The tilting tower near Transbay

San Francisco’s tallest and most luxurious residential skyscraper is sinking, leaning, and setting the stage for an epic, and even precedent-setting, bayside court battle.

When it was completed in 2008, the 58-story Millennium Tower in San Francisco was the toast of the town – ultra luxurious condos, exorbitantly expensive, a symbol of the city’s emergence as the center of the venture capital universe.

By 2013, the building had sold out. Penthouses went for nearly $10 million, and at one point, NFL icon and former 49er Joe Montana owned a condo there. According to press accounts, the project netted a healthy 25-percent profit.

But that was then and this is now.

The gleaming tower in the SOMA district has sunk at least 16 inches since it was built, and a tilt at the base has resulted in an alarming 15-inch lean at the top. Pavement has already buckled in several areas, and there have been complaints of water intrusion. The tower, built on landfill but not anchored in bedrock, will continue to sink and shift. Those are the claims behind a blockbuster, $500-million class-action lawsuit filed against the building’s developer, Millennium Partners, by building resident John Eng.

In the notice of claim, plaintiff’s attorney Ron Foreman says, “The subsidence and the threat of future subsidence obstruct Claimant’s and the other homeowners’ free use of, and interfere with their enjoyment of, their homes, and thereby cause them to be annoyed and/or disturbed.”

The suit also names as defendant the Transbay Joint Powers Authority, the multi-agency public entity that dug a 60-foot excavation next to the Millennium as part of the over-budget, increasingly troubled Transbay Transit Center. The suit says that Transbay exacerbated the Millennium’s foundation problems by installing a buttressing system that failed to halt the Millennium’s shift.

The ramifications of the case could be profound, says San Francisco-based Brodie Stephens, general counsel for global architecture firm Perkins + Will. While neither Stephens nor his firm are party to the suit in anyway, as a longstanding member of the A/E/P-legal community, and being based in the Bay Area market, Stephens says he’s interested in the outcome.

“This is a big case for the country,” he says.

Stephens says a high-rise issue of this magnitude has not unfolded since 1978, when famed engineer William LeMessurier undertook emergency welds to keep Citicorp’s headquarters in New York from being blown over by high winds.

As the Millennium is the tallest residential tower in the city and the third tallest overall, its troubles are no secret.

“It’s made headlines and people are talking about it,” says Jens Norman, president of the Golden Gate Branch of the ASCE. “It’s a concerning issue.”

In the filings, Foreman, citing the $500 million claim, says the “actual amount of damages is unknown at this time, but will likely exceed the estimate.”

Foreman’s filings also suggest that more defendants will eventually be added to the suit.

Referring to as-yet-unnamed defendants as “Does 1 through 200,” Foreman writes, “Plaintiff will seek leave to amend this complaint to allege the true names and capacities of said fictitiously named defendants when their true names and capacities have been ascertained.”

Handel Architects designed the building, DeSimone Consulting Engineers was the structural engineer, and the contractor was Webcor Builders. The Millennium, the tallest reinforced concrete structure in the Western United States, won a raft of awards, including the 2008 Outstanding Structural Engineering Project of the Year by the ASCE-San Francisco.

But those awards will mean little to nothing in the courtroom. And citing a 2014 ruling out of the California Supreme Court in the Beacon vs. SOM case, Stephens says Handel, and even DeSimone and others, could end up in court for a long time.

“In California, the duty of care potentially expands to a lot of parties,” Stephens says. “As a consequence, the plaintiff is going to be incentivized to add as many wallets to the party as they can. But just because a case gets filed doesn’t mean that any particular person or entity actually did anything wrong.”

Millennium, of course, says it’s not at fault. Instead, the Transbay authority is to blame.

“They built a half-mile tunnel 60 feet underground and next to our building, and they were supposed to [protect the Millennium] – and they just didn’t,” a Millennium spokesperson said to the San Francisco Chronicle.

In turn, Transbay denied responsibility. In a statement released before the lawsuit was filed, Transbay says, “The residents’ claims against the JTPA are misplaced; as demonstrated by data collected over more than seven years, full responsibility for the tilting and excessive settlement of the building lies with Millennium Partners, the developer of the Tower.”

With all the finger pointing, drilling down to the true cause of the problem will take time.

“They’ll bring in experts,” Norman says. “It’s hard to say how far it will go. It will take a while to figure out who is at fault.”

Norman says that since the building is situated on landfill, the Millennium will probably prompt building officials to at least look at, and even levy, additional regulations that could add cost to future projects.

Meanwhile, those who own condos in the Millennium are in danger of losing out on their multi-million dollar investments.

“Nobody’s panicking except the people who live there,” Norman says. “It’s a huge deal that they’re losing property value.”

As of Aug. 11, there were 9 Millennium listings ranging in price from $1M to $3.5M.

Dan Knise, president and CEO at Washington, D.C.-based Ames & Gough, a specialty insurance brokerage with a focus on architects, engineers, and law firms, says a lot of people and businesses will likely be affected by the Millennium case. Unfortunately, in a case this big, the liability is likely to outpace the coverage.

“Any engineer or architect involved with this project or the neighboring project is likely concerned that they will be dragged into this suit,” Knise says. “Someone is likely to raise an issue as to whether or not there was a design error. In any event such a claim is likely covered by the design firm’s professional liability insurance. The only issue there is that most firms only carry $1-5 million, or maybe $10 million, in coverage.”

Posted in Archives | August 30th, 2016 by