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Conley v. Pitney Bowles, 34 F.3d 714 (8th Cir. 1994).

Exception when one promise is dependent on prior performance of the other--

(1) Facts. Conley (P) was injured and received disability benefits from Pitney Bowles (D), his employer. Subsequently, D notified P that his disability benefits would be discontinued. P sued. D removed the case to federal court because it involved benefits governed by the federal ERISA statute. D moved for summary judgment on the ground that P had not exhausted his administrative remedies. P re­sponded that D's notification letter did not contain an explanation of the applicable appeals procedures. The district court granted sum­mary judgment for D. P appeals.

(2) Issue. When a benefits contract requires a claimant to exhaust ad­ministrative remedies, may the employer avoid liability to the claim­ant even though the employer did not fully comply with the notice requirements in the contract?

(3) Held. No. Judgment reversed.

(a) ERISA does not require exhaustion of administrative remedies, but the provisions of the plan do. However, the plan also re­quires D to provide P with explicit instructions of the appeal procedures. This D failed to do.

(b) In bilateral contracts for an agreed exchange of performances, when one party's performance is to be rendered prior to that

of the other, it is a constructive condition precedent to the latter's duty. This performance becomes a condition precedent to the other's duty.

(c) In this case, D was required to inform P of the appeal procedure when denying him benefits. This requirement necessarily preceded P's duty to exhaust administrative remedies. The requirement to explain appeals procedures furthers the same goals that exhaustion of remedies does. P had a contractual right to information on the appeals procedure. D's failure to provide such information excuses P's subsequent failure to exhaust remedies.

(4) Dissent. P consulted an attorney and provided him with a copy of the benefits plan, which clearly set forth the claim appeal procedure. This opinion favors form over substance.

(5) Comment. In Bell v. Elder, 782 P.2d 545 (Utah Ct. App. 1989), the seller of real estate was required to furnish culinary water to the property being sold. The buyers sought rescission when the sellers failed to first supply the water, despite the sellers' promise to provide the water when requested. The contract did not specify a time for the sellers to provide the water. The court held that neither party could claim a breach by the other until the party claiming the breach tendered performance of its concurrent obligation. This rule reflected public policy and common sense that in­stallation of culinary water prior to the buyers completing the purchase would be a waste.

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