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Fostveit v. Poplin, 301 P.3d 915 (Or. Ct. App. 2013)

James and Debra Poplin were the owners of a self-storage facility in Lincoln County, Oregon. Poplin hired Fostveit, a general contractor, to construct thirty-five additional storage units at the facility. The parties executed a contract that required all work be performed in a workmanship-like manner in compliance with all codes and laws. In order to save construction costs, the Poplins agreed to be responsible for the installation of the metal roofing, siding, insulation, and wall partitions and for paving the area surrounding the buildings.
A dispute arose between Fostveit and the Poplins regarding money due and owing shortly after Lincoln County issued a certificate of occupancy. The Poplins refused to pay Fostveit’s final invoice of $76,097.20. The Poplins also discovered there was water intrusion into one of the buildings which compromised some of the newly constructed storage units. The Poplins’ attorney sent Fostveit a letter instructing him to stop work on the site. Fostveit recorded a construction lien for the unpaid balance due under the contract and subsequently filed an action against the Poplins for foreclosure of the lien. The Poplins claimed Fostveit failed to perform his work in a “workmanship like” manner based upon the water intrusion and two admitted violations of the applicable building code. However, the trial court concluded that these deficiencies were not the cause of the water intrusion which was, in fact, caused by the Poplins’ deficient installation of the roof and siding and alteration of the grade of the driveway. The Poplins appealed the court’s order permitting foreclosure of the lien.
The Oregon Court of Appeals agreed with the trial court. Oregon law provided that “[a] construction lien may not be had by one who has failed to substantially perform his part of a contract.” “Substantial performance” occurs even if the contract is not completely performed if the omissions and deviations from the performance are inadvertent, do not impair the structure as a whole, can be easily remedied, and may be paid for by deductions from the contract price. Fostveit substantially performed the portion of the work assigned to him pursuant to the parties’ contract despite the violations of the building code. These violations did not contribute to the water leakage which was in fact the result of the Poplins’ own deficient work. The court credited the Poplins with $6160 to cover the cost of repairs for the building code violations but otherwise permitted Fostveit to foreclose upon his construction lien.