Contractors rely on information conveyed by design drawings and specifications to determine how to build a project. Ideally, the information in drawings and specifications will be consistent and complementary, providing a complete and accurate picture of what the owner and designer expect the contractor to build. Unfortunately, drawings and specifications can be inconsistent or ambiguous, and such design flaws often result in claims.
In Goodrich Quality Theaters, Inc. v. Fostcorp Heating and Cooling, Inc., the general contractor agreed to construct an IMAX movie theater based on a set of contract documents that included a Project Manual, Design Drawings and the Steel Joist Institute Manual. Two of the structural Design Drawing sheets showed that the framing plan for the roof consisted of joist girders and roof deck. The key issue in the case was whether these two sheets adequately depicted the design intent for the joists.
The project designer (“AE”) intended HVAC ducts to pass through openings in the roof joists. On the drawings it prepared, the AE used an hourglass-shaped dashed line on each roof joist to show where the ductwork would pass through the joist, inserted the word “opening” next to the hourglass mark, and wrote a dimension on the drawing to indicate the location of the opening in the joist. The AE undoubtedly believed it had supplied ample information to allow the contractor to determine where the joists needed to be modified to accommodate the ductwork.
Unfortunately, the hourglass mark meant nothing to the contractor and its structural steel subcontractor, and they simply ignored it. The structural steel subcontractor submitted shop and erection drawings that called for standard joist girders that did not contain openings for ductwork. These shop drawings were submitted to and approved by both the general contractor and AE. When roof joists arrived at the jobsite, the AE realized that the joists would not accommodate the ductwork.
The general contractor and AE instructed the structural steel subcontractor to proceed with erecting the standard joists, but the parties disputed for months about how to resolve the conflict with the ductwork, causing delays to the HVAC subcontractor. Eventually, the HVAC subcontractor incurred extra costs to modify its ductwork to fit around the roof joists.
Both subcontractors separately asserted claims and filed mechanics’ liens that ended up being tried together in a fourteen-day trial. The trial court found in favor of both subcontractors, ordering the general contractor to pay damages to both subcontractors.
On appeal, the Indiana Court of Appeals tackled the question of whether the structural steel subcontractor breached its subcontract by providing and installing standard roof joists that did not accommodate ductwork. The Court of Appeals found in favor of the structural steel subcontractor and concluded, like the trial court, that the contract documents only required standard joist girders. The Court reasoned that the hourglass mark used by the AE to indicate openings in the joist girders for ductwork was “not an industry-standard mark” according to the Steel Joist Institute Manual that was part of the contract. Indeed, the Manual specifically provided instructions for marking non-standard joist girders, and the AE did not follow those instructions.
The Court acknowledged that its interpretation effectively rendered the hourglass mark, the word “opening” and the dimensions written on the drawings next to the roof joists meaningless. The Court’s opinion is well-reasoned, but a different court, or a panel of arbitrators, might have reached a different conclusion because it is at least arguably more reasonable to expect the contractor to submit a Request for Information (“RFI”) than to simply ignore information on a drawing that it does not understand. It also ignored the typical contract interpretation ‘rule’ that a court should avoid, if possible, an interpretation that renders a portion of the contract meaningless.
The Court also rejected the argument that the structural steel subcontractor had a duty to discover and notify the general contractor of ambiguities in the plans. While such a duty was supported by a provision in the Project Manual and by Indiana law, the Court sidestepped this issue by concluding that the structural steel subcontractor did not know, and could not have known, that the hourglass mark created an ambiguity. Once again, a different court or arbitration panel might reach a different conclusion.
Finally, the Court attached great significance to the general contractor’s and AE’s approval of shop drawings that included standard trusses. The Court explained that “it was reasonable for . . . Wilson Iron to believe that the approval of the Joist Placement Plans meant that Roncelli and Paradigm intended them to use standard joist girders rather than special joist girders.” To avoid this kind of argument, designers often approve shop drawings by applying a stamp that contains a disclaimer. The disclaimer typically states that the approval of the shop drawing “does not relieve the contractor of its obligation to comply with the contract documents” or words to that effect. Such a disclaimer here might have undermined the structural steel subcontractor’s ability to rely on the shop drawing approvals. Unfortunately, the opinion does not address whether the shop drawing approvals contained a disclaimer. Regardless, the case certainly illustrates the logic behind including disclaimers in shop drawing approval stamps.
A fourteen day trial and an appeal were undoubtedly expensive, time-consuming and frustrating for the parties, especially because protracted litigation could have been avoided easily several different ways. The AE could have followed the Steel Joist Institute Manual, or provided a legend explaining what the hourglass mark meant, or supplied a note or detail showing how the ductwork intersected with the roof joists. The AE and general contractor could have reviewed the shop drawings more carefully, and determined that the structural steel subcontractor had missed the significance of the hourglass mark before fabrication started. Likewise, the structural steel subcontractor could have submitted an RFI asking about the meaning of the hourglass mark. Asking questions to understand the designer’s intent is almost always going to be the best practice for the contractor to achieve a successful project without claims. Unfortunately, none of these things were done in this case, which led to project delays, claims, and a lengthy trial.