Washington Subcontractors Can Seek Bond for Early Release of Retainage

Governor Jay Inslee recently signed into law Washington House Bill 1538 which authorizes subcontractors on public projects to request the prime contractor submit to the public owner a bond to release its portion of the retainage before the public project is complete. The bond needs to be in a form acceptable to the public body and it can only be rejected for “good cause.” This retainage bond should serve to relieve the cash flow burden on subcontractors that have finished their scope of work but cannot get paid in full until the project is completed. The law goes into effect July 23, 2017.

Hidden Hazards: Oregon Proposes New Burdens on Charities Seeking Property Tax Exemption

Oregon has a long tradition of narrowing the scope of the property tax exemption afforded to charities operating in the state. This tradition is alive and well in 2017, as the Oregon legislature contemplates imposing an annual reporting requirement on all charities holding or seeking a property tax exemption on their real or personal property. Under the proposed legislation (Senate Bill 181), charities that fail to make the required annual report would lose their tax-exempt status and would be required to repay all property taxes retroactively.  Continue Reading

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

On 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”

Environmental 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.


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

On 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

In 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

We 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

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