Standing Rules in Defect Cases Clarified by Division 2
This case arose from poor workmanship by a flooring subcontractor. When the GC withheld payment, the sub sued for the contract balance. The GC counterclaimed for costs incurred due to defects and rework.
At trial, the sub moved to dismiss the GC's counterclaim on the theory that only the project owner had standing to sue because only the project owner had sustained damage. The trial court granted that motion.
On appeal by the GC, Division 2 reversed and clarified that:
1. The sub's poor work exposed the GC to liability to the owner, and thus the GC had standing to sue for compensable damages.
2. The owner need not be joined as a party in the dispute because the owner ordinarily has no right of action against a sub and the GC can adequately protect whatever incidental interest the owner has in making sure that sufficient funds are recovered by the GC to make whole the problem.
Copy of opinion (Floor Express v. Daly) also available here Download file