Project Owner Breached Contract by Attempting to Terminate Contractor
Our client, large construction contractor, completed construction of a new entry at a public building. The scope of work included construction of new concrete sidewalks, stairs, accessibility ramp, canopy, lighting, railings and a non-load bearing cast-in-place concrete wall, among other improvements. The owner alleged the contractor was not entitled to payment due to purported late completion and faulty workmanship, particularly with regard to the cast-in-place concrete wall. Although the wall was built in accordance with the owner's specifications, the owner disliked the aesthetics of the finished wall. The owner ignored its role in causing delays attributable to its failure to secure the building permit for some six weeks following issuance of the notice to proceed. It refused the contractor's request to be permitted to return to the project to complete remaining punch list work. The contractor even offered to apply a sealant and coating to the wall to provide a more refined "architectural" finish. Instead, the owner and its architect, declared that the cast-in-place wall had to be demolished and completely re-built. It sought public bids and retained a new contractor.
Our client initiated arbitration in accordance with the contract's dispute resolution provision. It challenged the owner's rejection of the cast-in-place wall under the Spearin Doctrine. Under Spearin a contractor should not be held liable for a deficient project outcome in the work where it has carefully followed the plans and specifications provided by the owner. Following two days of arbitration hearings involving extensive expert testimony regarding American Concrete Institute standards and a site inspection of the completed work (the wall had not yet been demolished), the arbitrator ruled in our client's favor. The arbitrator declared that the completed work, including the cast-in-place wall, complied with the owner's plans and specifications. The arbitrator determined that the owner's expectations of an architectural finish were inconsistent with the specifications it issued for the cast-in-place wall. The arbitrator awarded our client 100% of the funds due on the contract and declared that the owner's attempt to terminate the contract was unwarranted.