Is the Spearin Doctrine Still a Contractor’s Shield if the Contractor Followed the Plans and Specifications?

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United States v. Spearin, 248 U.S. 132, 39 S.Ct. 59 (1918) is almost 100 years old, and it is still one of the most oft-cited cases in a construction lawyer’s playbook. In numerous contested cases, Spearin has given contractors a way to avoid liability for construction defects arising from the work, if the work met the project plans and specifications. Since the Spearin decision, however, its simple reasoning has evolved in complex ways that owners, contractors and design professionals should follow and understand.

Spearin’s legacy was a common sense industry standard: the owner impliedly warrants that the plans and specifications for the project are reliable for construction. However, “[T]he contractor must fully comply with and follow the design specifications, although faulty, to enjoy the protections of the implied warranty.”[1]

Challenges to the Spearin doctrine inevitably arose, mostly because it didn’t make economic sense for a contractor to follow errant plans and specifications simply to maintain the protections afforded by the owner’s implied warranty. The contractor would deliver a substandard project to the owner, and the owner then had to remedy the defects and spend additional money litigating its remedies against the designer. It was a no-win approach to building projects.

In disputes over defects in the plans and specifications, moreover, designers often refused to accept absolute responsibility, arguing that contractors are sophisticated enough to recognize design flaws and should be held accountable for building to plans and specifications that are obviously wrong. Designers further argued, for example, that contractors have tools during construction like Requests for Information to clarify apparent issues with the design, and that if the design was confusing, contractors should be also responsible for not asking questions.

Contractors, on the other hand, argued that Spearin expressly precludes contractors from having liability along with the designer and that the contractor was protected by the implied warranty. Contractors further argued that as long as the contractor did not deviate from the warranted plans, the Spearin doctrine provided immunity for the contractor.

Courts have been chipping away at protection afforded to contractors by the Spearin doctrine. Arizona courts have drawn the line at design specifications, clarifying that Spearin does not apply to “performance specifications” that are more within the contractor’s discretion to meet the owner’s objectives on the project.[2] Moreover, as recently as last month, a federal court in Florida held that “the Spearin doctrine is generally premised on contractual obligations” and, therefore, did not extend an implied warranty to a third party claiming negligence outside of the contractual relationship between contractor and owner.[3] A California federal court called the Spearin doctrine the “implied warranty of correctness” and recently added that “the contractor must prove that the agency affirmatively misrepresented, or actively concealed, material facts which rendered the bid documents misleading, and that the contractor reasonably relied on such misrepresentations in preparing its bid.” [4] This court burdened the contractor of essentially proving fraud in order to prevail under Spearin.

Judging from these and other authorities interpreting Spearin nationwide, it is apparent that some courts have elevated the reasonableness of the contractor in evaluating whether the contractor is entitled to the protection of the Spearin doctrine. In these courts, the issue of reasonableness (what the contractor reasonably should have known) naturally becomes a hotly contested and litigated issue rather than a strictly interpreted warranty and a presumption in the contractor’s favor.

The shift in Spearin is probably due to the public policy favoring efficient, timely and defect-free construction projects, especially in the public sector where taxpayer dollars fund the work. The evolution of Spearin is also probably meant to foster better teamwork between designer, contractor and owner.

Owners and contractors alike should recognize that they may, in the future, be judged by a standard of reasonableness when it comes to Spearin’s implied warranty of the plans and specifications. It is, therefore, prudent and good business to promptly raise questions about apparent errors and omissions in the design and to address them when recognized rather than instead relying on the Spearin doctrine.

Notes:

[1] Travelers Cas. & Sur. of Am. v. U.S., 74 Fed. Cl. 75, 89-90 (2006).

[2] See Willamette Crushing Co. v. State Dept. of Trans., 932 P.2d 1350, 1353 (Ariz. App. 1997).

[3] F.T. Lincoln v. Florida Gas Trans. Co., 2014 WL 3057113 *5 (N.D. Fla. 2014).

[4] United States v. Turner-Penick Joint Venture, 2014 WL 1279701 (S.D. Cal. 2014).

Topics:  Construction Contracts, Construction Disputes, Design Defects, US v Spearin

Published In: Construction Updates, Military Updates, Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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