In August 2004, Hobe Sound, which is a small community between Jupiter Beach and Stuart, Fla., was the scene of a condominium collapse where two were killed and seven injured. Tranquility Condominium, a multi-million dollar, high end condominium, suddenly collapsed to the ground bringing death and injuries.
As always, there are other issues. For example: Why did it fall and who was at fault? There is the claim that there was no workman’s compensation insurance for the dead and injured…how can this be? Was there a threshold engineer on the job? What happens to the families of the deceased with no insurance? What happens to the money the investors put up for this failure? Do the families of the deceased have a claim against the investors?
Typically, builders and developers want to make a profit. Often, one of the areas where builders and developers see hidden profit is in the workman’s compensation insurance. Workman’s compensation rates for high-risk activities like elevated concrete work and roofing work – are generally 50 percent or greater. So if a foreman is making $1,000 a week, the “comp” insurance is $500 a week. Consider: if a company has 15 men on the job at $500 a week plus a foreman, the weekly payroll would be $8,500 a week with a comp burden of $4,250 a week. If the condo takes a year to build, we are now at a $221,000 additional profit for the contractor. This is very tempting for a company that has 100 to 200 employees. It can quickly jump into the millions! However, this practice is a felony!
How is it done? Well, it can be as simple as just not paying the comp insurance, figuring that the chances of getting audited are low. Usually, it involves a much more insidious conspiracy. One that transcends into paying entire crews under the table, having secret sub-contractor companies that also do not have comp or licenses, and the use of illegal aliens. Obviously, this is also a felony. However, there is a claim that contractors call the “grey area method,” which involves “employee leasing” or labor force. This is where it gets cute. The contractor sends his employees to an employee leasing company. The company will have comp but deep auditing often reveals that the company will list the roofing and concrete workers as general labor or landscape workers. They now have hundreds or thousands of workers paying $10 on the $100 rather than the $55 on the $100. The general contractor knows this is going on but turns a blind eye and pretends he does not know. If he gets caught, he claims he was defrauded or misled. Bottom line: No comp! This all works until someone gets hurt badly or gets killed. FYI, getting hurt badly can run up a $500,000 bill but getting killed is usually limited to $100,000. So it’s better for the contractor to have the employee die rather than get badly hurt! A gruesome thought.
In one of my continuing education courses required by the state for license continuation, our instructor, a general contractor, professional engineer and professor at the University of Florida told us, “Regarding workman’s compensation, if someone gets badly hurt, the claim will eventually get paid by someone. The state will keep digging until they find someone that has insurance or viable assets.” This can eventually mean the condominium owners! Does the condominium want to play “turn a blind eye?” Aside from serious civil liabilities, there are possible criminal liabilities to anyone that knows or should have known about the little plot to defraud the government, the insurance company and the workers. The illegal aliens’ situation only compounds the entire thing.
Florida Statute FS:553.79 states: The enforcing agency shall require a special inspector to perform structural inspections on a threshold building pursuant to a plan prepared by the engineer or architect of record. The purpose of the structural inspection plan is to provide specific inspection procedures and schedules so that the building can be adequately inspected for compliance with the permitted documents.
The fee owner of a threshold building shall select and pay all costs of employing a special inspector, who in turn is responsible to the enforcement agency. The inspector shall be a person certified, licensed or registered.
The board shall, by rule, establish a qualification program for special inspectors and shall compile a list of persons qualified.
A threshold building is a building that is 40 feet or higher. Any life safety structural work on a condominium four stories or higher requires a licensed professional engineer or licensed architect that is also licensed as a threshold inspector. Other than work on federal government buildings, there is no waiver on this requirement. Not all engineers are licensed threshold inspectors and they need to sign off on a threshold building. The local building department cannot sign off on a threshold department unless the chief building official is a registered engineer or architect with a threshold license. Again, there is no way of excluding this requirement.
If a condominium hires a contractor to do structural work on a threshold building, it is the responsibility of the condominium to hire and pay a threshold inspector and not the contractors! If the condominium hires an engineer with no threshold license, they are in violation. If the association does not hire a threshold inspector on a threshold building and injury or death occurs, they would be legally responsible for civil and possible criminal penalties. As good condo association lawyers will tell you, ignorance of the law is no excuse.
In the instance of Tranquility Point, there were civil and criminal liabilities to several parties. There was reported to be a licensed threshold inspector on record but there are questions.
Was he onsite?
Did the contractor follow the engineer’s plans?
Did the engineer have a shoring and hardening schedule plan?
This all originated from the famous Harbor Kay death in the ‘70s where a complete high-rise condominium fell killing many and injuring many more. This was the origin of the threshold inspector engineer law.
Harbour Cay Condominium collapse
On the afternoon of March 27, 1981, when workers were finishing the concrete on the fifth floor slab, the almost completed Harbour Cay Condominium collapsed in Cocoa Beach, Fla. The building, a five-story flat plate reinforced concrete structure intended for residential use, collapsed vertically. Each floor slab broke away from the columns and landed on the next lower floor all the way to the ground level. Eleven workers died and 23 were injured. After the rescue operation ended and the on-site investigation was over, the collapsed structure was completely demolished.
The project’s structural engineers, who were retired NASA engineers, surrendered their state licenses. The architect who designed the project was severely punished by the Florida Department of Professional Regulation.
Recommendations:
Hire an engineer with a threshold license and require him or her to post a copy with the association and building department.
Require the engineer to produce professional liability insurance.
Require the general contractor to certify that all his workforce is legally employed and that all are insured by a workman’s compensation policy.
Require the general contractor to list as “also insured” the following: the association, the engineer, the board and the management company. “Also insured” is not “certificate holder.”
Have your attorney review these requirements and do a “due diligence” search for past litigation, insurance problems, INS violations and a credit check of the company and its officers.
Do not think playing dumb and turning a blind eye is a defense for a possible casualty. A board member could find himself in a personal legal bind as well as exposing his association to the same.
Final note: Cheaper is not better…if something sounds too good, it probably is.
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Author : Richard Charbonneau-Hambleton
Company : Charbonneau-Hambleton PA Roof and Structural Engineering Consultants
Richard Charbonneau-Hambleton is president of Charbonneau-Hambleton PA Roof and Structural Engineering Consultants in Satellite Beach, Fla.
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