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A ruling handed down in August by the Oregon Supreme Court has construction attorneys in Oregon scrambling to add pages to their contracts. They say they may even push for a legislative fix down the road.

is a big case in construction liability law. It concerns the prime contractor-subcontractor relationship when a worker gets hurt, and it applies to all projects governed by Oregon law. Lawyers say Yeatts gives injured workers one more potential source of compensation, and prime contractors one more layer of legal complexity to worry about.

Or, as Portland construction attorney Jeremy Vermilyea said, 鈥淚t鈥檚 another two pages of 8-point font in your contracts that you鈥檙e going to have to decipher when you鈥檙e negotiating your job.鈥�

Polygon and Wood Mechanix

Vermilyea 鈥� co-chairman of Schwabe, Williamson & Wyatt鈥檚 construction division 鈥� says Yeatts underscores an existing tension between the state鈥檚 Employer Liability Law (ELL) and Oregon鈥檚 hard-fought, nationally-recognized workers鈥� compensation reforms of the 1990s.

The case is a rare example of a general contractor being held liable for an injury to a subcontractor鈥檚 employee that it didn鈥檛 cause. In this case, a lower court found the injury to have been caused by the sub.

The plaintiff in Yeatts, Arthur Yeatts, was an employee of Wood Mechanix, a subcontractor of Polygon, a large, Seattle-based homebuilder. He was injured in a 19-foot fall while framing an exterior wall on a residential townhome project. He filed a claim against Polygon under the ELL, asserting it was his 鈥渋ndirect employer.鈥�

Ultimately the Supreme Court found there was sufficient evidence to preclude a summary judgment in favor of Polygon, and reversed decisions of the trial court and Court of Appeals relating to who had 鈥渁ctual control鈥� of the worksite and safety guidelines on the project.

The justices in Yeatts wanted to give injured workers another possible source of relief, said Gary Christensen, head of the construction group at Miller, Nash, Graham & Dunn. But from his end, what they鈥檝e done is change the landscape for general contractors and subcontractors in terms of safety requirements.

鈥淚鈥檓 trying to figure out how to draft around it, and I don鈥檛 know that I know the answer,鈥� he said. 鈥淚t鈥檚 making the contracting process more complicated and basically, generals are finding out 鈥� and owners too 鈥� that they have a greater risk than they thought they did 鈥� But are those risks controllable? Are they putting them on the person that really actually has control of the situation, or just theoretically has control?鈥�

The court鈥檚 decision put prime contractors drafting safety programs in a damned-if-you-do-and-damned-if-you-don鈥檛 situation, Vermilyea said. They already had a generalized duty to ensure subs had in place adequate safety measures, and as a result many contracts simply required a sub to follow the prime contractor鈥檚 safety program. But in the Yeatts case, the employee was able to bring a claim against the contractor even though it was shown Polygon had no factual relationship to Yeatts鈥� injury. All would be well, Vermilyea says, if general contractors were able to turn around and seek relief from the sub that caused the injury, but that鈥檚 not the case under current law. So attorneys are trying to add contract language that indemnifies generals.

鈥淭his is how you get contracts that are 40 pages long,鈥� he said.

What’s a contractor to do?

It takes a while for cases like this to have an impact. What it鈥檚 done so far is force law practitioners to rethink how risk is allocated among construction contract parties in the context of safety. Ironing out issues raised by Yeatts likely requires legislative fixes, like limiting the circumstances in which an injured employee can look to a third party to be compensated for damages, and tweaking the immunity provision of the workers鈥� compensation statute.

Christensen thinks this is unlikely to happen next session, though it could in the next few years. Attempting to tweak Oregon鈥檚 workers鈥� compensation law would take considerable political courage. Passed in 1990, those 鈥淢ahonia Hall鈥� reforms involved hard-fought compromises between representatives of labor and business. Trying to alter the law could stir up both sides, even though history shows the two laws haven鈥檛 worked well together.

Vermilyea also isn鈥檛 optimistic about a change, but he says it鈥檚 incumbent on the Legislature to act.

鈥淚t鈥檚 not good public policy for a party who has zero factual responsibility to have to pay the price for someone else鈥檚 negligence,鈥� he said.

Stephanie Holmberg, an associate with Schwabe, Williamson & Wyatt, thinks the court鈥檚 opinion contains a hint about the type of clause that could place more responsibility for safety measures on the sub. Only time will tell if that鈥檚 correct though.

鈥淚t鈥檚 just interesting to me that they point that out,鈥� she said. 鈥淚t seems to at least point to some avenue for there being a distinguishable factual scenario that may result in a different outcome.鈥�

And all this is going to make insurance that much more important, Christensen said.

鈥淚 mean a contract might not even help you, but now you have to be very careful about what you鈥檙e saying about safety, safety conditions, and what exactly you鈥檙e agreeing to do,鈥� he said.

For now, the construction sections at some of Portland鈥檚 largest firms are considering how to insure against this and make sure liability falls on the right party. Ultimately, if an injured worker can bypass his employer and sue a prime contractor for a situation it didn鈥檛 have any ability or authority to prevent, how does one protect against that?

鈥淲e鈥檒l figure something out,鈥� Christensen said. 鈥淏ecause we have to.鈥�