In a recent ruling, the Washington Supreme Court confirmed and clarified the ability of contractors to shield themselves from liability for construction claims arising out of defects in owner-provided plans and specifications. This rare decision on contractor liability provides guidance on the burdens and limits of the design defect affirmative defense in Washington state.
The underlying issue in Lake Hills Investments v. Rushford Construction Co., was responsibility for delay and damages arising out of the Lake Hills Village construction project in Bellevue, Wash. The owner claimed $16 million in damages against the contractor for what it asserted was defective work and delays to the project.
The contractor in turn counter-claimed for $5 million unpaid contract balance and asserted as an affirmative defense to the owner's claim that the owner's plans and specifications were defective. This affirmative defense is known as the Spearin Doctrine. A jury returned a verdict of over $9 million to the contractor.
On appeal, the owner argued that certain jury instructions were in error. Among the challenged instructions was one pertaining to a contractor's burden under the Spearin Doctrine—specifically whether the jury instruction should have included the word "solely" to indicate that the defense was available only if the alleged damages arose solely from defective plans and specifications. Addressing this argument, the appellate court agreed with the owner that the word "solely" should have been included in the jury instruction.
However, upon appeal to the Washington Supreme Court, the Court held that "the issue is not whether the word 'solely' was missing from the jury instruction. Rather, the issue is deciding 'whether the implied warranty of design accuracy can completely shield a contractor from liability for breaching its duty of good workmanship….'" In other words, the issue is whether and when the Spearin Doctrine can be considered a complete defense or partial defense.
In explaining the basis for its decision, the Court noted that the rationale for the Spearin Doctrine is one of "fairness based on control" and, accordingly, that design defects can be a partial or complete affirmative defense depending upon the circumstances. In either case—whether utilizing the Spearin Doctrine as a complete or partial defense—the burden is on the contractor to establish (i) the contractor relied on the subject plans and specifications, (ii) that the plans and specifications were defective, and (iii) the effect of the defect(s).
The ruling provides confirmation that defects in an owner-provided design can provide partial or complete relief to contractors—it is not necessary to establish that the design defect was the sole cause of alleged damages to utilize this affirmative defense. However, contractors should also be aware that to utilize this defense, they will need to establish causation and damages attributable to the design defect.