Pronschinske Trust v. Kaw Valley Companies, Inc.

Pronschinske entered into a Mining Leasing Agreement, giving Kaw the right to mine the sand, stone and rock products on the Pronschinske land but providing that it was not obligated to extract any materials or sell any product. Kaw decided not to mine the land and terminated the lease through its provisions. Pronschinske filed suit alleging that Kaw owed $400,000 as payment of a Commencement Royalty credit and a Minimum Production Royalty. The district court granted Kaw summary judgment. The Seventh Circuit affirmed as to production royalties. Pronschinske argued that paragraph 6 reflected a stand‐alone requirement of a minimum annual payment of $75,000 beginning with the first anniversary of the Effective Date, regardless of what actions are taking place on the property, reading “[n]otwithstanding anything to the contrary contained herein” as meaning that its location in paragraph 6 is irrelevant and that it represents a minimum annual payment unconnected to Production Royalties generally. Kaw argued that the “notwithstanding” language references the paragraph in which it is found, and means that notwithstanding the calculation of Production Royalties in this paragraph, a minimum payment of $75,000 is owed once the Production Royalty provision is triggered. The court characterized the contract as unambiguous and concluded that the provision’s placement and the term “Production Royalty,” indicate it is inapplicable before the mining commences. View "Pronschinske Trust v. Kaw Valley Companies, Inc." on Justia Law