Having lived in Philadelphia in 2013 when the four-story “Hoagie City” building collapsed during demolition and toppled the neighboring Salvation Army thrift store, killing seven people and injuring 12 others, I closely followed the recent civil trial that resulted in a $227 million settlement of the plaintiffs’ personal injury and wrongful death claims—a reported record for Pennsylvania state court.
According to news reports, $27 million of the settlement is being paid by the Hoagie City building owner, New York real estate investor Richard Basciano, and the remaining $200 million is being paid by the Salvation Army. Basciano’s demolition contractor, Griffin Campbell, and Campbell’s excavation operator, Sean Benschop, did not participate in the settlement, as both are serving long prison terms for their role in the collapse. Also not participating: the architect hired by Basciano to monitor the demolition, Plato A. Marinakos, who was believed to have already exhausted his insurance coverage. The settlement was reached while the jury was deliberating its damages award, having already found both Basciano and the Salvation Army liable to the plaintiffs.
According to the same new reports, evidence presented during the trial showed that Basciano—who died last week—did minimal due diligence before hiring Marinakos, who had little to no experience overseeing similar demolition projects, or before hiring Campbell, who was similarly unqualified and was unlicensed. The evidence also showed that the Salvation Army ignored warnings of the building’s imminent collapse and did not tell its employees and customers about the danger.
There are many lessons to be learned on all sides of this tragedy, including by owners who might otherwise assume they are insulated from liability for the acts and omissions of the professionals and contractors they hire. The tragedy in Philadelphia serves as an important reminder that owners have an obligation to perform reasonable due diligence in vetting designers and contractors—particularly when a project involves high-risk work. And while carefully drafted contract provisions can provide owners with some degree of protection, even the most owner-friendly contract likely would not have saved Basciano. For one, Basciano’s liability to the plaintiffs stemmed from his own obligation to vet and hire qualified professionals and contractors. Further, many states—including Oregon—prohibit a party to a construction contract from indemnifying any other person for that person’s own negligence.
There are similar insights to be gained by designers and contractors, the most obvious being that they should not perform work for which they are unqualified, and should make sure that the consultants and subcontractors they hire also perform only work they are qualified to perform.
And—as the Salvation Army learned—even neighboring property owners without any involvement or control over construction activities can have liability if they ignore warnings of imminent danger caused by their careless neighbor.
These lessons may seem obvious. But too often obvious takes a back seat to expediency and up-front cost savings.