On February 14, 2017, in Penzel Construction Co. v. Jackson R-School District, et al., a Missouri appellate court has, for the first time, recognized the Spearin Doctrine as a vehicle for a contractor to recover damages from a public entity owner based on deficient plans and specifications supplied by the owner ().

On October 10, 2005, Jackson R-2 School District entered into a contract with architect Warner-Nease-Bost (WNB) to build an addition to the Jackson High School in Jackson, Missouri. WNB then entered into a subcontract with Henthorn, Sandmeyer and Company to produce the electrical plans and specifications for the project. During the bidding phase, the District furnished those plans to Penzel Construction Company.

Total Electric submitted a bid to Penzel perform the electrical work for the project. The District entered into a contract with Penzel as general contractor on September 15, 2006, and in turn Penzel entered into a subcontract with Total Electric. Neither Penzel nor Total Electric noticed any errors in the plans during the bidding process.

On September 18, 2006, the District issued a notice to proceed to Penzel, requiring substantial completion of the project in 550 days. Total Electric substantially completed its work on approximately May 27, 2009, 16 months after the date required under the contract. Total Electric claimed the delay was the direct result of defects and inadequacies in the electrical plans provided by the District.

In July of 2010, Penzel executed a liquidating agreement with Total Electric authorizing Penzel to prosecute Total Electric’s claim for damages caused by its reliance on the plans furnished by the District. Penzel filed a breach of contract claim against the District under the theory that the District breached an implied warranty that the electrical plans for the contract were adequate and complete, pursuant to the Spearin Doctrine.

The Spearin Doctrine creates owner liability for an error or omission in the contract documents provided to the contractor for bidding and constructing the project. The United States Supreme Court held that where the contractor must build according to plans and specifications provided by the owner, the contractor is not responsible for the consequences of defects in those plans and specifications (United States v. Spearin, 248 U.S. 132 (1918)). For more information on the Spearin Doctrine, see Practice Note, Selecting the Right Private Project Delivery System: Box, The Spearin Doctrine.

To evaluate Penzel's claim, the court had to determine if the Spearin Doctrine constituted an actionable theory of recovery in Missouri, since the Doctrine had never been expressly accepted or rejected by Missouri courts. By examining Spearin and Missouri precedent, the court concluded that Spearin claims could be recognized in Missouri.

The court highlighted Missouri case law that allowed for breach of warranty claims based on a contractor's reliance on positive representations that plans and specifications for a construction project were adequate (Ideker, Inc. v. Mo. State Highway Comm’n, 654 S.W.2d 617 (Mo. App. W.D. 1983)). While the Spearin Doctrine relies on breach of an implied warranty, as opposed to a positive representation, the court decided that if a contractor bids in reliance on an owner's representations, express or implied, of what a project will entail based on furnished plans and specifications, the contractor should not be punished—and the owner should not receive a windfall—if the plans are defective.

To establish a claim for breach of contract under Spearin, the plans and specifications must be defective or "substantially deficient" (Caddell Const. Co. v. United States, 78 Fed. Cl. 406, 413 (2007)). Plans and specifications are considered "defective" if they are so faulty as to prevent or unreasonably delay completion of the contract performance (Wunderlich Contracting Co. v. United States, 351 F.2d 956, 964 (Ct. Cl. 1965)).

The District argued that implied warranty claims in Missouri are considered fault-based claims and, within the context of design documents, require proof from expert testimony that a design professional negligently prepared the design documents. The court disagreed and held that the implied warranty in a Spearin claim is that the plans are free from significant defects, it is not a guarantee that a particular level of care and competency was used to create the plans. Additionally, the Missouri case law the court found most similar to Spearin did not require a showing of fault or negligence by the government-owner. Accordingly, Penzel did not need to show that the District fell below a reasonable standard of care to prevail on its Spearin claim, so expert testimony was not required to attest to standard of care.

The court also held that expert testimony was not necessary to show that the plans furnished by the District were defective. Generally in Missouri, expert testimony is required when a fact at issue is so technical or complex that no fact-finder could resolve the issue without it (Stone v. Mo. Dep't of Health & Senior Servs., 350 S.W.3d 14, 21 (Mo. banc 2011)). However, a trial court has discretion to determine whether the facts in a case are so complicated that they require expert testimony (Hill v. City of St. Louis, 371 S.W.3d 66, 78 (Mo. App. E.D. 2012)). Here, the court found that while electrical engineering is highly technical and complicated, the problems alleged by Penzel, and testified about by its witnesses, were simple enough for a layperson to understand. For example, Penzel's witnesses testified that the plans:

As a result, Penzel was not required to produce expert testimony to prove the plans were substantially deficient.

Penzel claimed the plans were so defective that it could not allocate specific work hours or costs caused by specific defects. As a result, the court allowed Penzel to use the Modified Total Cost method of proving damages, which allowed the court to calculate damages in a way that more fairly represented losses suffered, finding that it was consistent with Missouri contract law on proof of damages.

This case is important because it is the first time the Spearin Doctrine was recognized as an actionable claim in Missouri. This holding creates an opportunity to recover damages for contractors who suffer losses caused by flawed or deficient plans furnished by a public entity owner. Government entities in Missouri should be aware of this new liability regime and take extra care to ensure that the project plans and specifications they submit to contractors are complete and accurate. Contractors and government owners should also note that expert testimony is not always required to establish these claims.