Publication

Recently, the Oregon Court of Appeals, in an en banc decision, held that the Construction Contractors Board (“CCB”) exceeded its authority when it assessed a $5,000 civil penalty against a licensee based on its unfitness for licensure on criminal conviction grounds. In Allied Structural v. Construction Contractors Board, the majority held that a criminal conviction alone is not sufficient grounds upon which to assess a civil penalty against a licensee.

The underlying case arose when Allied Structural and its principal owner applied to the CCB for a construction contractor’s license. In 2006, while holding a previous license, Allied’s owner was convicted of various sex-related crimes, including first-degree sexual abuse, attempted sexual abuse, and public indecency. Allied’s owner served a prison sentence for these crimes and was released subject to terms of parole. In 2014, Allied’s owner applied for a new construction contractor license. Under CCB rules, a license applicant must disclose criminal convictions if the convictions are less than five years old. In applying for the license for Allied in 2014, more than 5 years after the convictions, Allied’s owner did not disclose the convictions, and the CCB issued a license to Allied. After the license was issued, Allied’s owner violated the conditions of his parole, which prompted his parole officer to inform CCB. The CCB investigated the matter, which investigation culminated in the revocation of Allied’s contractor’s license and a $5,000 civil penalty.

The Allied court reasoned that the applicable statutory scheme and the relevant CCB rules relate to whether a person is presently fit to be a construction contractor, and not whether the prior conduct of the applicant was in violation of a relevant statute or rule.

Oregon statute authorizes the CCB to “revoke, suspend or refuse to issue or reissue a license and the board may assess a civil penalty” under some circumstances, including sexual abuse convictions.¹ In the Allied opinion, the majority of the court held that the CCB appropriately revoked Allied’s license because the principal did not report his conviction during the period that his prior license was in effect and also because he violated the conditions of his parole. The majority opinion further held, however, that the CCB could not assess a civil penalty when the licensee had not also violated a statute or rule. The majority and dissent opinions disagreed as to what constituted a “violation.” The dissent stated that “[t]he text of ORS 701.098 could not be more plain that each of the myriad of circumstances and misconduct described in ORS 701.098(1)(a) through (n) can constitute the basis for the assessment of a penalty.” The majority opinion disagreed, holding that the CCB did not have the authority to impose a civil penalty when a licensee was determined to be unfit to hold a license due to criminal convictions. In reaching this opinion, the court analyzed the text and context of the statute, reasoning that the operative part of the statute allows the imposition of a civil penalty only if a licensee “violated” a provision of ORS chapter 701 or a CCB rule.² The majority opined that a person does not “violate” any provision of ORS chapter 701 or a CCB rule simply because he or she was convicted of a crime. A fitness inquiry and a penalty inquiry are two separate inquiries, to which different rules apply. Therefore, the court held that the CCB exceeded its authority by assessing a civil penalty against Allied absent statutory authorization.