The U.S. Supreme Court Rids Constitutional Takings Claims of the “San Remo Preclusion Trap”

On June 21, 2019, the U.S. Supreme Court released Knick v. Township of Scott, in which the Court overruled a 1985 decision holding that a property owner’s claim against a local government under the Takings Clause of the Fifth Amendment was not ripe until a state court had denied the just-compensation claim under state law.  After that 1985 decision was released, however, it set up a trap that the Knick decision dubbed the “San Remo preclusion trap.”  In 2005, the Court held in San Remo Hotel, L.P v. City and County of San Francisco, that a state court’s resolution of a claim for just compensation under state law has a preclusive effect if the property owner subsequently brings a takings action in federal court.  In other words, the property owner has to go to state court before that owner can go to federal court to adjudicate the claim; but if the owner’s claim is denied in state court, the federal court will almost assuredly deny it as well on that basis.  Thus, the San Remo preclusion trap.  In overruling the state litigation requirement, the Knick decision stated that the existence of the trap is a tip-off that the San Remo decision rests on a faulty understanding of the Fifth Amendment.

Responding to a Crisis: How Human Resources Can Make Things Better, Not Worse

Cody Elliott and Mike Porter, two Miller Nash partners, were published in Constructor Magazine, a publication of Associated General Contractors. The link to the full story is available below.

Just as unforeseen site conditions can test a contractor’s problem-solving skills, unexpected events can test a construction employer’s crisis-management readiness. Crises can hit at any time, and individuals involved in human resources are usually — and rightly — on the front lines of working with a company’s management team to address the challenges that any present.

Click here to read the full article.

Judging Java: California Reverses Need for Proposition 65 Warnings on Coffee

California’s coffee industry breathed a collective sigh of relief earlier this month when the state’s Office of Environmental Health Hazard Assessment (“OEHHA”), the agency charged with implementing Proposition 65, finalized a regulation that exempts coffee from the need to bear a cancer warning.[1]

California maintains a list of chemicals that it considers to cause cancer or reproductive harm.[2] California’s list includes common carcinogens such as alcohol, lead, diesel exhaust fumes, asbestos, and nicotine, but also some that you might not suspect, including aloe vera leaf extract and wood dust.[3] The state’s Safe Drinking Water and Toxic Enforcement Act, commonly known as Proposition 65, requires businesses to provide warning labels before “exposing” consumers to any of the nearly 900 listed chemicals.[4] Businesses that violate Proposition 65 could face penalties of up to $2,500 per day for each violation.[5] A warning is not required if the carcinogen exposure poses no significant risk of cancer.[6] Businesses, however, have struggled with the financial and evidentiary burdens associated with meeting this standard.  Continue Reading

Dealing With the Ups & Downs: The Importance of Price Escalation Clauses in Construction Contracts

Vanessa Triplett, a Miller Nash construction law attorney, was published in the Summer 2019 issue of the NAMC-OR Newsletter. The newsletter is published by the National Association of Minority Contractors—Oregon and the Daily Journal of Commerce. The link to the full story is available below.

In this era of trade wars and tariffs, the likelihood that fluctuating building material costs will derail present and future construction projects is greater than ever. This is because over the past year the volatile world economy has made the price and availability of essential building materials such as steel, aluminum, lumber, asphalt, copper, and quartz increasingly uncertain. Without predictable access to standard construction materials, owners and contractors now face critical hurdles in building and completing construction projects on time and within budget.

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Bill Gives Design Build Boost in Public Contracting

Design-build is increasingly showing up in public works projects in the Washington State. This method allows the price to be established based on a conceptual design rather than through the competitive bid process. Offsetting the lack of competitive bid, the price can be set after construction documents are completed and all the subcontracts work can be put out for bid. Design-build has unique challenges. It leads to fundamental changes in the relationships between owners, designers and contractors. As a result, concerns were expressed that public agencies may not understand the resulting changes in their responsibilities or the impacts to contractors and design professionals so the legislature put strict limits on what capital project qualified for use of this method. Continue Reading

ORS 701.640 May Not Void Forum-Selection and Choice-of-Law

Miller Nash partner Jacob Zahniser had an article published in the Oregon State Bar Construction Law Section’s Construction Law Newsletter concerning little-discussed elements of construction contracts. The link to the full story is available below.

Do not underestimate forum-selection and choice-of-law clauses when coupled with an arbitration provision; ORS 701.640 may not apply and your client may find itself arbitrating claims far from the project under unfamiliar and unfriendly law.

Click here to read the full article.

Oregon Court of Appeals Gives a Boost to the State’s Provision of New Housing

On March 20, 2019, the Oregon Court of Appeals affirmed the Land Use Board of Appeals (“LUBA”) in a decision interpreting ORS 197.307(4), which is the “clear and objective” requirement of the ORS 197.295-.314 needed housing statutes. Warren v. Washington County helps ensure that the Portland metro region and other cities in Oregon can meet goals for the provision of new housing. Housing has been a critical issue in Oregon, especially since the recovery from the Great Recession of the mid-2000s. Since 1981, Oregon has had the needed housing statutes in place in one form or another. The purpose of the needed housing statutes is to ensure an adequate supply of buildable lands within urban growth boundaries for housing.  Continue Reading

Op-Ed: Tax-Advantaged Project Financing and Investment

David Brandon and Olivia Grabacki published an op-ed in a recent issue of the Daily Journal of Commerce. The article discusses the differing benefits between 1031 Exchanges and Qualified Opportunity Zones for real estate investments. The full article is available here (note that the full article is only available to paid subscribers).

Portland-Area Consumer Price Index Discontinued

Many local commercial leases use the Portland-area consumer price index (“CPI”) to calculate periodic rent adjustments. That index was discontinued in 2018.  For commercial landlords and tenants whose leases rely on the now-discontinued Portland-area CPI, discussing how to handle rent adjustments now can prevent tension later.

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Improving a Typical 1031

Section 1031 of the U.S. Internal Revenue Code provides real estate investors the opportunity to sell existing real property investments, reinvest the proceeds into the acquisition of qualified, like-kind replacement property, and defer recognition of capital gains realized from the sale to a later disposition, subject to time constraints and other regulations. Such a qualified like-kind exchange, more commonly known as a “1031 Exchange,” can be beneficial to investors holding appreciated investment properties that may otherwise be subject to a large tax liability at the time of sale. But to be able to completely defer tax on disposition, the replacement property must have a total fair market value equal to or greater than that of the relinquished property, and the investor must completely reinvest the sale proceeds into the replacement property, thereby limiting investors’ options. An improvement exchange, however, can provide investors more qualifying options to fully defer tax and the benefit of acquiring the “perfect” replacement property. Continue Reading