The Georgetown Center on Education and the Workforce recently reported that the unemployment rate for recent college graduates is highest in architecture (13.9 percent) because of the collapse of the construction industry. READ MORE

A year ago, Abraham v. T. Henry Construction, Inc., a construction defect case, completed its journey through Oregon’s appellate courts.

Some observers anticipated that Abraham would redefine and potentially increase contractor liability exposure in construction defect cases by permitting homeowners to sue for negligence, despite the existence of a contract defining contractors’ responsibilities. Read more

April 3rd, 2012 – 9:00am – 10:30am 
iQ Credit Union Board Room, Hazel Dell (Please park in Safeway Parking Lot)

Whether economic times are good or bad, the construction industry continues to evolve, as do the risks, rules and regulations governing construction. Whether you are the owner of a large general contractor, a project manager for a small specialty contractor, or play any role in between, you’ll gain valuable insight into the many issues that you need to consider in order to successfully, and profitably, perform your role in the construction process.

Schwabe, Williamson & Wyatt is pleased to partner with Southwest Washington Contractors Association on issues that matter most to the construction industry.

Click HERE for more information!

Failing to strictly follow claim notice procedures in a construction contract may have disastrous consequences.

In 2003, the Washington State Supreme Court altered the playing field and issued a cautionary and sobering opinion proclaiming that contractors that do not strictly comply with claim notice procedures are in danger of waiving claims for delays or extras, unless the project owner “unequivocally” waives the notice provision. Read more

For many design professionals, one of the worst things imaginable is having their ethics questioned. It can be perceived as an attack on not only quality of work, but honesty as well. The reaction can vary from outrage and hyper-defensiveness to panic and denial, and both can make a bad situation worse.

So, what should a design professional do, if the unthinkable happens? Read more

In a case decided on February 29, 2012, the Oregon Court of Appeals, in Cortez v. Nacco Materials Handling Group, Inc. (A144045), ruled that the exclusive remedy provision of the worker’s compensation law, ORS 656.018, does not protect the individual members of an LLC from tort liability.  

Section 1(a) of the statute says:

The liability of every employer who satisfies the duty [to provide worker compensation insurance] is exclusive and in place of all other liability arising out of injuries, diseases, symptom complexes or similar conditions arising out of and in the course of employment that are sustained by subject workers, the workers’ beneficiaries and anyone otherwise entitled to recover damages from the employer on account of such conditions or claims resulting therefrom, specifically including claims for contribution or indemnity asserted by third persons from whom damages are sought on account of such conditions, except as specifically provided otherwise in this chapter.

Section 3 of the statute extends the exemption from liability to the employer’s “agents, employees, officers and directors.”

In Cortez, the worker was employed by an LLC firm and was injured in a fork lift accident.  The worker filed a workers’ comp claim against the LLC and received benefits.  The worker then sued various parties in a so-called “action-over” claim under the Oregon Employer Liability Law (“ELL”).  One of the parties the worker sued was the sole member and owner of the LLC.  The member itself is a corporation.

The trial court dismissed the lawsuit, citing the workers’ comp exclusive remedy provision.  The Court of Appeals reversed, taking a narrow read of the meaning of “officers and directors” of the employer, and deciding that the legislature did not intend to include the members of an LLC when it created the exclusive remedy portion of the worker compensation statute.  The court said that the statute does not expressly refer to an “LLC member or owner,” and that the legislature could have easily included LLC members when it created the LLC form of entity, but did not do so.  Therefore, the court held that even though the exclusive remedy provision protects an LLC itself, as an “employer,” the statute does not protect an individual “member” of that LLC.

For construction contractors that are formed as LLCs – and more particularly their individual members – this decision creates some uncertainty and potential risk, given the nature of construction work.  It is a reasonable assumption that at some point the legislature may decide to close this apparent gap in the exclusive remedy section of the worker compensation law, but that is not a certainty.  There is also the possibility that the decision could be appealed to the Oregon Supreme Court and overturned, but that will depend on whether the parties to the lawsuit elect to seek review – which the Court may or may not decide to grant. 

Until one of those events occurs, companies organized as LLCs would be wise, at a minimum, to review their liability insurance policies to ensure that individual members are adequately covered for ELL claims.  It may also be wise to review the form of entity in light of the Cortez decision.

Let’s just get one thing out of the way: Most contractors that protest a bid or proposal award will lose. Why? Because the deck is stacked against them.

The public contracting process, initially developed as a fair, transparent basis for competition, sometimes lacks both fairness and transparency. Some agencies enact their own public contracting rules, which they interpret and execute with increasing subjectivity, and sometimes without much uniformity – even among different bids on the same procurement. Read More

All businesses want to save money.  And they don’t want to spend money on lawyers if they don’t have to.  But using your advisors is about more than the bill.  There are a number of protections that come with making the call to your attorney.  Those protections can turn out to be very important if a dispute gets bigger, or goes farther than the business originally anticipates.  Here is a case in point:

A contractor’s sub has a jobsite accident that results in damage to a third party.  The third party files an administrative claim with the state agency that oversees such matters.  The claim leads to an investigation by the state agency.  The agency issues a citation to the prime contractor.

Stop.  Call your attorney.

In our story, the contractor does not call the attorney, because the contractor’s principal is certain the accident was not the contractor’s fault and therefore there can be no liability, so an Administrative Law Judge (“ALJ”) is sure to overturn the citation.  So the contractor decides to appeal – on its own – the citation by the agency.  The principal undertakes an internal investigation, soliciting e-mails and other documents from the contractor’s employees as well as other external persons who may have knowledge about the accident.  The principal conducts extensive research, takes voluminous notes, lays out a strategy for the conduct of the hearing on the citation, argues the matter to an ALJ, and loses.

The fact of losing the hearing is not that notable or unusual.  Every case or claim has a winner and loser, and the outcome may not have been any different if an attorney had gotten involved at the beginning. 

But the ALJ’s decision is not the end of our story, because the third party, who has received an award from the agency, has determined that the award is not sufficient to cover the damage she suffered.  So the person sues the prime contractor and other subcontractors in court for the difference between what the person believes are her true damages and the amount that she was awarded by the state agency.  Then, she demands copies of all the contractor’s records relating to the accident, including all notes, e-mails, diagrams, photos, post-its, and any other scintilla of information or data in the contractor’s possession relating to the work or the accident.

Remember all the strategizing the principal did?  And all the questions he asked of his employees?  And the answers those employees gave – some of which were very damaging to the contractor’s position?  All of that information is discoverable, meaning it must be turned over to the other side.

“Why?” you may be asking.  The answer is because the contractor did not engage its attorney at the beginning of the investigation, or at the latest when the contractor received the notice of the citation from the agency.  Had the attorney been engaged in the investigation, the interviews of company employees, the internal document gathering, and the development of the strategy for the initial agency-level hearing, much of the information sought by the other party in the lawsuit would be protected by either the attorney-client privilege or the attorney work-product doctrine.

The attorney-client privilege is a legal concept that protects certain communications between a client and his or her attorney and keeps those communications confidential.  That means that anything said to the attorney by the contractor, its principal or employees is generally confidential and cannot be discovered by the other side unless the privilege is waived.

The attorney work-product doctrine is similar to, but broader than, the attorney-client privilege.  The work-product doctrine protects materials that are prepared in anticipation of litigation.  So, internal communications that are in response to questions or requests from the attorney in the above scenario are likely protected from discovery.  The “bad news” responses from the contractor’s employees are likely protected (although if the employees are deposed they must give accurate answers – the information or impression itself is not protected, only the communication about it to the attorney or at the attorney’s direction).  The “road-map” to the hearing that the contractor prepared?  Also protected by the work-product doctrine (assuming the contractor prepared such a document if he’d hired counsel), so long as it is prepared at the direction of the attorney.

So, the moral of the story is that what may appear at the outset to be a cost-effective way to approach a dispute could turn out to be disastrous strategy costing a great deal more in terms of potential damages than what the attorney’s fees might add up to.  The point is not to suggest that you, the client, should not investigate and do everything you can to get at the truth of the matter.  The point is to avail yourself of the protections the law provides so that you can get at that truth more fully and without handing the keys to the company to the other side.

There is an old adage in the law:  “The attorney who represents himself has a fool for a client.”  The same can be said of the contractor who represents himself.  Contractors are very good at building things and at managing business risk.  Lawyers (or at least most of us) are lousy at building things.  Lawyers hire contractors to do remodels or build new homes for a reason – we trust that work to the experts.  It is a wise contractor who understands that the reason he has a relationship with his attorney is to enable him to entrust his legal problems to someone better suited to addressing those problems and managing legal processes than is the contractor himself.

In 2011, the Oregon Legislature passed Senate Bill 961, a partial ban on a requirement of subrogation waivers in construction contracts. Since the legislation became effective in June 2010, much confusion, overstatement, hand-wringing, and general angst has ensued.

Click here to read the full article as it appeared in the December 30, 2011 issue of the Daily Journal of Commerce.

At the same time we are launching this blog, we are launching a monthly column in the Portland Daily Journal of Commerce called “Construction Zone.” Each month a member of Schwabe’s construction team will provide insight into a different area affecting the construction industry. This month’s column addresses a recent change to the law regarding contractual subrogation waivers, which was passed by the 2011 Oregon Legislature.

We hope you enjoy and get some value from this blog. We will be posting regularly, and we would love your feedback – what topics interest you, what are we missing, how can we make this a more valuable service for you? In the meantime, thanks for reading!