Chapter 414 Oregon Laws 2001

AN ACT

HB 2202

Relating to claims against construction contractors; creating new provisions; amending ORS 701.140, 701.145 and 701.180 and section 3, chapter 197, Oregon Laws 2001 (Enrolled House Bill 2189); and repealing sections 4 and 5, chapter 160, Oregon Laws 2001 (Enrolled House Bill 2188), and sections 5, 5a, 6, 7, 7a and 7b, chapter 197, Oregon Laws 2001 (Enrolled House Bill 2189).

Be It Enacted by the People of the State of Oregon:

SECTION 1. Sections 2 to 5 of this 2001 Act are added to and made a part of ORS chapter 701.

SECTION 2. The Construction Contractors Board may not process a claim against a licensed contractor, including a claim based upon a court judgment or arbitration award, unless the claim is filed in a timely manner as follows:

(1) Except as otherwise provided in this section, if the owner of a new structure files the claim, the board must receive the claim no later than the earlier of:

(a) One year after the date the structure was first occupied; or

(b) Two years after substantial completion of the structure by the contractor filed against.

(2) Except as otherwise provided in this section, if the owner of an existing structure files the claim, the board must receive the claim no later than one year after the date the work was substantially completed by the contractor filed against.

(3) Regardless of whether the claim involves a new or existing structure, if the owner of the structure files the claim and the licensed contractor failed to begin the work, the board must receive the claim no later than one year after the date the parties entered into the contract.

(4) Regardless of whether the claim involves a new or existing structure, if the owner of the structure files the claim and the licensed contractor failed to substantially complete the work, the board must receive the claim no later than one year after the date the contractor ceased to work on the structure.

(5) Except as otherwise provided in this section, if a licensed contractor files the claim against the licensed contractor performing work as a subcontractor on a new structure, the board must receive the claim no later than the earlier of:

(a) Fourteen months after the date the structure was first occupied; or

(b) Two years after substantial completion of the structure.

(6) Except as otherwise provided in this section, if a licensed contractor files the claim against the licensed contractor performing work as a subcontractor on an existing structure, the board must receive the claim no later than 14 months after the date the work on the structure was substantially completed.

(7) If a licensed contractor files the claim against the licensed contractor performing work as a subcontractor on a structure and the subcontractor failed to substantially complete the work, the board must receive the claim no later than 14 months after the date the subcontractor ceased to work on the structure.

(8) If the licensed contractor’s employee, subcontractor or material or equipment supplier files the claim, the board must receive the claim no later than one year after the date the contractor incurred the indebtedness.

SECTION 3. (1) Except for claims by owners of nonresidential property when the total contract is $25,000 or less, if a claim against a licensed contractor involves a nonresidential structure, the person filing the claim must:

(a) Bring an action on the claim against the licensed contractor in a court of competent jurisdiction; or

(b) Initiate a proceeding to resolve the claim through binding arbitration substantially in conformance with ORS 36.300 to 36.365. At the option of the claimant, a person filing a claim as an owner of nonresidential property when the total contract is $25,000 or less may elect to bring a court action or initiate arbitration and seek to claim against the bond in the same manner as if the total contract exceeded $25,000. If the person makes that election, all statutes and rules applicable to the processing of claims in accordance with this section apply to the claim.

(2) The claimant must file the claim with the Construction Contractors Board by delivering a copy of the complaint or the demand for arbitration or other document that is necessary to initiate arbitration to the board. The claimant must also give notice to the surety on the bond by delivering the complaint or the demand for arbitration or other document necessary to initiate arbitration to the surety. Delivery of the notice to the board and the surety must be accomplished by certified mail, return receipt requested, no later than the earlier of:

(a) The 90th day after the complaint was filed or made; or

(b) The 14th day before the first day of arbitration or trial.

(3) Filing the claim with the board under subsection (2) of this section constitutes filing the claim for purposes of establishing timeliness of the claim under section 2 of this 2001 Act and priority of the claim under ORS 701.150.

(4) Except as provided in this subsection and subsection (7) of this section, if a claimant properly gives notice of a claim to a surety, a judgment against the contractor entered in the action is binding on the surety. If the claimant delivers notice of the claim to the wrong surety, the surety receiving the notice may avoid being bound by a judgment or award by delivering notice of the mistake to the claimant or the claimant’s attorney of record, and to the board, on or before the 30th day after the surety receives the notice of claim. Delivery of the notice of mistake must be by certified mail, return receipt requested, or by facsimile machine or other form of transmission with an acknowledgment of receipt.

(5) A surety under subsection (2) of this section has an absolute right to intervene in an action or arbitration brought or initiated under subsection (1) of this section. A claimant may not join a surety as a party to an action or arbitration unless the claimant disputes the validity or timeliness of the surety’s notice of mistake or the surety disputes the validity or timeliness of the delivery to the surety of the complaint or the demand or other document necessary to initiate arbitration to the surety. If the surety elects to intervene or is joined as a party, the surety is bound by all issues of fact and law determined by the court or arbitrator and may not seek board review of those determinations.

(6) If a court issues a judgment on an action, or reduces an arbitration award to judgment, against a contractor in an action described in subsection (1) of this section, the claimant must deliver a certified copy of the judgment to the board and to the surety no later than the 30th day after entry of the judgment in order to retain a claim against the bond. The entry of a final judgment against the contractor concludes the contractor’s involvement in any proceedings to determine whether the bond is subject to payment of the claim. The claimant and the surety are the only parties to the administrative process set forth in subsection (7) of this section.

(7) Upon receipt of a timely filed certified copy of a judgment described in subsection (6) of this section, the board shall issue a proposed order in the amount of the judgment together with any costs, interest and attorney fees awarded by the court under the judgment, to the extent that the judgment, costs, interest and fees are within the jurisdiction of the board. The board’s determination of the claim is limited to whether the claim comes within the jurisdiction of the board and is subject to payment by the surety. The board shall issue the proposed order in a form that indicates the surety’s maximum liability to the claimant. If a hearing is not requested within the time set forth in the proposed order, the proposed order becomes final without any further action by the board. If a hearing is requested, unless review of an issue is precluded under subsection (5) of this section, the board may determine:

(a) Whether the claim was timely filed with the board as provided in section 2 of this 2001 Act.

(b) Whether the surety received timely notice as provided in subsections (2) and (6) of this section.

(c) Whether the claim is for work subject to this chapter.

(d) The extent of the surety’s liability to the claimant.

(8) The provisions of ORS 701.150 (4) apply to an order under subsection (7) of this section, and the surety may file exceptions to the proposed order if the order may cause the liability of the surety on all claims then pending to exceed the bond amount. The surety is not required to pay any claim under subsection (7) of this section until the surety receives notice from the board under ORS 701.140 that claims are ready for payment.

SECTION 3a. If House Bill 2189 becomes law, section 3 of this 2001 Act is repealed.

SECTION 4. (1) Subject to subsection (4) of this section, if the resolution of a claim under ORS 701.145 requires a hearing, the Construction Contractors Board may require that the hearing be conducted as a binding arbitration under rules adopted by the board under subsection (3) of this section. This subsection does not authorize the board to require binding arbitration of a claim that is subject to section 3 of this 2001 Act.

(2) The board may use mediation or arbitration to resolve a construction dispute between any parties who agree to follow the rules of the board, including but not limited to parties to a claim that is subject to section 3 of this 2001 Act.

(3) Rules adopted by the board to regulate arbitration under subsections (1) and (2) of this section must substantially conform with the provisions of ORS 36.300 to 36.365. The rules may include, but are not limited to, requirements that:

(a) The arbitrator send copies of an arbitration award to the parties and the board and allow the parties an opportunity to request reconsideration of the award;

(b) The arbitrator address in writing any issue raised in a request for reconsideration of the award;

(c) The arbitrator must delay submitting to the clerk of the circuit court an arbitration award that is or may become subject to a request for reconsideration; and

(d) The request for reconsideration and the arbitrator’s response to the request, including any matter the arbitrator is required to address, must be included with the award of the arbitrator and the written agreement to submit that is sent to the clerk of the circuit court under ORS 36.350.

(4) A party to a claim that is subject to a board order of binding arbitration under subsection (1) of this section may avoid the arbitration if the party requests to have the claim resolved through a contested case hearing or files a complaint in a court. A party making a request or filing a complaint under this subsection is subject to the following provisions:

(a) If the party requests to have a claim resolved through a contested case hearing, the party must, within the time specified in paragraph (c) of this subsection, deliver the request in writing to the board and to all parties entitled by board rule to receive a copy of the request.

(b) If the party files a complaint in court, the party must, within the time specified in paragraph (c) of this subsection, deliver a copy of the complaint to the board and to all parties entitled by board rule to receive a copy of the complaint. If the party filing the complaint is the claimant, the claimant must allege all elements of the claim in the complaint. If the complaint is filed by the contractor against whom a claim is alleged, the complaint may be a complaint for damages, a complaint for declaratory judgment or other complaint that allows the claimant to file a response alleging the elements of the claim. The claimant has the burden of proving the elements of the claim in any action described in this paragraph.

(c) A party that is subject to paragraph (a) or (b) of this subsection must deliver a request or complaint to the board as described in paragraphs (a) and (b) of this subsection no later than the 30th day after the board sends notice that an arbitration hearing has been scheduled. Failure to timely deliver a request or complaint under this paragraph constitutes consent to the binding arbitration.

(d) If a party makes a timely request under paragraph (a) of this subsection for a contested case hearing and another party timely files a complaint in compliance with paragraph (b) of this subsection, the filing of the complaint supersedes the request for a contested case hearing.

(e) A party may not withdraw a request made in compliance with paragraph (a) of this subsection unless all parties agree to the withdrawal.

(f) The board may adopt a rule that a contested case hearing for a claim of less than $1,000 is not available under this subsection.

(g) The provisions of paragraph (b) of this subsection are in addition to any other requirements imposed by law regarding the filing of a complaint.

SECTION 4a. If House Bill 2189 becomes law, section 4 of this 2001 Act is amended to read:

Sec. 4. (1) Subject to subsection (4) of this section, if the resolution of a claim under ORS 701.145 requires a hearing, the Construction Contractors Board may require that the hearing be conducted as a binding arbitration under rules adopted by the board under subsection (3) of this section. This subsection does not authorize the board to require binding arbitration of a claim that is subject to [section 3 of this 2001 Act] section 4, chapter 197, Oregon Laws 2001 (Enrolled House Bill 2189).

(a) The arbitrator send copies of an arbitration award to the parties and the board and allow the parties an opportunity to request reconsideration of the award;

(b) The arbitrator address in writing any issue raised in a request for reconsideration of the award;

(c) The arbitrator must delay submitting to the clerk of the circuit court an arbitration award that is or may become subject to a request for reconsideration; and

(e) A party may not withdraw a request made in compliance with paragraph (a) of this subsection unless all parties agree to the withdrawal.

(f) The board may adopt a rule that a contested case hearing for a claim of less than $1,000 is not available under this subsection.

(g) The provisions of paragraph (b) of this subsection are in addition to any other requirements imposed by law regarding the filing of a complaint.

(5) The board may refuse to accept a dispute for mediation or arbitration under subsection (1) or (2) of this section if the board determines that the nature or complexity of the dispute is such that a court or other forum is more appropriate for resolution of the dispute.

SECTION 5. (1) If a party to a claim under ORS 701.145 requests a contested case hearing, the Construction Contractors Board shall schedule the hearing. If a claim is filed in a court, the board shall suspend further processing of the claim until the claim is resolved by an appropriate court.

(2) If the claim is submitted for determination by a court, the board may require that the claimant provide status reports on the pending action. The board may dismiss or close a claim filed under ORS 701.145 if the claimant fails to submit status reports on a pending action.

(3) An arbitration conducted under section 4 (1) or (2) of this 2001 Act must be held before a hearing officer acting as arbitrator. The hearing officer assigned to act as arbitrator of the case on behalf of the board must be from the Hearing Officer Panel established under section 3, chapter 849, Oregon Laws 1999. The assignment of a hearing officer to act as arbitrator is subject to a request for a different arbitrator under section 11, chapter 849, Oregon Laws 1999, or a rule adopted pursuant to section 11, chapter 849, Oregon Laws 1999.

(4) Contested case hearings before the board must be conducted by a hearing officer assigned from the Hearing Officer Panel established by section 3, chapter 849, Oregon Laws 1999. The board may delegate authority to the hearing officer to issue a final order in any matter.

(5) Sections 2 to 21, chapter 849, Oregon Laws 1999, do not limit in any way the ability of the board to make full use of alternative dispute resolution, including mediation or arbitration, to resolve claims against contractors filed under section 2 of this 2001 Act.

(6) In assigning hearing officers for arbitration and contested case hearings conducted under the provisions of this section, the chief hearing officer of the Hearing Officer Panel established under section 3, chapter 849, Oregon Laws 1999, shall defer to board requests.

(7) The board, by rule, may require a deposit not to exceed $100 for the filing of a claim, a request for hearing or exceptions. The prevailing party may recover a deposit required by this subsection.

SECTION 5a. If House Bill 2189 becomes law, sections 5 and 5a, chapter 197, Oregon Laws 2001 (Enrolled House Bill 2189), are repealed and section 3, chapter 197, Oregon Laws 2001 (Enrolled House Bill 2189), is amended to read:

Sec. 3. Except as provided in [section 5 (2) of this 2001 Act] section 4 (2) of this 2001 Act, the Construction Contractors Board may resolve a dispute against a licensed contractor only if a claim is made against the contractor’s surety bond required by ORS 701.085. In order to have access to the bond, a person must file a claim of a type described in ORS 701.140 within the applicable time limitation described in section 2, chapter 197, Oregon Laws 2001 (Enrolled House Bill 2189) [of this 2001 Act]. The claim must be filed and resolved as follows:

(1) A claim that involves work on a residential structure or an appurtenance to the structure must be resolved as provided under ORS 701.145.

(2) A claim that involves work on a small commercial structure or an appurtenance thereto may be resolved as provided in ORS 701.145 or section 4, chapter 197, Oregon Laws 2001 (Enrolled House Bill 2189) [of this 2001 Act].

(3) Except as provided in subsections (4) and (5) of this section, a claim that involves work on a large commercial structure or an appurtenance thereto must be resolved as provided in section 4, chapter 197, Oregon Laws 2001 (Enrolled House Bill 2189) [of this 2001 Act].

(4) A claim by an owner that involves work on a large commercial structure or an appurtenance thereto when the total contract involved in the claim is $25,000 or less may be resolved as provided in ORS 701.145 or section 4, chapter 197, Oregon Laws 2001 (Enrolled House Bill 2189) [of this 2001 Act].

(5) Notwithstanding subsections (1) to (4) of this section, with prior agreement of the claimant and the licensed contractor, a claim may be resolved by the board through binding arbitration under [section 5 of this 2001 Act] section 4 of this 2001 Act.

SECTION 5b. If House Bill 2188 becomes law, sections 4 and 5, chapter 160, Oregon Laws 2001 (Enrolled House Bill 2188) (amending ORS 701.145), are repealed and section 5 of this 2001 Act is amended to read:

Sec. 5. (1) If a party to a claim under ORS 701.145 requests a contested case hearing, the Construction Contractors Board shall schedule the hearing. If a claim is filed in a court, the board shall suspend further processing of the claim until the claim is resolved by an appropriate court.

(4) Contested case hearings before the board must be conducted by a hearing officer assigned from the Hearing Officer Panel established by section 3, chapter 849, Oregon Laws 1999. Notwithstanding ORS 670.325, the board may delegate authority to the hearing officer to issue a final order in any matter.

(7) The board, by rule, may require a deposit not to exceed $100 for the filing of a claim, a request for hearing or exceptions. The prevailing party may recover a deposit required by this subsection.

SECTION 6. Section 5 of this 2001 Act is amended to read:

(3) An arbitration conducted under section 4 (1) or (2) of this 2001 Act must be held before a hearing officer [acting] designated by the board to act as arbitrator. [The hearing officer assigned to act as arbitrator of the case on behalf of the board must be from the Hearing Officer Panel established under section 3, chapter 849, Oregon Laws 1999. The assignment of a hearing officer to act as arbitrator is subject to a request for a different arbitrator under section 11, chapter 849, Oregon Laws 1999, or a rule adopted pursuant to section 11, chapter 849, Oregon Laws 1999.]

(4) Contested case hearings before the board must be conducted by [a hearing officer assigned from the Hearing Officer Panel established by section 3, chapter 849, Oregon Laws 1999.] the board or a hearing officer designated by the board. The board may delegate authority to the hearing officer to issue a final order in any matter.

[(5) Sections 2 to 21, chapter 849, Oregon Laws 1999, do not limit in any way the ability of the board to make full use of alternative dispute resolution, including mediation or arbitration, to resolve claims against contractors filed under section 2 of this 2001 Act.]

[(6) In assigning hearing officers for arbitration and contested case hearings conducted under the provisions of this section, the chief hearing officer of the Hearing Officer Panel established under section 3, chapter 849, Oregon Laws 1999, shall defer to board requests.]

[(7)] (5) The board, by rule, may require a deposit not to exceed $100 for the filing of a claim, a request for hearing or exceptions. The prevailing party may recover a deposit required by this subsection.

SECTION 7. The amendments to section 5 of this 2001 Act by section 6 of this 2001 Act become operative January 1, 2004.

SECTION 7a. If House Bill 2189 becomes law, sections 6, 7, 7a and 7b, chapter 197, Oregon Laws 2001 (Enrolled House Bill 2189), are repealed.

SECTION 7b. If House Bill 2188 becomes law, sections 6 and 7 of this 2001 Act are repealed and section 5 of this 2001 Act, as amended by section 5b of this 2001 Act, is amended to read:

(4) Contested case hearings before the board must be conducted by [a hearing officer assigned from the Hearing Officer Panel established by section 3, chapter 849, Oregon Laws 1999.] the board or a hearing officer designated by the board. Notwithstanding ORS 670.325, the board may delegate authority to the hearing officer to issue a final order in any matter.

SECTION 7c. The amendments to section 5 of this 2001 Act by section 7b of this 2001 Act become operative January 1, 2004.

SECTION 8. ORS 701.140 is amended to read:

701.140. The Construction Contractors Board shall only accept and make [determinations for damages] a determination on a claim against [contractors] a contractor licensed under this chapter. The board shall make a determination on a claim as provided under ORS 701.145 or section 3 of this 2001 Act. If upon final determination and order by the board a contractor fails to pay a claim determined against the contractor by the board, the board shall notify the surety that payment is due from the bond required under ORS 701.085. Claims that involve contracts for work on nonresidential structures or the appurtenances thereto, except claims by owners of nonresidential property when the total contract is $25,000 or less, [shall] must be resolved by a court of competent jurisdiction or through arbitration as provided under [ORS 701.145] section 3 of this 2001 Act. Claims that involve contracts for work on residential structures or the appurtenances thereto and claims by owners of nonresidential property when the total contract is $25,000 or less may be resolved by a court or through arbitration under section 3 of this 2001 Act or may be resolved directly by the board as [set forth in] provided under this section and ORS 701.145 and section 4 of this 2001 Act. The board shall only [accept and] make determination of the following types of claims:

(1) Claims against a contractor by the owner of a residential structure or other real property for the following in performing any work subject to this chapter:

(a) Negligent work.

(b) Improper work.

(2) Claims against a contractor by the owner of a residential structure or other real property to discharge or to recoup funds expended in discharging a lien established under ORS 87.010 to 87.060 and 87.075 to 87.093 under circumstances described under this subsection. The board may reduce any amount adjudged by the board under this section by any amount the claimant owes the contractor. The board shall only determine claims under this subsection if:

(a) The owner has paid the contractor for that contractor’s work subject to this chapter; and

(b) A lien is filed against the property of the owner under ORS 87.010 to 87.060 and 87.075 to 87.093 because the contractor failed to pay the person claiming the lien for that person’s contribution toward completion of the improvement.

(3) Claims against a licensed subcontractor by a licensed contractor for the following in performing any work subject to this chapter:

(a) Negligent work;

(b) Improper work; or

(4) Claims by persons furnishing labor to a contractor.

(5) Claims, as limited by rule of the board, by persons furnishing material or renting or supplying equipment to a contractor. The minimum limit set by the board shall not exceed $150.

(6) Claims against a contractor by anyone who is injured as a result of the contractor’s failure to comply with the requirements of ORS 454.605 to 454.755 or rules adopted by the Environmental Quality Commission under ORS 454.625.

SECTION 8a. If House Bill 2189 becomes law, section 8 of this 2001 Act (amending ORS 701.140) is repealed.

SECTION 9. ORS 701.145 is amended to read:

701.145. (1) [Any] A person having a claim [against a contractor of the type referred to in ORS 701.140 may] that may be resolved directly by the Construction Contractors Board pursuant to ORS 701.140 must file with the [Construction Contractors] board a statement of the claim in [such form as the board prescribes] a form prescribed by the board.

(2) The board may [refuse to accept, or refuse at any time to continue processing, a] suspend processing the claim if[:] the board determines that the nature or complexity of the claim is such that a court is the appropriate forum for the adjudication of the claim.

[(a) The same facts and issues involved in the claim have been submitted to a court of competent jurisdiction for determination or have been submitted to any other entity authorized by law or the parties to effect a resolution and settlement;]

(3) The board may dismiss or close a claim as established by rule of the board if:

[(b)] (a) The claimant does not permit the contractor against whom the claim is filed to be present at any inspection made by the board;

[(c)] (b) The board determines that the contractor against whom the claim is filed is capable of complying with recommendations made by the board relative to the claim, but the claimant does not permit the contractor to comply with the recommendations. [However,] The board may refuse to accept or further process a claim under this paragraph only if the contractor was licensed at the time the work was first performed and is licensed at the time the board makes its recommendations; or

[(d) The board determines that the nature or complexity of the claim is such that a court is the appropriate forum for the adjudication of the claim; or]

[(e)] (c) The amount in controversy is less than an amount adopted by the board and not more than $250.

[(3) The board shall not process a claim, including a claim based upon a court judgment or arbitration award, unless the claim is filed in a timely manner as follows:]

[(a) If the owner of a new structure files the claim, the board must receive the claim not later than one year after the date the structure was first occupied or two years after completion, whichever comes first.]

[(b) If the owner of an existing structure files the claim, the board must receive the claim not later than one year after the date the work was substantially completed.]

[(c) Regardless of whether the claim involves a new or existing structure, if the owner files the claim because the contractor failed to begin the work, the board must receive the claim not later than one year after the date the parties entered into the contract.]

[(d) Regardless of whether the claim involves a new or existing structure, if the owner files the claim because the contractor failed to substantially complete the work, the board must receive the claim not later than one year after the date the contractor ceased work on the structure.]

[(e) If a licensed contractor files the claim against a licensed contractor performing work as a subcontractor on a new structure, the board must receive the claim not later than 14 months after the date the structure was first occupied or two years after completion, whichever comes first.]

[(f) If a licensed contractor files the claim against a licensed contractor performing work as a subcontractor on an existing structure, the board must receive the claim not later than 14 months after the work on the structure was substantially completed.]

[(g) If a licensed contractor files the claim against a licensed contractor performing work as a subcontractor, because the subcontractor failed to substantially complete the work, the board must receive the claim not later than 14 months after the date the subcontractor ceased to work on the structure.]

[(h) If a material or equipment supplier, an employee, or a licensed subcontractor files the claim, the board must receive the claim not later than one year after the date the licensee incurred the indebtedness.]

(4) Upon acceptance of the statement of claim, the board shall give notice to the contractor against whom the claim is made and shall initiate proceedings to determine the validity of the claim. If, after investigation, the board determines that a violation of this chapter or of any rule adopted thereunder has occurred, or damage has been caused by the [licensee] contractor, the board may recommend to the [licensee] contractor such action as the board considers appropriate to compensate the claimant. If the contractor performs accordingly, the board shall give that fact due consideration in any subsequent disciplinary proceeding brought by the board. If a claim is for less than $1,000, the board may process the claim without conducting an investigation.

[(5) Except for claims by owners of nonresidential property when the total contract is $25,000 or less and those claims that are settled through binding arbitration under subsection (9) of this section, any person with a claim against a contractor involving nonresidential structures shall bring an action upon the bond required by ORS 701.085, as provided in subsections (6) to (8) of this section, in a court of competent jurisdiction or through binding arbitration in compliance with ORS 36.300 to 36.365. At the option of the claimant, a person having a claim as an owner of nonresidential property when the total contract is $25,000 or less may elect to bring an action upon the bond in this same manner. In such instances, all other statutes and rules applicable to the processing of claims in accordance with subsections (5) to (8) of this section apply.]

[(6) Except as set forth in subsection (5) of this section, in order to have access to the bond required by ORS 701.085, the claimant in an action against a contractor involving nonresidential structures must deliver a copy of the complaint to the board and to the surety on the bond by certified mail, return receipt requested, within 90 days of the date the complaint was filed. The surety shall not be joined as a party to the action, but shall have the absolute right to intervene in the action. If notice is so given, except as provided in subsection (8) of this section, the surety that received notice shall be bound by any judgment entered in the action, unless within 30 days of receipt of such notice, the surety delivers to the claimant or the claimant’s attorney of record and to the board by certified mail, return receipt requested, or by facsimile machine or form of transmission with an acknowledgement, a notice that the surety is not the surety that should have received the claimant’s notice. If the claimant disputes the validity of the surety’s notice, or if the surety disputes the validity or timeliness of the delivery of the complaint, the claimant may join the surety as a defendant or the surety may join as a party in the action. If the surety elects to intervene in the action or is joined as a party to the action, it shall be bound by all issues of fact and law determined by the court, which issues shall not then be subject to review by the board. The date the board receives a copy of the complaint shall be the date the board uses to establish the priority of the claim.]

[(7) If a court issues a judgment against a contractor in an action involving nonresidential structures, the claimant shall deliver a certified copy of the judgment to the board and to the surety within 30 days of the date of entry of the judgment in order to retain a claim against the bond. The entry of a final judgment against the contractor shall fully and finally conclude the contractor’s involvement concerning participation in any and all proceedings to determine whether its bond is subject to payment of the claim. The contractor shall not be a party to the administrative process set forth in subsection (8) of this section, which shall proceed with the claimant and surety as the only parties.]

[(8)(a) Upon receipt of a timely filed copy of the judgment specified in subsection (7) of this section, the board shall issue a proposed order in the amount of the judgment, together with any court costs, interest and attorney fees awarded by the court. The board’s determination of the claim shall be limited only to determinations of whether the claim comes within the jurisdiction of the board and is subject to payment by the surety. The proposed order shall be issued in such form as to indicate the surety’s maximum liability to the claimant. If there are no exceptions filed to the proposed order within the time period provided therefor after issuance of the proposed order, the proposed order shall become final without any further action required by the board. The surety’s right to except to the proposed order based upon a judgment, except where the surety has elected to intervene in the action as set forth in subsection (6) of this section, shall be limited to the following issues:]

[(A) Whether the claim was timely filed with the board as provided in subsection (3) of this section.]

[(B) Whether the surety received timely notice as provided in subsections (6) and (7) of this section.]

[(C) Whether the claim is for work subject to this chapter provided within the State of Oregon.]

[(D) The extent of the surety’s liability to the claimant.]

[(b) The provisions of ORS 701.150 (4) shall in all events apply and the surety shall be entitled to except to the proposed order as to the specific monetary liability of the surety in connection with all claims then pending. The surety shall not be required to pay any claim under subsection (7) of this section until such time as it receives notice from the board under ORS 701.140 that claims are ready for payment.]

[(9) With the prior agreement of the claimant and licensee, the board may resolve the claim through binding arbitration under rules adopted by the board generally in conformance with ORS 36.300 to 36.365. The board may also use the arbitration procedure to resolve a construction dispute between any persons who agree to follow the rules of the board.]

[(10) The board may require claims of less than $1,000 to be subject to mediation or resolved through binding arbitration. Notwithstanding the provisions of subsection (4) of this section, the board is not required to investigate claims of less than $1,000.]

[(11) The board may apply the provisions of subsections (5) to (8) of this section to any arbitration decision as it would to a judgment of a court whether the arbitration decision is rendered by the board or by independent arbitration.]

[(12) Contested case hearings before the board must be conducted by a hearing officer assigned from the Hearing Officer Panel established by section 3, chapter 849, Oregon Laws 1999. The board may delegate authority to the hearing officer to issue a final order in any matter.]

[(13) The board by rule may require a deposit not to exceed $100 for the filing of a claim, the filing of a request for hearing or the filing of exceptions. Such deposit is recoverable by the party.]

[(14) Sections 2 to 21, chapter 849, Oregon Laws 1999, do not limit in any way the ability of the board to make full use of alternative dispute resolution, including mediation or arbitration, to resolve claims against contractors filed under the provisions of this section. In assigning hearing officers for hearings conducted under the provisions of this section, the chief hearing officer of the Hearing Officer Panel established under section 3, chapter 849, Oregon Laws 1999, shall defer to board requests.]

SECTION 9a. If House Bill 2189 becomes law, section 9 of this 2001 Act (amending ORS 701.145) is repealed and ORS 701.145, as amended by section 14, chapter 197, Oregon Laws 2001 (Enrolled House Bill 2189), is amended to read:

701.145. For a claim described in section 3 (1), chapter 197, Oregon Laws 2001 (Enrolled House Bill 2189), [of this 2001 Act] involving work on a residential structure or an appurtenance thereto, a claim described in section 3 (2), chapter 197, Oregon Laws 2001 (Enrolled House Bill 2189), [of this 2001 Act] involving work on a small commercial structure or an appurtenance thereto that is not resolved under section 4, chapter 197, Oregon Laws 2001 (Enrolled House Bill 2189) [of this 2001 Act], or an owner’s claim described in section 3 (4), chapter 197, Oregon Laws 2001 (Enrolled House Bill 2189), [of this 2001 Act] involving work on a large commercial structure or an appurtenance thereto that is not resolved under section 4, chapter 197, Oregon Laws 2001 (Enrolled House Bill 2189) [of this 2001 Act]:

(1) The person having the claim must file with the Construction Contractors Board a statement of the claim in a form prescribed by the board.

(2) The board may suspend processing of the claim if:

(a) The same facts and issues involved in the claim have been submitted to a court of competent jurisdiction for determination or have been submitted to any other entity authorized by law or the parties to effect a resolution or settlement; or

(b) The board determines that the nature or complexity of the claim is such that a court is the appropriate forum for the adjudication of the claim.

(3) The board may dismiss or close the claim as established by rule of the board if any of the following conditions apply:

(a) The claimant does not permit the contractor against whom the claim is filed to be present at an on-site investigation made by the board.

(b) The board determines that the contractor against whom the claim is filed is capable of complying with recommendations made by the board relative to the claim, but the claimant does not permit the contractor to comply with the recommendations. The board may refuse to accept or further process a claim under this paragraph only if the contractor was licensed at the time the work was first performed and is licensed at the time the board makes its recommendations.

(4) Upon acceptance of the statement of claim, the board shall give notice to the contractor against whom the claim is made and shall initiate proceedings to determine the validity of the claim. If, after investigation, the board determines that a violation of this chapter or of any rule adopted thereunder has occurred, or damage has been caused by the contractor, the board may recommend to the contractor such action as the board considers appropriate to compensate the claimant. If the contractor performs accordingly, the board shall give that fact due consideration in any subsequent disciplinary proceeding brought by the board. If a claim is for less than $1,000, the board may process the claim without conducting an on-site investigation.

(5) Subject to section 4 of this 2001 Act, if the board is unable to resolve the claim under subsection (4) of this section, the board may issue a contested case notice under ORS 183.415 and:

(a) Issue a proposed default order under ORS 183.415 to become effective only if a party does not request a contested case hearing; or

(b) Refer the matter for hearing.

(6) The board shall send a copy of the notice and any proposed order described in subsection (5) of this section to the surety on the contractor bond required by ORS 701.085.

SECTION 10. ORS 701.145, as amended by section 173, chapter 849, Oregon Laws 1999, is amended to read: