Cracking…Defect or Normal?

Part 2: Case law on concrete cracking

Part 1 of this article, published in the September 2013 issue of Concrete International, discussed various causes of concrete cracking, industry guidance on the subject of cracking, and managing owner expectations. Part 2 focuses on the legal aspects of concrete cracking.

Legal Principles

Two fundamental legal principles impact an analysis of whether cracking is a construction defect and who is responsible for the outcome of the plans and specifications.

The first principle is referred to as the Spearin Doctrine. Named after the 1918 United States Supreme Court case of United States v. Spearin, 248 U.S. 132, 54 Court of Claims 187, 39 Supreme Ct. 59, 63 L.Ed. 166 (1918), this doctrine states that "it is well established that a contractor who performs according to detailed plans and specifications is not responsible for defects in the result." Thus, a contractor who can demonstrate that they have strictly complied with all aspects of the plans and specifications can successfully argue that their work was not defective and their work is not the cause of the defects.

The second principle is the doctrine of impossibility of performance. This principle is demonstrated in the 1991 Board of Contract Appeals case of Hobbs Construction & Development, Inc., ASBCA #34890, January 30, 1991, Contract No. N62467-80-C-0070. In that case, the Board of Contract Appeals determined that the contractor could not achieve the specified 1/8 in. (3.2 mm) in 10 ft(3 m) floor flatness requirement (a typical ACI specification at the time) while simultaneously performing the work in accordance with the contract provisions that required placing the concrete in 40 x 40 ft(12 x 12 m) squares in a checkerboard fashion and imposed restrictions on the use of a mechanical screed. Thus, there are instances where the combination of prescriptive specification requirements coupled with a performance requirement could be deemed impossible to perform. In those instances, the contractor is relieved of responsibility for the ultimate result.

Cracking is "Normal and Expected"

The Court of Common Pleas in Delaware has ruled in at least one case that cracking of a concrete patio was normal and expected and thus not a defect (Dockety v. Mahone, 2010 WL 1172975 [Del. Com. Pl.]). Dockety was a developer who built a custom home for Mahone. The court first found that Dockety and Mahone had entered into a valid and binding contract and that "compliance with applicable laws and regulations is a requirement and condition of building contracts for work to be performed in this State unless the contract expressly provides for a different measure of performance" (Kovel v. Peoples, 431 Atlantic 2d, 1284, 1286 [Del. Super. 1981]). The Court concluded that Dockety was contractually obligated to comply with the Sussex County Building Code.

The project resulted in cracks in the concrete patios to which the owner objected and asserted as a defect and resulting breach of contract. As a consequence of the cracks in the patios along with other work, the owner retained Legates to undertake repair work. The owner then asserted the cost of Legates' repair work as damages against the original contractor Dockety.

Dockety retained an expert, Millman, who testified that he had 15 or 16 years of masonry experience and that he had performed all of the work on the Mahone's home in a workmanlike manner. When asked on cross examination about the alleged problems with the masonry work, Millman stated that: "The concrete exhibited no signs of separation or cracking when he leftthe job site." Millman went on to explain that concrete joints will eventually crack after a series of freezing-and-thawing cycles because concrete will expand and contract. The court was influenced by the fact that Millman testified that: "This type of cracking is not a defect in the work, but rather the cracking is simply movement that is a constant in the nature of concrete." The court was also apparently swayed by the fact that Dockety had never been asked to return to the Mahone residence to fill or repair any of the cracks. The court went on to conclude:

"The Court finds that the testimony of Mr. Millman is credible. Cracking that is attributed to the expansion and contraction of concrete is an anticipated outcome of using concrete and does not constitute a defect in workmanship [emphasis added]. During his direct examination, the Mahone's contractor, Mr. Legates, testified that he merely performed the tasks that the Mahones requested whether or not he considered the repairs to be necessary. Mr. Legates further corroborated the testimony of Mr. Millman that the cracking in the concrete at the Mahone's home was normal and expected. Thus, there was insufficient evidence presented to establish that the masonry work was defective or required necessary repairs to the original work. As a result, Dockety was not responsible for any damages to the Mahones for concrete repair."

Cracking is a "Defect"

The United States Court of Federal Claims determined that cracking of a concrete slab-on-ground on a post office project was a construction defect and was significant enough (among other building construction defects) to support a termination of the contractor and replacement with another contractor (Mega Const. Co. v. United States, 29 Fed. CL. 396 [1993]). In 1985, Mega Construction Company had entered into a fixed-price building contract with the United States Postal Service for the construction of the main post office at Canoga Park, CA. Among other things, the contract required the placement of a concrete slab-onground floor of approximately 22,000 ft2 (2044 m2). The slab was designed as 4 in. (102 mm) thick with No. 4 (No. 13) reinforcing steel bars at 24 in. (610 mm) on center in each direction placed at least 1 in. (25 mm) below the upper surface of the slab. The 10-day trial resulted in an opinion that is 119 pages long. The essence of the finding by the Court with respect to the fact that the cracking of the concrete slab was a defect rather than a normal occurrence is captured in the opinion quoted as follows:

"Without exception, the architectural and structural engineering experts who testified at trial agreed that concrete shrinks when it cures, and that hairline cracks in poured concrete slabs are normal occurrences. However, credible evidence made it clear beyond doubt that the cracks in defendant's slab were far more than the usual hairline cracks [emphasis added]. It was uncontroverted that at least four of the cracks ran the entire length of the slab, and that some were so wide that the sand under the slab was clearly visible and a coin could fall to the sand fill through the crack. It was also clear from the record that 70% to 80% of the rebar lay exposed on the sand beneath the slab, and that the cracking was caused by plaintiff's failure to install the rebar according to the contract. Mr. Kelsen, the designer of both the original and replacement slabs, noted that if the rebar lay at the bottom of the concrete, it would act as a crack inducer, whereas properly placed rebar controls and minimizes cracking. All credible expert testimony confirmed this elementary principal of concrete engineering. Ample testimony and photographic evidence revealed that most of the rebar in the 4 foot by 10 foot section the plaintiffremoved on May 14, 1987 was not inserted through the holes of the 'Keyed Kold' control joints and that a number of the control joints were either absent or improperly placed. Mr. Kelsen had to concede that the rebar in that section of the main workroom floor was in the sand, not the concrete, and that plaintiffhad not installed it in accordance with the contract specifications."

Standard of Care-Contractor and Performance

What is the Standard of Care for performance and acceptance of concrete work? The Dockety case cited previously also contains a good discussion of these issues. As stated by the court in Dockety:

"Where a person holds himself out as a competent contractor to perform labor of a certain kind, the law presumes that he possesses the requisite skill to perform such labor in a proper manner, and implies as a part of his contract that the work shall be done in a skillful and workmanlike manner."

In determining whether the contractor's work was performed in a workmanlike manner, the standard is whether the party: "displayed the degree of skill or knowledge normally possessed by members of their profession or trade in good standing in similar communities, in performing the work. A 'good faith attempt to perform a contract, even if the attempted performance does not precisely meet the contractual requirement, is considered complete if the substantial purpose of the contract is accomplished.' Therefore, if the work done is such that a reasonable person would be satisfied by it, the builder is entitled to recover despite the owner's dissatisfaction [emphasis added]" (Dockety v. Mahone, 2010 WL 1172975 [Del. Com. Pl.]).

Substantial Performance

The doctrine of substantial performance may be helpful in determining responsibility for cracks in concrete construction. As stated in one of the established legal treatises:

"Substantial performance means not doing the exact thing promised, but doing something else that is just as good, or good enough for both Obligor and Obligee. It does not mean full or exact performance of every slight or unimportant detail, and a contract may be substantially performed even though its provisions or conditions have been deviated from in trifling or technical particulars" (17A CJS, Section 508).

In general, the doctrine of substantial performance is intended to avoid unfair results where a minor defect in the work might otherwise result in a complete tear-out and replacement of all of the work. This doctrine, along with the measure of damages discussion that follows, places practical limitations on damages that can result from cracking of concrete.

The Court of Appeals of Ohio applied the substantial performance doctrine to a case involving a cracked concrete driveway in the case of Hansel v. Creative Concrete and Masonry Const. Co., 148 Ohio App.3rd 53, 772 NE 2d, 138 (2002). In this case, the homeowners, the Hansels, entered into a contract with Creative Concrete for the installation of a 4.5 in. (114 mm) thick concrete driveway at the Hansel's residence. The plaintiffhomeowners later asserted that the driveway was only 4 in. (102 mm) thick and not 4.5 in. (114 mm) thick and that no gravel sub-base had been placed under the driveway. The homeowners also alleged that the driveway had settled and was cracking. Of note is that the case records that "all experts testified that cracks in concrete can never be prevented." The experts further testified that the driveway was deteriorating, and that the damage would continue to get worse with each successive exposure to freezing and thawing. The homeowners' expert also testified, however, that:

"On the other hand, it can be used like it is if somebody wanted to accept the defects that are there, but the only thing, there's no sub-base underneath there in some spots, so it is going to continue to deteriorate and eventually will probably look a lot worse than it does right now."

The Ohio Court of Appeals noted that pictures presented at trial showed some surface defects, but the driveway was clearly usable. The trial court had previously ruled that while there were problems with the driveway, Creative Concrete had substantially complied with the terms of the contract. In spite of that, the Magistrate at trial awarded $1206.00 to the Hansels, which was the difference between the original contract price of $10,855.10 for a 4.5 in. (114 mm) thick driveway and a prorated price based on the installed 4 in. (102 mm) driveway. The Magistrate apparently awarded these damages because the only other measure of damages that was presented at trial was the cost of a complete tear-out and replacement of the driveway for $23,860.00.

On Appeal, the Court first recognized that the underlying decision had intermingled the concepts of substantial compliance and the measurement of damages. Substantial compliance is not actually a damages issue-if a party is found to have substantially complied, then that party has not breached the contract at all. However, under Ohio law:

"A breach of one of several terms in a contract does not discharge the obligations of the parties to the contract, unless performance of that term is essential to the purpose of the agreement, and default by a party who substantially performed does not relieve the other party from performance.

"Stated another way, a party does not breach a contract when such party has substantially performed the terms of the contract, and minor, nominal, trifling, or technical departures are not sufficient to constitute breach.

"For the doctrine of substantial performance to apply, the part unperformed must not destroy the value or purpose of the contract."

Thus, under Ohio law, substantial compliance of the contract would support a recovery of the contract price less allowance for defects in performance or damages for failure to strictly comply with the contract (Creith Lumber, Inc. v. Cummins, 163 Ohio St. 264, 5600 242, 126 NE2d, 323 [1955]). Even though it was found that Creative Concrete had substantially performed the contract (which would normally provide for full recovery of its contract price), under Ohio law, Creative Concrete was still subject to damages for defects for failure to strictly comply with the contract.

The Court concluded that the underlying Magistrate was correct in determining that the doctrine of substantial performance applied. Of significance to the Magistrate was the fact that the appellants had parked heavy trucks used in their business on the driveway, and that the owners had paid the contractor in full.

"The evidence showed that there were defects with the driveway, such as cracking, scaling and pitting, and that these defects were largely due to Appellee's (Creative Concrete) failure to act in a workmanlike manner and finishing the driveway with the proper techniques. In addition, there were problems such as misplacement of the wire mesh and even sub-base. Further, taken core samples showed a range of thicknesses of the concrete of 3.4 to 4.6 inches, with an average thickness of 4 inches.

"Despite these problems, the evidence does support the Magistrate's conclusion that Appellee had substantially performed under the contract and that the driveway had not failed in its essential purpose [emphasis added]."

Note that this case is discussed further in the section herein on Damages, as the Court went on to allow the underlying Magistrates measure of damages. The reader should be cautioned that, in that regard, this case does more to confuse the doctrine of substantial performance than explain it. In general, if substantial performance is established, then the defendant has complied with the contract and no damages should be awarded.

Disclaimers

A Colorado Court of Appeals has held that a disclaimer in a concrete contractor's contract will be enforced but will be strictly construed (Belt v. Spencer, 41 Colo. App. 227, 585 P.2d 922 [Colo. Ct. App. 1978]). In 1974, the Belts, homeowners, contracted with Spencer Construction Company to build a home. Under Additional Provisions, the following clause was added: "Seller agrees to provide a standard one-year warranty except for cracking of concrete flatwork..."

After construction of the home, cracks began to appear in the basement floor, apparently as a result of an expansive soil condition produced by moisture combined with bentonite in the soil. The builder, Spencer, began to remove part of the floor to place an interior drainage system; however, Spencer discontinued work after the owners demanded the replacement of the entire basement floor. Litigation ensued.

The trial court had determined that the disclaimer referred "more to cosmetic defects" and did not exclude liability for substantial defects.

On appeal, the Colorado Court of Appeals did not disagree with that statement but did conclude that even if the disclaimer protected the contractor from liability for all "cracking," the contractor would still, under these circumstances, be liable for the damage that did occur.

In its analysis, the court first pointed out that: "In Colorado, a builder-vendor impliedly warrants to the purchaser of a new home that the home was built in a workmanlike manner and is suitable for habitation. These warranties may be limited by an express provision in the contract between the parties. However, such limitation must be accomplished by clear and unambiguous language. Such limitations will be construed strictly against the builder-vendor of the house [emphasis added]."

The court then analyzed the cause of the cracking and determined that cracking was due to the heaving of the expansive clay soils under the basement slab. Although the defendant had disclaimed liability for "cracking of concrete flatwork," they had not disclaimed liability for vertical displacement (heaving), which occurred in both the basement and the driveway. The court determined that: "Because 'cracking' and 'heaving' are not synonymous, the disclaimer clause did not limit the defendant's liability in implied warranty for defects accompanying the 'heaving' of the slabs."

Thus, any disclaimers must be clear and unambiguous, as they will be construed strictly against the party seeking to avoid liability by virtue of the disclaimer.

Damages

In general, damages in a construction case are limited to the cost of repairs of the defect; however, if repair costs would result in "economic waste," then the measure of damages is the actual diminution of value of the building incorporating the defect. The court in Hansel v. Creative Concrete, id., essentially determined that replacement of the concrete driveway was not the appropriate measure of damages because the driveway could be repaired. In that case, the underlying magistrate had determined that the measure of damages should be based on the average thickness of the driveway as completed (4 in. [102 mm]), compared to what the contract called for (4.5 in. [114 mm]), and thus arrived at a shortfall of 11.11%. Applying 11.11% to the contract price of $10,855.10, the computed damages were $1206.00.

The Court of Appeals in Ohio questioned the appropriateness of the computation of damages based on the thickness of the driveway; however, they also understood that the Magistrate had no other evidence to use in computing damages other than the total tear-out and replacement cost. The appropriate measure of damages should have been the cost to repair the driveway based on the reasoning by the Ohio Court of Appeals.

Another Ohio Court of Appeals case also wrestled with damages associated with cracking of a concrete driveway (Angles v. West, 2003 W.L. 203 593 [Ohio App. 4 Dist.]). Angles hired a contractor, West, to install two concrete driveways and a porch and steps for a newly built home. The parties entered into an oral agreement to do the work for $11,110. Four months after the work was completed, cracks referred to as "severe midline cracking" had developed. The owners sued the contractor for breach of contract for failing to perform in a workmanlike manner. The homeowner's expert at trial was Donald Pierce, a consultant with Columbus Testing Laboratory Engineers. Pierce testified that the cracking in the concrete slabs had occurred because of an insufficient number of saw joints and because the saw joints present were not deep enough. Pierce expressed an opinion that the saw joints should be no more than 10 ft(3 m) apart and that many of the saw joints installed by the contractor were 15 to 20 ft(4.6 to 6.1 m) apart. Pierce testified that the cracks could have been avoided if Appellants had used "proper joint methods" as recommended by documents published by ACI.

After a 1-day bench trial, the Court found that the contractor had not performed in a workmanlike manner and thus had breached the contract. The Court was then faced with determining damages for the defects in the construction, recognizing that the cost of repair was the appropriate measure. At a second hearing, to address cost of repair, a second expert, Joe DeFelice, testified that repairing the concrete so that it didn't look like a patch job would cost almost as much as replacing it. The replacement cost was calculated at $16,000 to $18,000. The Court then determined that there was no possibility for successful repair and therefore awarded the homeowners the original contract price of $11,110 as damages.

The Court of Appeals reversed the lower court's findings. The Court of Appeals found that there was no evidence on the record to support the Court's finding that the concrete had no value. The underlying Court's opinion had stated the concrete itself was not inherently defective and that the experts seemed to agree that the cracking impaired the aesthetic value of the concrete driveway as opposed to the functional value of the concrete.

The experts in the underlying trial agreed that the cracking did not make the driveway unusable. Pierce testified that the cracking would not prevent an individual from parking a car on the driveway. However, he testified that there are other uses for a driveway besides parking a car on it. According to Pierce, if a child wanted to use the driveway for roller skating, eventually it would become difficult to do so because the cracks would start to "unravel." Another expert also testified that the structural integrity of the concrete was not compromised by the cracks. The Court was also influenced by the fact that the owner had continued to use the concrete driveway while he awaited the outcome of the lawsuit. When asked at trial if he could live with the concrete the way it was, the owner responded:

"If it was do or die, I guess I could, yes, but you know, it's a new house and it just ruins the look of the whole place as you come in the driveway and the first thing you see is this driveway all cracking up, so you know it's not very satisfactory at all."

The Court of Appeals then concluded that:

"The evidence on the record establishes that the concrete is capable of being used. If the concrete is capable of being used, then it must have some value, even if that value is minimal. Therefore, we find that the Trial Court's judgment is against the manifest weight of the evidence because there is no competent, credible evidence to support the Trial Court's finding that the concrete work has no value. Accordingly, Appellant's first assignment of error is upheld and the Court's judgment is reversed."

The Court of Appeals then remanded the case to trial for a determination of the proper damages award.

In a classic case of "be careful what you ask for," the Court of Appeals then went on to point out the fundamental concept in the law that the damages in a breach of contract scenario require that the plaintiffreceive the benefit of the bargain if possible. Thus, the court of Appeals instructed the lower court that, once a Trial Court determines that the cost of repair is the proper measure of damages, as in this case, then the plaintiff/homeowner is entitled to an award of the full cost of repair, even if that amount was greater than the original contract price: "Unless to do so would be unreasonable by virtue of economic waste. In other words, the cost of repair need not be equal or less than the contract, but it should not be grossly disproportionate either [emphasis added]."

This, of course, confuses the issue. The lesson to be learned from this case is that the measure of damages in a construction case is indeed the cost of repairs or, if cost of repairs would result in economic waste, then diminution of value of the property. However, the cost of repairs can exceed the original contract price without constituting "economic waste." Economic waste, according to the Ohio Court of Appeals, must be something "grossly disproportional" to the original contract price... (whatever that means).

Scope of Release

The Supreme Court of South Dakota has confirmed that the release of a subcontractor for concrete work results automatically in the release of the general contractor for vicarious liability for that work, even though the release does not name the general contractor (Krause v. Reyelts, 646 N.W.2d 732 [SD 2002]). In 1993, the Krauses entered into a contract with Reyelts for the construction of a home in Rapid City, SD. Reyelts subcontracted with Melvin Geidel to perform the excavation work on the project. After construction, defects, including concrete cracks, occurred in the basement. Geidel's liability insurance carrier ultimately agreed to reimburse Reyelts for repairs to the work. In return, Krause and Reyelts signed a release in favor of Geidel. The release stated in part:

"Reyelts Construction and Wayne Krause hereby release and discharge Melvin Geidel Excavation...from any and all claims, demands, damage, lawsuits, and causes of action arising from Mel Geidel's excavation's work..."

After completion of repair work, the Krauses continued to experience problems, including cracking and heaving of the concrete basement, cracking of the concrete driveway, cracking of the south and west foundation walls of the garage, settling and cracking of the concrete patio, and other interior defects. The homeowners hired another contractor, Huntley, to correct the defects and in the process, Huntley noticed more construction defects, including voids under the concrete.

The Krauses then sued Reyelts claiming negligence, breach of express warranty, breach of implied warranty of fitness for a particular purpose, breach of contract, and fraud. Reyelts claimed that the release of Geidel, the subcontractor, released Reyelts (the general contractor). The Trial Court agreed and granted Reyelts' motion for summary judgment. Upon review, the Supreme Court of South Dakota confirmed that the release of an agent is a release of the principal, even when the release contains an express reservation and where the claim is premised on the single act of the agent. Therefore, Reyelts was correct that even if Krause did not intend to release its vicarious liability against Reyelts, South Dakota law did not permit the parties' intent to override the release of the vicarious liability claims.

However, because the release related only to claims arising from Geidel's work, and Geidel had undertaken only excavation work, the release in favor of the general contractor, Reyelts was limited to excavation work claims. Thus, the release of claims against Reyelts was limited to release of excavation work claims only. Because Reyelts could be liable for other problems in the work unrelated to the excavation claims, the Court reversed the lower court and remanded for a determination of the liability of Reyelts for claims other than claims relating to excavation.

Summary

In summary, concrete cracks! To avoid or minimize legal issues related to cracking of concrete work:

* Attempt to avoid cracking by:

* Using good placement, finishing, and curing techniques;

* Reviewing the job requirements and pointing out problems with the mixture design or other design issues as they are observed; and

* Documenting those issues in writing;

* Educate clients by using a disclaimer or limitation in contracts where possible. When not possible, educate clients by documentation in a letter;

* Don't assume cracks are "defects." Cracks may be considered to be defects when:

* Per Section 2.1 of Reference 1, "Cracks need to be repaired if they reduce the strength, stiffness, or durability of the structure to an unacceptable level, or if the function of the structure is seriously impaired"; or

* Per Section 1.3 of Reference 2, "Cracks are objectionable where their size and spacing compromise the strength, stability, serviceability, function, or appearance of the structure.";

* Include a repair allowance in your contract, or (better) include unit prices for repair work that is not limited by an allowance;

* Refer to ASCC Position Statements No. 5, No. 29, and No. 33 for guidance; and

* Remember the legal defenses of:

* Substantial Performance. Cracking may not result in breach of contract if the cracking does not "destroy the value and purpose of the contract";

* Measure of Damages. The measure of damages for a construction defect is the cost of repairs (not always remove and replace), unless the repair cost constitutes economic waste, meaning "grossly disproportional to the original contract price";

* Impossibility of Performance. If compliance with the specifications cannot be achieved without resulting in cracks in the floor, then the specifications are defective, not the contractor's work; and

* The "Spearin Doctrine": "...it is well-established that a contractor who performs according to detailed plans and specifications is not responsible for defects in the results."

References

1. ACI Committee 224, "Causes, Evaluation, and Repair of Cracks in Concrete Structures (ACI 224.1R-07)," American Concrete Institute, Farmington Hills, MI, 2007, 22 pp.

2. ACI Committee 207, "Report on Thermal and Volume Change Effects on Cracking of Mass Concrete (ACI 207.2R-07)," American Concrete Institute, Farmington Hills, MI, 2007, 28 pp.

Note: Additional information on the ASCC position statements discussed in this article can be found at www.ascconline.org.

Selected for reader interest by the editors.

Jeffrey W. Coleman, FACI, is an Attorney at Law and Principal of the Coleman Law Firm, LLC, Minneapolis, MN. An ACI member for more than 30 years, he currently serves on the ACI Board of Direction and chairs ACI Committee 132, Responsibility in Concrete Construction. He is a member of the Construction Award Committee, Construction Liaison Committee, Convention Committee, Financial Advisory Committee, TAC Construction Standards Committee, and ACI Committee 563, Specifications for Repair of Structural Concrete in Buildings. Coleman is the author of Legal Issues in Concrete Construction, which was published by ACI in 2004. A licensed professional engineer, he received his BS in civil engineering and MS in structural engineering.