Legal Ease

Suppose you were awarded a contract to reroof a local high school. Plans and specifications were prepared by an architect retained by the school district. The specifications called for removing the existing built-up roof system and underlying insulation down to the poured concrete deck and installing new tapered polyisocyanurate insulation with a minimum of 1/8-in-12 (0.6-degree) slope and a modified bitumen roof membrane. The job proceeded without incident, and progress payments were made.

At the project's conclusion, following spring rains, several areas of ponded water were apparent on the roof. The punch list required elimination of ponded areas. You request a change order be issued to cover the costs of constructing crickets. Because crickets were not called for in the original plans and specifications, you believe you are entitled to a change order. The architect and school district refuse to issue a change order or make any further payment until the ponded water is eliminated.

The school district believes it is entitled to a roof without ponded water, particularly given the specification requirement that the contractor install tapered insulation with a minimum slope of 1/8-in-12 (0.6 degree). Your response is that you bid a tight job, installed exactly what had been specified and were not responsible for the ponded water that must be a result of roof deck irregularities. The school district writes you a letter stating that if you do not proceed to eliminate the ponded water within seven days, it will terminate your contract and retain another contractor, at your expense, to correct the problem.

Are you liable? Can the school district require you to eliminate the ponded water? Are you entitled to receive final payment? Would you be liable for the amounts paid by the school district to another contractor to eliminate the ponded water?

The answers to these questions involve a fundamental principle of construction law commonly referred to as the Spearin doctrine. The doctrine is based on a principle set forth in a 1918 U.S. Supreme Court decision in United States v. Spearin. The principle, in practice long before the 1918 ruling, is that an owner warrants the sufficiency of the plans and specifications that a contractor is obliged to follow; therefore, a contractor who complies with plans and specifications will not be liable for the consequences of defects in the plans and specifications or an unsatisfactory end result.

If, in the example, you show you fully complied with the plans and specifications and the ponded water was the result of an inherent deficiency in the plans and specifications, you would be entitled to additional compensation to build crickets. If the specifications required you to ensure the existing deck was suitable or contained language requiring you to take steps to ensure positive drainage throughout the roof or a similar performance-type requirement, you might be liable.

Benefits

The Spearin doctrine can be extremely beneficial to contractors. If the Spearin doctrine applies, as long as a contractor conforms to plans and specifications, he is entitled to payment of the contract sum and additional compensation if extra or changed work is necessary to obtain a satisfactory result. A contract clause requiring a contractor to examine the site and become familiar with the conditions affecting the work or check the plans and specifications does not overcome the Spearin doctrine.

Although the Spearin case involved a contract with the U.S. government, the Spearin doctrine has been widely applied by most state courts in public and private construction disputes.

Specifications

The Spearin doctrine is based on an architect, hired by an owner, having prepared plans and specifications prescribing what a contractor is to do. However, if specifications do not detail the materials and application procedures a contractor is to follow, the specification may be categorized as a performance specification.

With a performance specification, only a standard of performance, such as "provide a watertight roof," is stated and the contractor is free to choose the design, materials and methods to meet the standard. If the specification is classified as a performance specification (versus a design, or prescriptive, specification), the Spearin doctrine is unlikely to apply.

In some cases, the difference between a design specification and performance specification may be difficult to discern.

Even when specifications are fairly detailed, there may be language in them that arguably imposes a warranty or performance requirement. Language in roofing specifications as simple as "roof shall be watertight" or "there shall be no ponding of water on the roof" can be problematic and will give rise to an owner's argument that the roofing contractor was responsible because of the "performance" or express warranty language. Courts have addressed these issues for years.

In a 1906 case involving a cellar that leaked following completion of construction, the 3rd U.S. Circuit Court of Appeals provided guidance regarding the issue.

The project's specifications stated the cellar was "to be made perfectly watertight and guaranteed." Despite this language, the court found the contractor not liable. Although the owner argued the contractor was bound to perform a watertight job, the court still found the contractor's obligation and guarantee were limited to his work. If the cellar was not watertight as a result of the contractor's work, the contractor would be liable. But if the specifications that were the work of the architect were inadequate, the contractor would not be liable.

The same logic was applied in a 1967 California case where an owner argued guarantee language made a heating, ventilating and air-conditioning (HVAC) subcontractor liable. The specifications for an air-conditioning system stated the system was to establish at least a 30-degree variation from outside temperature for cooling and 50-degree variation from outside temperature for heating. The specifications also contained a provision that stated the contractor will guarantee the equipment installed would cool and heat the building according to the design temperature differential and if the equipment did not do the job satisfactorily, the contractor will remedy the condition.

The question before the California appellate court was whether specification language should be considered as a warranty or guarantee by the HVAC subcontractor that the air-conditioning system would meet the prescribed criteria. The trial court had found the contractor's work was done in a workmanlike manner and the contractor had furnished the equipment specified in the plans and specifications or the substantial equivalent.

At the trial, the HVAC subcontractor successfully argued the air-conditioning system was designed incorrectly and inadequately. The California appellate court ruled the subcontractor did not warrant or guarantee the HVAC system specified by the architect would produce the desired variation from outside temperature. Reluctant to transfer the responsibility for defective plans and specifications procured by the owner to the subcontractor, the court did not interpret the guarantee to mean the subcontractor guaranteed the sufficiency of the end result.

Although courts favor giving liability to the person who is responsible for the act or omission that resulted in damages, courts recognize that contracts are valid means for parties to allocate and transfer liabilities among themselves. The tension between the principle of freedom of contract and principle that a contractor should not be liable for insufficient plans and specifications prepared by others leads to some close cases.

Case in point

If contract language or specification language could be construed to create a performance requirement or require a contractor to take steps not contemplated at the time a job was bid, a court may not give the contractor the benefit of the Spearin doctrine.

In a case similar to the hypothetical one described at the outset of this article, a Louisiana trial court and intermediate appellate court issued a decision in December 2002 against a roofing contractor. The Louisiana 4th Circuit Court of Appeals concluded the roofing contractor was liable because the contractor contractually had agreed to provide slope and failed to verify field conditions before performing the work.

Tri Star Construction, as the general contractor, entered into a construction contract with the Housing Authority of New Orleans in April 1993 to replace roof systems on 35 buildings for $1.614 million. The housing authority had contracted with an architect to draft drawings and specifications. Tri Star Construction was to follow the architect's specifications.

Of the 35 buildings, 15 buildings had low-slope roof systems consisting of 6-inch (152-mm) structural concrete roof decks covered with vermiculite lightweight insulating concrete and four-ply coal tar pitch and asphalt roof membranes. The low-slope roof systems were to be replaced with tapered roof systems manufactured and precut by an approved supplier. The roof systems' dimensions were specified in the contract documents and verified by the contractor to the extent physically possible during a field check.

As Tri Star Construction proceeded, it found water was ponding instead of flowing into drains. The company attributed this condition to holes in the deck, depressions and varying slopes. Tri Star Construction, which apparently had not anticipated or included correcting these conditions in its bid, asserted these conditions were not discovered until the vermiculite was removed.

The housing authority terminated Tri Star Construction's contract for failure to perform the work according to plans and specifications and failure to resolve the ponded water problem. The housing authority argued Tri Star Construction's failure to follow specifications that required installing a roof with a minimum 1/8-in-12 (0.6-degree) slope resulted in ponded water. The trial court determined the contract was a performance specification contract.

The architect testified that Tri Star Construction had failed to perform the work according to plans and specifications by failing to verify site conditions before undertaking the project and, as a result, violated the contract's general conditions.

Based on the trial court's determination that the slope requirement was a performance specification and architect's testimony that the contractor did not comply with the contract's general conditions, the appellate court found for the housing authority though Louisiana has, by statute, adopted the Spearin doctrine. On April 25, the Louisiana Supreme Court reversed the lower court's decision and ruled the trial court should hear all evidence before ruling.

Be careful

The Spearin doctrine is a fundamental construction law principle that can help contractors, but it cannot be applied in all circumstances. When there is a performance requirement or warranty within specifications, go on record at the earliest possible opportunity if you believe the desired result may not be attainable.

If specifications state there shall be no ponded water but fail to provide for correcting the substrate and tapered insulation or some other means to effectuate positive drainage, notify the general contractor or building owner in writing of the need for a change order in the specifications. Similarly, if you know there are deficiencies in the plans and specifications, notify the general contractor and building owner of the deficiencies. You may not be allowed to rely on the Spearin doctrine when you know there is a problem with the specifications.

Stephen M. Phillips is a partner with the Atlanta-based law firm Hendrick, Phillips, Salzman & Flatt.