“Get it in writing” is an age-old adage, but a reminder of its importance is merited from time to time.
I cannot count the number of times that field management personnel I have worked with in the past have proceeded on the basis of supposed verbal directives they received or understandings they had with an owner’s representatives in the field only to have such directives or understandings come back to haunt them at the end of the job.
In Jonovich Cos., Inc. v. City of Coolidge, 2011 Ariz. App. Unpub. LEXIS 1332 (Oct. 31, 2011), the contractor was awarded a gravity sewer construction project by the city of Coolidge, Arizona. The same design engineering firm that prepared the project plans and specifications also performed periodic site inspections on behalf of the owner. The specifications called for the placement of sand and gravel as bedding under the pipe and for native excavated soils to be used as backfill. The prime contractor claimed that during construction the engineering firm representative consented to the use of native soil for bedding rather than manufactured gravel and sand. The firm continued to inspect the contractor’s work throughout construction, and the contractor completed all work without incident.
Four months later, the pipe manufacturer conducted tests that revealed several sections of the pipe had deflected in excess of the permissible 5%. The city notified the contractor that the deflected portions of the pipeline constituted “defective work” under the contract and ordered the contractor to make the necessary repairs. The contractor responded with a proposed plan of repairs, but also notified the city that it intended to seek reimbursement for the cost of repair or replacement if it later was determined that it was not responsible for the defects.
The contractor completed all repairs, but hired an independent consultant to analyze the cause of the deflection. The consultant concluded that water from a nearby stormwater retention basin had permeated the backfill and bedding materials surrounding the newly installed pipeline, and the forces from over 20 ft of backfill cover caused the pipe to deflect. The contractor eventually filed a lawsuit against the city alleging, among other things, that the design for the pipeline was defective because it failed to properly take into account the actual soil conditions of the locale. The city filed a motion for summary judgment arguing that the contractor failed to construct the pipeline in accordance with the plans and, in particular, that it neglected to abide by the aggregate bedding requirements. The trial court agreed and entered judgment for the city. The contactor appealed.
On appeal, the Arizona Court of Appeals for the Second Division acknowledged that the Spearin Doctrine, which is recognized in Arizona, provides that “when a contractor is bound to build according to plans and specifications prepared by the owner, the contractor will not be responsible for the consequences of defects in the plans and specifications.” However, the court was troubled by the contractor’s variance from the bedding requirement in the plans. As there were no reported cases in Arizona addressing whether an owner’s warranty of plans and specifications was voided when a contractor deviates from the stated requirements, the court looked to cases interpreting federal law. According to those decisions, a contractor claiming breach of warranty of plans and specifications must have complied fully with such plans and specifications, and if it does not, the Spearin Doctrine does not apply. The court adopted these holdings.
The contractor countered that its deviation from the bedding requirements was authorized by the city’s engineer, and it pointed out that, although such authorization was verbal and otherwise undocumented, the same engineer continued inspections for the remainder of the project and never registered an objection. This, the contractor contended, was further proof that the bedding change was authorized. The court was unconvinced because the contract required all change directives to be in writing, and it contained a clause prohibiting the contractor from relying upon the engineer’s site inspections or raising the engineer’s observations as a defense to claims of defective work. This case thus reminds us that an owner’s warranty of plans and specifications is valid only where the contractor follows them to the letter. It is also another reminder of the importance of getting it in writing.
