Preliminary Notice in the Mail

Notices are annoying. We all know it. Having to consistently keep up with deadlines and requirements is a burden. In some states, it is downright exhausting, but there is a reward for your efforts. That reward is a perfected mechanics lien and full lien rights. On the other hand, if these notice deadlines and requirements are ignored or misinterpreted, you may be left with little-to-no recourse when dealing with nonpayment. Design Professionals, such as architects and engineers, may have different requirements when it comes to notice requirements and deadlines. The Oregon Court of Appeals reminded an engineering firm of that fact.

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The Case

Adler Commercial Properties (ACP) was looking to construct a commercial building on property they owned in Salem, Oregon. ACP hired Innovative Design & Construction LLC (Innovative) as a contractor on the project. Innovative then contracted with Multi/Tech Engineering Services, Inc. (Multi/Tech) in order to provide engineering services. The specifics of these engineering services included obtaining city approval and managing interaction with city officials, preparing grading, drainage, and utility plans and storm water detention analysis, and providing structural design and a geotechnical report. After Multi/Tech completed these services, ACP failed to pay them in full. Multi/Tech then filed for a mechanics lien for the amount of $6700.

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The Courts

The trial court initially ruled in favor of Multi/Tech. The court said that there was a valid lien and right to foreclose on the property. The appellate court wholly disagreed. In Multi/Tech Engineering Services, Inc. v. Innovative Design & Construction LLC, 274 Or. App. 389 (2015), the Oregon Court of Appeals reversed the trial courts ruling and instead said that Multi/Tech did not have a perfected mechanics lien. The reasoning behind this ruling was because Multi/Tech failed to properly file a notice of lien rights, not perfecting the lien and making it invalid.

Multi/Tech argued that a notice of lien rights was sent to the owner (a fill-in-the-blank form found in the contract with Innovative), but they were excepted from following the statutory notice requirements under ORS 87.021(3)(b). The court did not agree, stating

Although Multi/Tech’s employees had contact with the job site in the course of providing those engineering services, those contacts consisted of (1) clearing away some vegetation and digging small holes, (2) taking measurements of the property, (3) conducting “field exploration work,” and (4) taking a soil sample. Under Teeny, those incidental contacts do not operate to make Multi/Tech “[a] person who performs labor upon a commercial improvement or provides labor and material for a commercial improvement” within the meaning of ORS 87.021(3)(b). As a result, Multi/Tech was not excused from providing the notice required by ORS 87.021(1).

The court differentiated between providing “labor and materials” and the services rendered by this engineering company. Therefore, the lien was invalid and Multi/Tech did not have a right to foreclose on the property.

The Conclusion

This case changes the way design professionals operate in Oregon concerning mechanics liens. Most, if not all, design professionals must now comply with the notice requirements set out in ORS 87.021(1). This ruling may also affect the way courts look at other provisions of Oregon’s mechanics lien statute when dealing with design professionals. In other words, this decision suggests that the services design professionals render are not considered “labor” under the statutory meaning. Therefore, any other provision pertaining to “labor” may not apply to design professionals. Make sure you understand the requirements and deadlines that pertains to your role on a work project. As evidence by this case, it is vital that you comply with statutory requirements.

Summary
Engineers Not Provided Notice Exemption In Oregon
Article Name
Engineers Not Provided Notice Exemption In Oregon
Description
Notice requirements must be understood and followed carefully. Failure to do so can result in a loss of lien rights.
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Levelset
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