What to Do
When Construction Deals Go Bad
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Above
are a few photos used as evidence in a case involving water
infiltration in a home due to faulty windows.
Top
Photo: This demonstrates the damage to the house due
to water
infiltration and the hassles faced by the homeowners due to
the construction defects.
Middle
Photo: This photo depicts damage to a window itself due to water
infiltration.
Bottom
photo: Here’s an example of damage to framing due to leaking
windows; note that the sheathing was completely rotted away. |
By Jonathon Norling
In previous articles
for Northwest Renovation, I had discussed how homeowners can protect
themselves when working with contractors. (“Five
Things Every Homeowner Should Know About Construction Liens,”
April/May 2003; and “The
CCB: A Friend to Oregon Property Owners,” August/Sept 2003).
While a certain
level of due diligence can help to protect you, unfortunately, things
can go wrong and homeowners may find themselves having to sue a contractor
to either correct a problem or obtain money damages. This article
briefly discusses the legal steps involved in filing a suit against
a contractor and/or a product manufacturer and highlights issues a
homeowner needs to be aware of prior to filing a lawsuit (note: this
article does not address the filing of a CCB complaint against a licensed
contractor, which will be addressed in a future article).
Step 1: Identify
the Culprits
The first step in deciding whether to sue a contractor or a manufacturer
is to determine whether you have a claim. For example, I recently
represented homeowners who noticed significant amounts of water leaking
in around their windows on an eight-year old home purchased from the
builder. While it was initially unclear who was at fault, the homeowners
were certain that it was not their fault, and that it was something
they should not be forced to live with, especially when they needed
to replace $40,000 worth of windows. Therefore, they determined that
they had a potential claim against the builder, the window manufacturer,
and a window repair company that allegedly “took care of the
problem.” It is important to document all damages and problems
with pictures and writing, and, if feasible, to keep defective products
or damaged parts of your home to be used as evidence later.
Step 2: The
Demand Letter
After learning that you have a potential claim against a contractor
or a manufacturer, you should contact an attorney, who will likely
draft what is called a “demand letter.” This letter is the
first shot across the bow in any litigation, and sets forth why the
reasons the contractor or manufacturer is at fault and the amount
of the homeowners’ damages. Typically, a demand letter specifies
that the homeowners will file a complaint if the contractor or manufacturer
fails to respond to the letter. While often these letters do not result
in the contractor or manufacture paying the amount stated in the letter,
they often put the contractor or manufacturer (and, more importantly,
their insurance carriers) on notice that a potential claim exists.
Step 3: The
Complaint
Often the demand letter will not result in you getting the compensation
you deserve, thus requiring the filing of a complaint. The complaint
sets forth the facts giving rise to the claims and the general legal
theories, such as negligence or breach of contract. Before filing
a complaint, it is also necessary to review the contract (if any)
between the parties. Some contracts specify that any disputes will
be handled by arbitration.
It is important
not to delay the filing of a complaint, especially in cases involving
defective products, as the statute of limitations for product liability
actions is only two years. This means that the complaint must be filed
within two years of the injury or the claim may not be brought. This
is indeed a strict time limit, especially since Oregon courts have
said that the clock starts ticking on the day the damages begin, not
when they are discovered; therefore, it is in one’s best interest
to file products liability action as soon as possible.
Claims for damages
to real property or contract claims must be brought within six years.
Although Oregon courts have not applied the so-called “discovery
rule” to construction negligence or contract claims, it is arguable
that the six year statute of limitations begins when the homeowner
discovers the negligent act giving rise to the claim.
Step 4: Motion
Practice, Discovery,
and Mediation
After the complaint is filed, lawyers for the contractor or product
manufacturer (or, more precisely, attorneys hired by their insurance
carriers), now termed the “defendants,” will file an answer
or “motions” arguing why your case should be dismissed,
such as a failure to file the case within the time permitted by law.
In response, your lawyer will respond to these motions and may have
to attend hearings on the motions.
The lawyers in
the case will then likely file Requests for Production of Documents,
which are legal papers requiring a party to provide certain documents
related to the case. The lawyers will also meet either in person or
before a judge to set up a deposition schedule. A deposition is where
a person involved in a lawsuit answers questions under oath asked
by the other side’s attorney. The questions are typically designed
to find out what additional information is out there and to guide
the attorneys in proceeding with the case.
Depositions can
also be useful in settlement discussions or mediation. Lawyers will
often schedule a mediation, which typically follows the depositions
by about a month. Ideally, the mediation will lead to settlement negotiations
and resolution of the lawsuit.
Step 5: On
to Trial
If the mediation does not result in a settlement, the case will proceed
to trial. Typically, there will be a jury trial, unless you waive
your right to a jury trial in any contract with the defendants. Most
often, however, construction cases will be resolved by a settlement
before trial. At trial, it may be necessary to hire experts who can
testify why the damages occurred and why it was the fault of the defendants.
Prior to trial,
lawyers for the defendants may file a Motion for Summary Judgment,
which requests a judge to decide the case based on the law, rather
than the facts. For example, in the windows litigation discussed previously,
the lawyer for the window manufacturer threatened to file a Motion
for Summary Judgment, arguing that the case was not filed within the
statute of limitations applicable to product liability actions. Fortunately,
the case settled before the motion was filed.
Having to resort
to filing a lawsuit is an emotionally trying experience, and can be
especially so if the defendants delay the process by filing motions
and other pleadings designed to slow the process. Therefore, it is
in your best interest to identify potential claims and move your case
forward in a timely manner so as to avoid unnecessary aggravation
and costs.
Jonathan Norling,
a partner in the Portland law firm of Nelson Lovinger Norling Kaufmann
LLP, practices construction litigation and is a frequent contributor
to Northwest Renovation. He can be reached at (503) 230-8311 or norling@nlnk.com.
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