Oregon Court of Appeals "Clarifies" When a Contractor Can Be Sued For Negligence

Hmmm, this will be interesting for many contractors who may have shortcutted on a job….they may be open to defect suits and negligence…Read this article below from The Daily Journal of Commerce in Oregon.

Ruling on construction defect claims is criticized

POSTED: Monday, October 19, 2009 at 05:38 PM PT
BY: Melody Finnemore

The legal waters swirling around construction defect claims have gotten murkier for both residential and commercial contractors due to a recent decision by the Oregon Court of Appeals.

In Abraham v. T. Henry Construction Inc., et al., a residential construction defect case, the court tried to clarify when a contractor can be sued for negligence. The main issue was the statute of limitations, which is longer for a negligence claim than a breach-of-contract claim.

In a 2003 case, Jones v. Emerald Pacific Homes Inc., the appeals court ruled that an owner who had a contract with a contractor could sue for negligence if the contractor had violated a standard of care that was independent of any contractual duty. This non-contractual duty is called a “special relationship.” In Abraham, the court held that, among other things, a contractor’s responsibility to comply with applicable building codes creates the type of special relationship necessary for a negligence claim, according to a case summary by Portland law firm Stoel Rives.

Eric Grasberger, a Stoel Rives attorney who represents owners, developers, designers and contractors, said that prior to the Abraham decision, owners could make a strong case for the existence of a special relationship because owners must trust contractors to carry out certain “means and methods” of construction.

“You can’t be there to watch them hammer every nail or put every shingle on the roof, so the owner trusts the contractor to do that,” he said.

Generally, negligence claims would go to trial so a jury could determine whether a special relationship existed. The benefit of going to trial is that most cases settle before ever reaching a jury, Grasberger said.
However, the Abraham decision weakens the special relationship argument, a detriment for owners. It also allows owners to file negligence claims based on breaches of state building codes, which could bode badly for contractors, he noted.

“Most defect cases, 90 percent of the time, are water intrusion cases. I don’t think it’s too hard to show a breach of the Oregon uniform building code in most water intrusion cases,” Grasberger said.