Each year tens of thousands of building permits are issued by local governments across South Dakota as part of an effort to gain compliance with local building codes. A recent lawsuit illustrated the potential liability exposure with the permitting process. The adjacent property owners to a new home constructed in the historic district of the McKennan Park area of Sioux Falls, SD commenced a lawsuit against the new home owners and the City of Sioux Falls, alleging that the new home violated state historic district regulations and local ordinances. As a Member of the SDPAA, the City of Sioux Falls was provided a defense to the lawsuit. The Circuit Court, Second Judicial Circuit of South Dakota, granted an injunction requiring modification or reconstruction of the new home. The Circuit Court also held that the City of Sioux Falls owed a duty to the adjacent property owners to properly enforce local building codes and state historic district regulations. On appeal, the South Dakota Supreme Court affirmed the issuance of an injunction as to the new home owners, but reversed the Circuit Court’s ruling on the duty conclusion for the City of Sioux Falls.
The SD Supreme Court ruled in favor of the municipality due to the public duty doctrine, which holds that governmental entities generally owe a governmental duty only to the public at large, not to individuals or a particular class of persons. The SD Supreme Court held:
[The] primary purpose of building permits . . . is to secure to local government consistent compliance with construction, zoning and land use ordinances. Building codes, the issuance of building permits, and building inspections are devices used by municipalities to make sure that construction within the corporate limits of the municipality meets the standards established. But by issuing a permit, municipalities do not imply that the plans submitted are in compliance with all applicable codes. Local governments should not, for the particular benefit of individual persons, bear the burden of ensuring that every single building constructed within its jurisdiction fully complies with applicable codes. The duty to ensure compliance rests with the individuals responsible for construction. Permit applicants, builders and developers are in a better position to prevent harm to a foreseeable plaintiff than are local governments.
McDowells v. Sapienzas & City of Sioux Falls, 2018 SD 1 at ¶ 39 (citations and quotations omitted).
The public duty doctrine avoids the unreasonable burden that would be placed on local governments if they were required to ensure that all state and local laws are followed by building permit holders and their chosen private contractors. Many South Dakota communities may have hundreds or even thousands of permits issued and pending at any given time. Numerous open permits could not all be inspected on a regular basis with the limited governmental resources available. An analogy often used is that law enforcement cannot attain full compliance with the speed limit laws despite their noble efforts.
This lawsuit is a good reminder that local governments need to take steps to recognize and minimize any potential liability exposure from the permitting process:
1. Continue education efforts on applicable laws affecting the permitting process
Local governments should continue their efforts to educate those in the industry on their applicable local building codes. These educational efforts may include providing brochures and/or informational sessions on the various codes as locally adopted.
2. Fully utilize any local boards established as part of the adoption of a particular code
Many codes as adopted by state and local governments include provisions to establish local boards that are often comprised of people with experience in that code. For example, larger communities may have local plumbing, electrical, or mechanical boards whose members are from those various trades. These boards serve as a sounding board to identify potential issues with various codes and also to help “spread the word” on any local code changes or issues. Larger communities may also work in conjunction with these specialized boards to establish their own licensure requirements for individual contractors who would be responsible to comply with local codes. It would provide a comfort level for citizens to know that their chosen contractor has passed an examination demonstrating a minimum proficiency with the applicable code.
3. Consider pooling of resources to jointly retain a code official
Local communities without the resources to hire their own code official should consider joining with other communities to retain someone to perform that service on a contract basis. Local communities should consult with their legal counsel about the possible contractual arrangements for jointly retaining a regional code official. A regional code official could review building permit applications and perform building inspections as needed. This regional code official could identify emerging issues and suggest possible solutions for each of the contracting local governments.
4. Consult with legal counsel
The resources available and the procedures used by local governments in the permitting process likely vary as much as our landscape; after all, South Dakota is known as “the land of infinite variety.” Local governments should consult with their legal counsel to ensure that their particular permit application procedures are able to identify any possible issues with any applicable laws in the building plans as submitted. Procedures may also need to be revised to address those situations where significant revisions or changes are made “in the field” after a permit is issued. A revision to the building permit application process may require the applicant/owner/builder to notify the permitting authority before implementing any significant change that would vary from the original plans as submitted.
Disclaimer: while the author is an attorney, this article is for general information purposes only and should not be construed as providing legal advice or opinions for a specific situation. The reader is encouraged to contact the attorney of their choice for any specific legal discussion and legal advice.
Dave Pfeifle, Executive Director
South Dakota Public Assurance Alliance
Hyde County has been a Member of the SDPAA since 2003. We are very happy with the services provided to our County. Member Services and the Underwriting Department have been quick to respond whether it was a claim or questions. They are very easy to work with and have always followed up on any issues we have had.Marilyn Ring, Hyde County Auditor