “appraisers can never allocate damages between covered and excluded perils, then [they] can never assess hail damage unless a roof is brand new.” Id. at 892-93. Such a result “would render appraisal clauses largely inoperative, a construction we must avoid.” Id. at 893. Other district-court decisions have recognized as much, and we find their reasoning persuasive. See, e.g., Auto-Owners Ins. Co. v. Summit Park Townhome Ass’n, 100 F. Supp. 3d 1099, 1103 (D. Colo. 2015).

Notably, the Texas Supreme Court in Johnson also opined as follows in what has become an oft-cited headnote:

Indeed, appraisers must always consider causation, at least as an initial matter. An appraisal is for damages caused by a specific occurrence, not every repair a home might need. When asked to assess hail damage, appraisers look only at damage caused by hail; they do not consider leaky faucets or remodeling the kitchen. When asked to assess damage from a fender-bender, they include dents caused by the collision but not by something else. Any appraisal necessarily includes some causation element, because setting the “amount of loss” requires appraisers to decide between damages for which coverage is claimed from damages caused by everything else.

This of course does not mean appraisers can rewrite the policy. No matter what the appraisers say, State Farm does not have to pay for repairs due to wear and tear or any other excluded peril because those perils are excluded.

Johnson, 290 S.W.3d at 893. 

In a footnote, the Tenth Circuit cited authorities from the Supreme Courts of Alabama and Mississippi holding that appraisers cannot resolve causation issues.  The Tenth Circuit did not get into the rationales of those other courts, but stated that its decision was based on a conclusion of how the Colorado Supreme Court would resolve the issues.

The Tenth Circuit held that the district court properly granted summary judgment for the insured on its claim that the insurer breached the policy when it refused to allow the appraisal to proceed. 

Under Bonbeck, although appraisers may consider causation, the insurer was not wrong to be concerned that the appraisal process would be abused to sweep everything that was wrong with the insured’s buildings into the appraisal, resulting in an award that the insurer would be pressured to pay in full regardless of coverage.  It will be interesting to see how Bonbeck is applied and if a Colorado state court adopts the reasoning and its holding. 

“Tail Coverage” – Understanding The Extended Reporting Period

Pamela G. Michiels | Phelps Dunbar

Professional liability policies, almost always written on a claims-made basis, typically contain a number of options for the insured to obtain an Extended Reporting Period (ERP). What does that mean? And why might it be necessary, or at least a good idea? While many variations on the ERP exist, the basic purpose, function and operation of the ERP are fairly standard. Here’s what you should know.  

The ERP, also known as “tail coverage,” provides for an additional period of time during which the insured can report a claim after its claims-made policy has expired. That’s important, because the policy itself typically provides that the claim must be first made against the insured, and reported to the insurer, during the policy period. Tail coverage typically isn’t necessary if the insured is renewing its coverage, but it can be invaluable where that’s not the case. 

  • Some policies provide a limited “automatic” ERP to allow the insured a grace period, usually 30 to 60 days, to report a claim that was made during the policy period.This typically costs the insured nothing. 
  • If an insured’s policy is cancelled or non-renewed by the insurer, or the insured elects to cease carrying professional liability coverage, an “optional” ERP is available at an additional cost to the insured. The cost is usually based on a multiple of the premium on the cancelled or expiring policy. Such tail coverage is typically purchased in one-year increments, up to five years, and sometimes longer – but as the tail grows, the cost goes up, since the insurer is taking on additional risk.
  • Typically, the only instance in which an ERP will not be offered is where the policy has been cancelled for cause – nonpayment of premium, fraud or material misrepresentation.
  • Some ERPs extend the time during which a claim that was first made during the policy period can be reported.Other ERPs allow for the extension of coverage where the claim was both first made against the insured and reported to the insurer during the ERP, as long as the wrongful act giving rise to the claim took place after the retroactive date and prior to the end of the original policy period. 
  • The ERP does not extend the policy period, and does not change the scope of coverage or increase the policy’s available limits.
  • A common reason to obtain tail coverage is where an insured is winding up its business – due to retirement, sale or unprofitability, for example. While there’s no need to maintain professional liability coverage on a shuttered business, the insured will want to maintain some protection against wrongful acts it may have committed prior to the policy’s expiration, but a claim has not arisen and thus cannot be reported until after the policy has expired.
  • An ERP is always optional, and an insured is never required to purchase one. However, the ERP provides a great deal of additional protection and should be seriously considered, especially if the insured foresees a major change to its business or its insurance program.