a:\newslw.96 [4]Alan Lee MitchellStephen De'ak202002-09-26T22:17:00Z2006-07-01T22:30:00Z2006-07-01T22:30:00Z111906785 5615796011.8026 Scott Hookland LLPConsider . . .VOL. 11, ISSUE 4 October, 2002Law 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.comDON’T MESS WITH HARDY!Attorney General Hardy Myers recently issued a news release concerning lawsuits against various contractors for performing construction work while not licensed with the CCB.In one of the lawsuits, the Department of Justice obtained a default judgment against the contractor. That judgment obligated the contractor to pay restitution to the person he contracted with, to pay a $25,000 civil penalty and to pay $1,500 in attorney fees incurred by the Department of Justice.Remember as well, a contractor who does construction work while not licensed is generally prohibited from filing any construction liens, lawsuits, arbitrations or administrative claims.The focus of most of the lawsuits by the Attorney General appears to be contractors who were never licensed and who caused financial damage to homeowners. Thus, it may be unlikely the Attorney General would file a lawsuit against a contractor who just has a lapse in his license. However, the point remains that the State of Oregon is very serious about unlicensed contractors who cause financial harm to consumers.WATCH OUT FOR DEADLINESAs all of you know, Oregon is experiencing budget shortfalls, especially with government services. This can impact our clients who want to record construction liens or file lawsuits close to the statutory deadlines.Of course, most government offices are closed on holidays. What may be less known is that there are times when the relevant office may be closed on what you might consider a “regular” work day.As far as construction liens, they are recorded with the county recorder in the county where the property subject to the lien is located. Some counties have begun closing their recorder’s offices on Friday afternoons.As far as lawsuits, they are filed with the county clerk (which county can vary according to several factors). Again, some counties are closing their offices early on some days or all day on other days. For example, Clackamas County recently announced that its court is generally closed on Fridays.The “bottom line” is that you should never assume that government offices will be open, especially when you may be near a deadline such as the 75-day deadline for recording a construction lien. Once these deadlines pass, you may be unable to use the excuse “but I thought the office would be open.” Thus, in order to avoid potentially unpleasant consequences, always call the appropriate office well before the deadline. To be extra safe, set an “internal” deadline several days before the actual legal deadline.APPLICATION OF PAYMENTSA recent Oregon Supreme Court case is a powerful reminder of the rules that creditors should observe when applying payments to account balances.The general rule in Oregon is that a creditor can apply payments in any reasonable manner unless the creditor has knowledge or direction as to how the payment should be applied. Keith Brown Lumber Yard v. B & L Electric, Inc., 182 Or App 279 (2002).In Keith Brown Lumber, the checks included specific addresses on the tear-off portion of the check. The court held that these were sufficient direction that the checks should be applied against the debts owing for those addresses.The only check that lacked a specific address was in the specific amount of the balance owing for a specific project if the prior checks had been properly applied. The court held this was sufficient knowledge to require the creditor to apply the check to the remaining invoice for that specific project and not some other project. (“In the absence of a contrary indication, the coincidence of the amount of payment and that of one of the debts” is sufficient to inform the creditor how to apply the payment.)For Keith Brown Lumber, the result of this case was that its construction lien claims were denied and it was instructed to pay the attorney fees of the defendant property owner.Other creditors may want to make sure that the payments they receive are being properly applied. If there is any question about how a payment should be applied, the creditor should check with its customer.Debtors, on the other hand, may want to make sure that they expressly tell their creditors how payments should be applied.Another issue that arose in this case is that Keith Brown Lumber had a credit application and agreement with its customer. In that agreement, the customer agreed that Keith Brown Lumber could apply payments to the oldest invoices first. While the court did not comment specifically on this issue, its decision shows that the court did not feel the credit agreement overrode the general rules of application of payments.WHAT IS AN ADDITIONAL INSURED?Many construction agreements call for one company to name another company as an “additional insured.” Before this occurs, each party should have a general idea of what this means.In most situations, the insurance at issue is the Commercial General Liability (CGL) policy of the lower-tier party. A common scenario is a prime contractor asking a subcontractor to name the prime contractor (and perhaps the owner or others) as an additional named insured on the subcontractor’s CGL policy. This request is sometimes found within the terms and conditions of a proposed subcontract.Before agreeing to this, both parties should have a basic understanding of what it means. In general, naming a company as an additional insured on your CGL policy enables that company to make a claim directly against your policy.In today’s world of defective construction claims, prime contractors (and their insurance carriers) are becoming more insistent on obtaining a certificate of insurance where the prime contractor is a named additional insured. Then, if there is an allegation of defective construction by a subcontractor, the prime contractor can make a claim directly against that subcontractor’s CGL insurance. This can be particularly important if the subcontractor is no longer in business.FIRM NEWS:MICHAEL J. SCOTT will make a presentation on November 22, 2002 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.DOUGLAS R. HOOKLAND, ALAN L. MITCHELL and DARIEN LOISELLE of the law firm of Schwabe Williamson & Wyatt will present an all-day seminar on December 5, 2002 (in Portland) entitled “Advanced Construction Law in Oregon.” If you would like a brochure about the seminar, please contact Shari M. Persen at Scott Hookland LLP.MICHAEL J. SCOTT, DOUGLAS R. HOOKLAND, DOUGLAS L. GALLAGHER and ALAN L. MITCHELL will present an all-day seminar on December 12, 2002 (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:“Justice is my being allowed to do whatever I like. Injustice is whatever prevents me doing so.” Samuel Butler, 19th Century English Journalist.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