US Claims Court Explains Limits of Spearin Doctrine – Denies Contractor Recovery Where Testimony Regarding Defective Design Was Conclusory

Caddell Construction Co., Inc. v. United States
2007 U.S. Claims LEXIS 285, No. 04-461C, (September 7, 2007)

The United States District Court of Federal Claims held that the design deficiencies alleged by the plaintiff contractor did not rise to the level of a breach of the implied warranty set forth under the Spearin Doctrine.

Plaintiff Caddell Construction Co. (“Plaintiff”) entered into a contract with the Department of Veteran Affairs (the “Government”) to modernize and strengthen the VA Medical center in Memphis, Tennessee. Plaintiff claimed on behalf of its steel fabrication subcontractor, Steel Service Corporation (“SSC”), that the Government provided structural steel drawings that contained conflicts, errors, omissions, and/or inadequate details which resulted in delay and additional costs to SSC.
Specifically, Plaintiff pled a breach of the implied warranty set forth in United States v. Spearin, 248 U.S. 132 (1918). Under Spearin,

“[I]f the 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 plans and specifications. This responsibility of the owner is not overcome by the usual clauses requiring builders to visit the site, to check the plans, and to inform themselves of the requirements of the work…”

Plaintiff primarily presented three points of evidence to support its claim of a breach of Spearin implied warranty. First, Plaintiff tried to show that the number of RFIs and the short period of time in which they generated indicated the plans were faulty. Second, SSC’s steel detailer testified that the drawings were deficient. Finally, Plaintiff’s expert reviewed the RFIs and the Government’s responses and concluded that the plans were inadequate.

The Court held that a breach of the Spearin implied warranty occurs where the design specification is “so faulty as to prevent or unreasonably delay completion of construction performance.” [citations omitted] The owner’s documents must be “substantially deficient or unworkable” to constitute a breach. [citations omitted] Moreover, if there are many errors or omissions in the documents “the cumulative effect or extent of these errors was either unreasonable or abnormal”. [citations omitted].

Applying these criteria, the Court found that the Plaintiff’s evidence indicated that there were flaws in the plans, but that a defective design under Spearin is far more flawed that the plans in the present case. Specifically, the Court found that the unusually high number of RFIs did not alone evidence inadequate design. Moreover, the Court found the testimony of SSC’s steel detailer and Plaintiff’s expert to be conclusory. SSC ultimately was able to work with the plans. Moreover, if the Government’s answers to the RFIs included major changes to the work that increased SSC’s costs, SSC would have or should have requested a change order. The fact that SSC did not request such a change order was inconsistent with its allegations. To support a breach, the plans would have been largely unworkable and would have required substantial revision.

Click here to view full opinion as PDF (provided with the permission of LexisNexis).

This entry was posted in Delay, Subcontract, Warranty and tagged , , , , . Bookmark the permalink.