BMK Enterprises v. Bailey

── BMK Enterprises v. Bailey ── Court: Montana Supreme Court Date: May 12, 2026 Category: Direct Appeal 05/12/2026 DA 25-0474 Case Number: DA 25-0474 IN THE SUPREME COURT OF THE STATE OF MONTANA 2026 MT 102 BMK ENTERPRISES, INC., Plaintiff and Appellant, v. BAILEY ENTERPRISES OF MONTANA, LLC, JOE BAILEY, and MICHELLE FRANKS, Defendants and Appellees. APPEAL FROM: District Court of the Eighteenth Judicial District, In and For the County of Gallatin, Cause No. DV-22-254 Honorable Rienne H. McElyea, Presiding Judge COUNSEL OF RECORD: For Appellant: Charles H. Carpenter, Carpenter Law Firm, PLC, Missoula, Montana For Appellee: Karl Knuchel, Karl Knuchel, P.C., Livingston, Montana Submitted on Briefs: March 18, 2026 Decided: May 12, 2026 Filed: __________________________________________ Clerk Justice Beth Baker delivered the Opinion of the Court. ¶1 BMK Enterprises purchased commercial property from Bailey Enterprises in 2018. The Buy-Sell Agreement contained a provision granting BMK the right of first refusal on adjacent property owned by Bailey. BMK sued Bailey for breach of contract after Bailey sold the adjacent property to a third party. The District Court ruled that the right of first refusal provision was unenforceable as a matter of law and granted Bailey summary judgment. The dispositive issue on appeal is whether the District Court should have considered extrinsic evidence of the parties’ intent before declaring the provision unenforceable. We reverse and remand for that consideration. FACTUAL AND PROCEDURAL BACKGROUND ¶2 Joe Bailey and Michelle Franks own and manage Bailey Enterprises—a Montana limited liability company. Bailey owned two adjacent properties in Belgrade, Montana: 409 Briar Place (“Briar Property”) and 151 Bolinger Road (“Bolinger Property”). Bailey operated commercial storage businesses on both properties. The Bolinger Property was roughly eight acres and included ten storage unit buildings, a commercial office and shop space, a short-term vacation rental, and a residential home. The Briar Property contained approximately fifteen storage unit buildings. ¶3 BMK Enterprises, a Montana corporation owned by Ben and Myron Kovash, is in the business of renting mini-storage units. In May 2018, BMK purchased the Briar Property from Bailey. During negotiations for that purchase, Bailey showed BMK the adjacent Bolinger Property. BMK expressed interest in the Bolinger Property’s storage 2 unit complex and requested the right of first refusal if Bailey decided to sell the Bolinger Property in the future. The parties executed a Buy-Sell Agreement for the Briar Property on May 17, 2018. Exhibit A to the Agreement provided in part, “Seller Grants Buyer the first right of refusal if Seller sells storage units at 151 Bolinger, Belgrade, Montana.” The parties closed on the Briar Property on May 31, 2018. ¶4 In September 2019, Bailey notified BMK that it was considering selling the Bolinger Property. BMK met with Bailey to look at the Bolinger Property again but did not purchase it. Bailey listed the Bolinger Property for sale in July 2020 and sold it to TruNorth Properties, LLC in August 2021. Bailey did not contact BMK again before selling the property to TruNorth. ¶5 BMK sued Bailey for breach of contract and breach of the implied covenant of good faith and fair dealing, alleging that Bailey failed to honor the Agreement’s right of first refusal provision.1 BMK also sued the real estate b