Hindsight About Unforeseen Site Conditions
The Spearin Warranty & Differing Site Conditions
Part 2 - Selection of Remedies

By: Doug Shevelow, P.E.

Reprinted from September 2006 ohioconstructionlaw.com

In the January 2005 version of this column, I looked at how the Spearin doctrine, the owner’s implied warranty of the suitability of the plans and specifications, interacted with a typical differing site conditions provision and an owner’s disclaimer of subsurface information. I discussed the Ohio case of Sherman R. Smoot Co. v. Ohio Department of Administrative Services (2000), 136 Ohio App.3d 166, first reported in the March 2000 issue of ohioconstructionlaw.com.

The Smoot court held that a subsurface condition that is implied by the project drawings can rise to a warranty that thwarts the clearest of disclaimers of the accuracy or completeness of the subsurface information in the bid package.

A recent case out of Missouri, Damon Pursell Construction Co. v. Missouri Highway &Trans. Comm. (2006), 192 S.W.3d 461, looks at another Spearin/differing site conditions entanglement—whether a contractor is limited to the remedy provided in the contract’s differing site conditions clause when the differing site condition could also be characterized as a breach of the owner’s implied warranty of the accuracy of the plans.

In Pursell, the contract was for a highway construction project in Kansas City. The earthwork quantities in the plans were balanced, i.e., the volume of planned excavation was equal to the amount of planned fill. But it turned out that much of the excavated material was not suitable for fill—it was too rocky. Thus the contractor incurred extra costs in transporting and disposing of the unsuitable fill off-site, as well as the extra costs of importing a like quantity of clean fill from outside the project, resulting in a claim for $2.2 million.

The claim appeared to be a classic Type I unforeseen site conditions claim, arguing that the conditions found differed materially from those described in the plans and specifications. But the contractor sued only for a breach of the owner’s warranty under Spearin.

The owner argued that the contractor’s remedy was limited to the contract’s differing site condition clause, and because the contractor did not bring its claim under the different site conditions clause, it was not entitled to any relief whatsoever. But the court held that under Missouri law, a plaintiff is not held to a specific remedy unless remedies are expressly limited in the contract with the defendant. So the contractor was also entitled to characterize the differing site conditions as a breach of the owner’s Spearin warranty, i.e., the plans misrepresented key characteristics of the excavated material. Thus the contractor had an alternative theory of recovery, one that was preserved in the pleadings.

This case teaches two important lessons. One is “belt and suspenders”—the contractor could have saved itself some trouble by pleading its case both ways from the outset, under the contract’s differing site conditions clause and as a breach of the Spearin warranty.

The other lesson is that other states’ courts, as in the Smoot case from Ohio, are willing to look at the same claim simultaneously as a differing site condition and as a breach of the Spearin warranty.