The Worcester Superior Court recently issued an important decision that could significantly affect the risk assumed by construction managers performing public projects under the M.G.L. c. 149A construction manager – at risk delivery method.
In Coghlin Electrical Contractors, Inc. v. Gilbane Building Company, an electrical subcontractor filed suit against the construction manager seeking millions of dollars in extra costs allegedly resulting from project mismanagement. The construction manager, in turn, asserted third-party claims against the owner arguing that the subcontractor’s additional costs were caused by design errors. The owner moved to dismiss the third-party claims on the grounds that the construction manager was contractually obligated to defend and indemnify the owner against such claims.
The Superior Court allowed the owner’s motion to dismiss, noting that the construction manager undertook additional duties beyond those typically assumed by a general contractor in the traditional design-bid-build delivery method. The Court referred to language in the construction management contract placing “extensive” design review responsibilities on the construction manager, including the obligation to “review, on a continuous basis, development of Drawings, Specifications, and other design documents.” The Court held that this language trumped the long-standing “Spearin doctrine” which provides that the owner impliedly warrants the sufficiency of plans and specifications to its contractor.
This decision raises the possibility that construction managers on state and municipal projects may be held as guarantors of design specifications, with all of the attendant legal ramifications. This decision has been appealed. Check in with On Solid Ground for updates.