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).

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.

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.