Construction Law Watch

Don’t Let Your Construction Project Go Up in Smoke – What the Passing of Measure 91 Means for Employers in Oregon

Posted in Marijuana and the job site
Light a Joint

This article appeared online (Dec. 11, 2014) and in print (Dec. 3, 2014) in Cascade Business News, written by Ball Janik LLP attorneys Peter Hicks and Jacob Zahniser.

In Washington, and soon-to-be Oregon since the passage of Measure 91, construction workers and employees may legally possess and use marijuana. What does that mean for the job site?

Although construction workers and employees may now legally possess and use marijuana, nothing under Washington or Oregon law permits any worker or employee to possess or use marijuana while he or she is on the job.

Considering substance use is recognized as prevalent among construction workers, employers such as general contractors, developers and owners should take necessary and appropriate steps to prevent employees from operating dangerous and complex machinery, performing construction work, and otherwise completing construction-related tasks while under the influence of marijuana.  Read more here.

Oregon Court of Appeals holds cutoff time for negligent construction claims could be six years from discovery of a claim.

Posted in Architect, Construction Claims, Construction Defect, Construction Dispute, Oregon Construction Cases, Oregon Court of Appeals, Statute of Limitations, Statute of Repose

We spend a lot of effort on this blog talking about the time deadlines for property owners to sue contractors and design professionals for negligence.  There are two reasons for this:  first, the law on this is rapidly evolving in Oregon.  Second, it is of the utmost importance to contractors, design professionals, and property owners because there are very few absolute defenses to a claim for negligent construction besides the timing of claims.  Also, since many property owners rightfully loathe to dive into a lawsuit, they may delay filing until absolutely necessary.

The news keeps coming.  At the end of October, the Oregon Court of Appeals decided Riverview Condominium Association v. Cypress Ventures, Inc., et al., Case No A150586 (October 29, 2014).  There, the defendants developed testimony and documents evidencing that various types of water leaks had been affecting the property for several years.  The case discusses the “statute of repose” (the drop-dead deadline date for bringing any claims) as well as the “statute of limitations” (the time limit on bringing various claims). Continue Reading

Past the Statute of Limitations for a Construction-Defect Case? Try Looking at Your First-Party Property Policy for Coverage.

Posted in Construction Claims, Construction Contracts, Construction Defect, Contract Clause, Uncategorized

The following is a report from my blog post on The Policyholder Report on November 20, 2014.

The Seventh Circuit just released an opinion in Strauss v. Chubb Indemnity Insurance on November 18, 2014, upholding coverage for insureds who discovered the presence of long-term water damage five years after their insurance policies had expired, and likely well after the statute of limitations passed for a construction-defect action. With this opinion, the Seventh Circuit joins with other jurisdictions that have determined there is coverage for long-term latent defects that go undiscovered for years.

The insureds constructed a new home in Wisconsin that was completed in 1994. They moved in and purchased insurance with various insurers through 2005. But unknown to the insureds, the defective construction in 1994 had been allowing water to infiltrate their home. These damages went undiscovered until 2010, five years after the last insurance policy had expired and likely beyond the time allowed to file a lawsuit against the negligent contractor. The insurers denied coverage, arguing that there was no coverage for the water damage because it didn’t “manifest” until 2010 and a “manifestation trigger” applies to all first-party property insurance claims. Not only is that an incorrect statement of the language of the policies, it is also a blatant misstatement of the law. The district court rejected the insurers’ arguments. So did the Seventh Circuit. Continue Reading

A Condominium Conundrum: When does the one-year limitations period to challenge the validity of an amendment to a condominium declaration not apply? When the amendment is invalid.

Posted in Condo Conversion, Condominium, Ridpath Hotel, Statute of Limitations

Division III of the Washington Court of Appeals published an opinion two days ago interpreting, for the first time, RCW 64.34.264(2), the one-year statute of limitations for challenges to the validity of an amendment to a condominium’s declaration. In Club Envy of Spokane, LLC, et al v. The Ridpath Tower Condo. Assoc. et al., No.31913-0-III, the Court held the one-year limitations period does not apply when the amendment is “void from its inception.” In other words, when the amendment was improperly passed under the Condominium Act, the one-year limitations period to challenge the amendment’s validity does not apply.

The Unique Facts of Club Envy

The facts in Club Envy are rather unique. In February 2008, the Ridpath Tower Condominium was created and the Association formed. Continue Reading

And Then There Were Two: The Oregon Ct. of Appeals Finds There Are Two Possible Statutes of Repose for Negligent Construction Claims

Posted in Construction Claims, Construction Contracts, Construction Defect, Construction Defect Repairs, Construction Dispute, Consumer Protection, Oregon Construction Cases, Oregon Court of Appeals, Statute of Limitations, Statute of Repose, Substantial Completion

The Oregon Court of Appeals recently issued a surprising decision regarding the ultimate timeline to file a construction defect claim involving a “spec home.” (A “spec home” is a house which a builder or developer constructs not for a specific owner but on speculation that the home will sell to the general public upon completion.)  In Shell v The Schollander Companies, Inc. (September 24, 2014), the Court of Appeals decided that ORS 12.115, as opposed to ORS 12.135, supplies the appropriate ten-year statute of repose for an owner seeking a negligent construction claim where the owner does not have a traditional “construction contract” with the builder.  The plaintiff in Shell was the original owner of the home.  She purchased the property midway through construction from the original developer/builder using a real estate sales agreement to complete the transaction. Continue Reading

Oregon Court of Appeals Case Decided Yesterday: Policyholder Wins

Posted in Insurance Coverage, Oregon Court of Appeals

Be sure to check out Dwain Clifford’s post on The Policyholder Report:  Oregon Court of Appeals Rejects Insurer’s Heads-I-Win, Tails-I-Win Policy Interpretation.

The Oregon Court of Appeals yesterday issued an opinion confirming that Oregon law remains faithful to the bedrock principle in coverage disputes that ambiguities in a policy must be resolved in favor of the insured.

In Patton v. Mutual of Enumclaw Ins. Co. (Oct. 8, 2014), an insured seeking coverage under his homeowner’s policy found himself between a rock and hard place, at least under the insurer’s erroneous attempt to link two unconnected policy provisions to deny coverage.  Read it here.

Broad and Ineffective “Reservation of Rights” Letter has Big Consequences

Posted in ROR letter

Insurers issue reservation of rights letters (“ROR Letters”) to contractors all the time. Typically, a contractor is sued, reports the claim, and one of the first responses from its insurer is an ROR Letter. They are generally long and regurgitate what seems like the entire policy without actually informing the contractor which provisions may actually matter in light of the allegations in the complaint.

The $5 Million ROR Letter

At least one court has held that ROR Letters that fit within this category can have big consequences that benefit insureds put in this unfair position. In Advantage Builders & Exteriors, Inc. v. Mid-Continent Cas. Co. (Mo. 2012), Continue Reading

It’s a bird, it’s a plane, it’s … a construction drone. Government regulations are still catching up to elusive flying machines.

Posted in UAVs
Drone picture

Unmanned aerial vehicles (UAVs), commonly called drones, are frequently in the news and gaining popularity on the jobsite.  Architects, engineers and contractors are exploring ways to easily document and map building construction progress and quality control with the ease of monitoring by UAVs.  Despite their rising popularity, the laws and regulations surrounding the use of UAVs remain unsettled.  While on the cusp of this exciting technology, architects, engineers and contractors ought to coordinate closely with other project participants, and their own insurance companies, before deploying and using UAVs in a project.  It is an open question whether any use of a UAV is legal, or free from risk, while the responsible government agencies sort out the regulations and jurisdictional issues. Continue Reading

New AIA Design-Build Agreement: The Waiting Game

Posted in AIA Contract Forms, Construction Contracts, Uncategorized

Formal design-build agreements are used by property owners in circumstances where a single firm is hired that will be responsible for both designing and constructing a project. Sometimes projects fall into this category by default.  For example, a contract that simply states the contractor will install a bill of materials, without reference to plans, is in fact a design-build agreement—but may leave unclear who is responsible for the actual design of the construction.  This can lead to numerous problems down the road.  Fortunately, the American Institute of Architects (AIA) publishes a commonly-used form for design-build agreement forms, the AIA A141. This AIA form may be worthy of consideration when choosing among starting points for a design-build project – but I recommend proceeding with caution.

The AIA recently published a 2014 update to the 2004 A141 form, and the 2004 form will no longer be available for use after 2015.  The 2014 updated form includes a variety of modifications.  Some clarify 2004 provisions, some simplify the form, and some change the risks and responsibilities of the parties.

Of particular note is that the 2014 form includes a key structural change from the 2004 from.  Continue Reading

The debate continues: do construction defects present a single or multiple “occurrence” for insurance coverage purposes?

Posted in Construction Claims, Construction Defect, Construction Defect Repairs, Insurance Coverage

Our colleagues at The Policyholder Report  note on a recent decision of whether construction defects present a single or multiple “occurrence” for insurance coverage purposes. In Chartis Specialty Ins. Co. v. Am. Contractors Ins. Co. (Aug. 12, 2014), Judge King of the federal district court in Oregon ruled that allegations of “deficiently managed construction” constituted a single occurrence for coverage purposes. Whether defective construction, development, administration and management give rise to one or more “occurrences” has profound consequences for both insurers and their insureds with regard to policy limits in play and deductibles/self-insurance retention amounts.  Read it here.