The Role of a Peer Reviewer
By now, many of you are probably familiar with the litigation swirling around the Millennium Tower, San Francisco’s $350 million, 58-story condominium building. When it opened in 2008, it was touted as the most luxurious tower in San Francisco, attracting wealthy purchasers from tech millionaires, venture capitalists, and local sports figures.
According to several of the lawsuits, the building has sunk 16 inches and has tilted 15 inches at its tip and 2 inches at its base since 2009. And the building continues to sink. One of the lawsuits filed by a group of homeowners claims that the developer was warned in a 2005 geotechnical report that estimated rates of building settlement had uncertainty rates as high as “plus or minus 50%” and that this information was withheld from prospective homebuyers. The homeowners’ lawsuit also alleges that excessive groundwater pumping starting in 2010 at the neighboring Transbay Transit Center site is also responsible for the settlement. The Transbay Joint Powers Authority (TJPA) blamed the settlement on the building’s design, which combines heavy concrete construction with a concrete slab foundation and piles that go into sand rather than down to bedrock.
Needless to say, determining if a fix is needed and then designing and implementing such a fix will almost certainly take several years, and the litigation to determine who will pay for it could take even longer. In the interim, homeowners are impacted as property values plunge and resales are improbable.
One of the aspects of this litigation that we found interesting emerged from the testimony of an engineering expert who was retained to conduct a peer review of the foundation’s structural soundness in 2006. The UC Berkeley structural engineering professor, retained by the developer’s structural engineer, said that during the peer review process he was only able to verify that the building itself was up to code, not the foundation or the ground it was built on. He certified that “on the basis of my review, it is my opinion that the foundation design is compliant with the principles and requirements of the building code, and that a foundation permit can be issued for this project.” The developer has used this statement as proof that they “met and exceeded the requirements of the city.”
A city supervisor, however, was incensed by the testimony, stating that the engineer:
“knew there would be dewatering next door and didn’t mention anything about it in his letter. He knew that there had been no geotechnical peer review but doesn’t mention it his letter. I mean you’d think that a professional like this would at least cover their behind a little bit.”
When asked why he didn’t push the planning department for a geotechnical review, the professor’s response was “it really wasn’t my place to demand that there be one. I was hired under a specific scope and was working under that scope.”
This illustrates the great divide that often exists between perception and reality and why it is essential to have a clearly defined scope of services in every professional services agreement. We don’t know yet if this engineer has or will be brought into the litigation, nor what type of contract he had with his client. There are standard form agreements available that will help protect you if you perform a peer review. For example, EJCDC document E-581, 2017 Agreement Between Owner, Design Engineer, and Peer Reviewers for Peer Review of Design, includes a mutual waiver of claims between the peer reviewers and the design engineer, a mutual waiver of consequential damages, and indemnification from the owner.
We are aware of only a handful of claims involving a peer reviewer. A project peer review is not meant to shift or spread exposure for professional liability claims. The goal is to provide feedback to reduce the probability of claims and to make any filed claims easier to defend.
Look for future updates as we learn more about the fate of the Millennium Tower.