## Facts

- An owner (American Continental Life Insurance Company) hired a general contractor (Ranier Construction Co., Inc.) to build an office building for about \$517,286.
- The contract required monthly progress payments of 90% of work completed only upon the project architect’s certificate for payment.
- The contract also required, as prerequisites to final payment, substantial completion and the contractor’s submission of the architect’s final certificate for payment.
- During construction, the owner paid about \$457,247.
- Near project end, the architect issued a certificate of substantial completion and a punch list of items to finish or correct before a final certificate would issue.
- The owner rejected the architect’s punch list and issued its own list; disputes remained unresolved and the architect never issued a final certificate for payment.
- The owner refused to pay the remaining balance (including retainage), citing defective work, delay, and the missing final certificate, but occupied and used the building.
- The contractor sued for breach of contract seeking retained funds and additional damages; the owner counterclaimed for defective work and delay under contract and negligence theories.
- The owner moved for a directed verdict, arguing the contractor failed to satisfy the final-certificate condition precedent; the trial court denied the motions.
- The jury awarded \$130,000 to the contractor and \$10,000 to the owner on the counterclaim; the trial court denied attorney’s fees to both, finding no prevailing party.

## Issues

1. Whether the architect’s final certificate for payment was a condition precedent to the contractor’s right to final payment, and whether the owner waived (or was estopped from asserting) that condition by conduct including occupancy and relaxed compliance with other contract procedures.
2. Whether the trial court erred in denying attorney’s fees on the ground that neither party was the prevailing party.

## Decision

- The court held the architect’s final certificate for payment was an express, enforceable condition precedent to the owner’s duty to make final payment.
- The court found no waiver or estoppel; lax enforcement of other procedural provisions (e.g., change orders or time extensions) did not show intentional relinquishment of the distinct final-certificate requirement.
- Occupancy and use of the building did not, by itself, excuse or waive the final-certificate condition.
- Because the contractor never obtained the final certificate and did not prove the condition was excused, it could not recover final payment under the contract; the trial court should have granted a directed verdict for the owner on that claim.
- The judgment for the contractor was reversed, and the attorney’s-fees disposition was also reversed and remanded for reconsideration in light of the appellate outcome.

## Legal Principles

- An express condition precedent to payment in a construction contract, such as an architect’s final certificate for payment, is enforceable according to its terms.
- Waiver of a contract right requires clear, intentional relinquishment; nonenforcement of other, separate procedural provisions does not alone waive a specific condition precedent.
- Owner occupancy or use of the completed work does not necessarily waive an express contractual condition governing entitlement to final payment.
- When the appellate decision changes the outcome on the merits, a trial court’s prevailing-party determination for attorney’s fees must be reconsidered.

## Conclusion

The court enforced the contract’s final-payment certification condition, reversed the contractor’s judgment because the architect never issued a final certificate for payment, and remanded for further proceedings including a new determination of attorney’s fees consistent with the revised merits outcome.


Am. Cont’l Life Ins. Co. v. Ranier Constr. Co., 125 Ariz. 53, 607 P.2d 372 (Ariz. 1980)