LaShip, LLC v. Hayward Baker, Inc., 2017 U.S. App. LEXIS 3694 (5th Cir. Mar. 1, 2017)
Beginning in 2007, LaShip, LLC (“LaShip”) undertook the construction of a large shipbuilding facility in Houma, Louisiana (the “Project”), situated on its own private land as well as land owned by the Terrebonne Port Commission (“TPC) – a subdivision of the Louisiana state government. In July 2008, LaShip accepted a bid from Hayward Baker, Inc. (“HBI”) to complete the soil mixing and drill shaft work on the Project.
The contract between LaShip and HBI (the “Contract”) provided for HBI to install subterranean soil-mix columns to form the foundation of the shipbuilding facility and prevent it from collapsing into the soft and compressible Louisiana soil. Pursuant to the Contract, HBI obtained soil samples to ascertain the columns’ strength. Laboratory testing revealed that, in general, the soil possessed the requisite compressive strength provided for in the Contract. Nevertheless, as the work progressed the columns exhibited spiraling, and HBI experienced several cave-ins during its installation of the drill shafts and unwanted settlement of the foundation columns.
On January 21, 2011, LaShip filed suit against HBI in the Louisiana Federal District Court alleging that HBI violated Louisiana law by not warning LaShip about alleged defects in the design of the columns. TPC joined the lawsuit on March 6, 2013, also claiming that HBI acted negligently in failing to warn of a dangerous condition. The District Court ruled that LaShip failed to prove by a preponderance of the evidence its claims against HBI. LaShip and TPC then appealed.
The Fifth Circuit reviewed the District Court’s ruling de novo and fully affirmed the decision. In regards to LaShip’s arguments that HBI is liable for its failure to warn of the column defects, the Fifth Circuit found that HBI was “statutorily immune” from this claim under Louisiana Revised Statute 9:2771 (“LRS 9:2711”), which provides that:
No contractor . . . shall be liable for destruction or deterioration of or defects in any work constructed, or under construction, by him if he constructed, or is constructing, the work according to plans or specifications furnished to him which he did not make or cause to be made and if the destruction, deterioration, or defect was due to any fault or insufficiency of the plans or specifications.
Pursuant to LRS 9:2711, a contractor is shielded from liability for any defects that may arise as a result of the contractor’s adherence to plans and specifications that were provided to the contractor. This wording of the provision resembles the common law doctrine announced in Spearin. See U.S. v. Spearin, 247 U.S. 128 (1918) (“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”). However, as the Fifth Circuit noted, a contractor will be liable “if he has a justifiable reason to believe that adherence to plans and specifications would create a hazardous condition.”
Applying LRS 9:2711, the Fifth Circuit reviewed the record and found that the problematic settlement of the structure in the Project stemmed from a design defect in the length of the columns. As such, HBI was afforded immunity based on its installations of the columns according to specifications in the Contract.
The Fifth Circuit rejected LaShip’s argument that based on HBI’s geotechnical expertise, its knew or should have known that the design was allegedly defective and thus had an affirmative duty to warn LaShip. The Fifth Circuit opined that such an argument would unduly broaden the affirmative tort duty of contractors under Louisiana law. In affirming the District Court’s decision, the Fifth Circuit distinguished prior case law where a contractor was found to have breached a duty to warn the owner of a potential defect in the construction of a grain storage tank, noting that in that situation, the liable contractor “both designed and constructed” the storage tank. HBI did not design the soil-mix column specifications.
The Court also affirmed the dismissal of LaShip’s breach of contract claim, finding that HBI fulfilled its contractual requirement in confirming that the soil tested met the minimum threshold for unconfined compressive strength. The dismissal of TPC’s claims was also affirmed on the basis that TPC failed to initiate the action within the one-year prescription period provided by Louisiana law for tort claims not governed by a contract.