On April 25, 2007, the Ohio Supreme Court shook the foundation of a longstanding doctrine of construction law. Its decision in Dugan & Meyers Construction Co. v. Ohio Dept. of Administrative Services significantly limits the applicability of the Spearin Doctrine in the State of Ohio. Established by the United States Supreme Court in 1918, the Spearin Doctrine limited contractor liability for the consequences of defects in plans or specifications prepared by the owner. However, the Court in Dugan & Meyers declined to extend the Spearin Doctrine beyond an owner’s representations regarding job site conditions and emphasized the primacy of express contractual provisions.
The case arose from the $20.9 million contract to construct three new buildings for Ohio State University’s Fisher College of Business. Dugan & Meyers were under strict time constraints for completion of the project. Accordingly, OSU included in the contract a liquidated damages provision for each day Dugan & Meyers failed to meet the completion deadline. Additionally, Dugan & Meyers was not entitled to mitigation of liquidated damages or any additional compensation for delays in construction beyond its control. Its sole remedy for a condition causing delay was tendering a written request for a time extension. These provisions and their interaction with the Spearin Doctrine constitute the core of the dispute in this case.
After the first year of construction, Dugan & Meyers made hundreds of requests for information, field work orders, and architectural instructions. The contractor cited an excessive number of errors in the design plans as the cause of the numerous informational requests resulting in delays. Eventually Dugan & Meyers was terminated, and litigation followed. The trial court applied the Spearin Doctrine and ruled in favor of Dugan & Meyers for damages of the impact of the excessive amount of design changes. However, the decision was reversed by the Court of Appeals, and the Ohio Supreme Court affirmed the reversal.
The Ohio Supreme Court denied the application of the Spearin Doctrine for cases involving delays due to design changes. Alternatively, the Court focused its decision on the “no damages for delay” and “written requests for time extension” clauses in the contract. The Court said, “We observed that the Spearin Doctrine does not invalidate an express contractual provision.” Because Dugan & Meyers failed to comply with the express procedure for time extension requests, the Court held that it was not entitled to relief. The decision demonstrates a clear movement in Ohio away from the Spearin implied warranty of design plans toward express contract clauses. Henceforth, the contractor’s explicit negotiation for efficient allocation of the risk of deficient design plans is of vital concern. The days of safe reliance on the adequacy of the owner’s design plans are over.
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