In a September 2, 2015 decision, the Massachusetts Supreme Court bolstered the Spearin Doctrine when it found that a public owner had impliedly warranted the plans and specifications for a project constructed under the construction manager-at-risk delivery system. See Coghlin Elec. Contractors, Inc. v. Gilbane Bldg. Co., 2015 WL 5123135 (Sept. 2, 2015). This case became noteworthy when the lower court had ruled that the owner’s implied warranty regarding the adequacy of its designer’s plans and specifications, commonly known as the Spearin Doctrine, did not apply to Gilbane, who was operating under a construction manager-at-risk contract. The lower court focused on the difference in roles the construction manager-at-risk undertakes versus the traditional design-bid-build delivery system where a contractor has little or no involvement with the project’s design.
The Massachusetts Supreme Court overruled the lower court’s decision and found that the public owner’s implied warranty regarding design defects still applied to construction manager-at-risk projects. The court also noted the Massachusetts legislature could not have intended to shift all design risk onto a construction manager when a statute permitted a guaranteed maximum price (“GMP”) to be established while the design was still evolving and only sixty percent complete. The court reasoned that under such a scenario, if the owner’s implied warranty no longer applied, this would result in the construction manager having to assume all design risks at the time it entered into the GMP without having reviewed the remaining forty percent of the design.
The court did recognize the added role a construction manager-at-risk plays in a project’s design and applied a reasonableness standard regarding the degree to which the risk for design defects could be shifted onto a construction manager-at-risk. In particular, the court found that the construction manager “may recover damages caused by the breach of the implied warranty, but only if it satisfies its burden of providing that its reliance on the defective plans and specifications was reasonable and in good faith.” Whether the construction manager acted reasonably will depend on a number of factors, including its involvement in the project’s design.
This case provides an example as to how another state dealt with the construction manager-at-risk delivery system and a public owner’s responsibilities for the errors of its design professionals. How this case would play out in Ohio for public projects remains to be seen, but a court would likely have to balance a construction manager’s obligation to satisfy the contract’s notice provisions, notably Article 8, and an owner’s liability for the delays it causes under R.C. §4113.62.
