Del Mar Beach Club Owners Association, Inc. v. Imperial Contracting Company, Inc.

The Del Mar Beach Club Owners Association (the association) (plaintiff) was created to acquire and hold title to property included in the Del Mar Beach Club, a planned-development community. As such, the association was the managing entity and owner of the land and buildings in the development, which consisted of 192 units, a clubhouse, a swimming pool, a parking structure, and tennis courts. The general contractor for the development was Imperial Contracting Company (the general contractor) (defendant), which built the development in three phases. After the first two phases of construction were completed and erosion problems were discovered and not resolved, the association sued the general contractor for negligence, breach of contract, and declaratory judgment. Amended and additional claims regarding the third phase were also filed, and these alleged strict liability against the architects and engineers who worked on the development. The trial court granted demurrers on the ground that the association lacked standing to sue. The association appealed. The development’s declaration authorized the association to prosecute or defend, under the name of the association, any action regarding the common areas of the development or in which all the owners had an interest or right to relief arising out of the same transaction or series of transactions. State procedure rules allowed one or more to sue for the benefit of all if the question was one of a common or general interest or the parties were so numerous that it was impracticable to join them all. The state rule was based on the doctrine of virtual representation, which considered necessity and convenience paramount to avoid a failure of justice.