Federal District Court Finds Area of Mutual Interest Clause Not a Covenant Running with the Land

摘要

In Mountain West Mines, Inc. v. Cleveland-Cliffs Iron Co., 376 F. Supp. 2d 1298 (D. Wyo, 2005) the U.S. District Court for Wyoming found that an area of mutual interest (AMI) clause did not bind successors to the agreement containing the clause. In the 1960s Mountain West acquired various uranium properties in the Powder River Basin. In 1967, Mountain West and defendant, Cleveland-Cliffs Iron Company (Cliffs), entered into an option agreement with respect to certain properties, granting Cliffs the option to acquire from Mountain West various interests in exchange for payments to Mountain West, including percentage royalty payments on uranium production. The option agreement contained an AMI clause that obligated Cliffs to pay production royalty on uranium from any properties acquired by Cliffs within the AMI. The AMI clause provided: With respect to "other lands" and any and all lands acquired by "Mountain West" in the "Powder River Basin" ... by lease or otherwise after the date of this Option and Agreement, said lands will be assigned or deeded at "Cliffs' " request. . . subject only to a two and one-half percent (2-1/2 percent) overriding royalty or reserved royalty to "Mountain West" ... It is further understood and agreed that "Mountain West" will be entitled to and "Cliffs" agree [sic] to convey a two and one-half percent (2-1/2 percent) royalty interest to "Mountain West" in any lands it may hereafter acquire in the "Powder River Basin." Id. at 1300. In 1969 Cliffs exercised its option and obtained an interest in four properties. Through various assignments these properties were eventually owned by Power Resources, Inc. (Power) and Pathfinder Mines Corporation (Pathfinder).