Ambiguous Lease Amendment Removing “Paragraph 5” Permits Extrinsic Evidence and Preserves a Lessee’s Tenancy-in-Common Purchase Right

Introduction

Tuma v. Britt, 2026 MT 144, is a Montana Supreme Court decision resolving a dispute over whether a 2018 lease amendment eliminated only a now-obsolete fee-simple “option to purchase” mechanism or also eliminated a separate, alternative right to acquire an undivided tenancy-in-common interest when subdivision is legally unavailable. The controversy arose after George and Irene Tuma purchased a 38.2-acre “Parent Tract” in Flathead County from the Slater Trust, subject to a long-term lease (and amendments) held by Adam and Amber Britt.

The Parent Tract lies in a floodplain and cannot be subdivided under county regulations, a fact that made the lease’s “tenancy-in-common” fallback provision practically important. The central interpretive question was the meaning of a single sentence in the 2018 “Second Amendment”: Paragraph 5. ‘Option to purchase’ is hereby removed. The Tumas contended the sentence unambiguously deleted all of Section 5 of the 1992 Lease, including the tenancy-in-common provision. The Britts contended it removed only the first paragraph (fee-simple option language) while leaving intact the second paragraph (tenancy-in-common fallback).

The Supreme Court affirmed partial summary judgment for the Britts, upholding the District Court’s determination that the amendment was ambiguous, that extrinsic evidence could be considered to determine the parties’ intent, and that the evidence established the Britts retained a vested right to acquire an undivided tenancy-in-common interest in the Parent Tract with exclusive use of the 10.325-acre leasehold area.

Summary of the Opinion

  • The Court held the Second Lease Amendment was ambiguous because its reference to removing Paragraph 5 did not map cleanly onto the 1992 Lease’s structure (organized by numbered sections), and because Section 5 contained two distinct paragraphs describing two different purchase mechanisms.
  • Because of that ambiguity, the Court held the District Court properly considered extrinsic/parol evidence to ascertain the contracting parties’ intent, consistent with Montana contract interpretation statutes and case law.
  • The Court concluded the extrinsic evidence was consistent and undisputed as to intent: the parties removed only the first paragraph of Section 5 (the fee-simple option language that had become largely obsolete after 20 years), while preserving the second paragraph (the tenancy-in-common alternative triggered by subdivision restrictions).
  • The Court held that Don Hostak’s deposition testimony—reflecting memory gaps and inability to define “tenancy in common”—did not create a genuine issue of material fact where it did not “fundamentally contradict” the earlier joint declaration and was corroborated by Myrna Hostak and the drafting attorney.
  • The Court affirmed the order requiring the Tumas to execute a quitclaim deed conveying a 27.5% tenancy-in-common interest to the Britts, while recognizing the Britts’ exclusive use of the 10.325-acre leasehold.

Analysis

Precedents Cited

The Court’s reasoning is best understood as an application and synthesis of Montana’s established contract-interpretation and summary-judgment doctrines. The cited precedents provided the doctrinal scaffolding for three steps: (1) determining ambiguity; (2) admitting extrinsic evidence upon ambiguity; and (3) assessing whether a factual dispute exists sufficient to defeat summary judgment.

1) Summary judgment framework

  • BMK Enters. v. Bailey Enters. of Mont., LLC, 2026 MT 102: Cited for the de novo standard of review and the Rule 56 framework, and for the important proposition that when a contract is ambiguous, intent is a question of fact that nonetheless may be resolved on summary judgment when the relevant extrinsic evidence is undisputed. This case functioned as the Court’s primary, current articulation of the “ambiguous contract + undisputed extrinsic evidence” path to summary judgment.
  • AWIN Real Estate, LLC v. Whitehead Homes, Inc., 2020 MT 225: Reinforced the same point: ambiguity shifts the inquiry to intent, and intent can be decided without trial if the extrinsic evidence is not genuinely in conflict.

2) Determining ambiguity and applying unambiguous language

  • Mary J. Baker Revocable Tr. v. Cenex Harvest States, Coops., Inc., 2007 MT 159: Provided the core definitions—ambiguity exists where language is susceptible to at least two reasonable, conflicting meanings; mere disagreement does not create ambiguity; and contract interpretation seeks mutual intent at the time of contracting. This decision anchored the Court’s analysis that the dispute was not simply “two parties disagree,” but a textual problem (section/paragraph mismatch) creating two reasonable readings.
  • Richards v. JTL Grp., Inc., 2009 MT 173: Cited for the proposition that clear and unambiguous contracts must be applied as written. In Tuma, this served as the contrast case: because the Second Lease Amendment was not susceptible to only one reasonable interpretation, the Court did not enforce it “as written” in the Tumas’ preferred manner.

3) Extrinsic evidence and the parol evidence rule

  • K&R P'ship v. City of Whitefish, 2008 MT 228: Cited for the principle that, upon ambiguity, courts may consider extrinsic evidence to determine the meaning of the writing.
  • Olson v. Jude, 2003 MT 186: Cited for the rule that extrinsic evidence may be used to discover intent where the written instrument is ambiguous.
  • Mary J. Baker Revocable Tr. v. Cenex Harvest States, Coops., Inc., 2007 MT 159: Also did double duty here, emphasizing that the parol evidence rule does not exclude evidence of circumstances under which the agreement was made, and does not bar intent evidence when the dispute is over the meaning of ambiguous language.

4) What counts as a “genuine issue” at summary judgment

  • Becker v. Rosebud Operating Servs., 2008 MT 285: Cited to underscore that summary judgment is not defeated by speculative or conclusory assertions. This supported rejecting the argument that Don Hostak’s uncertain memory alone created a triable issue.
  • Stott v. Fox, 246 Mont. 301 (1990): Cited for the requirement that the non-moving party present “material and substantial evidence,” not conjecture, to avoid summary judgment. The Court used it to characterize the Tumas’ position as resting on their preferred interpretation of the documents rather than competing, substantial evidence of contracting intent.

Legal Reasoning

1) The ambiguity finding turned on contract structure and drafting mismatch

The Court’s ambiguity analysis was highly textual. The 1992 Lease was organized into numbered sections, not numbered paragraphs. Section 5 bore the title “Option to Purchase” and contained two paragraphs, each creating a different right: (i) a fee-simple purchase option tied to rent payment and subdivision approval, and (ii) a tenancy-in-common alternative if subdivision restrictions prevent conveyance of the leased acreage.

The Second Lease Amendment stated: Paragraph 5. ‘Option to purchase’ is hereby removed. The Court identified a drafting mismatch: the amendment referenced a “paragraph” in a contract structured by “sections,” and Section 5 contained two paragraphs. That mismatch made two competing interpretations reasonable:

  1. It removed all of Section 5 (both paragraphs), as the Tumas argued.
  2. It removed only the first paragraph (the one beginning with the “Option to Purchase” heading and addressing the fee-simple option), leaving intact the second paragraph (tenancy-in-common fallback), as the Britts argued.

Importantly, the Court did not require that the Britts’ reading be the “best” reading—only that it be a reasonable reading. That sufficed to create ambiguity under Mary J. Baker Revocable Tr. and to trigger extrinsic evidence under Montana statutes.

2) Once ambiguous, extrinsic evidence was not merely allowed—it was required

Having affirmed ambiguity, the Court applied Montana’s interpretive framework: effect must be given to the parties’ mutual intent at the time of contracting (§ 28-3-301, MCA), and courts may consider the circumstances and related evidence (§ 28-3-402, MCA; § 28-2-905(2), MCA). The Court rejected the Tumas’ parol-evidence objection because it depended on the premise that the amendment was unambiguous—a premise the Court had already rejected.

The District Court considered declarations from the successor trustee and his wife (Don and Myrna Hostak), from the Britts, and from attorney Brant Beaudry (drafter of the Second and Third Amendments). The Supreme Court accepted the District Court’s assessment that this evidence was consistent on the central point: the “tenancy-in-common” paragraph was not intended to be removed.

3) The “paid in full” language reinforced a property-like interest, not a purely terminable lease

The opinion treated the amendment’s “paid in full” recital as context supporting the intended preservation of meaningful acquisition rights. The Second Lease Amendment stated that if the parent tract were subdivided to allow conveyance, the assignees had “paid in full” and did not need to purchase the tract. The District Court found this consistent with an understanding that the Britts had already paid full consideration for their interest in the leasehold acreage. The Third Amendment expanded the leasehold acreage and recited additional consideration.

While “paid in full” did not itself operate as a conveyance, the Court treated it as probative of intent: a deal structure aiming to provide the lessees rights “equivalent to full ownership,” with a mechanism to secure an ownership interest even if subdivision law prevented a parcel conveyance.

4) Don Hostak’s deposition did not create a factual dispute because it was memory loss, not contradiction

The Tumas’ key attempt to manufacture a Rule 56 factual dispute relied on Don Hostak’s deposition testimony that he did not recall why the option language was removed, did not know what “tenancy in common” meant, and did not recall whether any part of the option remained.

The Court held that such testimony did not “fundamentally contradict” the prior joint declaration—especially where Don acknowledged his signature and agreed he would have understood it when signed, and where Myrna Hostak confirmed the declaration’s accuracy and testified that Don’s memory had significantly declined. In other words, the Court treated the deposition as showing diminished recollection, not evidence of a different contemporaneous intent. Under Becker and Stott, that was insufficient to create a genuine issue absent “material and substantial evidence” pointing the other way.

5) Tie-breaker canon: construe residual ambiguity in favor of the beneficiary

The Court also approved the District Court’s reliance on § 28-3-306(2), MCA: where a provision is equally susceptible to two constructions, adopt the construction most favorable to the party “in whose favor the provision was made.” The tenancy-in-common alternative in Section 5 was drafted for the lessee’s benefit. Thus, even if ambiguity persisted after considering circumstances, Montana law required the pro-lessee construction.

Impact

1) Drafting lesson: “section” vs. “paragraph” imprecision can preserve rights you thought you deleted

Tuma is a cautionary precedent for transactional drafting. A deletion clause that references a “paragraph” in a document structured by “sections,” especially where the targeted provision contains multiple paragraphs describing distinct rights, invites an ambiguity finding and extrinsic-evidence litigation. Parties seeking to eliminate rights should specify: (i) the exact section number; (ii) whether all paragraphs/subparts are removed; and (iii) include redlined exhibits or restated sections.

2) Litigation lesson: ambiguity can convert a parol-evidence fight into an intent case that may still be resolved on summary judgment

The decision also illustrates how an ambiguity ruling shifts the battleground. The parol evidence rule does not end the inquiry; it can open the door to intent evidence. But the door does not guarantee a trial: if the extrinsic evidence is one-sided or not genuinely disputed, courts may still resolve intent on summary judgment under BMK Enters. v. Bailey Enters. of Mont., LLC and AWIN Real Estate, LLC v. Whitehead Homes, Inc..

3) Real property and land-use context: tenancy-in-common as a workaround for non-subdividable parcels

Subdivision restrictions are a recurring feature of Montana real property disputes (floodplains, sanitation constraints, county regulations). Tuma confirms that parties may contract for an ownership workaround—an undivided tenancy-in-common share coupled with exclusive-use rights—when fee-simple conveyance of a sub-parcel is legally barred. Future litigants can be expected to cite Tuma where a long-term lease attempts to replicate ownership on non-subdividable land.

4) Due diligence signal: recorded lease amendments and disclosed encumbrances matter

Although the legal holding turns on contract interpretation between the original contracting parties (and their successors), the factual context underscores a practical impact for purchasers: title commitments disclosing recorded leases and amendments can foreshadow complex, property-like tenant claims. Tuma will likely be cited in disputes where a buyer argues they believed an encumbrance was merely “terminable,” but the recorded instruments and contracting history support a deeper interest.

Complex Concepts Simplified

Ambiguity
A contract term is ambiguous when it reasonably supports two different meanings. If only one reasonable meaning exists, the court enforces that meaning without looking outside the text.
Parol evidence / extrinsic evidence
“Parol evidence” generally means evidence outside the written contract (statements, negotiations, circumstances). Montana’s parol evidence rule usually prevents using such evidence to add to or contradict a complete written agreement—but it permits considering circumstances and intent evidence when the written language is ambiguous.
Tenancy in common
A form of co-ownership where each owner holds an undivided percentage interest in the whole parcel. No owner owns a specific physical slice unless there is an enforceable agreement granting exclusive use of a defined area (as Section 5’s second paragraph provided here).
Vested right (in this context)
A right that has become enforceable and is not merely speculative. Here, the courts treated the Britts’ contractual mechanism to obtain an ownership interest as preserved and enforceable under the lease documents and amendments, rather than extinguished.
Summary judgment
A procedure allowing a court to decide a claim without trial when there is no genuine dispute of material fact and one party is entitled to judgment as a matter of law. In ambiguous-contract cases, summary judgment may still be appropriate if the extrinsic evidence of intent is undisputed.
Quitclaim deed
A deed transferring whatever interest the grantor has (if any), without warranties of title. The court ordered one here as the mechanism to convey the Britts’ tenancy-in-common share.

Conclusion

Tuma v. Britt reaffirms and practically sharpens Montana contract law in the real-property setting: when an amendment imprecisely “removes” a provision in a way that is reasonably susceptible to multiple meanings, the instrument is ambiguous, extrinsic evidence of intent is admissible, and the court may resolve intent on summary judgment if the evidence is not genuinely conflicting. The decision also underscores Montana’s statutory tie-breaker rule—residual ambiguity is construed in favor of the party for whose benefit the provision was made—here, the lessee’s protective tenancy-in-common alternative crafted to address subdivision restrictions.