The U.S. Court of Appeals for the Eighth Circuit reversed a lower court ruling in a contract dispute that hinged on the meaning of a single word: "termination." In *Reinhardt Enterprises, LLC v. Kaseya U.S., LLC*, the appeals court held that the term "termination" was ambiguous in the context of the parties' business agreement, overturning the district court's dismissal with prejudice.
The case arose from a 2016 marketing contract between Reinhardt Enterprises and BNG Holdings, Inc., a predecessor company to BNG Holdings, LLC. Under the original agreement, Reinhardt agreed to market BNG Holdings' services for an initial three-year term. The contract included an automatic renewal provision in section 7.1, stating it would "automatically renewed for additional terms of 1 year each unless either party notif[ied] the other no later than 30 days prior to the end of the current term that it d[id] not wish to renew."
After the initial term ended, the parties allowed the contract to renew automatically for several years without incident. However, the legal dispute emerged following corporate changes in September 2021, when BNG Holdings, Inc. was negotiating the sale of its business to Kaseya U.S., LLC.
Before the sale was completed, Reinhardt and BNG Holdings, Inc. amended their contract, specifically replacing the existing version of section 8.1. The new section 8.1, titled "Compensation to [Reinhardt] Following Termination," became central to the subsequent legal battle. While the full text of this provision was not included in the available court documents, it apparently established Reinhardt's right to receive a buyout fee upon "termination" of the agreement.
The dispute crystallized when Kaseya, after acquiring BNG Holdings, decided not to renew the contract with Reinhardt. Reinhardt argued this decision constituted a "termination" under the agreement, triggering its right to receive the buyout fee specified in section 8.1. Kaseya and BNG Holdings disagreed, contending that simply allowing the contract to expire through non-renewal was not a "termination" within the meaning of their agreement.
Reinhardt filed suit alleging breach of contract, seeking the termination buyout fee. The case was initially heard in the U.S. District Court for the District of North Dakota, where Reinhardt faced an unfavorable ruling. The district court dismissed the case with prejudice, reasoning that Kaseya's decision to let the contract expire was not a "termination" as contemplated by the parties' agreement.
This dismissal with prejudice meant the district court concluded that Reinhardt had no viable legal claim and could not refile the case. The lower court's interpretation effectively distinguished between letting a contract expire naturally and actively terminating it, finding that only the latter would trigger the buyout fee provisions.
However, the Eighth Circuit Court of Appeals, in an opinion authored by Circuit Judge Grasz, disagreed with this interpretation. The three-judge panel, which also included Circuit Judges Smith and Kelly, concluded that the term "termination" was ambiguous within the context of the parties' specific contract language.
The appeals court's finding of ambiguity is significant because it shifts the case from a matter of legal interpretation to one requiring factual development. When contract terms are found to be ambiguous, courts cannot resolve disputes solely through legal analysis of the written agreement. Instead, they must consider additional evidence, such as the parties' intentions, course of dealing, and industry customs, to determine the actual meaning of the disputed terms.
"Because 'termination' is ambiguous in the context of the parties' contract, we reverse and remand," Judge Grasz wrote in the court's opinion. This language indicates that the case will return to the district court for further proceedings, where factual questions about the parties' understanding of "termination" can be explored.
The ruling represents a victory for Reinhardt Enterprises, which now has the opportunity to present evidence supporting its interpretation that non-renewal constitutes "termination" under their agreement. The company will be able to pursue discovery and potentially present testimony about the parties' intentions when they drafted the amended section 8.1.
For Kaseya and BNG Holdings, the reversal means they will face continued litigation and potential liability for the disputed buyout fee. The companies will need to present their own evidence and arguments about why "termination" should be interpreted more narrowly to exclude non-renewal situations.
The case highlights the importance of precise contract drafting, particularly in business agreements involving acquisition scenarios. The dispute emerged specifically after corporate ownership changes, suggesting that clearer language about post-acquisition obligations might have prevented the litigation.
The Eighth Circuit's decision also demonstrates how courts approach contract interpretation when key terms lack clear definition. Rather than impose a single interpretation, the appeals court recognized that reasonable parties could disagree about whether "termination" includes non-renewal, making it a question of fact rather than law.
The case was submitted to the Eighth Circuit on Oct. 23, 2025, and the court issued its opinion on Jan. 29, 2026. The matter will now return to the District of North Dakota for further proceedings consistent with the appeals court's ruling that the contract language requires factual development to resolve the ambiguity.