Extreme Construction Co. v. RCG Glenwood, LLC, 2012 COA 220

Background

Extreme Construction Co. sued RCG Glenwood, LLC over interpretation of a cost/plus payment clause in a construction contract.
The contract set a guaranteed maximum price; paragraph 4 included an ambiguous 'cost' provision with an illustrative list including overhead and profit.
Extreme billed at hourly rates ($68.50 for superintendence, $38.50 for labor) which RCG paid without objection, despite disputes about costs.
Spradlin offered a personal guarantee via a letter proposing a promissory note and payments; Extreme did not accept a lien forbearance or a definite guarantee.
The trial court held paragraph 4 ambiguous, accepted extrinsic evidence supporting RCG/Spradlin’s interpretation, and rejected estoppel; Extreme was awarded $18,523.65 and RCG/ Spradlin won other issues.
On appeal, the court vacated Extreme’s damages on the contract claim, held RCG estopped from contesting Extreme’s interpretation, and remanded for recalculation of damages; other rulings affirmed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether equitable estoppel applies to contract interpretation	Extreme contends estoppel precludes RCG from contesting its interpretation.	RCG argues estoppel does not apply in contract interpretation.	Estoppel applies to ambiguous contract interpretation.
Whether paragraph 4 is ambiguous	Extreme argues ambiguity allowing extrinsic evidence.	RCG asserts clarity of cost/plus terms.	Paragraph 4 is ambiguous.
Whether RCG is equitably estopped from contesting Extreme's interpretation	RCG’s delay and silence induced Extreme to perform under the disputed interpretation.	RCG did not act in bad faith warranting estoppel.	RCG is equitably estopped; damages on Extreme’s contract claim vacated and remanded for recalculation.
Whether Extreme accepted Spradlin's personal guarantee offer	Extreme accepted the guarantee through conduct or earlier offers.	No acceptance evidence; Spradlin's letter was not an acceptance.	Extreme did not accept Spradlin's offer of a personal guarantee.
Who is prevailing party and related fee/interest issues	Extreme prevailed on the contract claim; fee-shifting applies.	RCG should prevail; settlement offer issues and interest abatement apply.	Extreme is prevailing party; remand for recalculation of damages; other fee/interest issues deferred.

Key Cases Cited

In re Schofield's Estate, 101 Colo. 443, 73 P.2d 1381 (1937) (estoppel arising from contract performance)
City of Colorado Springs v. Kitty Hawk Dev. Co., 154 Colo. 535, 392 P.2d 467 (1964) (estoppel to challenge contract provisions after benefits received)
Kiewit W. Co. v. City & Cnty. of Denver, 902 P.2d 421 (Colo.App.1994) (estoppel where parties benefit from contract terms)
Hartford Live Stock Ins. Co. v. Phillips, 150 Colo. 349, 372 P.2d 740 (1962) (limitations of estoppel in insurance contexts)
Empire Cas. Co. v. St. Paul Fire & Marine Ins. Co., 764 P.2d 1191 (Colo. 1988) (estoppel/preclusion of forfeiture in insurance context)
Management Specialists, Inc. v. Northfield Insurance Co., 117 P.3d 32 (Colo.App.2004) (if insurer's conduct prejudices insured, estoppel can apply)
State Farm Mut. Auto. Ins. Co. v. Stein, 940 P.2d 384 (Colo.1997) (binding terms of policy; estoppel considerations)
Five Oaks Homeowners Ass'n v. Efirds Pest Control Co., 331 S.E.2d 296 (1985) (contract interpretation is binding where unambiguous; estoppel limits rights)
Marquardt v. Perry, 200 P.3d 1126 (Colo.App.2008) (acceptance requires objective manifestation)
Taylor v. Hake, 92 Colo. 330, 20 P.2d 546 (1933) (guarantee acceptance can occur through knowledge; silence not acceptance)
Union Interchange, Inc. v. Sierota, 355 P.2d 1089 (Colo.1959) (prescribed mode of acceptance controls contract formation)
Ervin v. Amoco Oil Co., 885 P.2d 246 (Colo.App.1994) (estoppel in absence of economic duress)
Dennis I. Spencer Contractor, Inc. v. City of Aurora, 884 P.2d 326 (Colo.1994) (prevailing party under contract fee-shifting)