69th OREGON LEGISLATIVE ASSEMBLY--1997 Regular Session

NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .

LC 706

                         House Bill 2042

Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
  Presession filed (at the request of Construction Contractors
  Board)


                             SUMMARY

The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.

  Eliminates nonowner claims from jurisdiction of Construction
Contractors Board.

                        A BILL FOR AN ACT
Relating to allowable claims before the Construction Contractors
  Board; amending ORS 701.140, 701.145 and 701.150.
Be It Enacted by the People of the State of Oregon:
  SECTION 1. ORS 701.140 is amended to read:
  701.140. The  { + Construction Contractors + } Board shall only
accept and make determinations for damages against contractors
registered under this chapter. 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 be resolved by a court of competent jurisdiction.
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 directly by the board as set forth in this
section. 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.
  (c) Breach of contract.
  (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 registered subcontractor by a
registered contractor for the following in performing any work
subject to this chapter: - }
    { - (a) Negligent work; - }
    { - (b) Improper work; or - }
    { - (c) Breach of contract. - }
    { - (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) - }  { +  (3) + } Claims against a contractor by
 { - anyone - }   { + an owner + } who is injured as a result of
the contractor's failure to comply with the requirements of ORS
454.605 to 454.745 or rules adopted by the Environmental Quality
Commission under ORS 454.625.
  SECTION 2. ORS 701.145 is amended to read:
  701.145. (1) Any person having a claim against a contractor of
the type referred to in ORS 701.140 may file with the
Construction Contractors Board a statement of the claim in such
form as the board prescribes.
  (2) The board may refuse to accept, or refuse at any time to
continue processing, a 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 and settlement;
  (b) The claimant does not permit the contractor against whom
the claim is filed to be present at any inspection made by the
board;
  (c) 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 registered
at the time the work was first performed and is registered 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) The amount in controversy is less than an amount
established by the board, which amount shall not exceed $250 + }.
  (3) The board shall not process a claim unless it 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 registered contractor files the claim against a
registered contractor performing work as a subcontractor, 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. - }
    { - (f) If a registered contractor files the claim against a
registered contractor performing work as a subcontractor, because
the subcontractor failed to substantially complete the work, the
board must receive the claim not later than one year after the
date the subcontractor ceased to work on the structure. - }
    { - (g) If a material or equipment supplier, an employee, or
a registered subcontractor files the claim, the board must
receive the claim not later than one year after the date the
registrant 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, the board shall recommend to the registrant such action
as the board considers appropriate to compensate the claimant for
any damages incurred as the result of the violation. If the
contractor performs accordingly, the board shall give that fact
due consideration in any subsequent disciplinary proceeding
brought by the board.
  (5) Except for claims involving residential structures, 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 general contractor or specialty contractor
shall bring an action upon the bond required by ORS 701.085 in a
court of competent jurisdiction or through binding arbitration in
compliance with ORS 36.300 to 36.365.
  (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
plaintiff in an action against a general contractor or specialty
contractor 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, the surety shall be bound by any judgment
entered in the action, except as limited by this section. 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 general contractor
or a specialty contractor, the plaintiff 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. Execution on the judgment
against the bond shall only be in accordance with ORS 701.150.
  (8) Upon receipt of a timely filed copy of the judgment, 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 a determination of whether the claim comes within
the jurisdiction of the board.
  (9) With the prior agreement of the claimant and registrant,
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 dispute between a person bringing a claim

and any other contractor who agrees 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) The board may delegate any of its functions described in
this section to a hearings officer. If the board delegates its
authority to decide claims to a hearings officer, the board may
provide for appeal of such orders to the board.
  (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.
  SECTION 3. ORS 701.150 is amended to read:
  701.150. (1) If a final board order is not paid by the
registrant, the  { + Construction Contractors + } Board shall
notify the surety on the bond.
  (2) An order of the board that determines a claim under ORS
701.140 to 701.160 which becomes final by operation of law or on
appeal and remains unpaid 10 days after the period of time
allowed in this section has expired, shall constitute a judgment
in favor of the claimant against the person and may be recorded
with the county clerk in any county of this state.
  (3) Upon receipt, the clerk shall record the order in the
County Clerk Lien Record. After recording, the order is
equivalent to a judgment and is controlled by and subject to
statutes relating to judgments.
  (4) Determinations by the board or judgments against the surety
bond of a contractor shall be satisfied in the following priority
in any 90-day period. A 90-day period shall begin on the date the
first claim is filed with the board. A subsequent 90-day period
shall begin on the date the first claim is filed with the board
after the close of each preceding 90-day period. Within a 90-day
period:
  (a) Determinations and judgments as a result of claims against
a contractor by the owner of a residential structure shall have
payment priority to the full extent of the bond over all other
types of claims.
    { - (b) If the claims described in paragraph (a) of this
subsection do not exhaust the bond, then amounts due as a result
of all other types of residential structure claims filed within
that 90-day period may be satisfied from the bond, except that
the total amount paid from any one bond to nonowner claimants
shall not exceed $2,000. - }
    { - (c) - }  { +  (b) + } If determinations involving
residential structures do not exhaust the bond, the judgments
involving nonresidential claims shall be satisfied { + . + }
 { - in the following order, except that the total amount paid
from any one bond to nonowner claimants shall not exceed
$2,000: - }
    { - (A) Labor, including employee benefits. - }
    { - (B) Claims for breach of contract by a party to the
construction contract. - }
    { - (C) Any court costs, interest and attorney fees the
plaintiff may be entitled to recover. The total cost paid from
any one bond for court costs, interest and attorney fees shall
not exceed $2,000. - }
    { - (d) - }  { +  (c) + } If the total claims filed with the
board against a general contractor or a specialty contractor
within 90 days after the board receives notice of the first claim
against the contractor exceed the amount of the bond available
for such claims, the bond shall be apportioned as the board
determines, subject to the priorities established under this
section.
    { - (e) - }  { +  (d) + } If the total amounts due as a
result of claims filed with the board within 90 days after the
first claim is filed do not exceed the amount of the bond
available for such claims, all amounts due as a result of claims
filed within the 90-day period shall have priority over all
claims subsequently filed until the amount of the bond available
for such claims is exhausted, but not later than one year after
whichever occurs first:
  (A) The date of expiration of the certificate of registration
in force at the time the work was completed or abandoned; or
  (B) Cancellation by the surety of the certificate of
registration in force at the time the work was completed or
abandoned.
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