The law of unintended consequences theorizes that the actions of people – especially government – often have effects that are surprising or unplanned. The idea of unintended consequences is generally traced back to English philosopher John Locke. In 1692, in a letter to Sir John Sommers, a member of England’s Parliament, Locke counseled the defeat of a parliamentary bill designed to regulate interest rates. Locke argued that instead of benefiting borrowers, as the bill intended, it would hurt them because creditors would find ways to circumvent the law, and those related costs would be borne by the borrowers, namely “widows, orphans and all those who have their estates in money.” John Locke, Some Considerations of the Consequences of the Lowering of Interest and the Raising the Value of Money (1691). Oregon House Bill 2661 (“HB 2661”) should be considered with unintended consequences in mind.

HB 2661’s goal is to curtail or reduce the spiraling costs of new residential construction in order to make housing more affordable. While that is an admirable and laudable goal, the key features of this bill remind me of Locke’s letter to Sommers and his concerns about that century’s old bill to regulate interest rates.

HB 2661’s key features include:


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Please check out my latest post on the Policyholder Report blog regarding a recent Florida decision  – another win for policyholders.  Here is an excerpt:

Last week, a federal district court in Florida reaffirmed the black-letter law in Florida that claims against a general contractor for damage to the completed project resulting from the defective

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).
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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.
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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? 
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If you look through the general conditions (or back page provisions) of your standard construction contract, you might be surprised to see a “choice of law” provision.  This provision is a term in the contract that states that the law of another jurisdiction applies to disputes arising from the work performed or obligations incurred under the construction contract.  For example, a construction contract for a house being built in Portland, Oregon could contain a provision that in the event of a dispute between the owner and builder, Washington law will apply.  A choice of law provision may be included for a variety reasons such as an out-of-state contractor, or an out-of-state  developer, the parties’ use of an unreviewed, standard form contract, or more favorable laws for the drafting partyin other jurisdictions.  Whatever the reason, for projects built in Oregon, cherry-picking
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The Bulletin in Bend, Oregon, reports on the benefits and limitations of the Construction Contractors Board’s dispute resolution process in the article, “More construction disputes could go to court.  State no longer resolves complaints through arbitration” by  Joseph Ditzler / The Bulletin, published June 27, 2014.  Read it online at the Bend Bulletin here.

The Oregon state courts have unique rules regarding expert discovery.  The Oregon Rules of Civil Procedure do not allow for pre-trial depositions or document discovery from experts hired by the parties.  However, lawyers frequently confuse and challenge each other on the basis for this.  Often there is reference to the concept that the expert may be within the attorney-client privilege, or that his or her work product may somehow be confidential.  As a result, in order to protect their experts from discovery requests, and to avoid a “waiver” of protection, parties often share expert reports and materials as “mediation communications.”  The parties put significant effort into making sure that all of the other participating parties agree that any expert materials which are shared are “mediation communication” to make sure that there is no “waiver” of whatever protection exists in Oregon for experts. 

Can expert witnesses be deposed in Oregon?
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Building officials are typically immune from liability for failing to properly inspect construction for code violations. Code compliance generally falls on the shoulder of the developer and contractors.  Our colleagues over at Herrick, Feinstein report on the perfect storm:  “The city building inspector for Norristown, PA forces condominium owners to relocate due to structural defects