So, where has all of the mechanic lien posts gone?!

If you’re a reader of this blog but not my other blog – The Construction Lien Blog – you may be wondering.  But as you can gather from the blog’s title, a few years ago I created a separate blog focused on lien issues across the country, and post very regularly there on the topic.

As I exhaust the subject on that blog, and don’t to duplicate postings from there over here, most of my mechanic lien and bond claim talk is done on the Construction Lien Blog.  So, if you’re interest in lien laws (and if you are a construction participant or construction law person, lien laws are super important), I recommend you take a look at this other blog.

To give you a more direct path to relevant information, here are the articles posted on the construction lien laws in the states where Wolfe Law Group practices.

• Washington
• Oregon
• California (Yes, we now practice here. Announcement coming soon!)
• Louisiana
• Miller Act Claims
• State Bond / Little Miller Act Claims

Also, be sure to check out these other resources providing through the lien and notice preparation and management company I founded in 2007, Zlien:

• 50-State Lien Law Summaries
• 50-State Little Miller Acts Full-Text Compilations

The case is important because it carved an exception to the economic loss rule, which typically prohibits a tort claim between contracting parties when the claims arises out of a failure to perform contractual obligations. In Abraham, a plaintiff in a construction defect case was allowed to sue its builder for negligence for failing to comply with the building codes. This despite the builder’s contractual obligation to comply with the building codes.

The Oregon Supreme Court accepted review at the Abraham decision at the dawn of this year, and just last week issued an opinion affirming it. An interesting quote explains the court’s conclusion:

[W]e agree with plaintiffs that…earlier cases support the conclusion that common law negligence principles apply — notwithstanding a contractual relationship — as long as the property damage for which the plaintiff seeks recovery was a reasonably foreseeable result of the defendant’s conduct. Thus, a negligence claim for personal injury or property damage that would exist in the absence of a contract will continue to exist unless the parties define their respective obligations and remedies in the contract to limit or foreclose such a claim. Parties may limit tort remedies by defining their obligations in such a way that the common-law standard of care has been supplanted…or, in some circumstances, by contractually limiting or specifying available remedies

Does this undermine the distinction between contract and tort and permit every breach of contract to be brought as a tort claim?  Or in other words, completely undermine the economic loss rule?  The Oregon Supreme Court digresses here with an example of why it’s decision is limited and does not undermine the ELR:

An example will help demonstrate the difference between actions taken in the performance of a contract that can be the basis for a contract claim only, and those that may also provide a basis for a tort claim. If an individual and a contractor enter into a contract to build a house, which provides that the contractor will install only copper pipe, but the contractor installs PVC pipe instead (assuming both kinds of pipe comply with the building code and the use of either would be consistent with the standard of care expected of contractors), that failure would be a breach of contract only. That is so because the contract defined the contractor’s obligation to use a particular material (and no other), which the contractor then failed to do…If the failure to install the copper pipe caused a reduction in the value of the house, the plaintiff would be able to recover that amount in an action for breach of contract. That would be a claim that, as this court stated in Georgetown, “is based solely on a breach of a provision in the contract[.]”

On the other hand, if the contractor installed the PVC pipe in a defective manner and those pipes therefore leaked, causing property damage to the house, the homeowner would have claims in both contract and tort. The homeowner could recover in contract both for the failure to install copper pipe and for the failure to perform the contract in a reasonably skillful manner.  The homeowner also would have a tort claim for property damage to the house caused by the leaking pipes if the homeowner could prove that the contractor’s failure to meet the standard of care caused the property damage. In those circumstances, the obligation to install copper instead of PVC pipe is purely contractual; the manner of installing the pipe, however, implicates both contract and tort because of the foreseeable risk of property damage that can result from improperly installed pipes.

Read the Oregon Supreme Court’s full opinion online by clicking here.

That opinion - Abraham v. T. Henry Construction, Inc., 230 Or.App. 564 (2009) – has been sent to the Oregon Supreme Court for review, and oral arguments were heard last month. You can read the Oregon Supreme Court’s media release here. The media release does a great job of outlining the issues at stake in the case.

The two issues of particular interest to the state’s application of the economic loss rule are identified in the media release as so:

1. If a property owner alleges that his or her contractor violated the “building code,” whether the property owner has a negligence claim when the contract between the parties expressly required the contractor to follow all building codes.
2. Whether the Oregon Residential Building Code sets forth a standard of care independent from the contract between a property owner and a contractor or subcontractor, and thus permits imposition of negligence liability, when the parties’ contract expressly requires compliance with all building codes.

Stay tuned at the Construction Law Monitor, as we’ll monitor the outcome of this case.

I completely overlooked a recent change in the Oregon law related to licensing joint ventures.   A change in ORS §701.021 puts Oregon in Washington’s camp insofar as joint ventures are concerned.  Like in Washington, so long as a single member of the joint venture is licensed, the JV entity will be considered licensed.

The change took effect on July 1, 2010.  Read the full text of ORS §701.021 here. Read a great article discussing details of the changed statute from Steward Sokol & Gray LLC here.

In the earlier decision, the Oregon court clarified the statute of limitations in a breach of contract claim for construct defects. Surprisingly, because of some ambiguity in two Oregon statutes, it has not been settled whether these suits were to be brought within 6 years from the date of breach, or ten.

The Court in Waxman v. Waxman & Associates, Inc. appears to have settled the rub, holding the claim must be brought within six years from the date of the breach – regardless of when the breach was or should have been discovered. 224 Or. App. 499, 198 P.3d 455 (Or. Ct. App. 2008).

Which leads us to a case the following year before the Oregon Court of Appeals, Abraham v. T. Henry Construction Inc., 230 Or. App. 564, 217 P.3d 212 (2009).

In this case, the plaintiffs brought suit against their contractors for breach of contract (defects) and negligence….8 years after the breach. As we just learned from the Waxman case, therefore, the breach of contract claims were prescribed, and the Abraham court found as such.

Interesting about this case, however, is that the negligence claims were allowed to proceed. This, despite application of the economic loss doctrine.

Typically, the economic loss doctrine will prohibit a tort claim between contracting parties when the claim arises out of a failure to perform contractual obligations. In other words, since negligence is a duty/care claim, one party must breach a standard of care….not simply a contractual obligation.

The plaintiffs in Abraham argued, however, that the contractors had breached a standard of care because it had violated the Oregon Building Code.  The Oregon Court of Appeals agreed that the Oregon Building Code did create a standard of care, and allowed the claim of negligence to proceed.

This begs the very important questions – what is a construction improvement project? And beyond that, what is a construction improvement?

With respect to Virginia’s law on the issue, the Virginia Real Estate, Land Use and Construction Law Blog just posted on this topic: The Line Between Furniture and Fixtures: What Constitutes An Improvement, Part II. The post quotes a recent federal civil case, Summit Community Bank v. Blue Ridge Shadows Hotel & Conference Center, LLC, whereby the judge distinguished between installed cabinets (which can be liened) and furniture delivered to the project (which cannot be liened) saying:

It is not sufficient for materials to simply add value to a building by their mere presence without any further connection to the building.

The law in Washington and Oregon is very similar to Virginia. In both of these states, claimants may lien for work they perform in the “improvement of real property” or work used “in the construction of any improvement.”

Louisiana’s lien law is a bit more unique in this regard, and perhaps the most unique in the nation. In Louisiana, claimants may file a lien whenever they perform services in connection with a “Work.” A “Work” is defined as follows by the statute (LA RS 9:4808):

A work is a single continuous project for the improvement, construction, erection, reconstruction, modification, repair, demolition, or other physical change of an immovable or its component parts.

I once represented a claimant in a Louisiana action against it to remove a mechanics lien, whereby I submitted a memorandum to the court distinguishing “work” (little w” from “Work” required by the statute (big w). I quoted the 1985 Louisiana Fourth Circuit case Lake Forest, Inc. v. Crilot Co., et al (466 So.2d 61) wherein a subcontractor’s lien against a property for excavation work related to the operation of a sand pit was challenged.

Interesting about this case is that there was no building or “improvement,” but the lien was found valid because the work was considered a “Work,” with the court explaining as follows:

Although “improvement” language is used in this general statement, La. R.S. 9:4808 contains a broader wording. The definition of “work” as “a single continuous project for the improvement…or other physical change of an immovable…” appears to apply to this unique sand pit operation.

We conclude that this sand pit…was designed to improve Lake Forest’s property. At the very least the operation was for the “modification…or other physical change of an immovable.”

Summary

Here is a short summary of this post. It’s important to know what is and what is not an “improvement” to determine whether you can in fact file a construction lien for the work or materials you provided. It’s also important to answer that question within the context of the laws applicable to your project. Most of the stuff is black & white…but in some cases, there can be a little gray.

This article was originally posted on Express Lien’s topic-specific Construction Lien Blog.

In the construction business, NSF checks are a fact of life.   And sometimes, the NSF checks may cause big problems because they’re written in amounts that exceed $10,000, $50,000 or $100,000.

In Oregon, like in Washington, those who draft NSF checks have a specific window of time to make payment on the check amount, or be subjected to statutory penalties and their adversaries litigation costs.

I just published a Legal Guide on Avvo that gives step by step instructions to folks on how to collect against a NSF check.   Unlike many states, like Washington and Louisiana, that requires the use of particular forms and language, the Oregon statutes are very bland in their requirements.   To charge interest, penalties and legal expenses on a party who writes a hot check in Oregon, the recieving party need only send a written notice of the NSF check.   There’s no requirements as to the form of the notice, or how the notice should be sent.

Although, of course, we have our recommendations.

In sending the notice, you should send it through some service that allows your company to track its mailing and delivery.   In writing the notice, be certain that you identify the check in question, and indicate that if the check isn’t paid within 30 days, you’ll seek interest, penalties, attorneys fees and other costs allowed by the Oregon statutes.

This article was originally posted on Wolfe Law Group’s topic-specific Northwest Construction Law Blog.

That’s because nearly every state imposes stiff penalties against those who pass hot checks.   What type of penalties you ask?   If you’re forced to collect on an NSF check, you’ll likely be entitled to attorneys fees, legal costs and interest, and that’s in addition to statutory liquidated damages that can be as stiff as double the amount of the check.

In all the states where I practice (Oregon, Washington & Louisiana), there exists powerful statutes designed to deter bad checks.  If you receive a NSF check, it’s important you follow the procedures of these statutes to ensure you will qualify for the penalties.

Over the past few days, I’ve been contacted by folks about NSF check collections a bit more than usual, and so I spent some time over the weekend drafting short and understandable step-by-step guides on how to collect on a NSF check in these three states.

We published them as Legal Guides over at Avvo.com.   Take a look at them here:

How to Collect on NSF Check in Louisiana

How to Collect on NSF Check in Washington

While the DJC article focuses on an eco-roof as a solution for builders wanting to build higher, it hints at the bigger picture for Oregon developers and builders:  Portland’s very progressive Eco-Roof program.

The increase in building height is just one of the many incentives Portland provides for installing an eco-roof.

What The Heck Is An Eco-Roof?

An “eco-roof” is another word for a “green roof,” which is defined by Wikipedia as a roof “that is partially or completely covered with vegetation and soil, or a growing medium, planted over a waterproofing membrane…[that] may also include additional layers such as a root barrier and drainage and irrigation systems.”  The website for Portland’s Eco-Roof Program describes it as a “living, breathing vegetated roof system.”

It’s like a garden on the roof, and it has a lot of positive features for the environment and the energy consumption of the building (i.e. stormwater control, better insulates the building to lower energy costs, etc.).   The Portland Bureau of Environmental Services published this Eco-roof Fact Sheet explaining the benefits of a Eco-Roof.

Available Incentives in Portland

Portland leads the country in providing incentives to builders and developers to incorporate eco-roofs into their projects.

As seen in the DJC article, a developer / builder can circumvent building height restrictions by installing an eco-roof.    Another incentive for builders and developers to invest in eco-roofs is that the Portland Eco-Roof Program will fund up to $5 per square foot of an eco-roof project.   With installation costs of eco-roofs ranging between $5 and $20 per square foot, this incentive can be up from 25% – 100% of the roof’s cost.

How to Apply

Those interested in the incentive cash must apply through the Portland Bureau of Environmental Services, through the Portland Grey to Green program.  Applications are accepted and reviewed twice annually, and the application process just closed for the last time in 2009 (December 1st 2009).  However, applications can be submitted against starting in April 2010, and will be reviewed in June.

Qualifications to apply include:

• The project is within the Portland city limits.
• The project manages stormwater.
• The project has a designated project manager.
• Construction will start within two years of being approved for an incentive.
• Funding can be secured within two years.
• The project is feasible and buildable.
• The ecoroof must not be complete on or before December 1, 2009.
• The project must agree with and satisfy the city’s contact agreement requirements to receive funding.

How to Learn More

You can learn more easily online, as Portland has published a number of web pages explaining this program:

• Grey to Green Program
• Portland Environmental Services
• Portland’s Official Eco-Roof Blog
• Eco-Roof Page at Portland’s Bureau of Environmental Services

Additionally, the city of Portland is sponsoring Ecoroof Portland, a conference offering folks a chance to learn about the alternative roofing process on March 12-13, 2010.

This article was originally posted on Wolfe Law Group’s topic-specific Northwest Green Building Law Blog.

How to File a Construction Lien in Oregon

How to File a Construction Lien in Louisiana

These two legal guides offer plain english explanations on how to prepare and file a construction lien in either of these states.

The two above-listed legal guides were written and published by Scott Wolfe Jr., the founding attorney of Wolfe Law Group.  He previously published a similar legal article on Avvo.com about filing construction liens in Washington, which you can read here.