By Stanley Santire, Santire Law Firm, PLLC
A unique feature of Texas construction law has been how the State allocates risk for defective plans and specs. This will change dramatically on September 1, 2021. Unlike all but one State, for over a century Texas common law held that if an owner provided defective plans and specs to a contractor, the contractor, and not the owner, bears the risk. This is the Lonergan doctrine born in a 1907 Texas Supreme Court decision, Lonergan v. San Antonio Loan & Trust Co. 101 Tex. 63 (Tex. 1907). The reasoning of the Court was that:
“The owner does not warrant, and therefore is not responsible for the sufficiency of plans adopted by it, and which the contractor must follow, but the contractor must satisfy himself of their practicability before he enters into his contract.” Thomas Lonergan et al. v. San Antonio Trust Co., 101 Tex. 63, 65 (Tex. 1907)”
Eleven years after Lonergan the United States Supreme Court came to the opposite conclusion in a case establishing what is known as the Spearin doctrine:
“. . . if the contractor is bound to build according to plans and specifications prepared by the owner, the contractor will not be responsible for the consequences of defects in the plans and specifications.” United States v. Spearin, 248 U.S. 132, 136 (1918)
While Texas courts for over a century clung to the Lonergan doctrine, all but one other state followed the US Supreme Court guidance in Spearin. Overriding the century old Texas common law approach, this year the Legislature added a new chapter to the Texas Business & Commerce Code. It is Chapter 59 titled RESPONSIBILITY FOR DEFECTS IN PLANS AND SPECIFICATION: In Subchapter B titled CONTRACTOR RESPONSIBILITY we find the following:
Sec. 59.0052 LIMITATION ON CONTRACTOR’S LIABILITY AND RESPONSIBILITY FOR CERTAIN DEFECTS. (A) a contractor is not responsible for the consequences of design defects in and may not warranty the accuracy, adequacy, sufficiency, or suitability of plans, specifications, or other design documents provided to the contractor by a person other than the contractor’s agents, contractors, fabricators, or suppliers, or its consultants, of any tier.
So Lonergan doctrine dies on September 1 2021. Texas joins the majority of States in the allocation of risk between owners and contractors. Furthermore, this shift of risk is further enhanced by the following provision in this Legislation.
Sec. 59.0054. WAIVER PROHIBITED. This subchapter may not be waived by a contractor, subcontractor, or owner.
While only time will tell what this waiver prohibition language means, for now we can assume an owner cannot use a contract provision to escape liability for defective plans and specs.
About the Author: Stanley Santire, Esq. is founder and managing member of the Santire Law Firm, PLLC based in Houston, Texas. For more than three decades he has counseled and represented clients in labor and employment matters, civil rights, construction, and business transactions. He is experienced in mediation, arbitration, trial and appellate work. Following service as a naval officer, he graduated from the University of Texas School of Law followed by postdoctoral work at Columbia Law School in New York and The Hague Academy of International Law in The Netherlands. A former Chief Legal Counsel for Lockheed Aircraft International, A.G. and International Counsel for Lockheed Corporation.
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This article is published in ConstructionRisk Report, Vol. 26, No. 7 (Sep 2024).
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