316 P.3d 344
Or. Ct. App.2013Background
- In April 2007 seller hired Homemasters (Lundstrom) to clean the roof/gutters; seller asked Lundstrom to look at two interior window sills but did not show him the prior inspection report or Buyer’s Repair Addendum.
- Lundstrom inspected the windows only from the interior (~15 minutes), removed sills in one place, concluded there was no mold or dry rot, recommended sill replacement and cosmetic drywall repair, and wrote a letter to seller (with an added paragraph later at the buyer’s realtor’s request).
- Seller had the sills replaced and interior repairs performed; complainant purchased the house in May 2007 and later discovered leaking around both windows after rains and sued Homemasters before the Construction Contractors Board (CCB) for "improper" and "negligent" work under ORS 701.140 and OAR 812-004-0535.
- The CCB dismissed the complaint (ALJ and subsequent board orders), finding Homemasters performed the work the seller requested, there was no improper performance, and complainant’s negligence claim was barred by the economic-loss doctrine because no special relationship existed.
- Complainant sought judicial review; the court reviewed for substantial evidence on facts and substantial reason/legal error on conclusions and affirmed the CCB’s final order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the board erred by refusing to consider oral testimony in complainant’s exceptions | Complainant argued the board ignored favorable hearing testimony when adopting ALJ findings | Board argued complainant failed to supply transcript as required by OAR and board may refuse to consider oral testimony | Board did not err; refusal was proper because complainant failed to follow procedural rule requiring transcript |
| Whether Lundstrom’s inspection constituted "improper work" under ORS 701.140 | Complainant argued the inspection and letter were inadequate and unsuited to circumstances | Homemasters argued Lundstrom performed only the interior tasks seller requested and the work was suitable to those circumstances | Board reasonably found work was not "improper"; substantial evidence supports that Lundstrom did what seller asked |
| Whether Homemasters committed "negligent work" given purely economic damages (economic-loss doctrine) | Complainant argued a negligence claim exists under ORS 701.140 independent of common-law duties or that a special relationship existed | Homemasters argued "negligent work" invokes common-law negligence and economic-loss doctrine bars recovery absent a special relationship | Court held ORS 701.140 refers to common-law negligence; no special relationship existed, so economic-loss doctrine bars complainant’s negligence claim |
| Whether ORS/OAR created a special relationship between complainant and respondent sufficient to avoid economic-loss bar | Complainant argued board jurisdictional rules and the inspection context establish a statutory special relationship | Board argued the statutes/OARs only confer jurisdiction and do not create a heightened duty separate from common law | Court held ORS/OAR do not create a distinct special relationship; complainant still must prove common-law special relationship and did not do so |
Key Cases Cited
- Abraham v. T. Henry Construction, 350 Or. 29 (Or. 2011) (economic-loss doctrine requires heightened duty or special relationship for recovery of purely economic damages)
- Fazzolari v. Portland School Dist. No. 1J, 303 Or. 1 (Or. 1987) (elements and foreseeability analysis for common-law negligence)
- Gaines v. State, 346 Or. 160 (Or. 2009) (statutory construction principles; text and context govern legislative intent)
- Meininger v. Henris Roofing & Supply, 137 Or. App. 451 (Or. Ct. App. 1995) (special relationship may arise where professional inspection was intended to be communicated to and relied on by buyer)
- Roberts v. Fearey, 162 Or. App. 546 (Or. Ct. App. 1999) (special relationship requires obligation to further plaintiff’s economic interests)
- Bell v. Pub. Empl. Rel. Bd., 239 Or. App. 239 (Or. Ct. App. 2010) (definition and factors of special relationship analysis)
- Conway v. Pacific Univ., 324 Or. 231 (Or. 1996) (distinguishing actual reliance from a legal right to rely)
- Strader v. Grange Mut. Ins. Co., 179 Or. App. 329 (Or. Ct. App. 2002) (functional, fact-driven inquiry for special-relationship existence)
- Goin v. Employment Dept., 203 Or. App. 758 (Or. Ct. App. 2006) (review standard: whether findings logically lead to conclusions of law)
- Contreras v. [Noted as authority], 253 Or. App. 693 (Or. Ct. App. 2012) (use of legal-term meanings when construing statutes)
- Harris v. Suniga, 344 Or. 301 (Or. 2008) (definition of "economic loss")