Atlantic Richfield Co. v. Whiting Oil & Gas Corp., 320 P.3d 1179

ARCO and Equity entered into a series of agreements starting in 1968 to develop oil shale, with Equity conveying half of its Boies Block interest to ARCO and an obligation to convey more if production was not commercial by 1988.
In 1983 Equity received a non-exclusive option to repurchase the Boies Block interest; the 1988 amendment extended exercise to 2008 and granted ARCO the sole right to cancel the option, with Equity having a right of first refusal if ARCO received a third-party offer.
Equity failed to achieve commercial production; the 1983 option remained exercisable under a market-based price adjustment tied to ARCO’s crude benchmark through 2008.
Equity tried to exercise the 1983 option in 2006; ARCO refused to convey, arguing the option violated the rule against perpetuities but Equity sought specific performance.
The trial court reformed the option under section 15-11-1106(2) by inserting a savings clause based on a 21-year post-death limit, and Equity was awarded specific performance with a constructive trust against ARCO.
The Colorado Court of Appeals affirmed, and the Colorado Supreme Court ultimately held the 1983 option did not violate the common law perpetuities rule and thus was not subject to reform under section 15-11-1106(2).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether 15-11-1106(2) authorizes reform of pre-1991 nonvested interests	ARCO—argues reform allowed broad pre-1991 nonvested interests and nondonative instruments may be reformed.	Equity—argues reform applies to pre-1991 nonvested interests determined to violate pre-1991 rule.	No reform required; option did not violate pre-1991 rule.
Did the 1983 option violate the common law rule against perpetuities as construed before 1991?	ARCO—option could vest beyond 21 years after life in being, violating the rule.	Equity—option was fully revocable and thus imposed no practical restraint, avoiding the rule.	The option did not violate the rule; it was fully revocable and valid as negotiated.
Should the reformation provision apply to commercial nondonative instruments?	ARCO—reformation should not apply to commercial instruments or be retroactive.	Equity—reformation applicable to pre-1991 nonvested interests when necessary to align with common law rule.	Not reached; court held option was not subject to reform because it did not violate the rule.

Atchison v. City of Englewood, 170 Colo. 295 (Colo. 1969) (voided unlimited preemptive right; analyzed rule vs. restraints on alienation)
Cambridge Co. v. E. Slope Inv. Corp., 700 P.2d 537 (Colo. 1985) (discussed purposes of perpetuities and sale of condominium units)
Perry v. Brundage, 614 P.2d 362 (Colo. 1980) (stated rule against perpetuities applies to options and preemptive rights)
Crossroads Shopping Center v. Montgomery Ward & Co., Inc., 646 P.2d 330 (Colo. 1981) (explored purposes of perpetuities and application to commercial rights)
Fitzpatrick v. Mercantile-Safe Deposit & Trust Co., 220 Md. 534 (Md. 1959) (unrestricted present power destroys future interest; not within rule)