On December 9, 2018, United States v. Spearin, [1] a landmark construction law case, will be 100 years old. The Spearin “doctrine”[2] provides that the owner impliedly warrants the information, plans and specifications which an owner provides to a general contractor. The contractor will not be liable to the owner for loss or damage which results from insufficiencies or defects in such information, plans and specifications.
Some construction lawyers questioned whether the Spearin doctrine was still viable in Washington after the Washington Court of Appeals decided the recent case of King County v. Vinci Constr. Grand Projets.[3] Some concerned contractor industry groups even considered a “statutory fix” in the wake of the Court of Appeals Vinci decision. It is our opinion that the facts in the Vinci case are distinguishable and the Spearin doctrine is alive and thriving in Washington.
The Vinci case arises out of the $210 million Brightwater Project contract to bore tunnels (the tunnels are to act as settling tanks and conveyance lines, part of the sewage treatment process). The Project was awarded in 2006 to a joint venture of three firms (“contractor”). The contract contained a differing site conditions (“DSC”) clause entitling the contractor to an equitable adjustment should the contractor encounter “materially” different conditions. The contract incorporated a geotechnical report which contained the data from soil borings taken every 300-400 ft along the tunnel alignment. The report identified twelve types of soil conditions that could be expected while tunneling. The contract further dictated the means and methods of tunneling in so far as it specified the use of a Slurry Tunnel Boring Machine (“STBM”). STBMs require adjustment of pressure and slurry mix when soil conditions change which, in turn, requires that the tunneling operation stop while the changes are implemented.
During tunneling, the contractor discovered that the soil conditions changed more frequently than anticipated. This resulted in more STBM shutdowns, which increased the cost and delayed the work. Eventually, STBM broke down (got stuck) and the project was significantly delayed. The County hired another contractor using an earth pressure balance tunnel boring machine (“EPBM”) to “rescue” the STBM and complete the project. The contractor sued the County for breach of contract based on the DSC and breach of the implied warranty because the STBM did not do the job.
The Court of Appeals summarized the basic elements of a successful DSC claim as follows:
• The contract documents included indications or representations of certain physical conditions at the site;
• The contractor reasonably relied on those representations when pricing its bid;
• Actual conditions in the field differed materially from the conditions indicated in the contract documents; and
• The differing site conditions were not reasonably foreseeable by the contractor when preparing its bid.
The Court of Appeals ruled that the contractor failed on the first two points as the contract documents contained no express representations concerning the frequency of the soil transitions along the tunnel alignment. Though the contractor argued that the contract contained affirmative representations when the boring data leads to logical inferences, the appellate court rejected this argument.
The contractor then turned to asserting that because the specifications contained a warranty that the contractor was required to use an STBM and since the STBM was not capable of boring the tunnel, it followed that the specifications were defective and thus under the Spearin doctrine, the contractor should prevail.
The Court of Appeals reiterated that it is a well-established rule in Washington that when a contractor is required to build in accordance with the plans and specifications furnished by the owner, it is the owner, not the contractor, who impliedly guarantees that the plans are workable and sufficient.[4] The evidence indicated that the County ultimately selected the STBM because it was found that an EPBM could not control the external pressures. The County’s design team concluded that “the risks associated with driving the tunnel with an EPB[M] far out-weigh the risk of requiring a[n] [S]TBM.”[5] The contractor did not help itself when the chief engineer for the STBM supplier (Herrenknecht) testified that there was nothing defective or wrong with the specification of an STBM. Further, the contractor asserted that when the STBM was rescued with the EPBM there was a material issue of fact whether it was feasible to excavate the tunnel using a different machine. In the end, the court concluded that the contractor failed to create a question of fact that the specification requiring STBM was defective, concluding instead that although the EPBM was used to rescue the STBM, it did not demonstrate as a matter of legal certainty that the STBM failed to function because the specifications were defective, implying instead that the STBM failed to perform due to issues within the contractor’s control.
As far as the Spearin doctrine is concerned, the Court of Appeals quoted the Spearin doctrine with approval and distinguished the facts present in the Vinci case from the facts that are generally associated with a defective specification claim. If a contractor is bound to build according to plans and specifications prepared by the owner, the contractor will not be responsible for the consequences of defects in the plans and specifications. The contractor is relieved from responsibility if it was misled by erroneous statements in the specifications.[6]
[1]248 U.S. 132 (1918).
[2]A well-established Supreme Court principle based on the ruling in the Spearin case.
[3]191 Wn. App. 142, 364 P.3d 784 (2015).
[4]191 Wn. App. at 172 citing Weston v. New Bethel Missionary Baptist Church, 23 Wn. App. 747, 753-54, 598 P.2d 411 (1978).
[5]191 Wn. App. at 173.
[6]United States v. Spearin, 248 U.S. 132 (1918).