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

Brief Fact Summary.

Ranier Construction Co., Inc. (Ranier) sued American Continental Life Insurance Co. (American) for breach of contract when American refused to make payment under the contract terms.

Synopsis of Rule of Law.

A contract’s procedural requirements are not waived if some of the other procedural requirements are not followed.

Facts.

American Continental Life Insurance Co. (American) hired Ranier Construction Co., Inc. (Ranier) to build a building. American paid Ranier for 90 percent of the work completed on a monthly basis after receiving a certificate of payment from the architect. At the end of the project, Ranier received a punch list from the architect for tasks that needed to be completed prior to receiving a final payment certificate. American refused to accept the architect’s final punch list and gave Ranier its own final tasks. Because Ranier never got a final certificate of payment from the architect, American refused to pay under the contract. Ranier sued for breach of contract and American countersued for construction defects.

Issue.

Whether a contract’s procedural requirements are waived if some of the other procedural requirements are not strictly followed?

Held.

No. The judgment for Ranier is reversed. American was not obliged to make the final payment because Ranier did not receive the certificate of payment from the architect.

Dissent.

(Struckmeyer, CJ.) The builder is entitled to payment minus any damages for defects because the owner occupied the building and refused to accept the architect’s punch list.

Discussion.

A contract’s procedural requirements are not waived if some of the other procedural requirements are not followed.