March 12, 2019

The Effect Of Submittals On Allocating Risk And Responsibility

Patrick R. Kingsley

If you have ever been involved in a construction project of any size, you’ve been involved with submittals.  Submittals are prepared and transmitted by a contractor or subcontractor to illustrate and explain how some portion of the work on the project is proposed to be carried out.  Submittals can include shop drawings, diagrams, schedules, product data, product brochures, samples and even mock-ups.  A large project with dozens of subcontractors will often have more than a thousand submittals.  Even a moderately sized project can have hundreds of submittals.  It is not uncommon for the sheer volume of submittals to exceed the contract documents (including the drawings and technical specifications) themselves.

Many aspects of design documents produced by architects and engineers do not contain the level of specificity or detail necessary to fabricate, assemble and construct all aspects of the project.  This fine detailing is frequently left to the submittal process.  Therefore, these aspects of design are not generated by the design professionals, but by the party engaged to effectuate the design.  It is often suggested that this is a more efficient process since that level of detail is best done by people who work in the field and not at a drafting table.

The purpose of submittals then is to prevent misunderstanding or problems during construction projects.  It is a time honored method by which a contractor indicates its understanding of the plans and specifications and its proposed approach to prosecuting the work in conformance with those plans and specifications.  Once prepared by the contractor, the submittal is sent to the owner or the owner’s designer for review and approval. Better to spot a deficiency or shortcoming in advance, so the theory goes, then to correct it after it has been installed.  In practice, submittals are used to fulfill this purpose. 

However, the legal significance of submittals, once approved, is less than perfectly clear.  Most standard form contracts provide that even approved shop drawings do not become part of the “contract documents”, i.e. those documents that define the responsibility of the contractor in building the project.  So, if approved submittals are not part of the contract documents what exactly are they?  And what if there is an inconsistency between the approved submittals and the underlying contract documents?  Consider these scenarios:

1.     What if the approved submittal is less robust than the contract documents provide?  For example, a submitted floor plan provides for ¾ inch plywood whereas the plans themselves require 1 inch of plywood.  If the submittal for ¾ inch is approved, what is the effect?

2.     What if the approved submittal is more robust than the contract documents would otherwise require?  For example, a window submittal shows double paned windows, whereas the contract documents themselves only require single pane windows.  After the double pane window submittal is approved, the contractor installs the single pane windows in apparent conformity with the contract documents but in contravention to the submittal.  Is the contractor in breach?

3.     What if the owner insists on submittals with qualities beyond the contract documents.  For example, the contract provides for lighting fixtures “as approved” by the designing professional.  The design professional repeatedly rejects lighting fixtures that appear to be appropriate for the job.  What are the consequences?

Let’s examine what might happen in each instance. 

When The Submittals Are Less Robust Than The Contract Documents

Generally speaking, when courts address the effect of a submittal which provides the owner less than it might have expected in the contract documents, the courts will usually find that the submittals are ineffective to change or reduce the requirements in the contract documents.  The court’s opinion is typically grounded in provisions found in the underlying construction contracts themselves.  Consider the following provisions, which frequently occur in construction contracts:

  • Paragraph 3.12.4 of AIA Document A-201-2017 provides that “Shop drawing, product data samples and other similar submittals are not contract documents.”
  • Section 3.12.8 of  AIA Document– A201-2017  provides that a contractor is not relieved from responsibility for deviations in the contract documents by the architect’s approval of submittals unless the architect has been given specific notice of the proposed deviation and gives written approval of it.
  • Section 4.2.7 of AIA Document A201 - 2017 –provides that the review by the architect or design professional of shop drawings is limited to checking for conformance with information in the contract documents from the design concept. 
  • Paragraph 6.17.C.3 and 6.17.D.3 of the EJCDC Document C-700 provides that the design professional’s review and approval of submittals shall not relieve the contractor from responsibility for any variation of the requirements of the contract documents themselves unless the contractor has specifically called out the modifications.

Note that some of these provisions embrace the notion that if the contractor specifically calls out the contractual deviation, its approval may have the effect of modifying the contract. 

Cases addressing the effect of submittals are fact dependent and typically turn on provisions like those cited above.  Historically, the case law on the effect of approved submittals was somewhat conflicting.  The modern trend seems to be that if a submittal is approved which is less robust and protective of the owner’s interest than provided in the contract documents, the approved submittal does not have the effect of modifying and reducing the requirements of a the contract documents.  See, e.g., Samuel J. Creswell Iron Works, Inc. v. Housing Auth. Of Camden, 449 F.2d 557 (3d Cir. 1971).  However, if the change is specifically called out in sufficient detail to avoid any doubt that the approval with the less robust modification was intentional, then it will be enforced as a valid change to the contract.  See, e.g., Appeal of Roberts Constr. Co., 1986 WL 20061 (ASBCA 1986).  Of course, if the construction contract provides that approved shop drawings became part of the contract, that language will be given effect.  See, e.g., Strong Const., Inc. v. City of Torrington, 255 P.3d 903 (Wyoming 2011).

The following are some court rulings illustrating the view that approved shop drawings do not provide a defense for a contractor’s breach of the contractual specifications:

  • The architect’s approval of shop drawings that describe interior doors to be furnished by the contractor as “particle board” doors did not constitute a valid modification of the contract and, therefore, was not binding upon the owner where the contract documents themselves clearly called for the installation of solid wood core doors.  Fauss Const.,Inc., v. City of Hooper, 249 N.W.2d 478(Neb. 1977)
  • Architect’s approval of shop drawings depicting vertical burglar bars on the windows could not modify the contractually required vertical and horizontal burglar bar requirement unless the shop drawing departures were specifically described by the contractor.  Appeal of Harris Const. Co. Inc., 1994 WL 744640 (P.S.B.C.A. 1994)
  • Approval of shop drawings showing window air conditioning units did not waive the contract document requirement for wall-through air conditioning units.  Appeal of R.J. Sullivan, Inc., 1996 WL 69690 (A.S.B.C.A. 1996)
  • Contractor required to replace thermostat that did not comply with the contract documents even though they were installed according to approved shop drawings.  Community Science Tech. Corp., Inc., 1977 WL 185683 (A.S.B.C.A. 1977)
  • Contractor required to modify fire protection system at no cost even though it was installed according to approved shop drawings.  Appeal of Meredith Const. Co., Inc., 1990 WL 133150 (A.S.B.C.A. 1990)

There are, of course, cases that go the other way and conclude that the owner is bound by the architect’s approval of the contractor submittals even without a specific finding by the court that the contractor followed approved protocol for calling out the contractual deviation.  However, most cases so finding are somewhat dated and inconsistent with what appears to be a modern trend.  See, e.g., Alabama Soc. For Crippled Children and Adults, Inc. v. Still Const. Co., Inc., 309 So.2d 102 (Alab.Civ.App. 1975)

When The Approved Submittals Are More Robust Than The Contractual Requirements

Of course, if a contractor transmits a submittal indicating that it will do work beyond the contractual requirements, which is approved, there should be no issue from the owner’s perspective.  But what if the contractor seeks a claim for extra work?  Or what if the contractor later installs work in conformance with the contract documents but not as indicated in the shop drawings?  These perplexing questions do not have very clear answers and there is almost no case law addressing these scenarios. 

On the one hand, if approved shop drawings do not change the contract requirements for the benefit of the contractor, then why should it have that effect to the detriment of the contractor?  On the other hand, if the contractor has issued a submittal to prosecute the work in a specific way, why should it be allowed to unilaterally change its mind?  In that regard, Section 3.12.8 of the AIA A201 provides that the work must be performed in accordance with the approved submittals.  That provision essentially requires that the contractor must meet both the requirements of the contract document and any requirements in the approval submittals.  That provision essentially disallows the contractor from “changing its mind” if it later realizes that the work reflected in the submittal exceeds the contract requirements. 

This provision in the AIA form seems inconsistent with the statement elsewhere in the same form contract that “approved submittals are not contract documents.”  If the contractor is obligated to follow them, they certainly seem like part of the contract.  Unfortunately, there is little law addressing this subject. 

The Owner’s Use Of Submittals As A Sword, Not A Shield

Theoretically submittals are to be approved if they comply with the requirements reflected in the contract documents.  An owner and its architect are not allowed to unilaterally withhold approval to extort some uncompensated change beyond what the contract documents otherwise require.  In other words, while it is generally true that the submittal process may not be used by a contractor to reduce the contractual requirements, it is equally true that the submittal process cannot be used by an owner to increase the contract requirements.

Perhaps the best example of this concept is Nova Const., Inc. v. City of Olympia, 2017 WL 1382883(Wash. App. 2017) rev’d on other grounds, 191 Wash.2d 854 (Wash. 2018).  In that case, the City of Olympia hired a contractor to replace a culvert.  The contract required contractors to send submittals describing its plan for bypass pumping during construction.  The city repeatedly rejected the contractor’s submittals despite their apparent consistency with the contract documents.  The contract required the engineer’s approval as a prerequisite to starting work, and also provided that the city’s decision to accept or reject a submittal was final.  Because work could not proceed, the city eventually default terminated the contractor for failure to prosecute the work.  The contractor filed suit against the city for breach of contract claiming that its handling of the submittal process was an effort to impose requirements which were not part of the contract’s specifications.  Ultimately, the court agreed with the contractor that the contract did not provide the city with an absolute right to reject all submittals for any reason and that implied in the contract was a duty to act in good faith toward the contractor.  Because the city was rejecting submittals for no legitimate reason, it had breached the duty of good faith and fair dealing.  

The Delegation Of The Designer’s Responsibility

Architects should beware that although the act of approving submittals may not serve to change the requirements of the contract documents, it does have consequences with respect to an architect’s liability.  The act of approving shop drawings is part of a design professional’s discharge of his or her professional responsibilities and if negligently performed can have severe consequences.  See, e.g., Duncan v. Missouri Bd. for Architects, Professional Engineers and Land Surveyors, 744 S.W. 2d 524 (Mo.Ct.App. 1988)

The leading example of this concept relates to the catastrophic failure of the skywalks at the Hyatt Regency Hotel in Kansas City, which killed or injured over 300 people.  In that case the architect approved shop drawings at odds with the requirements of the contract documents and without a valid explanation.  The design for the skywalks called for a “one rod” system to supsend the walkways, but the steel contractor proposed the use of a “double rod” system.  The design professional approved the submittals.  A year later the walkways collapsed.  The failure was at the connection points.  It was discovered that the “double rod” system reflected in the submittals had the effect of doubling the load on the connections suspending those walkways.  In a subsequent disciplinary proceeding, the tribunal evaluated the design professional’s approval.  It concluded that no review was made nor calculations performed to determine whether the connections on the shop drawings met code requirements or were otherwise proper.  The tribunal concluded that the design professionals lack of review reflected a “conscious indifference to [his] professional duty”.  The tribunal went on to conclude that the design professional’s duty was non-delegable and he could not rely on others -- i.e., the contractor who submitted the shop drawings -- to fulfill this duty. 

Conclusion

Given the nearly universal use of submittals on construction projects and the scarcity of case law analyzing their significance, it can fairly be concluded that the submittal process usually works well and achieves its intended purpose.  That said, when the process goes awry, there may not be clear law to resolve the conflict.  Court’s seem to generally defer to the provisions in the underlying contract that specifically address the issue.  But even then, form contracts sometimes have provisions that seem to conflict internally.  Therefore, caution and attention to these issues is warranted at the drafting and bid stages to avoid controversy once the work is underway.

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Patrick R. Kingsley

Stradley Ronon Stevens & Young, LLP