Today, the Oregon Supreme Court ruled that homeowners may sue the contractor who built their home for negligence; they did not need to rely only on a breach of contract claim. In Abraham v. T. Henry Construction, the distinction was important because, by the time the homeowners discovered the construction defects, the time had expired for a breach of contract lawsuit.
Generally, when someone breaches a contract, it does not matter whether the breach is intentional or negligent. If you do not live up to your bargain, then you must pay the other person for the monetary loss caused by your breach. Often, the person hurt by the breach may only sue for breach of contract, but there are exceptions.
The first exception is when a "special relationship" exists between the parties. The lawyer-client relationship, for example is considered a special relationship of trust. That's why a client may sue his or her attorney for legal malpractice, not just breach of contract. Other special relationships include those between people and their doctors, architects, engineers, and trustees.
Another exception to the general rule that one may sue the other side of a contract only for breach of contract is when there is some standard of care or conduct independent of the contract. Here, Mr. and Mrs. Abraham alleged that both (1) common law negligence established an independent duty of care and (2) Oregon's building code sets a standard independent from the contract. They alleged that the contractor failed to meet either standard, and that failure caused water damage to their house. Oregon's Court of Appeals relied on the building code to find an independent standard to support a negligence claim.
Oregon's Supreme Court agreed that Mr. and Mrs. Abraham could sue in negligence, but not just because of the building code. The court reminded us that when a builder's negligence causes property damage, then even people who did not contract with the builder may sue. Just because you hired the builder does not mean you lose your right to sue for negligence. The homeowner might have both a claim for breach of contract and for negligence.
When applying the law to the facts in this case, the court said the homeowners could proceed with their negligence suit under the general common law claim that their contractor failed to exercise reasonable care to avoid foreseeable property damage.
Jeff Merrick, Oregon Trial Attorney
Injury & Employment Law
503-665-4234
