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

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 3 Open Questions About Construction Claims and Oregon Law

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 Continue Reading Choice of Law in an Oregon project? Not in THIS House!

Attorneys’ fees are very often the major driver of any dispute resolution. Fee shifting provisions in contracts are powerful tools to make the parties work together to resolve any dispute amicably. What happens when the fee shifting provision is ambiguous, potentially applying to all disputes or maybe only certain types of disputes? The Oregon Court of Appeals’ recent decision in Adair Homes, Inc. v. Dunn Carney Allen Higgins & Tongue, LLC presents a cautionary tale for lawyers, homeowners, and contractors alike. Continue Reading Ambiguous Fee-Shifting Provisions: A Cautionary Tale

Oregon’s lien statutes appear to have a gap in protection for architects who provide services at the request of someone other than the owner.  Because non-owners frequently hire architects, this issue should make all parties extra cautious about the nature of their contractual relationships. 

Like most states, Oregon protects payment rights for contractors, Continue Reading Obvious Gap in Oregon Lien Laws for Architects?

When contracts go bad and a lawsuit percolates, it is important to know whether your attorneys fees will be covered based on provisions outlined in the contract. Relying on an indemnity provision is not enough, as illustrated by the Oregon Court of Appeals in its recent opinion in Pacificorp v. SimplexGrinnell, LP, 256 Or App 665 (2013). Continue Reading Does Your Contract Cover Attorney Fees? Recent Case Underscores the Importance of Provisions vs. Indemnity Provisions in Construction Contracts