April 5, 2004

SUB-SUB WINS NEGLIGENCE CLAIM AGAINST PRIME, IS AWARDED DAMAGES BASED ON TOTAL COST METHOD; BUT NO PASS THROUGH CLAIM PERMITTED

Court of Appeal of the State of California—Second Appellate District—Division Five

A sub-subcontractor sued a prime contractor for breach of contract and negligence based on its own claims against the prime, as well as the claims the sub had assigned to the sub-sub (for it to pursue against the prime). The trial court awarded over $400,000 in damages, $300,000 in attorneys fees, $45,000 in prejudgment interest, and $85,000 in costs. The appellate court found that the $400,000 award must have been based in negligence (not breach of contract) because there was no privity between the sub-sub and the prime, and there was no pass-through claim. The Court also allowed the negligence award to be calculated using the total cost method.

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