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
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.
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
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
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
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.
It is an all too familiar scenario: A condominium association (“COA”) sues a manufacturer of allegedly defective products used in the construction of the condominium. The COA alleges, among other claims, an Unlawful Trade Practices Act (“UTPA”) claim. The manufacturer–defendant seeks to dismiss the UTPA claim, arguing the UTPA, as a consumer protection statute, does not apply because neither the COA nor its members are “consumers” of the defective product, which was manufactured by the defendant, distributed by a third–party, and installed by a contractor. According to the manufacturer–defendant, this is a commercial transaction outside the UTPA. The COA argues its members are “consumers” because they purchased their units containing the defective product. Whether the UTPA requires plaintiffs to have some transactional relationship with the defendant to qualify as a “consumer” is currently unsettled in Oregon. Continue Reading
Today the Oregon Court of Appeals handed down a lengthy opinion upholding a money judgment awarded in favor of a judgment creditor in its garnishment action against American Family Insurance Company. Read about it and get the decision on Ball Janik’s Policyholder Report.
Leave it to Oregon. We proudly possess some of the most confusing statutes of limitation and repose anywhere, especially as they relate to construction claims. We always have interesting questions that linger unanswered for years or even decades before finding resolution by case law or statute. Even when we get answers, those answers always seem to raise more questions. Three current questions warrant brief discussion.
1. What is the statute of limitations for negligent injury to real property? Continue Reading
Oregon subdivisions often have Declarations of Covenants, Conditions, and Restrictions (“CC&Rs”) with varying degrees of restrictions on the characteristics of homes to be built there. For example, some CC&Rs restrict how tall homes can be to protect views of all of the homes in the neighborhood, or may specify certain materials for roofing or siding, to keep a consistent aesthetic in the community. Other CC&Rs require levels of upkeep on homes and give the HOA the power to fine owners that do not comply. It is important that prospective purchasers and owners in communities governed by CC&Rs know the restrictions in order to avoid potentially costly disputes. Continue Reading