Background: PRP and CCP signed a joint venture agreement (JVA) and a lease agreement (Lease) with Cardero. Declining coal prices stalled the project, leading to claims of breach of both agreements.

Legal Issues:

• Breach of JVA: CCP and PRP alleged that Cardero breached the JVA by abandoning the Freehold and failing to maintain it in trust. Cardero argued CCP breached the JVA by refusing to cooperate and follow Management Committee decisions.
• Breach of Lease: PRP claimed Cardero’s surrender notice was ineffective, constituting a breach of the Lease. The trial judge found Cardero breached the Lease by not paying a $500,000 advance royalty fee but did not breach the JVA.

Judgment:

• Appeal and Cross Appeal: The appeal by CCP and PRP was dismissed. The cross appeal by Cardero was allowed in part.
• Contractual Interpretation: The court upheld the trial judge’s interpretation, which did not find Cardero in breach of the JVA and validated the surrender notice under the Lease.

Costs and Awards:

• JVA Action: Cardero was entitled to purchase CCP’s interest in the joint venture. CCP’s counterclaim was dismissed.
• Lease Action: PRP was awarded $500,000 plus interest. PRP’s claim for $2 million was dismissed.
• Costs Award: PRP was entitled to indemnity for costs up to August 19, 2021, with parties bearing their own costs thereafter.

The court enforced the contractual indemnity clauses, emphasizing adherence to the agreements made by the sophisticated parties.