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Contractor that Failed to Take Field Measurements Liable to Sub, Idaho Supreme Court Holds
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May 26, 2008
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Thelen Reid Brown Raysman & Steiner LLP
An Idaho subcontractor was awarded additional compensation for extra work it performed after encountering site elevations at the jobsite that differed from those shown on the plans and specifications provided by the general contractor. The Idaho Supreme Court held that the construction contract, which included the American Institute of Architects' A201 general conditions, imposed on the general contractor an affirmative duty to field verify site conditions or be liable for extra costs arising from any such discrepancies.
Newby-Wiggins Construction, Inc. contracted with the State of Idaho to build a regional headquarters for the Department of Parks and Recreation's in Boise. Newby subcontracted with Gillingham Construction, Inc. for site demolition, excavation and grading. After completing approximately 85 percent of its work, the subcontractor realized that actual site elevations were substantially higher than shown on the site plans and specifications provided by Newby. The general contractor immediately ordered the sub to stop work until the issue was resolved.
As a result of the stop work order and ensuing weather delays, the subcontractor incurred additional costs from its equipment sitting idle and from having to demobilize and then remobilize certain equipment. Revised site drawings also required the sub to perform extra excavation work. At the end of the project, the subcontractor sued the general contractor for breach of implied warranty of the accuracy and reliability of the plans and specifications and for breach of contract. The general contractor counterclaimed against the sub. After a trial, the Idaho Supreme Court affirmed dismissal of the warranty claim, holding that a subcontractor could not bring such a claim against a general contractor that had not prepared the plans and specifications. The Supreme Court ordered a new trial on other issues.
Three contract provisions were at the center of the second trial between the general contractor and subcontractor. First, §3.2.1 of the prime contract's A201 general conditions provided that the general contractor "shall carefully study and compare the Contract Documents with each other" but would not be liable to the owner or architect "for damages resulting from errors, inconsistencies or omissions" in the documents unless it "recognized such errors, inconsistencies or omissions" and performed work knowing there were such errors, inconsistencies or omissions.
Second, §3.2.2 of the of A201 general conditions provided that the general contractor
shall take field measurements and verify field conditions and shall carefully compare such field measurements and conditions and other information known to the [general] Contractor with the Contract Documents before commencing activities. Errors, inconsistencies or omissions discovered shall be reported to the Architect at once.
Third, although the subcontract contained a provision generally flowing down prime contract obligations to the subcontractor, the subcontract excluded survey work from the subcontractor's scope of work.
The subcontractor prevailed in a jury trial, but the trial court granted the general contractor's motion for a judgment notwithstanding the verdict (JNOV) or, in the alternative, ordered a new trial. The subcontractor appealed. The Idaho Supreme Court reversed, holding in favor of the subcontractor. Gillingham Construction, Inc. v. Newby-Wiggins Construction, Inc., 142 Idaho 15, 121 P.3d 946 (2005)
First, the Supreme Court found there was credible evidence that the general contractor could have verified the field measurements even though the project plans and specifications did not have a benchmark on them. The architect testified that the project benchmark was made available to the general contractor and that the benchmark was needed to conduct staking. The prime contract's field engineering provisions required the general contractor to hire a registered land surveyor to locate benchmarks and corner stakes. The general contractor admitted that it had hired a surveyor and could have asked it to verify site conditions. The Supreme Court concluded that the absence of a benchmark on the plans and specifications did not make Newby's performance of its field verification obligation impossible.
Second, the Supreme Court held that the trial court incorrectly required the subcontractor to show that verification of the field conditions would have prevented it from submitting an incorrect bid. Idaho law on extra work claims does not require the party claiming to have performed extra work to make such a showing. The subcontractor only needed to show "(1) that it relied on the plans and specifications in making its bid, (2) that it encountered conditions that were unforeseeable and varied substantially from the anticipated conditions, and (3) that it performed extra work." Because the subcontractor presented sufficient evidence on each of these requirements, it was entitled to be compensated.
Third, the Supreme Court found there was sufficient evidence for the jury to conclude that the subcontract's scope of work did not require the sub to make field measurements. The A201 general conditions in the prime contract imposed an affirmative duty to make field measurements on the general contractor. The project architect testified that verification of field measurements required some survey work. But, the subcontract's scope of work excluded survey work. Accordingly, the obligation to take field measurements remained with the general contractor and did not flow down to the subcontractor.
The Supreme Court quoted an AIA commentary on A201, which contrasted §3.2.2 with §3.2.1. Section 3.2.1 only requires a contractor to speak up if it detects errors or inconsistencies in project documents. But, the Supreme Court wrote, §3.2.2 imposes an affirmative duty to verify site conditions before starting work. As the AIA wrote, under §3.2.2 "the contractor bears the risk inherent in discrepancies that should have been discovered, whether they were discovered or not." The Supreme Court noted there was undisputed evidence that the general contractor had failed to verify field conditions before starting work, and the court held that there was sufficient evidence for the jury to conclude that general contractor had such a verification duty and was responsible for any damages resulting from its failure to do so.
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For more information about the issues covered in this report, please contact Paul Berning in our San Francisco office at 415-369-7229 or at pwberning@thelen.com or contact your Thelen attorney. For more information about Thelen's Construction and Government Contracts Department, click here.
©2008 Thelen Reid Brown Raysman & Steiner LLP
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