Legal Updates

A recent Oregon Court of Appeals case has held that a violation of the Oregon Building Code can support a negligence claim against contractors. In Abraham v. T. Henry Construction, Inc., 230 Or App 564 (2009), plaintiff homeowners sued contractors and subcontractors for construction defects in their "dream house." They sued on breach of contract and negligence theories. Although it had been more than eight years since the house was built, it was less than one year since they had discovered the damage.

The trial court dismissed all the plaintiffs' claims on summary judgment, reasoning that (1) the contract claims were barred because the six-year contractual statute of limitations had run, and (2) parties in contractual privity cannot bring tort claims against each other absent the breach of a standard of care independent of the terms of the contract. The Court of Appeals affirmed the dismissal of the plaintiffs' contract claims, but reversed the trial court's dismissal of the plaintiffs' negligence claims, holding that they survived summary judgment because they were based on a regulatory standard (the Oregon Building Code) independent of the terms of the contract, and plaintiffs had raised a question of fact as to whether a violation of the building code had caused them damage.

In its reasoning, the Court of Appeals rejected the plaintiffs' argument that the question of whether a "special relationship" existed between the parties was a question of fact that precluded summary judgment. The court disagreed, finding that the relationship was an arm's-length transaction and that no "special relationship" existed.

The court was persuaded, however, by the plaintiffs' alternative argument that a "special relationship" was not necessary to support tort liability between parties in contractual privity, but only a standard of care independent of the contract. The court agreed and found that such an independent standard existed in the Oregon Building Code. The court stated that to make a proper negligence claim on the basis of a violation of the building code, plaintiffs have to "allege that the defendants violated administrative rules [such as the building code]; that the violation caused them damage; that the purpose of the Oregon Building Code is, among other things, to protect people in their position from the effects of substandard construction; and that they had suffered the kind of injury that the code was designed to prevent." The court held that because the plaintiffs had alleged the necessary elements and because plaintiffs' counsel had retained experts who would testify as to questions of fact regarding defendants' violations of the Oregon Building Code and the property damage they caused to the house, plaintiffs had created a genuine issue of fact as to whether defendants breached a standard of care independent of the terms of the contract, making the trial court's grant of summary judgment on the negligence claim improper. It thus reversed the trial court's dismissal of the negligence claim and remanded the case.