Builders' $26.5M Settlement Will Rebuild College's Collapsed Garage
Contractors and insurers involved with a $22.5-million Miami Dade College parking-garage project that partially collapsed during construction in October 2012 agreed to finance a complete rebuild by paying the school roughly $26.5 million via a settlement. Additionally, the contractors forgave an unspecified amount of payment claims previously filed with the school.
The insurance payment—due within 30 days of the May 6 settlement—was divided up five ways, with Hartford Fire Insurance Co., the project’s builder’s risk insurance carrier, agreeing to pay a total of nearly $10.3 million. Included within Hartford’s total was nearly $4.85 million for direct physical loss, satisfied by prior payments to repair the structure. Reached by ENR, the insurer had no further comment about the matter.
The next-highest amount, $8.7 million, was assigned to Coreslab Structures and its subsidiary, Solar Erectors, along with their insurers. Of that amount, Coreslab and Solar—which, together, supplied and erected the garage’s precast-concrete members—will be responsible for just over $2 million. The companies’ insurer, United States Fire Insurance Co., will cover $4 million of the payment, while Alterra Excess & Surplus Insurance Co. and Indian Harbor Insurance Co. will contribute to a $1.75-million payment, according to the settlement. Century Surety Co. is responsible for another $950,000 of the settlement.
General contractor Ajax Building Corp. will be responsible for $3.66 million of the $26.5-million total.
In October 2013, Miami Dade College sued Ajax, its insurer and six subcontractors in state circuit court in Miami, claiming that the collapse “rendered the remaining portion … unsafe, unusable and not reparable to contractual tolerances or aesthetics.” The main dispute between the college and the builders was whether the collapsed, 88,000-sq-ft section of garage, which measured 520,000 sq ft in total, could be repaired, says the college’s attorney, Stuart Sobel.
"The hard part of the case was getting everybody to agree that it really couldn’t be repaired adequately,” Sobel says. “That’s where the big fight was.”
The respective parties each hired inspectors, says Sobel. During mediation, the college offered its inspection team’s findings, which asserted the following collapse-induced impacts: 81% of columns out of tolerance; 19% of splices overcapacity; 16% of the structure’s columns overstressed; and 24% of the installed double-tee beams damaged.
At first, the two sides argued over whether those out-of-spec conditions were a result of the collapse, which would be covered by the builder’s risk policy, or whether they were the result of faulty construction, which would not be covered by the builder’s risk policy.
"It was a big victory when we got Hartford to buy into the idea that you couldn’t have that many columns erected that far out of tolerance and nobody notice it,” Sobel adds. “That’s why they ended up stepping up and paying a big chunk of it."
"It was a good settlement for everyone involved because it was a potentially difficult and drawn-out litigation,” says Michael Jay Rune II, the attorney for Ajax. Noting that the litigation expense would have been “astronomical” due to the fact that more than 20 parties were involved in the case, Rune says, “That’s why you had a buy-in to do a fairly large monetary settlement.
"We were satisfied with the allocation, which meant that the tier of responsible subs and the builder’s risk carrier paid the vast majority of the settlement,” Rune adds. “Ajax is very pleased to put this behind them."
While noting that the school was "satisfied” with the legal outcome, spokesman Juan Mendieta is quick to remember the four workers—Robert Budhoo, 53; Jose Calderon, 60; Carlos Hurtado de Mendoza, 48; and Samuel Perez, 53—who died in the accident. “You can’t be pleased with this settlement," he says, “because lives were lost, and it should’ve never happened in the first place."
Miami Dade College is already moving forward to build a new garage.
This article was updated with new information on May 27, 2015.