Has the Spearin Doctrine in Ohio Eroded on Private Work?
Kegler Brown Construction Newsletter December 1, 2008
Since at least 1997 when our firm prevailed on behalf of a contractor on a school project and the Spearin doctrine (owner impliedly warrants the sufficiency of the plans) was first officially recognized in an Ohio appellate decision, courts have made no effort to distinguish between public and private work. However, a recent federal court decision has threatened the Spearin doctrine on private work.
In that case, Wal-mart modified the AIA contract with Supplementary Conditions attempting to disclaim responsibility for the soils borings or report and shifting responsibility for site conditions to the contractor. The contractor requested a change order for unforeseen rock encountered and removed by its excavating subcontractor. Wal-mart denied the request.
The Court was not convinced by the contractor's argument that it was not practical or customary for the contractor to perform its own subsurface borings and analysis and accepted Wal-mart's argument that it was not liable for subsurface reports it specifically disclaimed in the contract.
The opinion stated "this Court finds no basis for extending the Spearin doctrine to include cases involving private entities and elects to not do so." Thomas & Marker Construction Co. v. Wal-mart Stores, Inc., 2008 WL 4279860 (S.D. Ohio).
The troubling aspects of this decision should be obvious to anyone who understands the construction process. It is hard to imagine contractors conducting meaningful soils investigations prior to submitting a bid, particularly when the owner has already provided a soils report in the bid documents. It is also difficult to imagine how bidders can fairly price the risk of unforeseen subsurface conditions in an equitable and efficient way.
The entire case was not dismissed by the Court and at last report a trial on a waiver theory was still facing Wal-mart and the contractor.