When Three’s Company, and Not a Crowd

Negotiating construction contract language in 2017 can have important consequences years into the future. The obligations and rights arising from one often overlooked clause, that addressing contractual “third-party beneficiaries,” i.e. “a person or entity who, though not a party to the contract, stands to benefit from the contract’s performance,”  can vary considerably from state to state and even case to case. In my latest article for the Daily Journal of Commerce, I look into the legal aspects of the third-party beneficiary clause in Oregon, Washington and Utah and give you some pointers to protect your rights with regard to the clause in your next contract negotiation. Read the full article here.

“When Three’s Company, and Not a Crowd” was originally published by the Daily Journal of Commerce on November 17, 2017.

Oregon Supreme Court Rules That the Practice of Architecture Includes Development of Master Plans

In a rare opportunity to interpret Oregon’s statutory requirements for licensure of architects, the Oregon Supreme Court recently held that the development of master plans constitutes the “practice of architecture”—even if constructible drawings and specifications are not contemplated or produced.

The case, Twist Architecture & Design, Inc. v. Oregon Board of Architect Examiners, 361 Or 507, 395 P3d 574 (2017), stemmed from a determination by the Board of Architect Examiners (the “Board”) that Seattle based firm Twist Architecture & Design, Inc. and two of its principals who were not licensed in Oregon (collectively “Twist”) engaged in the unlawful practice of architecture and unlawfully represented themselves as architects in violation of ORS 671.020—Oregon’s statute containing the licensure requirement—when they prepared master plans for three proposed commercial developments in Oregon. Continue Reading

Is “As-Is” Really “As-Is” in Real Estate Contracts? Tell the Truth, the Whole Truth, or Risk Liability for Nondisclosure

The inclusion of an “as-is” clause in a contract for a real estate transaction has led courts in Oregon to allow parties to a deal to allocate the risk as to the property differently than through the historic concept of “caveat emptor” (let the buyer beware), which permitted a seller to shift the obligation to the buyer. In our recent Daily Journal of Commerce article, we look at how the courts are interpreting the inclusion of the “as-is” clause in Oregon and in California, where the courts have not allowed such a clause to protect a seller from liability for nondisclosure of known material matters or fraud. Read the full article here.

Originally published as “OP-ED: Is ‘as is’ really ‘as is’ in real estate contracts?” by the Daily Journal of Commerce on October 20, 2017.

Doing It Differently: Portland’s Plan to Redevelop the U.S. Post Office Site and Broadway Corridor

Portland real estate is booming and Portland is now on the map for many national and international developers for the first time. This success, while enviable, is not without some negative consequences, as evidenced by increasing housing costs and congestion.

As Portland anticipates the arrival of even more people, it is trying to figure out where to put those new arrivals and how to preserve and enhance quality of life for both new and existing residents. Large-scale City planning efforts such as the 2012 Portland Plan and 2017 Comprehensive Plan reflect a recognition that not everyone has enjoyed the benefits of past prosperity and public investment, and that the City will seek to be more intentional and inclusive going forward.

Broadway Corridor Study Area, Prosper Portland

An emerging redevelopment area offers an opportunity to try new things and develop differently this time. The Broadway Corridor redevelopment area is 24 acres located between the Pearl District and Old Town/Chinatown. The area is centrally located in downtown Portland, has freeway access and is served both by Amtrak, via historic Union Station, and by TriMet’s light rail.  The “pearl” of this redevelopment area is the 14-acre U.S. Post Office site, bordered by NW 9th Avenue, NW Hoyt Street, NW Broadway and NW Lovejoy and purchased by the City of Portland in 2016.

The City purchased the Post Office site for almost $90,000,000 and understandably is carefully shepherding this public investment. The City’s Broadway Corridor Framework Plan provides a conceptual “framework” for future development of a 24-acre area including the Post Office site, but actual development will require a new type of public-private partnership and substantial further refinement of the plan, with the City committed to recovering its financial investment. Continue Reading

Stoel Rives’ Construction & Design Group Selected for Practical Law Publication on Construction Lien Claims

Practical Law, a Thomson Reuters Company and division of West Publishing Corporation that produces online resources for attorneys across myriad legal topics, recently invited members of the Construction & Design Group of Stoel Rives’ Portland and Seattle offices to provide construction lien resources for Oregon and Washington.  According to Kate Kruk, Practical Law’s Content Acquisition Editor, “[s]erving as a Practical Law contributor showcases [Stoel Rives’] expertise and drives home [its] position as a legal thought-leader in the northwest.”

The resources, once published in the coming months, will afford attorneys practicing nationally and globally in law firms and corporate legal departments access to valuable online content to answer their respective questions about construction liens in Oregon and Washington.  Practical Law will employ unique formats to present the information in an easily readable manner and to aid attorneys’ access to critical information (e.g., required notices, deadlines, procedures, and notable cases) about construction lien claims in the two states.

The contributing authors for the Practical Law resources on construction lien claims in Oregon and Washington are Stoel Rives’ construction lawyers Kip Childs (from the Portland office) and Karl Oles and Bart Reed (both from the Seattle office).  The contributing attorneys value the opportunity to highlight the firm’s depth of experience and expertise regarding construction lien claims.

An additional notice and an announcement will be published on Stoel Rives’ Ahead of Schedule blog once Practical Law confirms the date of publication of the online construction lien resources.

Insurers Attempt to Avoid Coverage (Mis)using the Professional Services Endorsement

Parties spend significant time negotiating insurance provisions for protection in the event they face claims related to defective construction, but those protections can be rendered worthless if the wrong insurance forms are used.  In my recent Daily Journal of Commerce article, I look at one particularly troublesome provision – the “professional services” endorsement – and discuss tips for avoiding the unintended exclusion of otherwise covered losses, including endorsements that are specifically tailored for use in connection with contractors’ and design-builders’ liability insurance policies. Read the full article here.

Originally published as “OP-ED: Watch for insurers misusing professional services endorsement” by the Daily Journal of Commerce on September 15, 2017.

The Poisoned Foreclosure – Lawyers Beware of the Affirmative Duty to Search Records

A Sacramento bankruptcy judge issued a hard hitting judgment against Bank of America for the way it handled a single residential foreclosure in Lincoln, California.  Referring to the famous novelist whose works evoke oppressive and nightmarish characteristics, Judge Klein wrote: “Franz Kafka lives… [and] he works at Bank of America.”  This ruling has been widely discussed for the hefty award recovered by the plaintiff.  In addition to the harsh ruling, Judge Klein memorialized a rule that was not previously addressed in case law – the affirmative duty of an attorney to search bankruptcy filings to confirm whether a violation of a stay order was likely.  While this rule could arguably be characterized as dicta, because there were no claims against the attorneys in the suit, all attorneys should take note of this rule or risk serious consequences.  The relevant facts are summarized below.

In 2008, the plaintiffs entered into a loan with the expectation that they could refinance or modify the loan immediately after closing. However, after closing, Bank of America said that it would not consider a loan modification request unless and until the homeowners ceased making payment.  Accordingly, in 2009, the homeowners defaulted on their loan payments, which triggered a series of troublesome events.  During the course of the ensuing years, Bank of America strung along the homeowners with multiple “lost” loan modification requests, while at the same time pursuing foreclosure. Continue Reading

Contracts Are King, But Don’t Forget Tort Law

The construction industry is driven by its memorialization of business terms and legal obligations in written contracts.  However, “tort” law also imposes many implied rights and obligations independent of what parties may have formally agreed to, the foremost of which is to use reasonable care so as to avoid damage to others. In my recent Daily Journal of Commerce article, I look at a recent court case that serves as a good reminder that those engaged in construction projects must consider the extra-contractual risks and remedies imposed by tort laws. Read the full article here.

“Contracts Are King, But Don’t Forget Tort Law” was published by the Daily Journal of Commerce on August 18, 2017.

Washington Supreme Court Affirms Brightwater Decision Regarding Application of Olympic Steamship to Sureties

On July 6, 2017, the Washington Supreme Court confirmed that the equitable rule announced in Olympic Steamship—providing for attorney fees where the insurer compels the insured to take legal action—applies to performance bond sureties on public projects.[1]  In King County v. Vinci Construction Grands Projects/Parsons RCI/Frontier-Kemper, the Court affirmed the trial court’s award of over $14 million in attorney fees and costs against sureties of a public works contract.[2]

In 2006, King County contracted with a joint venture of three construction companies to build the piping/conveyance system for the new Brightwater wastewater treatment project.  The joint venture contractor submitted a performance bond from five surety companies.  Under the contract, if the contractor was in default, the sureties were obligated to step in and remedy the default.  When the project was delayed, King County declared the contractor in default and asked the sureties to cure.  They refused, claiming that the contractor was not in default. Continue Reading

Draconian Results for Local Agencies Influenced to Improperly Target Private Enterprise

The federal Civil Rights Act (“Act”) was enacted by Congress in 1964 to protect individual civil liberties, but the Act has evolved over time into a vehicle that can also be used to challenge public agencies on a wide range of topics, as long as there is a constitutional right implicated. This side of the Act recently shocked the County of Sacramento, when a jury awarded a mining operator more than $100 million in compensatory and punitive damages for unconstitutional treatment affecting the business. In my recent Daily Journal of Commerce article, I look at the implications of the verdict in Hardesty v. Sacramento Metropolitan Air Quality Management District. Read the full article here.

Originally published as “Op-Ed: Draconian results for California agencies in civil rights case”  by the Daily Journal of Commerce on July 21, 2017.

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