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In U.S. for benefit of Bonita Pipeline, Inc. v. Balfour
Beatty Construction LLC, et. al., 2017 WL 2869721 (U.S. Dist. Ct., S.D. Cal.),
the United States District Court for the Southern District of California ruled the
Spearin Doctrine, in which an entity providing plans or specifications is
liable for deficiencies in the plans or specifications, applies to subcontractors
in design-build projects, even when plans or specifications are by definition meant
to be further refined by the subcontractor.
Naval Facilities Engineering Command Southwest (“NFECS”)
contracted with Balfour Beatty Construction, LLC (“BBC”) to design-build a
hangar replacement at Camp Pendleton (the “Project”). BBC provided schematic design
documents to potential subcontractors, including Bonita Pipeline, Inc.
(“Bonita”), so it could bid on the structural steel work on the Project. Bonita
was awarded the design-build subcontract in an agreement which stated Bonita was
not entitled to increased costs associated with refinement of the plans and
Bonita issued 93 Requests for Information and 37 Change
Orders on the Project, and completed its work in 721 days as opposed to the
scheduled 431 days. Bonita asserted claims against BBC, seeking damages
associated with the extra work and delays, arguing the defective plans and specifications
caused the alleged damages.
BBC argued the nature of a design-build subcontract inherently
calls for plans that are incomplete at the time of the initial subcontracts. Bonita
responded by admitting it expected to refine the design, but argued the
extended time needed to refine the drawings was unforeseeable and only
necessary due to the original defective schematic design by BBC. Bonita
admitted it assumed the plans were incomplete, but believed they were at least correct.
The Court agreed with Bonita, holding the Spearin Doctrine necessitates plans
being correct, even if incomplete, and allowing recovery for costs associated
with the extra work caused by the incomplete plans and specifications.
The Court’s ruling in this matter emphasizes potential
liability for architects and engineers when their plans are not finalized and
they leave it up to others to do so. Any
incomplete plans should provide a large note disclaimer stating any reliance on
the plans until completed is at the user’s own and sole risk.