Chapter 331 Oregon Laws 1999

Session Law

AN ACT

HB 2733

Relating to claims filed with the Construction Contractors Board; amending ORS 701.145.

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

SECTION 1. 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;

(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 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 registered contractor files the claim against a registered contractor performing work as a subcontractor on a new structure, the board must receive the claim not later than [one year] 14 months 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 on an existing structure, the board must receive the claim not later than [one year] 14 months after the work on the structure was substantially completed.

(g) 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] 14 months after the date the subcontractor ceased to work on the structure.

(h) 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, or damage has been caused by the registrant, the board may recommend to the registrant 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.

(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.

(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 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.

Approved by the Governor June 23, 1999

Filed in the office of Secretary of State June 24, 1999

Effective date October 23, 1999

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