Chapter 294 Oregon Laws 2003

AN ACT

HB 2233

Relating to claims against construction contractors; amending ORS 701.146 and 701.147.

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

SECTION 1. ORS 701.146 is amended to read:

701.146. For a claim described in ORS 701.139 (3) involving work on a large commercial structure or an appurtenance thereto, a claim described in ORS 701.139 (2) involving work on a small commercial structure or an appurtenance thereto that is not resolved under ORS 701.145 or an owner’s claim described in ORS 701.139 (4) involving work on a large commercial structure or an appurtenance thereto that is not resolved under ORS 701.145:

(1) The person seeking to file 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.

(2) The claimant must file the claim with the Construction Contractors Board by delivering to the board a copy of the complaint or the demand for arbitration or other document necessary to initiate arbitration. The claimant must also give notice to the surety on the bond by delivering to the surety a copy of the complaint or the demand for arbitration or other document necessary to initiate arbitration. Delivery 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, demand or other document was filed or made; [or]

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

(c) The 30th day before:

(A) The court issues a judgment on the complaint; or

(B) The arbitrator issues an award on the arbitration.

(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 ORS 701.143 and priority of the claim under ORS 701.150.

(4) Except as provided in this subsection and subsection (7) of this section, if the claimant properly gives notice of the claim to the surety under subsection (2) of this section, a judgment or award against the contractor entered in the action or arbitration 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 notice under subsection (2) of this section. 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. 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 on a claim 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 delivered certified copy of the judgment as 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 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 ORS 701.143.

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

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

SECTION 2. ORS 701.147 is amended to read:

701.147. (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] 701.139 if the claimant fails to submit status reports on a pending action.

(3) An arbitration conducted under ORS 701.148 (1) or (2) 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. Notwithstanding ORS 670.325, 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 ORS 701.143.

(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.]

(7) The board by rule may impose a processing fee for claims filed under ORS 701.139. The fee amount may not exceed the amount of the filing fee provided by ORS 21.110 (1) for a plaintiff filing a civil action in circuit court. The board may impose different processing fees for claims processed under ORS 701.145 than for claims processed under ORS 701.146.

(8) If the board adopts rules under subsection (7) of this section, the rules:

(a) Except as provided in paragraph (b) of this subsection, must provide that a prevailing claimant recover processing fees as damages in the final order of the board.

(b) Must provide that the board may waive or defer all or part of the processing fee upon application by the person filing the claim that shows the person is unable to pay all or part of the fee. The application must be made under oath and notarized. The application must show the average monthly income and expenses of the claimant, assets and liabilities of the claimant and any other information required by board rule.

(9) Before filing a claim under ORS 701.139, a person must send notice to the contractor that the person intends to file the claim. The person must send the notice at least 30 days before filing the claim. The notice must be mailed by certified mail to the last known address of the contractor as shown in board records. The board by rule may specify the manner in which the person may show compliance with this subsection at the time of filing the claim.

(10) If the notice described in subsection (9) of this section is mailed to the contractor less than 45 days before expiration of the time limitation under ORS 701.143 for the board to receive the claim, the time limitation for the board to receive the claim does not expire until 60 days after the notice is mailed.

SECTION 3. ORS 701.147, as amended by section 7b, chapter 414, Oregon Laws 2001, is amended to read:

(3) An arbitration conducted under ORS 701.148 (1) or (2) must be held before a hearing officer designated by the board to act as arbitrator.

(4) Contested case hearings before the board must be conducted by 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.

[(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.]

(5) The board by rule may impose a processing fee for claims filed under ORS 701.139. The fee amount may not exceed the amount of the filing fee provided by ORS 21.110 (1) for a plaintiff filing a civil action in circuit court. The board may impose different processing fees for claims processed under ORS 701.145 than for claims processed under ORS 701.146.

(6) If the board adopts rules under subsection (5) of this section, the rules:

(a) Except as provided in paragraph (b) of this subsection, must provide that a prevailing claimant recover processing fees as damages in the final order of the board.

(7) Before filing a claim under ORS 701.139, a person must send notice to the contractor that the person intends to file the claim. The person must send the notice at least 30 days before filing the claim. The notice must be mailed by certified mail to the last known address of the contractor as shown in board records. The board by rule may specify the manner in which the person may show compliance with this subsection at the time of filing the claim.

(8) If the notice described in subsection (7) of this section is mailed to the contractor less than 45 days before expiration of the time limitation under ORS 701.143 for the board to receive the claim, the time limitation for the board to receive the claim does not expire until 60 days after the notice is mailed.

Approved by the Governor June 11, 2003

Filed in the office of Secretary of State June 11, 2003

Effective date January 1, 2004

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