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The Oregon Legislature intended the mechanic鈥檚 lien laws to be relatively straightforward. On the issue of when to record a lien, ORS 87.035(1) requires a lien claimant under ORS 87.010(1) or (2) to perfect the lien by recording it 鈥渘ot later than 75 days after the person has ceased to provide labor, rent equipment, or furnish materials or 75 days after completion of construction, whichever is earlier.鈥�

This seems simple enough, right? An unpaid contractor should make sure it records its lien 75 days after it has completed its significant (nontrivial or non-trifling) contract work and removed its equipment. And an owner should be able to rest assured of no subcontractor liens 75 days after each trade completes its work, and ultimately be worry-free of liens 75 days after project completion.

Unfortunately, the law of unintended consequences often renders the simple and straightforward much more complex. Take the recent case of Bethlehem Construction, Inc. v. PGE (2019). A subcontractor contracted with a general contractor (GC) to produce and deliver precast concrete panels to be used as part of a new power plant generation building for the project owner. For the contract price of $122,851, the subcontractor produced and delivered the panels, completed the work in April 2015 and submitted its final billing to the GC at that time. Subsequently, the GC requested additional work from the subcontractor in December 2015. The additional work consisted of an engineering opinion regarding load tolerances. The parties memorialized the add-on in a change order to the original subcontract for $578.13. The subcontractor provided the additional work and billed for the same. Days later, the owner terminated its prime contract with the GC. The GC failed to pay the subcontractor both the final payment due under the original contract and the amount due under the change order.

The subcontractor recorded its mechanic鈥檚 lien in January 2016, within 75 days of providing the work in the change order but well past 75 days after providing the work under the original contract. The owner contested the validity of the lien and the subcontractor sued. On cross-motions for summary judgment, the trial court sided with the subcontractor and concluded that the subcontractor did not cease to provide labor or furnish materials within the meaning of ORS 87.035(1) until it performed the additional work requested by the GC in December 2015, pursuant to the first change order. The trial court thus concluded that the subcontractor鈥檚 January 2016 lien was timely. The owner appealed.

On appeal, the owner argued: 1, the subcontractor鈥檚 December engineering opinion was under a separate contract and thus not part of the original contract completed in April such that the subcontractor could not lien for any of that original contract work, and 2, that subcontractor鈥檚 $578.13 December work was trivial or trifling when compared to the $122,851 original contract and thus inadequate to keep alive any lien claim for the work completed under the original contract (on this second argument the owner relied on prior Oregon case law holding that 鈥渁 contractor does not extend the time to file a lien by returning to a job to perform some trifling work or a few odds and ends after apparently completing the job and removing its equipment鈥�).

The court of appeals dispensed with the owner鈥檚 first argument in finding that the GC and the subcontractor 鈥渇ully expressed their intentions through the change order.鈥� The change order referred to the original contract and contract number and further specified the scope of change to that original contract. The court found no evidence in the record that any party, owner included, intended or considered the December work not to be part of the initial contract.

On the trivial or trifling question, the court of appeals reasserted prior decisions that explained 鈥渃ost alone does not determine if work is trifling.鈥� Instead, the law will look to whether the later work is 鈥渄irectly related to the original work and in furtherance of (the subcontractor鈥檚) contractual obligation to provide precast concrete panels that would perform a particular structural function 鈥︹�� The court found 鈥渢he December work was significant because, absent the engineering opinion, (the GC) could not rely on the panels to perform that structural function.鈥� The court thus affirmed the trial court鈥檚 decision, upholding the validity of the subcontractor鈥檚 mechanic鈥檚 lien.

What lessons can be learned? Contractors should be aware of their lien rights and calendar the 75-day expiration of the same following their completion of work on projects 鈥� don鈥檛 count on later change order work reviving lien rights as happened for the subcontractor here. Owners should be aware of the various trade and prime contractor lien rights on their projects and ensure that trade contractors are being paid timely by requiring lien and claim waivers and releases with payment applications (conditional for current pay applications and unconditional for past pay applications).

And beware of later additional work constituting a change to an existing contract that extends the lien filing period. To mitigate this risk, use a new short form contract or purchase order (as opposed to change order on the existing contract) where possible to clarify that the new work is part of a new, separate contract.

C. Andrew Gibson is an attorney in the construction and design practice group of Stoel Rives LLP. Contact him at 503-294-9878 or [email protected].