Wednesday, September 9, 2015

Cross-Post From Division 12: Massachusetts Decision Limits Spearin Doctrine in CM-at-Risk Contracts on Public Projects

Below is the link to a post from our colleagues over at Division 12 regarding the September 2, 2015, decision of the Massachusetts Supreme Court in Coghlin Electrical Contractors, Inc. v. Gilbane Building Company, et al., SJC Docket No. SJC-11778.

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On September 2, 2015, the Massachusetts Supreme Judicial Court issued a long-awaited opinion in Coghlin Electrical Contractors, Inc. v. Gilbane Building Company et al., SJC Docket No. SJC-11778.  Among other issues decided in the case, the Court held that the scope of a public-awarding authority's implied warranty of adequacy and sufficiency of the plans and specifications is more limited in the context of a construction-management-at-risk contract than a traditional design-bid-build contract.  
This case represents the first time that the highest court in Massachusetts has looked at the Spearin Doctrine in the context of the CM-at-Risk delivery method under the state's relatively new CM-at-Risk statute (M.G.L. c. 149A, Sections 1-13).  Under this law, public awarding authorities are permitted to retain construction managers early during the project's design phase in order to involve them in project planning and design development.  
In Coughlin, the Court recognized the relationship between the awarding authority and a construction manager at risk is different from the traditional relationship in the design-bid-build context, insomuch as a construction manager may be engaged to participate extensively in the design phase and, therefore, has an opportunity to influence the final plans and specifications. However, despite several noted differences between CM-at-Risk and design-bid-build delivery, the Court was not persuaded that the implied warranty should not apply. In construing the relevant statutory language, the Court determined that "the legislative intent in providing the construction management at risk alternative [to design-bid-build] was to permit the [construction manager at risk] a greater consultative role regarding the project's design, not to eliminate the owner's responsibility for design defects."  The Court concluded that the proper scope of the implied warranty in the CM-at-Risk context should be limited to instances where the construction manager acts in good faith and acts reasonably in light of its design responsibilities.  Therefore, on projects where the construction manager's design responsibilities are greater, the construction manager will have a higher burden to show that its reliance on the defective design was reasonable.
Links to more information regarding this case, including the text of the opinion, all appellate and amicus briefs, as well as video of the oral argument, are below.

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