Important Policyholder Win in the Oregon Court of Appeals: Contractors—This Is Good News

pexels-photo-7931On May 10, 2017, the Oregon Court of Appeals made several significant holdings in the appeal of an insurance policy garnishment proceeding. The court of appeals held that a liability insurer’s exclusion for multi-unit new residential construction was ambiguous and, when construed against the insurer, did not apply to defeat coverage for construction-defect claims in a mixed-use development. The result was especially gratifying because the insurer had refused to defend its subcontractor insured, against which a default judgment had been entered. The court of appeals also held that attorney fees awarded to an indemnitee for defending a construction-defect claim were covered by a liability insurance policy, either as damages or as costs taxed against the insured. Finally, the court of appeals held that a party is entitled to a jury trial on factual issues in an insurance policy garnishment proceeding and that an Oregon statute allowing a bench trial is unconstitutional. Continue Reading

A Light in the Darkness: The “Small Business Know-Before-You-Bid Construction Transparency Act of 2017”

Federal government contracting comes with a myriad of challenges, not the least of which are sometimes opaque procedures for getting paid (or taking action if you’re not getting paid). A bill has just been introduced in the House of Representatives that would help simplify that process, especially for smaller contractors. The legislation, H.R. 2350, the “Small Business Know-Before-You-Bid Construction Transparency Act of 2017,” would require a federal agency to: Continue Reading

Environmental Groups Seek to Kill “Zombie Permits”

320px-Pond-001Environmental groups recently sued the Oregon Department of Environmental Quality (“DEQ”) over its alleged failure to renew permits in a timely manner. Most permits issued by DEQ under the Clean Water Act have an initial term of five years. According to the complaint, at least 75 percent of all such permits in Oregon have exceeded their five-year term. Instead of renewing the permits, DEQ has been “administratively continuing” them. The petitioners allege that some of the permits have been continued for more than two decades (called “zombie permits” by the petitioners).

This is a concern for the environmental groups because DEQ continually updates its water quality standards and its list of impaired water bodies. Permits that are administratively continued instead of being renewed do not take these changed circumstances into account. Continue Reading

BEWARE—The Pollution Exclusion Is Alive in Oregon

This article was originally posted on The Northwest Policyholder, Miller Nash Graham & Dunn’s insurance coverage blog.

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Contractors, builders, real estate managers, and others should be aware of a March 9, 2017, decision by an Oregon federal judge who found that carbon monoxide is included in the plain meaning of “pollutant” as defined in a liability insurance policy. As a result, an insured contractor had no coverage for its faulty work.

In Colony Ins. Co. v. Victory Constr. LLC, U.S. District Court, Oregon, Case No. 3:16-cv-00457-HZ, Colony Insurance sought a declaratory judgment that it had no duty to defend and indemnify Victory Construction in two state court personal-injury lawsuits. The defendant, Victory, installed a pool and was alleged to have been negligent in the installation and ventilation of a gas heater, resulting in the escape of carbon monoxide into a home, causing the residents to be sick. Victory was insured by Colony, which denied coverage for the residents’ ensuing claims. Colony’s Commercial General Liability Insurance Policy contained a Hazardous Materials Exclusion, i.e., a pollution exclusion. The policy defined “hazardous materials” as: “‘pollutants’, lead, asbestos, silica and materials containing them.” The definition of “pollutants” included “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.” The court concluded that because carbon monoxide clearly fell within the definition of a pollutant, there was no coverage. Continue Reading

City of Corvallis Loses the First Round of the Voter Annexation Fight

Community_planningOn February 24, 2017, Judge Matthew J. Donohue, Benton County Circuit Court, released a decision upholding SB 1573, which exempts certain annexations from voter approval. A number of cities in Oregon have home rule charter provisions that require voter approval of annexations. This requirement, however, sometimes works at cross-purposes with Oregon’s overall land use planning system, which requires cities to keep a 20-year supply of urbanizable land within their urban growth boundaries, which can then be annexed over time to meet the 20-year need.  Continue Reading

IRS: “Shea It Ain’t So!” The Ninth Circuit Opens The Door For Real Estate Developers to Defer Income Tax

income-taxIn a coup for real estate developers, the Ninth Circuit affirmed the U.S. Tax Court’s approval of a real estate developer’s strategy to defer income in Shea Homes, Inc. v. Commissioner, 834 F.3d 1061 (9th Cir. 2016). The strategy appears fairly narrow, and will likely be the subject of future IRS challenges. Continue Reading

Chapter 2: Ending “Drive-By” Lawsuits Under the ADA

barrier-77492_1280We wrote about the plans to amend the Americans With Disabilities Act on January 31, 2017, to deal with so-called drive-by lawsuits claiming that there are illegal physical barriers to access. Now we have the language in the proposed bill, HR 620. This differs from the bill that was submitted in Congress in 2015 in ways that will please property owners even more. Continue Reading

Ending “Drive-By” Lawsuits Under the ADA

Wheelchair_ramp_sign_Businesses are required to comply with the obligations under Title III of the Americans With Disabilities Act (“ADA”)—there cannot be discrimination on the basis of disability in the full and equal enjoyment of the goods, services, facilities, or accommodations of any place of public accommodation. When a plaintiff prevails in an ADA lawsuit, the court awards attorney fees. In recent years, the number of lawsuits filed to complain about alleged violations under Title III has skyrocketed, especially in Florida, Texas, Arizona, and California. Continue Reading

That Was Fast! 2017 Washington Legislature Proposes Bills Responding to the Hirst Decision

wishing-well-76869_640Last week, my colleagues wrote about the Whatcom County v. Hirst decision by the Washington Supreme Court. As a consequence of Hirst, if public water is not available to serve a development, a county must independently verify that water from wells is available before it issues permits, even for single-family or small-development construction that, in the past, relied on permit-exempt wells. No longer can a county assume an adequate water supply, even if the Department of Ecology has not closed the basin to new development. This decision could interject uncertainty, delay, and cost into the land use permitting process. Continue Reading

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