The Business Court has granted summary judgment in favor of a purchaser of bulk-bleach from a Greenville manufacturer.
FSTI, Inc. v. PVS Minibulk, Inc., et al. (2026 Tex. Bus. 69; October 1, 2026) arose from a dispute over a purchase agreement whereby DPC, PVS’s predecessor in interest, agreed to buy 100% of the bleach FSTI produced at its Greenville facility (excluding FASTI’s production for retail and mini-bulk sales, i.e. less than 2, 850 gallons in a truckload delivery). The parties agreed that the Bulk Contract constituted an “output contract” governed by Chapter 2, UCC. They operated under the contract for two years, during which PVS bought more two million gallons of bleach. The parties communicated daily about bulk bleach orders, and witnesses testified that DPC bought all of the bulk bleach FSTI produced at the facility.
In February 2024, FSTI sold the plant to HASA, but excluded from the sale the Bulk Contract and another contract at issue in the suit. Defendants alleged that the exclusion of the contracts allowed FSTI to inflate the sales price by at least $15 million. FSTI didn’t inform PVS, a DPC affiliate that was a party to the other contract in the case, of the contract in advance but waited until the deal had closed. They did not, however, inform DPC. That task fell to PVS’s president. Things went on as usual for a month, but then the trouble commenced. In March 2024, DPC received a response to an order email stating that HASA was the vendor for the delivery and instructing that fuirther orders be sent to a new contact at HASA. DPC followed these directions, and for a few months HASA delivered at the contract price. But soon thereafter HASA refused to honor that price, informing DPC that the Bulk Contract had been excluded from FSTI’s sale of the facility to HASA.
In March 22024, FSTI sued seeking a declaratory judgment that its sale of the facility did not result in a breach of the Bulk Contract. FSTI contended that it didn’t have an obligation to sell any bleach to DPC it it didn’t actually produce bleach, so long as FSTI acted in good faith. DPC responded by bringing counterclaims for repudiation and breach. It alleged that FSTI used the sale and the exclusion of the Bulk Contract to raise the price, “even though FSTI knew it would be unable to perform under the contracts once it sold the Greenville facility to HASA.” According to DPC, FSTI acted didn’t act in good faith or in accordance with commercial standards of fair dealing. FSTI responded by amending its pleadings to deny that DPC actually bought the facility’s total bulk bleach output, thus breaching the contract. DPC sought summary judgment on that claim.
In an opinion by Judge Andrews, the court granted DPC’s motion. DPC contended that it complied with the contract by purchasing 100% of bulk bleach actually produced at the plant. FSTI countered that the contract required DPC to purchase 100% of the plant’s capacity, as FSTI contended. It argued that it could have produced more bleach if DPC had ordered and picked it up and that DPC’s orders “functionally limited” its total production. The Bulk Contract was thus a “hybrid” agreement that combined an output contract with a requirements agreement. FSTI further argued that DPC was obligated to make its purchases within a reasonable time, which FSTI interpreted as “one that ‘did not constrain FSTI’s ability to produce in good faith.’” DPC scoffed at this “hypothetical” argument, noting that FSTI’s production was never constrained and in line with FSTI’s historical production data.
The court went with DPC, holding that it satisfied its purchase obligation under the Bulk Contract by purchasing 100% ot the bulk bleach produced in Greenville. That’s what the plain text of the contract required, and DPC conclusively proved that it complied. FSTI produced a damages model based on the difference between its revenue on the sale of the facility’s actual bulk-bleach production and “what its revenue would have been if it had produced and sold the amount of bulk-bleach it alleges to be the facility’s good faith capacity.” The court found this contention comically irelevant, observing that “[t]he UCC’s ‘good faith’ requirement does not rewrite the parties’ contract to change the work ‘production’ to ‘capacity.’” The court dismissed FSTI’s reliance on a take-or-pay case (SCOTX has held that § 2.306, UCC, doesn’t apply to take-or-pay contracts) and an Idaho lawsuit involving a trout-supply contract (a dual-sale requirements contract).
Here “FSTI was aware of the factual circumstances it complains of at the time of contracting and was free to negotiate contract terms that protected against them.” But it didn’t, and “[it] got what it bargained for.” As to FSTI’s contention that DPC effectively controlled its production because DPC wasn’t obligated to buy bleach at specified times, resulting in shortage of storage space and spoiling of unused bleach, the court observed that the Greenville facility had numerous storage tanks that never came close to the limit during the contract term. In fact, the facility’s average daily inventory was less than 30,000 gallons and never got above 60,000, far short of the 100,000 gallon storage capacity it actually had. In short, FSTI manufactured a hypothetical breach for purposes of the lawsuit. Regarding the “reasonable time” argument, the parties agreed that bleach pickups were scheduled every day, and FSTI didn’t allege or offer evidence that any of the facility’s bleach became “unsellable” because DPC delayed in buying and picking it up.
At the time of the contract, the parties knew that the historical production history of the Greenville plant reflected an annual output of about 7 million gallong, or just over 19,000 gallons per day. FSTI actually produced and sold more than that under the contract than it did in prior years, so arguments that it didn’t fare well under the deal sounded rather hollow. Indeed, the evidence demonstrated that DPC took as much bleach as FSTI produced. The court thus granted DPC’s motion for summary judgment on FSTI’s breach of contract claim.
