Oregon, unlike Washington, allows for contractors to be sued in tort for property damages arising from negligent construction. Rather than restrict plaintiffs’ claims to remedies resulting from a breach of contract, as is the rule in Washington, Oregon courts allow plaintiffs to seek remedies for both tort and contractual claims. This should sound frightening to all contractors thinking of performing work in Oregon. But don’t worry too much because there is a solution.
The Supreme Court of Oregon set the standard for all future damages claims against contractors in Abraham v. T. Henry Construction, Inc., 350 Or. 29, 249 P.3d 534 (2011). In Abraham, the plaintiffs separately hired a contractor to build their house and a contractor to complete the framing of the home. Id. at 33. More than six years after completion, the plaintiffs discovered that severe water damage they claimed resulted from defects in the work of both contractors. Id. at 34.
Originally the plaintiffs filed suit claiming both a breach of contract and negligence. Id. In Washington, the negligence claim would have been dismissed. However, the Oregon Supreme Court allowed the negligence claim on the basis that the property damage claim was a separate action a breach of contract and that the property damage was a foreseeable harm that could result from a failure to take reasonable care in constructing the home. Id. at 43. Thus, the contractors could be sued for negligence and breach of contract.
This case is significant because claims for breach of contract have a six year statute of limitations in both Oregon and Washington; however, the statute of limitations for claims for negligence begins to run only when the damage is discovered. This means that a claim for negligence could be brought long after the work has been performed and, as in Abraham, even after the statute of limitations on the contract claim had run. However, the court in Abraham provided a way for contractors to avoid liability for negligent construction. Id. at 37. The court held that the terms of the contract between the parties could completely eliminate any common law duty of care, and thus, absolve a contractor from any liability for negligent construction. Id.
Therefore, if you are performing work in Oregon we recommend that you modify your existing contracts to help prevent you from being held liable for negligent construction years after your project is completed. Please contact one of the lawyers at our firm to assist you in drafting language to limit your liability for negligent construction in Oregon.