Hypothetical Cases
Business Liability for Earthquake Hazards & Losses

The company knows, either from its design professional or by a public inspection, that its commercial or office building is hazardous in a moderate earthquake - either because of the facility's design inadequacy or geologic setting. The company takes no action and a moderate earthquake occurs, resulting in many injuries and deaths to employees and members of the public. Building occupants trapped in the upper stories for extended periods suffer extreme psychological distress. What happens?

The company may be negligent in failing to mitigate the hazard associated with the building's inadequate design or geologic setting. In deciding the question, the jury must analyze the company's actual behavior under the reasonable person standard.

If the original problem is a design inadequacy, three pertinent issues are raised.

  • Is the design inadequacy one of which the company knew, or should have known, at the time the building was built?
  • At the time the company knew, or should have known, of the inadequacy, what actions were available to the company to eliminate or mitigate the hazards associated with the design inadequacy (i.e., redesign or structural retrofitting of the building), change the use, implement emergency planning precautions)?
  • What are the benefits of these remedial measures weighed against the cost of instituting such measures?

Thus, the benefits and costs of an action is just one of the issues that is raised in the determination of liability. In addition, while a building owner may determine prior to an earthquake that he or she is not concerned about loss of life or injury when making such an analysis, the viewpoint of a jury after the earthquake when faced with injured victims and relatives of people killed is not likely to come to that same conclusion.

In analyzing these issues, the standards by which the company will be judged are supplied by the testimony of expert witnesses. Typical questions are raised.

  • Did the architectural and/or engineering design meet professional standards?
  • What design or retrofitting options were available either at the time of construction or at the time the company learned of the design inadequacy?
  • How effective are the alternative emergency planning measures?

If the company is also the building developer, it may be held liable for the negligence of the professionals who contract with it to construct and design the building under legal theories of nondelegable duty, implied warranty, or strict liability.

If the negligence lies in the selection of the site for the building, the foregoing analysis still applies. However, it should be noted that the practical alternatives are available primarily during the design phase when the building could have been relocated.

If the jury determines that the company is liable, it is fairly clear that the victims of the earthquake may recover from emotional distress. If the victim is an employee and the emotional distress produces an occupational disability, the victim may recover.

Proving the magnitude of the risk of an earthquake poses an interesting question. The possibility of the occurrence of an earthquake of a specific magnitude and the shaking exposure likely to result from that earthquake at the location of the building can be assessed in light of expert testimony from seismologists, geologists, and other similar professionals.

Information for risk analysis is better and more widely disseminated in 2004 than 20 years ago. Since the late 1980s, the U.S. Geological Survey (USGS) has regularly published estimates of earthquake probabilities and provided this information to the public. The data have been widely publicized by the news media. Since the mid-1970s, the California Geological Survey (CGS) (and its predecessor, the California Division of Mines and Geology) publishes maps of fault hazard special study zones for all of California under the Alquist-Priolo Fault Special Studies Zones Act. More recently, CGS has published maps of areas where liquefaction and landsliding are more common and require special studies to determine if mitigation is needed for many urban areas as part of its Seismic Hazard Mapping Program. Disclosure that a property is located in one of the areas mapped by CGS under either of these two programs is required for all real estate transactions in the state. ABAG and USGS have produced maps showing ground shaking intensity for various expected earthquakes that are readily available on the internet. Probabilistic versions of shaking hazard have been produced by CGS and USGS.

The hazards associated with particular building types are also better known, and more widely disseminated, than 20 years ago. For example, various U.S. Department of Homeland Security - FEMA reports and programs (such as HAZUS and FEMA 154) combine the predicted exposure with typical building types. The building type with the most known structural problems is probably unreinforced masonry buildings due to the state requirement that cities and counties identify these buildings, notify the owners, and adopt a program to mitigate their risk (but not necessarily require structural retrofit). Other building types that have collapsed in recent earthquakes when exposed to violent shaking (and thus should be commonly known as problem building types) are:

  • "Non-ductile" concrete frame buildings built prior to the mid-1970s when the building code was changed to require more and different steel reinforcing in the concrete;
  • "Soft-story" apartment buildings with commercial or parking on all or part of the ground floor; and
  • "Tilt-up" concrete buildings with inadequate connections between the outside walls and the roof and floor.

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ABAG, the Association of Bay Area Governments, is the regional planning and services agency for the nine-county San Francisco Bay Area. This information is based on a two-year research effort that resulted in the 1984 ABAG report, "Liability of Private Businesses for Earthquake Hazards and Losses," including an Executive Summary, a Guidebook, and a Background volume. The research effort that forms the basis for this information was funded by the National Science Foundation's Earthquake Hazard Reduction Program, as well as by ABAG. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors of these reports and do not necessarily reflect the views of the funding agencies. None of these materials constitute legal or engineering advice to the reader. Please consult your own attorney or engineer for advice on a specific situation or facility. The information contained on these pages was reviewed for accuracy based on 2004 laws and case laws in 2004. This page was last updated 4/13/04 by jbp.