Source: http://www.lexology.com, July 12, 2017
By: Carly Miller, Bradley Arant Boult Cummings LLP
In a recent Missouri appellate decision, the court recognized and reaffirmed the Spearin Doctrine which provides that an owner impliedly warrants the adequacy of plans and specifications it provides to a contractor. In Penzel Construction v. Jackson R-2 School District et al., No. ED103878 (Mo. Ct. App. Feb. 14, 2017), a general contractor sued a school district for furnishing deficient and inadequate plans and specifications to the contractor for the construction of an addition to a high school. The contractor alleged that providing the deficient plans was a breach of the owner’s implied warranty of the sufficiency of the design. The owner furnished the plans and specifications to the contractor who, in turn, provided them to the electrical subcontractor. Neither the contractor nor electrical contractor noticed any errors in the plans during the bidding process. At the end of the much-delayed project, the electrical subcontractor claimed the 16 month delay was the result of the design’ defects and inadequacies.
The Spearin case established that when the federal government provides the detailed design for a construction contract, it impliedly warrants the adequacy of the design. If the contractor follows the plans and specifications which then turn out to be defective, the contractor will not be liable for either the additional costs incurred in attempting to follow the defective design or costs to repair or otherwise address the design deficiencies. To be clear, the government has been held to the standard that impliedly warrants that the design plans are “reasonably accurate,” but not that they are necessarily perfect. In determining whether the design is defective, one of the things courts may look at is the cumulative effect of the alleged errors. Since the Spearin case was decided in 1918 by the U.S. Supreme Court, the same or a similar doctrine has been adopted in a majority of states.
In Penzel, the court had to first address whether the contractor’s claim based on the Spearin Doctrine was actionable in Missouri, which had not previously adopted the doctrine. The court found that Spearin claims were acceptable vehicles for bringing claims for a defective design on government construction projects. Spearin aligns with principles established by prior Missouri case law—namely, that if a contractor bids on a job based on the government’s representations of what the project will entail, he should not be punished because the resulting product is defective.
The two issues of concern in this case were (1) whether the government owner actually breached the contract, and (2) whether the contractor suffered damages that it can prove with reasonable certainty. Focusing on the first issue, the plans and specifications must be “defective” or “substantially deficient,” and they are considered “defective” if they are “so faulty as to prevent or unreasonably delay completion of the contract performance.” The court found that the contractor had sufficiently met its burden as to whether the plans were defective. As to the second point, the court found that there was sufficient evidence to determine that damages were suffered and the amount of those damages. Specifically, the court found that the contractor presented an “adequate basis” under the modified total cost method for calculating a rational estimate of damages.
If contractors are careful, diligent and honest, and if design specifications are defective, the Spearin Doctrine may provide a defense to potential claims of defective workmanship.