In a much anticipated ruling, the Massachusetts Supreme Judicial Court clarified the application of the Spearin Doctrine to At Risk Construction Managers. On Sept. 2, 2015, the highest Court in Massachusetts held that public owners implied warranty plans and specifications furnished in conjunction with a construction management at risk project. The Court also held that under the facts of the case, the parties did not disclaim this implied warranty and that the indemnification agreement in the parties’ contract did not prevent the construction manager from bringing a third-party complaint against the public project owner seeking indemnity for damages alleged by a subcontractor claiming additional costs arising out of alleged design defects.
This decision correctly retains the concept of the implied warranty of the plans and specifications although it does water it down on a case by case analysis when construction management at risk contracts are involved. The broad implication for construction managers at risk (at least in Massachusetts) is to carefully negotiate the scope of contractual responsibilities pertaining to the project design, including indemnity provisions. The construction manager’s scope of work related to design should be narrowly written so that control of the design remains firmly with the owner and it is clear that the construction manager is not serving as designer and assumes no liability for the design. With such language in place, the construction manager will have a better chance of demonstrating that it reasonably relied on the design and, therefore, has a claim for design defects under the implied warranty.
While this decision is fact specific as to Massachusetts public projects, it is likely applicable in the private setting. It is also instructive for the application of the Spearin Doctrine in other states that permit and utilize the CMAR project delivery method. Construction managers must carefully determine their scope of services when it comes to accepting legal responsibility for design work performed by a third party designer.The citation to this case is Coghlin Elec. Contractors, Inc. v. Gilbane Bldg. Co., et al., ___ Mass. ___, 2105 WL 5123135 (Sept. 2, 2015). Click here to read the decision.