Blocker Exploration Company v. Frontier Exploration, Inc.

740 P.2d 983 (1987)

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Nature of the Case

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Facts

In January 1981, Lewis entered into an agreement with Great Lakes Niagaran [GLN] whereby GLN assigned its rights in certain Michigan oil and gas leases to Lewis. Lewis was the operator for the exploration and development of the leases. Lewis and GLN agreed they would enter into an operating agreement before any drilling began. An unexecuted operating agreement was appended to the GLN-Lewis agreement. In exchange, GLN received a reversionary 15% working interest. Lewis entered into an agreement with P to conduct seismic work on the leases. In March 1981, Lewis assigned a portion of its interest in the Michigan leases to D. The Lewis-Blocker agreement gave D a 25% working interest. D agreed to contribute certain sums to overhead, pay one-third of Lewis' out-of-pocket expenses for the reconnaissance seismic program, up to $750,000 (and one-fourth of such costs thereafter), and 25% of the costs incurred for the detailed seismic survey if d elected to participate in that stage of the exploration and development. D and Lewis also agreed to share data and interpretation. The agreement provided that unless otherwise indicated, the parties' rights would be governed by the GLN-Lewis contract. P performed the seismic work for Lewis. In February 1982, Lewis filed for bankruptcy. P was unable to satisfy the outstanding debt through Lewis' bankruptcy proceeding. P filed suit against D, claiming D was liable for Lewis' debts because a mining partnership existed between Lewis and D. The trial court granted D's motion for summary judgment. The trial court held that one of the required elements of a mining partnership -- namely, joint operation -- was absent, and no mining partnership existed. P appealed. The court of appeals affirmed the trial court's order of summary judgment on the mining partnership issue but declined to address the additional and alternative issues raised by D because Blocker had not filed notice of cross-appeal. Both parties appealed.