The Insurer Disagrees With the Building Official and Will Not Pay Ordinance or Law Coverage—Find Out What To Do By Watching Tuesday at 2 With Chip

Building officials play a substantial role in ensuring that zoning codes, local ordinances, and building codes are met. It is not uncommon for insurance companies to challenge the policyholder’s engineers, contractors, and even the building officials about the applicable building codes to lower or prevent payment of insurance benefits owed under Ordinance or Law Coverage. While the rest of this post will discuss this issue with an emphasis on Florida law, please join me this afternoon for a livestream at 2 pm EST when we will discuss Ordinance or Law Coverage and how to combat a more frequently raised issue.

The authority of a building official varies depending on the local governing ordinances. Generally, building officials are authorized to order the repair or restoration of any part of any dwelling when an improper design or structural defect exists.¹ An agency’s interpretation of a statute that it is charged with enforcing is entitled to great deference and will be approved by the court unless it is clearly erroneous.² The Supreme Court of Florida, in BellSouth Telecommunications, noted that agency orders come to the court “clothed with a presumption of validity.”³ The burden of overcoming these presumptions is on the party challenging the agency’s interpretation.

There are several Florida cases establishing the design professional’s responsibility for code compliance. The design professional has a professional responsibility to prepare drawings and plans that conform to applicable building and zoning codes.⁴ Furthermore, “[t]his duty of the architect cannot be avoided by delegating the responsibility of [e]nsuring that portions of this design comport with the applicable laws and regulations.”⁵ Similarly, the engineer is tasked with ensuring that its work complies with the applicable codes, rules, and regulations governing its engineering work.⁶ Further, an architect is entitled to rely on a building official’s interpretation of a given code, even though another interpretation may be possible.⁷

Official acts of public officers are presumed regular, in the absence of clear evidence to the contrary.⁸ The presumption is that public officials perform their duties.⁹ Here, this presumption applies to Mr. Hodges’s findings that Treetop is required to rebuild to a Level 3 Alteration to comply with the requirements of the 2017 Florida Existing Building Code. Acts done by a public officer which presuppose the existence of other facts to make them legally operative are presumptive proofs of the latter.¹⁰ The presumption that public officers properly perform their duties must be overcome by clear and convincing evidence to the contrary.¹¹ Further, Fla. Stat. Section 468.604(1), titled “Responsibilities of building code administrators, plans examiners, and inspectors,” provides, in part: “The building code administrator or building official shall faithfully perform these responsibilities without interference from any person.”

An important case outside of Florida is Mesaba Holdings, Inc. v. Federal Insurance Company.¹² Mesaba Holdings sought coverage for the cost of an upgraded fire suppression system after its maintenance hangar was damaged in a windstorm. County officials advised Mesaba that when it rebuilt the hangar, it would have to comply with the requirements of the building code, which required a “far more sophisticated fire suppression system” than existed before the loss. Federal argued that the county was wrong and that Mesaba would not be required to comply with the building code. The court in Mesaba Holdings further emphasized the authority granted to the public official’s determinations, stating:

Federal’s argument appears to be that Wayne County’s officials charged with implementing its building code were wrong. This argument, however, is not persuasive. Wayne County has the right to interpret its own laws and Mesaba has no obligation to contest its decisions, see Stevick v. Northwest G.F. Mut. Ins. Co., 281 N.W.2d 60, 64 (N.D.1979).

Additionally, an insurer may waive its right to challenge a building official’s order and/or findings if they are not objected to in a reasonable time after the findings are first reported. In Algernon Blair Group, Inc. v. United States Fidelity and Guaranty Company,¹³ after a substantial fire loss and its investigation, the supervisor of building inspection for the Metropolitan Government of Nashville and Davidson County issued an order that the area should be barricaded and the remaining structure be demolished. Four days after the order, the insurer obtained a temporary restraining order, but it failed to challenge the validity of the building inspection order. When the issue of the validity of the order was later brought up, the Eleventh Circuit found in favor of the insured, and held the insurer had waived its ability to challenge the validity of the order by not challenging it when it was initially presented. Specifically, the court stated:

USF & G should have made this argument in state court during its (abandoned) attempt to get an injunction challenging the demolition order. USF & G had standing to challenge the demolition order; in fact it obtained a TRO. It could have disputed the factual findings of the Metro Government code administrator at that time by pursuing a preliminary injunction; it chose not to do so. Instead, it has waited until after the property has been demolished to challenge the correctness of the order. We agree with the district court that the validity of the Metro Government’s demolition order may not be challenged at this late date. See e.g. Gambrell v. Cambellsport Mutual Ins. Co., 47 Wis.2d 483, 177 N.W.2d 313 (1970); Maryland Casualty Co. v. Frank, 452 P.2d at 921 (condemnation order, unchallenged before the local authorities, is conclusive in court and sufficient to support a finding of total loss).¹⁴

Any person studying this situation should also read the post on this topic by Merlin Law Group attorney Ed Eshoo, What Constitutes Enforcement of a Building Ordinance or Law?

Here is a link for the Livefeed at 2 pm. My guest will be Nick Conklin.

Thought For The Day

A person has to remember that the road to success is always under construction. You have to get that through your head. That it is not easy becoming successful.
—Steve Harvey
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¹ See Thomas v. City of West Palm Beach, 299 So.2d 11 (Fla. 1974).
² See BellSouth Telecommunications, Inc. v. Johnson, 708 So.2d 594 (Fla. 1998); see also Florida Interexchange Carriers Ass’n v. Clark, 678 So.2d 1267 (Fla. 1996); Florida Cable Television Ass’n v. Deason, 635 So.2d 14 (Fla. 1994).
³ BellSouth Telecommunications, 708 So.2d at 596.
⁴ See, e.g., Atlantic National Bank of Jacksonville v. Modular Age, Inc., 363 So.2d 1152, 1155 (Fla. 1st DCA 1978) (“It is clearly an architect’s function and responsibility to design walls which will meet code requirements … [and] to [e]nsure that the plans and specifications comply with the applicable building codes for the area where the structure is to be built.”); Robsol, Inc. v. Garris, 358 So.2d 865, 866 (Fla. 3d DCA 1978) (“The law is clear that an architect owes a duty of due care to his client in arranging site plans and drawing buildings which are in conformance with building and zoning codes as well as other similar local ordinances. The architect is liable to his client in tort and contract when that duty is breached as to any damages proximately caused by such breach.”).
⁵ Atlantic National Bank of Jacksonville, 363 So.2d at 1155.
⁶ See also Whitehead v. Rizon East Ass’n,, 425 So.2d 631 (Fla. 4th DCA 1983) (notwithstanding apparent code compliance by engineer, cause of action exists for “negligent advice” regarding design of bathroom venting).
⁷ Edward J. Seibert, A.I.A. Architect & Planner, P.A. v. Bayport Beach & Tennis Club Ass’n, Inc., 573 So.2d 889, 892 (Fla. 2d DCA 1990).
⁸ U.S. v. Chemical Foundation, 47 S. Ct. 1 (1926).
⁹ Clements v. Starbird, 12 So. 2d 578 (Fla. 1943); Higbee v. Housing Authority of Jacksonville, 197 So. 479 (Fla. 1940).
¹⁰ R.H. Stearns Co. v. U.S., 54 S. Ct. 325 (1934).
¹¹ NLRB v. Bibb Mfg. Co., 188 F.2d 825 (5th Cir. 1951). See also Citizens Ins. Co. v. Barnes, 124 So. 722, 724 (1929) citing Monteleone v. Royal Ins. Co., 47 La. Ann. 1563, 18 So. 472 (“the decision of those officers should be disturbed only upon very clear grounds”).
¹² Mesaba Holdings, Inc. v. Fed. Ins. Co., No. 02-660, 2002 WL 31856384 (D. Minn. Dec. 19, 2002).
¹³ Algernon Blair Group, Inc. v. United States Fidelity and Guaranty Co., 821 F.2d 597 (11th Cir. 1987).
¹⁴ Id. at 602.