INET v DFW Airport Board, 2016 WL 1445205 (5th Cir., April 12, 2016)
Who is responsible for defective design under Texas law? The contractor, under Lonergan? The owner, under Spearin? A recent Fifth Circuit decision suggests that in some cases this might be the wrong question when design responsibility is disputed. The appellate court recently remanded a case back to the district court to determine whether the contractor or owner breached an implied duty to cooperate in discovering defects in design and subsequently pricing the change required to correct the problem.
INET won a competitive bid to provide rooftop air conditioning units (“Units”) to passenger jetways at Terminal E of the DFW airport. By submitting its bid, INET certified that it had satisfied itself with respect to plans and specifications. The Units were to use “30% ethelyne glycol/water” (“EG Water”) supplied by DFW. INET also agreed to provide schematic drawings of control sequence operations and the required components for a fully operational control sequence that would “provide auto defrost of the coils” within the rooftop units, through which the EG Water would cycle. At the preconstruction meeting, INET expressed a concern that the Units might not function properly with the EG Water, suggesting that the EG Water’s sub-freezing temperature might cause ice buildup on the coils and prevent their proper operation. After INET received no response, it resubmitted the concern in two separate RFI’s.
The contractor, owner and designer conducted “extensive discussions” about the problem and prepared at least two proposals to modify the control sequence program and the piping design. However, the parties never reached agreement on pricing of the proposals or how to proceed. After the substantial completion date passed, DFW notifi ed INET that DFW would begin to assess liquidated damages since the rooftop units were not completed. DFW then made a claim against INET’s performance bond and completed the work with a different contractor. A dispute ensued about whether the contract had been terminated or abandoned, and a federal lawsuit resulted.