Renaissance Alaska, LLC, v. Rutter & Wilbanks Corporation

Renaissance Resources Alaska, LLC (Renaissance) partnered with Rutter & Wilbanks Corporation (Rutter) to develop an oil field. Renaissance and Rutter acquired a lease to the entire working interest and the majority of the net revenue interest of the field. They then formed a limited liability company, Renaissance Umiat, LLC (Umiat), to which they contributed most of the lease rights. But when they formed Umiat, Renaissance and Rutter did not contribute all of their acquired lease rights to the new company: they retained a 3.75% overriding royalty interest (ORRI). Rutter was eventually unable to meet the capital contributions required by Umiat's operating agreement and forfeited its interest under the terms of the agreement. Rutter filed suit against Renaissance seeking a declaratory judgment that it was entitled to half of the retained 3.75% ORRI. Renaissance argued why it deserved the entire 3.75%: (1) Renaissance held legal title to the 3.75% ORRI; and (2) Rutter could only obtain title through an equitable remedy to which Rutter is not entitled. Upon review, the Supreme Court affirmed the superior court’s conclusion that Renaissance's characterization was inaccurate and that Rutter was entitled to title to half of the 3.75% ORRI. Furthermore, Renaissance argued that the superior court should have found an implied term that Rutter would forfeit its share of the 3.75% ORRI if Rutter failed to contribute its share of expenses. The Supreme Court affirmed the superior court’s determination that there was not such an implied term in the agreement. View "Renaissance Alaska, LLC, v. Rutter & Wilbanks Corporation" on Justia Law