Hindsight About Unforeseen Site Conditions
Site Conditions Aren’t Technically Different,
Aren’t Compatible with Plans—What Happens?

By: Doug Shevelow, P.E.

Reprinted from June 2006 ohioconstructionlaw.com

What happens when a contractor encounters site conditions that require a radically new approach to the work, but it turns out the conditions were actually foreseeable? Does the contractor get relief? What if the cost to the contractor was $10 million? The contractor lost just such a claim in Martin K. Eby Construction Co., Inc. v. Jacksonville Transportation Authority, 2006 U.S. App. LEXIS 10488, a recent case out of the United States Court of Appeals for the Eleventh Circuit (the federal appellate court for cases arising in Alabama, Georgia, and Florida).

In Eby, the contractor contracted to construct two highway bridges, one over the Intercoastal Waterway and another over Greenfield Creek near Jacksonville, Florida. It takes an army of equipment and workers to construct a large, modern bridge, and part of the contract was dedicated to the construction of temporary access roads to get that army to the worksites for the two bridges. The plans called for the roads to be constructed by placing and compacting fill upon filter fabric.

The contract included standard differing site conditions relief for Type I (contract misrepresentation) and Type II (not reasonably anticipated) site conditions. The contract documents also included much information regarding subsurface conditions beneath the proposed alignment of the temporary roads, including information found in the boring logs, environmental permits, and written responses to contractor questions. This information showed that the soils were very soft, which should not have surprised anyone, since the proposed work was in and around an estuary. Some information even indicated that soft soils extended to a depth of 45 feet.

As it turned out, in many places the temporary access roads could not be constructed as proposed. Fill over filter fabric wouldn’t work, and the contractor was forced to construct a different, more expensive access road. In one area of the project, the contractor abandoned road building altogether and used barges to transport men, material and equipment. Adding insult to injury, the contractor had to dredge a channel to make barge transport even possible, and even then there could be no barge transport at low tide.

The contractor attributed over $10 million worth of damages to production inefficiencies caused by the soft, wet soils, characterizing them as differing site conditions. The contractor then brought suit in Federal District Court, where it lost after a nine-day trial in front of a judge. The appeals court upheld the District Court’s verdict, holding that the contract documents indicated the site conditions were wet and marshy, and that is exactly how they turned out.

But what about the plan sheets that indicated work that was clearly not possible under the actual site conditions? Didn’t the owner violate its implied warranty of the suitability and constructability of the plans and specifications, i.e., the Spearin doctrine? Interestingly, there is no mention of the Spearin doctrine in the court’s opinion. The contractor either did not make a Spearin claim, or chose not to appeal a negative Spearin ruling made by the trial court. (If anyone out there is seeing the name Spearin for the first time, you may want to look back at this column in our January 2005 issue, which explains Relating an Unforeseen Site Conditions Claim to the Spearin Doctrine)

The tension between the Spearin doctrine and disclosure of difficult site conditions is an interesting one. One Ohio case, which I discussed in the January 2005 edition of this column, sheds some light because it concerned whether a contractor could use the Spearin doctrine in response to the owner’s argument that there could be no Type I differing site conditions claim because the owner disclaimed the accuracy of the boring logs in the contract documents. That case is Sherman R. Smoot Co. v. Ohio Department of Administrative Services (2000), 136 Ohio App.3d 166, and we first discussed it in the March 2000 issue of ohioconstructionlaw.com.

According to Smoot, the Spearin doctrine would most likely trump the owner’s waiver of warranty of site information, but only if a contractor’s reasonable site investigation would not have revealed the differing conditions.

So in applying the principle of Smoot to the Eby case, we would probably get the same result, as an even less than thorough site investigation (in fact a quick perusal of the boring logs) showed “wet and marshy conditions.” In other words, the contract contained enough information showing that it would be much more expensive or even impossible to construct the proposed access roads, and so the risk of such an outcome shifted to the contractor.