As with most things, COVID-19 has disrupted the land use permitting process in Oregon, causing questions and sometimes chaos for applicants and local governments who are in the middle of such processes. At this time, most local government offices in Oregon are closed to the public, although some are accepting the public by appointment only. The majority of the work in processing land use applications, engineering plans, and building permit applications is continuing, but remotely as people work from home. Continue Reading
COVID-19 now controls our day-to-day, but it may not control our existing contracts. To know the extent of its reach on construction projects, it’s important to touch on how delay is handled under contract law and specifically the role of force majeure.
What is Force Majeure?
An unforeseen, uncontrollable event. Force majeure is an event or effect that can be neither anticipated nor controlled by parties in a contract; an unexpected event, including acts of nature and of other people, which prevents a party from performing its contractual duties.
Why does Force Majeure matter?
It can excuse nonperformance of a contract. Force Majeure is an excuse for nonperformance or untimely performance of a contractual duty, such as constructing a building. General contract law excuses nonperformance only when the contractual duty becomes impossible or “commercially impracticable,” frustrating the basic purpose of the contract by no fault of the party seeking relief—a very high bar¹. A force majeure contract term, however, overcomes that rule and provides an excuse to nonperformance or delayed performance. But in most construction contracts it doesn’t terminate the duty to perform the contract, it only delays it. Continue Reading
Yesterday at 5:30 pm, Governor Inslee issued his “Stay at Home, Stay Healthy” proclamation. The proclamation (much of which takes effect immediately, but which goes into full effect at 5:30 pm on Wednesday, March 25) requires generally that:
- Every Washingtonian stay at home unless they need to pursue an essential activity.
- All gatherings for social, spiritual and recreational purposes are prohibited.
- All businesses except essential businesses must close, unless their business can be conducted remotely.
At the same time, the Governor’s office also issued guidance on “essential workers” and “essential businesses” who are exempt from this edict. The current guidance only exempts construction workers who are working on projects in areas otherwise deemed “essential infrastructure” (such as healthcare, utility and communications projects) and emergency repairs to residences. But the proclamation also exempts “workers such as plumbers, electricians, exterminators, and other service providers who provide services that are necessary to maintaining the safety, sanitation, and essential operation of construction sites and construction projects . . ..”. A number of industry groups (including the Associated General Contractors of Washington) are seeking further guidance as to the scope of this proclamation, given the ambiguity of the quoted clause. If your project does not fit into one of the designated essential critical sectors, proceed cautiously as this proclamation may halt your project. We will post more information once it is available.
On Monday, March 23rd, Governor Kate Brown issued a new executive order for the state, further limiting personal interactions. It appears that construction industry businesses are not subject to the order so long as the business designates “an employee or officer to establish, implement, and enforce social distancing polices.”
The press release accompanying the order states, in part:
“Following this order will save lives, while still allowing businesses to function if they can protect employees and customers through social distancing. There are other businesses that make robust plans to meet social distancing requirements—and enforce those requirements—may remain in operation, preserving jobs while ensuring health.
This distinction from closing all businesses except for those categorized as essential as mandated in other states, aims to minimize unintended consequences and add clarity for businesses who can adjust their business models to accommodate vital social distancing measures.
Other retail businesses will not be able to continue to operate unless they can implement strict social distancing measures and designate an employee or officer charged with ensuring compliance.”
We generally encourage businesses to specifically, in writing, designate a person at each project site who is authorized to implement and enforce your company’s social distancing policies, as stated above. Keeping a record of compliance with this order is important to make it effective and to establish a record for your company.
This post is not legal advice, but simply an effort to inform you of current events. We are happy to discuss this with you and provide legal advice—contact any member of our Construction team for more information.
This was originally published on our blog, The Northwest Policyholder.
The economic fallout from COVID-19 has been swift and severe. Moratoriums, quarantines, and bans will continue to upend daily life and with this impose severe economic consequences on regional, national, and international commerce. While the federal government struggles to prop up the overall economy, many businesses are looking to what, if any, specific relief might be had. This search inevitably leads to insurance. Unfortunately, the question of whether commercial lines insurance might cover COVID-19 related losses results in a lawyerly answer: it depends. More specifically it depends on the (1) the type of insurance purchased, (2) the wording of individual policies, and (3) the particular circumstances surrounding each business’s loss. Continue Reading
Environmental activist groups recently petitioned the Oregon Environmental Quality Commission (the “EQC”) to enact far-reaching rules that would regulate air emissions from so-called indirect sources in cities and metropolitan districts with populations of 50,000 or more. The petition identifies an indirect source as any facility, building, structure, or installation that attracts mobile sources (vehicles), and includes construction sites, hospitals, development projects, office buildings, ports, warehouses, retail facilities, and schools. Construction and operating permits would be required for certain indirect sources.
Construction permits would be required for projects that exceed certain sizes (e.g., a permanent commercial, industrial, or residential structure of at least 10,000 square feet) or values (over $1 million and exceeding certain air pollutant emission thresholds for particulate matter (“PM”), nitrous oxides (“NOx”) and greenhouse gases). A construction permit would limit average hourly and daily emissions from certain vehicles; if the limits could not be met, then the permit applicant must reduce construction emissions by certain percentages. An operating permit may also be required for a new and existing indirect source that meets certain emission thresholds due to mobile source activity associated with the indirect source, or that exceeds other criteria related to vehicle trips, aggregate engine power, or diesel and gas consumption used in any 24-hour period. The applicant must show that the average emissions from mobile sources associated with the source meet certain emission standards for PM, NOx, and greenhouse gases; if the emissions exceed those standards, the source must implement a mitigation plan to meet the required reductions. Continue Reading
Oregon federal Magistrate Judge Stacie Beckerman gave policyholders an early Christmas present on December 20, 2019, holding that the most commonly-used suit limitation clause in commercial property insurance is ambiguous, and that therefore the policyholder had two years from the discovery of hidden water damage to file suit against the insurer. This ruling provides additional clarity to the interpretation of a widely-used coverage form, in the context of one of the most common property-loss scenarios in the Pacific Northwest: hidden decay over many years due to water infiltration.
Along with seven other states and the District of Columbia, Oregon signed a Statement of Intent to develop a multi-state memorandum of understanding to support and accelerate the deployment of medium- and heavy-duty ZEVs (zero-emission vehicles) for consideration by the states’ governors and the mayor of the District of Columbia in summer 2020. The primary purpose is to reduce greenhouse gas emissions, but these vehicles are also major sources of diesel particulates, which is a serious pollution problem in Multnomah County. Most of the signatories are also members of the ZEV Task Force, which focuses on ZEV passenger cars and light trucks. Under the Action Plan established by the Task Force, Oregon has engaged in various initiatives such as support for workplace charging, ZEVs in fleets, and rebate programs.
On November 21, the Washington State Supreme Court held that general contractors may be on the hook for the injuries of the workers on their jobsites (Vargas v. Inland Washington, LLC). And not just on the hook to provide a safe jobsite for all, but for the injuries of its subcontractor’s workers. And not on the hook in one way, but potentially four ways.
The plaintiff, Mr. Vargas, was an employee of a subcontractor who was struck in the head by a whipping concrete hose as he was pouring the concrete walls for a parking garage. The hose knocked off his hard hat, leaving him unconscious and ultimately with a traumatic brain injury.
The Vargas family sued the general contractor, the concrete supplier, and the concrete pumper subcontractor for negligence. The general contractor moved for summary judgment, which the trial court eventually granted, finding that general contractors are not generalized guarantors of jobsite safety, and that the general contractor could not be held vicariously liable for the negligence of its subcontractors. The Vargas family appealed, and eventually got Supreme Court review. The Supreme Court reversed the grant of summary judgment, holding that “[g]eneral contractors have expansive statutory and common law duties to provide a safe workspace” and that those duties may potentially have been breached here.
To justify its broad holding, the Court laid out two theories under direct liability (common law and the Washington Industrial Safety and Health Act (WISHA)) and two theories under vicarious liability (WISHA delegation and jobsite control). Continue Reading
The Construction Team hosted back-to-back Breakfast Roundtables in Portland and Seattle earlier this month. Attendees included contractors, suppliers, design professionals, in-house counsel, and others from across the construction industry. The topic: delegated design. We kicked off the discussion by defining the topic as delegating to the contractor a portion of the design of the work. For example, a contractor may have delegated design responsibility for portions of the exterior system, and then delegate that design out to various specialty subcontractors who both design and construct that portion of the exterior. Delegated design is not design-build or an architect delegating to design subcontractors (e.g., structural engineers). There was consensus among the groups that delegated design was becoming more prevalent in the industry. Delegated design provides potential cost savings, efficiencies in having subcontractors participate in the design, and more. On the other hand, we discussed potential pitfalls and solutions to better managing delegated design. These included:
- Avoiding gaps in the scope of the project through clear contractual delegation of responsibilities and assigning responsibility for ensuring coordination between design elements.
- Ensuring communication between all parties, including through preconstruction meetings by all potentially involved parties.
- Avoiding costly and protracted disputes, including through the use of early dispute resolution and third-party neutrals.
- Effectively using technology to prevent miscommunications and gaps in the scope.
- Obtaining appropriate insurance that covers delegated design.
- Analyzing the applicability of design professionals’ obligations under existing regulations and the potential for future regulatory changes applicable to delegated design.
Thank you to those who joined us in our discussions! If you were not able to attend, but would like more information on this topic, contact Jacob Zahniser, Tristan Swanson, James Walker, or Tara O’Hanlon.