Pennaco Energy, Inc. v. KD Co., LLCAnnotate this Case
Pennaco Energy, Inc. obtained oil and gas leases and made contracts with the surface landowners, who were predecessors of Appellees. The contracts granted Pennaco use of the landowners’ land during exploration and production under the mineral leases. After several years, Pennaco assigned its interest in its coal bed methane operation to CEP-M purchase, LLC, which re-assigned those interests to High Plains Gas, Inc. After the assignment, neither Pennaco nor the assignees made any required payments under the assignments, nor did they reclaim any of the land, as required under the agreements. Appellees sued Pennaco for breach of the agreements. The district court granted summary judgment in favor of Appellees. Pennaco appealed, arguing that the district court erred in concluding that Pennaco remained liable under the agreements even after the assignment. The Supreme Court affirmed, holding that because the agreements contained indications that Pennaco’s contractual obligations continued even after assignment and because there was no express clause that terminated Pennaco’s obligations upon assigning the agreements to a third party, Pennaco remained liable to Appellees to perform the covenants in the event its assignee defaulted.