ORS 701.565 contains a notice provision (colloquially, “701 Notice”) well known to those who practice construction defect law. Those who handle product liability cases may be less aware of the application of ORS 701.565. And yet, in product liability cases where property damage is alleged, 701 Notice provides key protections to manufacturers and suppliers of components used in new construction, remodels, or residences that have undergone repairs. Given this, when allegations include defective products in residences (water supply lines, materials, appliances, etc.), defense attorneys should not overlook the potential defenses and inspection and cure opportunities available under ORS 701.560 et seq.
ORS 701.565 requires the owner[i] of a residence to notify a contractor, subcontractor, or supplier of defects “in any system, component or material incorporated into a residence located in [Oregon] . . .” before suit may be brought or arbitration commenced. The statute applies to newly constructed residences, and residences that have undergone repairs or remodeling. Within 20 days of receiving a written request for inspection of the residence, the owner must make the residence available for inspection.[ii]
Under the statutory scheme, persons requiring notice of defects include “suppliers,” a term defined as “any person that furnished or manufactured the systems, components or materials incorporated into a residence as part of the construction, alteration or repair of the residence.”[iii] Therefore, a manufacturer or distributor of a product that was incorporated into a new construction, a remodel, or a repaired residence is required to receive a 701 Notice before arbitration or suit may be instituted. In turn, they must provide a 701 “Secondary Notice” to any other known supplier within 14 days of receiving the 701 Notice from the owner.[iv]
Failure to provide a 701 Notice mandates dismissal of the suit or arbitration. The dismissal is without prejudice, but the suit or arbitration may only be commenced anew after the requirements of ORS 701.565 and 701.575 are met. If the suit is initially brought within the applicable statute of limitations period, and after dismissal is refiled within 180 days of dismissal but after the statute of limitations has run, Oregon’s “savings statute” (ORS 12.220) may allow the plaintiff to pursue the claims.[v]
While the potential statute of limitations arguments stemming from a 701 Notice defect may be circumvented by ORS 12.220, there are key issues of inspection rights, preservation of evidence, spoliation, and opportunity to cure that arise. These issues strengthen the defenses, giving support for motions to dismiss, to impose sanctions, or to limit evidence. Therefore, the importance of 701 Notice requirements, as applicable to product liability cases, should not be overlooked.
[i] The statutory definition of “owner” includes: a homeowners association, a managing entity, an owner association, an association of unit owners, and any other entity that possess an interest in a residence or represents owners of a residence. ORS 701.560.
[ii] ORS 701.575.
[iii] ORS 701.560.
[iv] ORS 701.570.
[v] ORS 12.220 states that if a new action is commenced within 180 days of an involuntary dismissal without prejudice, the filing of the new action dates back to the filing of the original action. Therefore, if the original action was timely filed, and served within 60 days of filing, the new action also would be timely if filed within 180 days of dismissal.