a:\newslw.96 [4]Alan Lee MitchellStephen De'ak202001-10-02T19:02:00Z2006-07-01T22:29:00Z2006-07-01T22:29:00Z1227012945 107301518511.8026 Scott Hookland LLPConsider . . .VOL. 10, ISSUE 4 October, 2001Law OfficesSCOTT HOOKLAND LLP9185 SW BURNHAM ST. POST OFFICE BOX 23414TIGARD, OR 97223 TIGARD, OR 97281(503) 620-4540 -- (800) 334-8986 -- FAX: (503) 620-4315www.furrer-scott.comNEW LEGISLATION:Please take a moment to review the following legislative summary. Unless stated otherwise, the following new laws go into effect on January 1, 2002.Contractors and ConstructionContractsSubcontractor Disclosure: ORS 279.027This law (HB 2052) attempts to clarify the requirement that prime contractors on public works projects disclose (at the time of bidding) certain information concerning their subcontractors. First, the law no longer applies to materials-only suppliers. Second, prime contractors need only disclose the subcontractor name and category of work and no longer need to disclose the amount of the subcontract.The law also clarifies that the public agency’s only obligation is to require the disclosure. The public agency does not need to determine the disclosure’s accuracy or completeness. The public agency is required, however, to send the disclosure information to the Bureau of Labor and Industries. Finally, the law gives the Oregon Construction Contractors Board (“CCB”) the authority to investigate complaints of unlawful substitutions (substitution is allowed only for “good cause,” a term to be defined by the CCB) and to impose civil penalties for violations.Master Builders: ORS various chaptersHB 2012 creates a new “master builder” program that is administered by the Department of Consumer and Business Services (“DCBS”). DCBS will prepare administrative rules that set the criteria for this program. Local governments can also opt into this program. If a local government has a master builder program, it can waive certain plan review and building inspection requirements for those contractors holding a master builder certificate. HB 2012 was declared an “emergency” and became effective as of June 18, 2001.Disposal of Mercury: ORS various Chapters HB 3007 establishes new regulations of the manufacture, sale, installation or disposal of devices that contain mercury. This includes old HVAC thermostats. The DCBS will develop rules and procedures for disposal of old thermostats. Certain portions of this bill do not become effective until January 1, 2003. The bill requires the CCB to provide an annual notice to licensed contractors of the rules as they are adopted by DCBS. The bill also allows the CCB to assess sanctions against contractors who violate the DCBS rules (the sanctions can range from civil penalties to suspension of the CCB license).2.Construction Contractors BoardSurety Bonds: ORS Chapter 701If a contractor’s CCB surety pays out a claim on the contractor’s bond, the CCB can require the contractor to either obtain a new surety bond or obtain certification that the surety remains liable for the full amount of the bond. (HB 2185)RMI Rule: ORS 701.075This bill requires all “new” contractors to have at least one Responsible Managing Individual (“RMI”) who has completed and passed the CCB education requirement (or is exempt from that requirement). The RMI can be either an owner or an employee. A “new” contractor is one who applies for a new license after July 1, 2000 or whose current license lapses for more than two years. (HB 2186)Inactive CCB License: ORS 701.055The CCB will now allow contractors to ask that their license be placed into “inactive” status. A contractor who does so may not work as a contractor and does not have to meet the insurance and bonding requirements. The CCB limits “inactive” status to once during any two-year period. (HB 2186)CCB Claims Process: ORS Chapter 701HB 2202 allows the CCB to require that claims which are not resolved through negotiation or mediation be resolved through binding arbitration unless one of the parties requests a hearing or files a lawsuit within 30 days after the CCB gives notice of proposed date for the arbitration hearing. Note that this does not generally apply to claims for “large commercial” projects.Also, claims relating to “small commercial” projects can now be processed through either the courts or through the CCB system. (HB 2189)Appearances in CCB Claims: ORS 701.160Previously, corporations were the only business entity where an officer could appear in a CCB hearing without the assistance of an attorney. Now, HB 2254 extends this ability to officers of limited liability companies and certain other business entities. CCB Discipline: ORS Chapter 701HB 2322 strengthens the CCB’s commitment to pursue contractors who engage in dishonest or fraudulent conduct. This bill gives increased funding to the CCB’s activities with other enforcement agencies such as the Oregon State Police and the Department of Justice and increases the penalty for certain violations from Class B misdemeanors to Class A misdemeanors plus increased civil penalty amounts. HB 2322 was declared an “emergency,” with an effective date of July 1, 2001.Residential Contracts: ORS Chapter 701HB 2322 also provides that a residential construction contract “may not contain a provision that limits the right of a person to file” claims with the CCB (yes, this is another “Michael J. Scott” bill). The bill does not specify whether this limitation applies only prospective waivers of rights. This bill does allow the inclusion of mediation or arbitration clauses in these contracts. HB 2322 was declared an “emergency,” with an effective date of July 1, 2001.Surety Payments to Non-Owners: ORS 701.150HB 2728 increases non-owner claimants’ access to contractor’s CCB surety bonds. Previously, non-owner claimants (as a class of claimants) were limited to a maximum $2,000 recovery from a contractor’s CCB surety bond. Now, this amount is increased to $3,000. This increase does not apply to claims filed prior to January 1, 2002 or claims where the CCB sent its “pay” notice to the surety prior to January 1, 2002.This bill does not change the existing limitation that all non-owner claimants share access as a class to a contractor’s CCB surety bond. The bill also does not change the following priority order for payment of claims by CCB surety bonds: (1) Owners of residences or small commercial structures; (2) Non-owner claimants on residences or small commercial structures; (3) Claims concerning large commercial structures.Licensing Sanctions: ORS 701.102HB 3007 increases the CCB’s ability to suspend or terminate a contractor’s license if an owner of the business was an “owner or holder of a direct or indirect interest” in any other contracting business that: (1) Owes any amount under a final order or arbitration award of the CCB; (2) Owes any amount under a final court judgment (in any state); or (3) Has had a contractor’s license suspended in any other state. This portion of HB 3007 was declared an “emergency,” with an effective date of August 8, 2001.While the bill does not define the phrase “direct or indirect interest,” it orders the CCB to adopt rules to define the phrase and also places certain limits on those rules. The new CCB rules may not define this phrase to include investors who have no right to manage the construction business, including persons who are only a minority shareholder in a corporation, members of a member-managed limited liability company or limited partners in a limited partnership (if the limited partner does not participate in controlling the business). The new rule is OAR 812-002-0555.The bill also expands the CCB’s power to place a contractor on probation. Previously, if a total of three or more claims were filed against the contractor in a twelve month period, the CCB could place the contractor on probation. Failure to comply with probation terms exposes a contractor’s license to termination by the CCB.HB 3007 expands this law to allow the CCB to place a contractor on probation if a former construction company in which the contractor held at least a ten percent ownership interest has three or more claims filed against it in a twelve month period. The bill also directs the CCB to define the phrase “ten percent ownership interest.”Professional Credentials: ORS Chapter 701HB 2759 allows the CCB to establish a program of professional credentials. Upon written request, contractors can have their professional credentials listed in their CCB license records.3.Construction LiensReal Property Transactions: ORS Chapter 93HB 3842, while nominally a “lien” law bill, actually places new obligations on all property sellers. Now, all property sellers must provide purchasers with the following: (1) A list of any party hired by the owner to perform construction work within two years of the date of sale if the owner has not paid the party in full or the party disputes that it has been paid in full; (2) A copy of all Notices of Right to a Lien, lien claims, lien satisfactions, lien waivers and lien releases received by the seller within the past two years; and (3) A copy of a new “cautionary notice” to be prepared by the CCB. A violation of this obligation is a Class B Misdemeanor. 4.Public Works ProjectsDesign-Build Contracting: ORS Chapter 279While not using the name “design-build,” HB 2936 now allows construction contractors to include “appurtenant” design services as part of their construction contracts. Of course, the design services must still be performed by a licensed design professional as required by law. Bids for these contracts must disclose that the bidder is not a design professional and name the design professional who will perform the services.Disqualification of Contractors: ORS Ch. 279HB 2617 now allows public contracting agencies to ask the CCB to “debar” a contractor for certain offenses. This is in lieu of any disqualification process used by the agency itself.Design Professionals: ORS Chapter 279HB 3804 now requires that certain design consultant personal services contracts must be awarded through a two-tiered system where the state contracting agency prepares a list of pre-qualified design professionals and the local government body makes its final selection from that list.Design Professionals: ORS Chapter 279HB 2014 revises the way in which public bodies select design professionals for construction projects. Now, for all projects over $400,000 in value, of which a minimum of 35% is from the State Highway Fund, the public body will select a design professional from a list of pre-qualified design professionals. The public body will then contract directly with the design professional (this is known as QBS-selection). This law is not effective until July 1, 2002.Prevailing Wage: ORS Chapter 279Of all the various prevailing wage exemption bills introduced this session, only HB 3350 has been signed into law. This bill exempts most projects where no public agency funds are used. This bill had an “emergency” clause and took effect as of June 26, 2001.5.Landscape ContractorsIndependent Agency: ORS various ChaptersThis bill (HB 2127) converts the Oregon Landscape Contractors Board to a semi-independent state agency and severs its long-standing connections with the Construction Contractors Board. This conversion will occur on July 1, 2002. Scope of LCB License: ORS Chapter 671Three bills expand the scope of a landscape contractor’s license. HB 2191 authorizes landscape contractors to plan and construct ornamental water features. HB 2195 exempts persons from LCB licensing if they are engaged in making conceptual plans or drawings for site work that does not include sensitive natural areas such as wetlands or steep slopes. HB 2192 allows the LCB to license contractors to install backflow prevention devices for irrigation systems and ornamental water features.LCB Procedures: ORS Chapter 671Two bills address various procedures with the Landscape Contractors Board. HB 2194 extends the sanctioning power of the LCB to any party who (1) Owes any amount to a surety company that has paid money from the contractor’s surety bond; or (2) Has had a landscape contractor’s license suspended in any other state. HB 2201 allows the LCB to use arbitration as its “default” claims processing mechanism unless one of the parties elects otherwise.LCB Licensing Sanctions: ORS 671.610HB 3007, which is discussed above under the CCB section, also increases the Landscape Contractors Board’s ability to suspend or terminate a contractor’s license. Unlike the CCB section of HB 3007, the CCB changes are effective on January 1, 2002. 6.Debtor/CreditorUCC Article 9: ORS Chapter 79Oregon has now joined virtually every state in the country in adopting major and substantial changes to its version of Article 9 to the Uniform Commercial Code. Too numerous to be addressed in summary fashion, these changes include everything from the forms used to perfect security interests to the foreclosure sale of those security interests. The bill, SB 320, was declared an “emergency” and became effective on July 1, 2001.Attorney Fees: ORS 20.080In certain actions the court can award attorney fees if the plaintiff prevails and made a written demand for payment of the claim at least ten days prior to commencing the action. Previously, to be entitled to attorney fees under this statute, the claim needed to be based upon an injury to person or property.Now, if the parties have a contract (verbal or written) that does not include an attorney fee clause and the lawsuit is for less than $5,500 and the claimant gives at least ten days written demand before filing suit, then the court will award the prevailing party its reasonable attorney fees in addition to the amounts recovered in the lawsuit. This change applies only to actions commenced after January 1, 2002. (HB 2381)FIRM NEWS:MICHAEL J. SCOTT will make a presentation on November 29, 2001 about Contract Formation—The Contractor/Subcontractor Perspective as part of a two-day seminar entitled Oregon Construction Law and presented by The Seminar Group. If you would like a brochure, please contact The Seminar Group at 800-574-4852 or this office.MICHAEL J. SCOTT, DOUGLAS R. HOOKLAND and ALAN L. MITCHELL will present an all-day seminar on December 6, 2001 (in Portland) entitled “Oregon and Washington Construction Lien and Bond Law.” If you would like a brochure about the seminar, please contact Shari M. Persen at Scott Hookland LLP.RANDOM THOUGHTS:“When your only tool is a hammer, every problem looks like a nail.” Anonymous.This newsletter is published quarterly by the law firm of Scott Hookland LLP for the benefit of its clients and friends and is intended to inform them about legal matters of interest. While this information is meant to be current, we do not promise or guarantee that the information is correct, complete or up-to-date. This information is not intended to and should not be considered to provide legal advice or create an attorney-client relationship. No action should be undertaken in reliance hereon without professional legal counsel.Alan L. Mitchell, EditorSCOTT  HOOKLAND LLPL A W Y E R SMailing Address: Post Office Box 23414, Tigard, Oregon 97281  Street Address: 9185 SW Burnham, Tigard, Oregon 97223Telephone: 503-620-4540  Facsimile: 503-620-4315 www.scott-hookland.com