by Quenda Behler
Some time ago in Colorado, a property owner hired a contractor
to construct a building. Not long after it was completed, a
heavy snowfall caused the roof to collapse. The property owner
did what you would expect him to do: He sued the contractor.
But he also sued every sub who had ever set foot on the job
Is that legal? Can a property owner sue a subcontractor?
"Hey," I hear all you outraged subs saying, "my contract is
with the prime contractor, not the property owner —
which is why if I'm not paid, I can't sue the property owner.
As it is, I have to jump through hoops to file a mechanic's
lien. So if I can't sue the property owner, surely he can't sue
Well, most of the time, he can't — but there are
circumstances in which a property owner may be able to
successfully sue a subcontractor. A property owner's ability to
sue a sub with whom he doesn't have a contract hinges on two
legal theories, one that deals with "third-party beneficiaries"
and another that addresses negligence lawsuits based only on
To explain, let's look at another lawsuit, this one in
Pennsylvania. The court allowed a property owner to sue a sub
because the property owner was a "third-party beneficiary" of
the contract between the prime contractor and the property
owner. The reason the property owner was a third-party
beneficiary, the court said, was threefold: He had directed the
contractor to use that particular sub; there had been a prior
direct relationship between the property owner and that sub;
and the sub had helped plan the project.
In other words, the court decided that the three parties were
so closely and so directly involved with each other, the usual
subcontractor-prime contractor-property owner relationship
didn't exist. In the court's opinion, the relationship that did
exist among these these three parties was different enough from
the norm that the usual rules did not apply.
Negligence Without Injury
Could these waters get any muddier? Oh, yes. In yet another
lawsuit in Colorado, a property owner claimed he didn't need a
contract to sue a sub who performed work on his building
because that subcontractor had a duty to perform his work
carefully, and since he hadn't, the property owner could sue
that sub for negligence even though no one had been
Allowing a negligence lawsuit in which there are only economic
damages is startling for a couple of reasons. First, for most
of the past thousand years, negligence lawsuits had to start
with a personal injury: Someone was stupid, and because of that
stupidity someone else was hurt. That, in a nutshell, is
negligence law — no physical injury, no foul. This
particular suit upset that old equation.
Second, a negligence lawsuit allows the plaintiff to ask for,
and possibly win, money for things that a plaintiff could
never, ever win in a lawsuit based on a breach of contract. For
example, suppose a beer delivery truck ran a red light and hit
your car. You don't have to have a contract with the beer
company to sue it, because it has a duty to see to it that its
beer trucks are driven carefully and don't hurt anybody. The
company failed to meet that duty, and as a result you were
injured and your car was damaged. Therefore, you can sue the
company for negligence. You can demand — and you could
win — money for all sorts of things, like your pain
and suffering, or even loss of consortium. Try to get that kind
of award the next time you sue someone for not paying the money
he promised you in the building contract.
To put it another way, by suing the sub for negligence rather
than for breach of contract, the plaintiff dramatically
increased the amount he could conceivably collect.
The truth is that the old rules have been eroding —
slowly but surely — for quite a while. In some cases,
the courts have said that all of the parties on a construction
project, including the subcontractors, have a duty to do their
work carefully, and those courts didn't seem to care much about
the lack of a physical injury. For them, it was enough that the
subs were careless. And in several of those lawsuits, some
plaintiffs who suffered only economic loss were allowed to sue
subs for negligence.
Why Subs Get Dragged In
So if you're a sub, how worried should you be? What are your
chances of getting sued by a property owner?
As is so often the case, the answer depends on the particular
circumstances. If I'm representing a property owner, I will not
usually bother to add the name of, say, the drywall sub as a
defendant in my lawsuit against the prime contractor —
unless, that is, the prime contractor doesn't look too good for
the money. Maybe the prime contractor doesn't have enough
insurance, and maybe the drywall sub does.
In that case, I would add everybody on the job site to the
lawsuit — including the drywall guy — because
I'm looking for deep pockets, and the drywall sub's insurance
company is rich.
Will I succeed in the suit? I might. Legal outcomes turn on
the specifics of each case and on the intricacies of local law,
so it's impossible to predict.
My advice to you is to always be sure you are not the only one
on the job site with insurance. When your contractor asks you
for that insurance certificate, ask to see his. And if you do
find yourself the defendant in one of these lawsuits, notify
your insurance company right away. Insurance companies keep
attack-trained lawyers on staff whose whole job is to get out
there and defend you.Quenda Behler Story has practiced and
taught law for more than 25 years.