California authorities are rightly seeking to assess blame for the devastation that killed and injured so many of our neighbors in the Northridge earthquake in January.
Investigators are trying to learn why purportedly reinforced freeways collapsed and why building inspectors are finding a pattern of faulty construction and design in destroyed and damaged buildings.
In this period of reassessment of earthquake-related building policies, however, nothing is being said about a quirk in California law that literally allows the courts to blame the blameless--owners of apartment buildings--for the injuries and deaths caused by quake-damaged buildings.
Apartment house owners may seem unlikely candidates for our compassion, but the reality is that California law requires that they shoulder the liability for design or construction defects that cause their buildings to fail and injure or kill people inside--even when they bought the buildings long after they were built and had nothing to do with their design or construction.
The owner of a single-family rental house that falls down and kills everyone inside faces no such strict liability. Neither does the owner of the strip mall that caves in and kills dozens, or the owner of a hospital that collapses and kills hundreds. Such owners who had nothing to do with the structure's design or construction will not be held strictly liable for the injuries or deaths even if it is determined that a construction or design defect contributed to the damage.
But if any apartment building gives way, its present owner is liable for any injury or damage that results from a defect, even if he or she had nothing to do with its design or construction and was in fact the fourth, fifth or 10th owner of the building. The owner can attempt to recover all or part of the damages from those actually at fault, such as the architect and builder--if they are still alive, are solvent and can be located.
In general, when an injury occurs, the U.S. judicial system holds responsible the person who caused the harm. This is liability based on fault. However, in products liability cases, the courts have carved out an exception whereby every person ever connected with the design, manufacture or sale of a product is held liable for any injury proved to be caused by the product's failure to perform as expected. This is known as strict liability.
In 1985, in Becker vs. IRM Corp., the California Supreme Court expanded the scope of strict liability to apply to the owners of apartment buildings. The Becker case means that even the 100th buyer of a building could be held liable for problems he never knew existed and could not have discovered even through reasonable inspection.
The rationale behind Becker is that landlords are in the best position to bear the cost of injuries and can obtain insurance to protect themselves. Unfortunately, this reasoning does not acknowledge that insurance is expensive, that obtaining insurance to cover all eventualities is impossible and that rents are controlled by both the marketplace and rent control laws.
As the attorney representing numerous owners of apartment buildings damaged in the Northridge quake, I am witnessing the impact of this travesty firsthand. Some of my clients are large developers. But others are retired couples who planned their retirement around the income of a small apartment house. They owned the buildings but had nothing to do with their design or construction. Yet they face years of litigation, huge damage claims and in some cases financial ruin--all for alleged activities for which they are unquestionably blameless.
Imagine the implications of such a law in the aftermath of the catastrophic earthquake that so many experts predict for our state. Not only would we face unparalleled injury, death and destruction, but with that kind of liability, we would also face a future in which destroyed apartment buildings would simply never be rebuilt.
California is in the minority of states that impose strict liability on apartment owners. As the implications of this legal doctrine become clear as a result of this earthquake, we can expect the number of investors willing to risk everything to own apartment buildings to shrink, which in turn will reduce an inadequate pool of affordable housing.
During this period of rebuilding and reaffirming California's commitment to a healthy social and business environment, the public, Legislature and courts should re-examine the wisdom of singling out apartment owners as the one group of real estate owners somehow suited to be blamed when they are blameless.