a:\newslw.96 [4]Alan Lee MitchellStephen De'ak211998-07-15T20:12:00Z2006-07-01T22:25:00Z2006-07-01T22:25:00Z111896778 5615795211.8026 FURRER & SCOTT LLCConsider . . .VOL. 7, ISSUE 3 July, 1998Law OfficesFURRER & SCOTT LLC9185 SW BURNHAM ST. POST OFFICE BOX 23414TIGARD, OR 97223 TIGARD, OR 97281(503) 620-4540 -- (800) 334-8986 -- FAX: (503) 620-4315www.furrer-scott.comCONSTRUCTION BONDSThere are many kinds of bonds in the construction industry. There are Oregon Construction Contractor Board (“CCB”) bonds, bid bonds, payment bonds and performance bonds as well as other types.One aspect that most, if not all, bonds share is that the bonding company (also known as the surety) will normally require the company requesting the bond to also arrange for a person to sign a personal guaranty.Like the personal guaranty that you may have to sign in order to obtain a credit account, personal guaranties to sureties mean that the person who signs the guaranty is personally liable for the debts of the company. What makes this unique in this situation are the many uses for which bonds are obtained.For example, if a claim is awarded against your company’s CCB bond and the surety pays on that claim, then the surety may look to you under the personal guaranty for reimbursement of those payments.Another example is where the bond is given as security for a debt. Again, if the surety ends up paying the underlying debt, the surety may look to the personal guarantor for recovery.In addition, these personal guaranties often contain attorney fee clauses. Then, if the surety incurs any attorney fees related to the payment of claims, the surety may look to you not only for repayment of the claim but also for reimbursement of its attorney fees. And, while there may be no Oregon case law directly on point, it is possible that the surety who has to sue you for reimbursement may be able to recover from you the attorney fees incurred in seeking that reimbursement.The moral is to know what you are signing and what consequences may flow from that agreement.HOME INSPECTORS MUST BE CERTIFIEDAs of July 1, 1998, home inspectors who inspect or offer to inspect one or more components of a house (e.g., plumbing and heating) in Oregon must first be certified with the CCB.This certification is in addition to the existing requirement that home inspectors be registered with the CCB. To become certified, home inspectors must pass a written five-part examination by the CCB and must comply with various new administrative rules.Home inspectors must provide their customers with both a written contract that contains certain information as noted below and a summary of the Oregon Home Inspection Certification Law. The inspection itself must comply with a lengthy and detailed list of Standards of Practice and Behavior.The written contract must:State that the inspection will comply with the Standards and, if the inspection will not comply with the Standards, the contract must specify how the inspection will differ from the Standards;Describe the services to be provided and their costs; andState whether the inspection will include a pest and dry rot inspection.The home inspector must provide a written report that:Describes the systems and components inspected and identifies any that were not inspected;States whether any systems or components do not function as intended or will adversely impact the habitability of the house; andStates the inspector’s CCB number, certification number and is signed by the inspector.Home inspectors must now provide a $10,000 bond with the CCB. Also, home inspectors are not permitted to undertake or submit a bid to undertake repairs on any structure within 12 months of performing an inspection on that structure.To inquire about a specific inspector or obtain information about who is certified to do home inspections, contact the CCB at (503) 378-4621, ext. 4900.PUBLIC WORKS CLAIMSIf you perform any work on public works projects, you should be aware of the ability to make claims upon the payment bonds associated with those projects. However, a recent federal case may open the door for claims outside the normal bond claims process. In particular, this case may permit “equitable lien” claims on public works projects.The case is called Blue Fox, Inc. v. Small Business Administration, 121 F.3d 1357 (9th Cir. 1997) and was decided by the Ninth Circuit Court of Appeals, whose jurisdiction includes Oregon. (Note that the U.S. Supreme Court recently accepted a petition to review this case. The Court will likely not rule on this case until the 1998-1999 session.)Blue Fox was a subcontractor on a project at the Umatilla Army Depot. The Army erroneously did not require the prime contractor to provide a payment bond that would have protected Blue Fox’s interests.When it was not fully paid by the prime contractor, Blue Fox asserted an equitable lien claim against funds held by the Army. (Normally, equitable lien claims depend on the owner not having fully paid the prime contractor.)The court ruled that Blue Fox had a right to make an equitable claim upon funds held by the Army and that the claim attached at the time Blue Fox gave the Army notice of its claim.This case raises two important issues for contractors. First, just because a federal public works project lacks a payment bond, do not assume that you have no rights. Second, whenever you do make a claim, give notice to every single potential party, including all public agencies that may have any connection to the project. This rule should be followed even when making a claim under the federal Miller Act, which does not require giving notice to the owner.KEEPING RECORDSAs discussed in an earlier newsletter, employers have an obligation to keep wage and hour records for at least two years under state law and three years under federal law. However, it is best to keep these records for at least six years.It is not only wage and hour records that should be kept for six years. In general, all employee records should be kept for six years. While many statutes may only permit suits for two or three years (usually, after termination), at least some statutes permit suits for six years.Thus, in order to avoid confusion, employers should keep all employee records for six years. There is one exception to this rule: Records regarding collective bargaining agreements should be kept indefinitely. This is due to the fact that these records and agreements may provide evidence as to the historical practices of the parties, which evidence may become important in future contract negotiations.All employee records should be maintained in a secure, locked area to which only one designated person has access. This is essential in order to meet employee privacy requirements.In addition, all medical records should be kept in a separate file, also stored in a secure, locked area. Under the Americans with Disabilities Act, employee medical records are confidential and must be maintained in a separate file.FIRM NEWS:PATRICK J. FURRER spoke on “Securing Judgments in Oregon” to the Oregon Paralegals Association on April 8, 1998.MICHAEL J. SCOTT spoke on “Oregon Construction Lien Claims” to the Portland Chapter of the National Electrical Contractor’s Association on May 15, 1998. MIKE also spoke on “Legal Issues Involved in New Home Construction” at a June 4, 1998 seminar sponsored by the Oregon Law Institute at the Oregon Convention Center.DOUGLAS R. HOOKLAND recently updated his Washington Construction Lien Claims materials.This newsletter is published quarterly by the law firm of Furrer & Scott LLC for the benefit of its clients and friends and is intended to inform them about legal matters of current interest. This information is not intended to be, and should not be considered to be, legal advice. No actions should be undertaken in reliance hereon without professional legal counsel.Alan L. Mitchell, Editor