American Continental Life Insurance Co. v. Ranier Construction Co., Inc.

American Continental Life Insurance Company (American) (defendant) hired Ranier Construction Company, Inc. (Ranier) (plaintiff) to build a $500,000 building for American. Under the contract, American paid Ranier for 90 percent of the work done every month after receiving a certificate for payment from the architect. The contract stated that American would make the final payment after: (1) the work had been substantially completed and (2) Ranier gave American a final certificate for payment from the architect. The parties followed the certificate-for-payment procedure throughout the project, but did not always strictly follow the contract’s procedures for change orders and time extensions. At the end of the project, Ranier got a certificate of substantial completion and a standard final punch list from the architect. The punch list included tasks that needed to be completed before the architect would issue the final payment certificate. American refused to accept the architect’s punch list. Instead, American gave Ranier its own list of final tasks. Ranier never got a final payment certificate from the architect to give to American. American refused to pay the final $50,000 under the contract because: (1) Ranier’s work was not up to American’s standards and (2) Ranier did not get the architect’s final certificate for payment. American did, however, begin using the building. Ranier sued American for breach of contract. American responded by seeking damages from Ranier for construction defects and delays. The jury awarded $130,000 in damages to Ranier and $10,000 in damages to American. American appealed, arguing that the architect’s certificate for payment was a condition precedent to Ranier being entitled to the final contract payment.