## Facts

- The Permanent Mission of the Republic of Namibia to the United Nations undertook renovation of a Manhattan townhouse to use as a chancery.
- The townhouse shared a party wall with an adjoining townhouse owned by Robert Adelman and insured by USAA Casualty Insurance Co.
- USAA alleged that during renovation the Mission (through its contractors) failed to comply with mandatory New York City Building Code requirements intended to protect adjoining structures, including requirements to support or shore a party wall.
- The party wall allegedly collapsed, causing extensive damage to Adelman’s townhouse.
- USAA paid the loss under the policy and, as subrogee, sued the Mission (and contractors) for negligence and related state-law tort claims.

## Issues

1. Whether the FSIA’s discretionary function limitation in 28 U.S.C. § 1605(a)(5)(A) restores sovereign immunity where the alleged tort arises from failure to comply with a mandatory local building code provision.
2. Whether a foreign mission’s policy decision to locate and renovate a chancery can shield alleged operational negligence in implementing that decision.

## Decision

- The Second Circuit affirmed the denial of the Mission’s motion to dismiss on FSIA immunity grounds.
- The court held the Mission was not immune because the alleged duty to protect the party wall arose from a mandatory Building Code requirement and therefore was not “discretionary.”
- The court distinguished between protected policy choices (where to locate a chancery) and unprotected conduct in carrying out construction subject to mandatory safety rules.
- The case was remanded for further proceedings on the merits.

## Legal Principles

- Under the FSIA, the noncommercial tort exception can permit suits for torts occurring in the United States, but the exception does not apply to claims based on discretionary functions. 28 U.S.C. § 1605(a)(5)(A).
- Conduct is not a protected “discretionary function” when a statute or regulation prescribes a specific course of action; violating a mandatory directive is not discretionary.
- A foreign state entity’s policy decision may be immune, but alleged negligence during implementation is not immune when it consists of failure to follow mandatory, generally applicable safety regulations.
- Once a foreign mission elects to engage in local construction activity, it must comply with mandatory local building-safety duties and cannot invoke discretionary-function immunity to avoid tort liability for alleged noncompliance.

## Conclusion

The Second Circuit held that a foreign mission could not claim FSIA discretionary-function immunity against a tort suit alleging damage to neighboring property caused by failure to comply with mandatory New York City Building Code requirements during renovation of a chancery.


USAA Cas. Ins. Co. v. Permanent Mission of the Republic of Namib., 681 F.3d 103 (2d Cir. 2012)