Judge Allows Construction Defect Lawsuit to Proceed

Multifamily owners should audit structural warranties after a $40 million lawsuit over water leaks moves forward in Richmond.

Updated on Oct. 21, 2026 in Construction

A section of a modern brick building facade with construction scaffolding under gray, rainy skies. — A Richmond Circuit Court judge allowed a $40 million construction defect lawsuit against the builders of the River's Edge apartments to proceed. AI Illustration. Upload story photo >

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A Richmond Circuit Court judge denied a request to dismiss a $40 million lawsuit alleging construction defects at the River's Edge apartment complex. The ongoing litigation, which follows persistent water leak issues, highlights the operational risks for owners managing multifamily properties with significant structural needs.

Why it matters

The dispute centers on claims that the 212-unit property was not built to design specifications, forcing the current owner to consider a massive re-cladding project. For operators, the case underscores the importance of rigorous due diligence regarding structural history during high-value real estate acquisitions.

Four Mile Capital is seeking over $40 million in damages for the 10-story River's Edge building, which it acquired for $47.5 million in 2021. The property currently maintains a 92% occupancy rate across its 212 units.

The players

Four Mile Capital

A real estate investment firm that owns and manages multifamily residential properties.

Jacqueline McClenney

A Richmond Circuit Court judge presiding over the civil construction litigation.

Purcell Construction Corp

A construction services company that was an original defendant in the breach of contract claims.

The details

The owner claims the building, located at 505 Porter St, suffers from persistent water leaks that require a total re-cladding of the facade. The court's September 21, 2026, ruling keeps the lawsuit active, requiring the owner to potentially relocate tenants while structural remediation occurs. The owner has since amended its complaint to narrow the scope of contract claims against the original construction firm.

2021: Four Mile Capital purchased the River's Edge apartment property.
September 21, 2026: Judge Jacqueline McClenney issued an opinion and order denying the dismissal.
October 13, 2026: Four Mile Capital filed an amended complaint in the case.

Market Landscape

This litigation follows a pattern of increasing structural defect claims in urban multifamily developments. The case mirrors broader industry trends where investors face unexpected capital outlays for property remediation shortly after initial acquisitions.

Operators should review existing insurance policies and construction warranties to ensure adequate coverage against latent defects that may surface post-acquisition. Owners must also factor potential tenant relocation costs into their long-term capital improvement budgets.

The takeaway

The case serves as a sharp reminder for operators to audit structural integrity and water-proofing history before finalizing large-scale property acquisitions. Asset managers should monitor the upcoming jury trial to identify new benchmarks for liability in property defect claims.