Can a court resolve an ambiguous contract on summary judgment using one-sided extrinsic evidence? Burlington Coat v. Newgate Mall Explained

Background and facts

In 2013, the predecessors-in-interest of Burlington Coat Factory Warehouse Corporation and Newgate Mall executed a commercial lease for retail space at the Newgate Mall in Ogden, Utah. The lease contained a co-tenancy provision specifying that an “Operating Failure” occurred if “Dillard’s and Sears are not open and operating for business” at the Mall, entitling Burlington to pay reduced rent equal to two percent of net sales. A separate cure provision addressed the scenario in which “Dillard’s and/or Sears are no longer open and operating” — labeling those stores “Dark Department Stores” — and allowed the landlord to satisfy its obligation by replacing the departed anchor with a regional or national tenant of similar size and caliber. When Sears vacated the Mall in April 2018, Burlington filed suit seeking a declaratory judgment that the closure constituted an Operating Failure. After discovery, Burlington moved for partial summary judgment, submitting a declaration from the attorney who had negotiated the lease on its predecessor’s behalf and a letter of intent that predated the final lease. Newgate’s corporate predecessor had dissolved before litigation, leaving Newgate without contemporaneous evidence of its predecessor’s drafting intent.

Key legal issues

The central dispute was whether the conjunction “and” in the co-tenancy provision required both Dillard’s and Sears to close before an Operating Failure arose, or whether the closure of either anchor tenant was sufficient. The district court found the provision facially ambiguous because both readings were plausible. Newgate argued on appeal that once ambiguity is found, a court cannot weigh extrinsic evidence to resolve the ambiguity as a matter of law — the question of intent must go to the factfinder.

Court’s analysis and holding

The Utah Court of Appeals affirmed the grant of partial summary judgment, applying the correctness standard of review. The court reiterated that where a contract is facially ambiguous, the parties’ intent is a question of fact — but that factual question may be decided as a matter of law at the summary judgment stage “so long as the parol evidence submitted by the parties is so one-sided that a reasonable factfinder could reach but one conclusion.” The court found that the negotiating attorney’s declaration, which stated that the parties intended rent reduction to be triggered by the closure of either anchor tenant, was undisputed. Newgate offered no competing contemporaneous evidence of its predecessor’s intent, and the after-the-fact internal emails it did submit were properly excluded as irrelevant to drafting intent. The court further held that the letter of intent — which Burlington’s predecessor had drafted — supported rather than undermined Burlington’s position, because it showed the cure provision was simply carried over from the letter of intent and relabeled in the final lease. Because the extrinsic evidence was one-sided, no genuine issue of material fact precluded summary judgment.

Practice implications

This decision reinforces that ambiguity does not automatically preclude summary judgment on contract interpretation questions. Practitioners should be prepared, at the summary judgment stage, to affirmatively marshal extrinsic evidence — draft negotiations, letters of intent, and contemporaneous declarations — rather than relying on the contract text alone to sustain an ambiguity argument. Critically, a party that cannot produce evidence of its predecessor’s drafting intent faces a significant risk that undisputed opposing evidence will be deemed one-sided and dispositive. Counsel representing landlords or tenants in commercial lease disputes should preserve and document negotiating history from inception, as the dissolution of a predecessor entity may render that history permanently unavailable.