Washington State Supreme Court Weighs In On Spearin Doctrine And Limiting Contractor Liability For Construction Defects

• Published date: 12 October 2021
• Subject Matter: Corporate/Commercial Law, Real Estate and Construction, Contracts and Commercial Law, Construction & Planning
• Law Firm: Wood, Smith, Henning & Berman LLP
• Author: Mr Timothy J. Repass

Why This Case is Important

The Spearin Doctrine dictates that a project owner impliedly warrants that the plans and specifications it provides are accurate and suitable, and can protect a contractor against liability. Must a contractor prove that all of the construction defects are attributable to the owner's defective plans and specifications to prevail on this affirmative defense? The Washington State Supreme Court in Lake Hills Investments, LLC v. Rushforth Construction Co., Inc. d/b/a AP Rushforth, et al. answers this question and provides guidance on the application of the Spearin Doctrine in defending construction defect claims.

Facts

Lake Hills Investments ("Lake Hills") was the developer of a mixed-use project in Bellevue, Washington, called Lake Hills Village and hired Rushforth Construction Co., Inc. d/b/a AP Rushforth ("AP") to build the project. The project was to be built in a series of phases. AP was the general contractor for certain phases, to be completed by certain dates.

Lake Hills claimed that AP was delayed in completing certain phases and that work was defective. AP responded that the delays and defects had resulted from faulty design specifications and plans provided by Lake Hills. Lake Hills withheld millions of dollars in progress payments and proceeded to file suit against AP for breach of contract. Soon after, AP stopped work on the project and counter claimed alleging failure to pay and defects in design specifications. AP argued that any construction defects were the result of Lake Hills providing "a sketch" or "a concept" instead of suitable plans and specifications.

At trial, AP asserted affirmative defenses, including that the Spearin Doctrine shielded it from liability for defects that arose from deficient plans and specifications supplied by Lake Hills. The jury worked from a special verdict form, which resulted in a mixed verdict, finding that the project was completed in each phase, primarily by the acts of Lake Hills. The jury also found that AP did not breach the contract by stopping work but that Lake Hills did by underpaying AP. The jury returned a mixed verdict with a net judgment award of more than $9 million for Lake Hills.

On appeal, the court found that the jury instruction for the affirmative defense of faulty plans or specifications was misstated and therefore, prejudiced Lake Hills. The...