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Whitham Farms, LLC v. City of Longmont
Colorado Court of Appeals
97 P.3d 135 (Colo. Ct. App. 2003)
Whitham Farms, LLC (Whitham) (plaintiff) and the City of Longmont (Longmont) (defendant) each purchased surface and mineral rights on a section of a tract of land that was subject to an oil and gas lease held by North American Resources Company (NARCO) (defendant). NARCO’s predecessor in interest had drilled one well on the tract of land. Whitham told NARCO to release any parts of the tract that were not necessary for that well. NARCO refused. Whitham brought suit against NARCO for a declaratory judgment that NARCO had breached the implied covenant to develop the leasehold. Longmont joined the suit against NARCO. All parties agreed that NARCO drilling additional wells on the tract would not be economically viable. The parties disagreed as to whether this fact meant that NARCO had breached the implied covenant to further develop, which would result in the termination of the lease. The trial court ruled in favor of NARCO, finding that Whitham could not demonstrate that NARCO had breached the implied covenant to further develop without a showing that the drilling of additional wells on the tract would be financially viable. Whitham and Longmont appealed.
Rule of Law
Holding and Reasoning (Carparelli, J.)
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