Construction Managers At-Risk May Assert Spearin Doctrine Claims

By Philip J. Truax, Esq.

It is widely known that a project owner impliedly warrants to the contractor the suitability of its design documents. This is known as the Spearin Doctrine, named after the 1918 U.S. Supreme Court decision, United States v. Spearin.  Generally, the project owner exclusively controls the design of the project, by and through its design consultants.  Therefore, the contractor is entitled to rely on the sufficiency and completeness of the design when it bids on the project; and where the design is erroneous or incomplete, the contractor can pursue its additional costs from the owner to complete the actual project.  Even a design builder, who cannot reasonably detect errors in the owner’s “bridging” design during procurement, can assert a Spearin claim against the owner in some jurisdictions.

Until recently, the Spearin Doctrine had not been applied to the CM At Risk delivery method.  In Coghlin Electrical Contractors, Inc. v. Gilbane Building Co., Gilbane served as the CMAR for the construction of a Massachusetts psychiatric facility.  The state separately contracted with an A/E firm for the design.  The CMAR’s preconstruction activities included a review of the design documents, but the contract provided that the CMAR did not assume responsibility for the design.

Coghlin, as Gilbane’s electrical contractor, asserted a claim for defective design and resulting increased costs, which Gilbane then passed through to the state.  The trial court found in favor of the state, holding that Gilbane effectively assumed liability for the design.  The Massachusetts appellate court, however, held that in authorizing CMAR delivery methods on public works, the legislature never intended to abolish the owner’s implied warranty as to its design or require the CMAR to bear the entirety of the risk arising from design defects.

Key to the court’s decision was that the CMAR’s contract with the state did not contain an express disclaimer of the owner’s implied warranty, including that the design documents were suitable for the Project. In fact, the provisions requiring the CMAR to “carefully study” and “carefully compare” all design documents, to “take field measurements and verify field conditions,” and to review the design “on a continuous basis” were not enough to abrogate the implied warranty.

CMAR’s often have extensive responsibility relating to design, including various preconstruction activities and review of the owner’s design for value engineering and constructability. But a CMAR is not an architect, and it is entitled to rely on the design as part of its proposals and preparation for the project.  CMAR’s should not be held responsible for design errors that cannot be discovered prior to the work. Even so, as shown in Coghlin, the CM agreement’s express language relating to design and the owner’s responsibility thereof will likely carry the day.