Texas Business Court Decision – May 27, 2026

No. 25-BC11B-0073   DK Trading & Supply, LLC v. Wink to Webster Pipeline LLC (Eleventh Division,  Judge Sharp) 2026 Tex. Bus. 33

Contracts.

Background. DK Trading & Supply (Delek) and Wink to Webster Pipeline (Wink) entered into two 2021 agreements governing crude-oil storage at a terminal in Midland County and pipeline transportation from that terminal. Disputes arose over whether Delek had exclusive use of designated storage tanks and how deficiency payments were to be calculated under a “ship or pay” clause. The parties filed cross-motions for partial summary judgment. Both parties agree the contracts are unambiguous.

Held:

1. Regarding the Terminal Agreement – Exclusive Tank Use Issue. The court holds that the Terminal Agreement grants Delek exclusive use of two specific tanks rather than a mere volumetric entitlement to fungible storage space anywhere in the Midland facility. The court reasons that treating Storage Capacity as comprising tangible facilities – evidenced by provisions for construction costs, segregated maintenance expenses, the “Delek Tanks Only” cost schedule, and clean-out obligations – gave the exclusivity guarantee meaningful content. Wink’s contrary reading would render both the exclusivity language and the tank-substitution mechanism surplusage.
2. Regarding the Transportation Agreement – Deficiency Payment Calculation.  The court construes the “ship or pay” clause to require that all barrels actually shipped during a “True-Up Period” reduce  Delek’s volume shortfall, regardless of whether those shipments were paid using Deficiency Credits earned in prior periods. The plain definition of “Actual Shipments” – all barrels physically moved on the pipeline – compels this decision, and the differing time periods for calculating Deficiency Payments (multi-month) versus Credits (monthly) makes Wink’s contrary construction mathematically unworkable.
3. Notice as Condition Precedent.  The court grants summary judgment for Wink on six older invoices, holding that Section 8.02 of the parties’ Agreement, requiring  written dispute notice by the invoice due date, creates a condition precedent to any remedy and not merely a covenant. Delek’s first notice, sent in August 2025, was untimely as to invoices dating to 2022-2024. The court rejects Delek’s arguments that the clause unlawfully shortened the limitations period or was excused by Wink’s material breach, finding  neither a limitations issue (the clause governs notice, not filing suit) nor adequate evidentiary support for the materiality factors.

Disposition: Delek’s motion for partial summary judgment is granted on tank exclusivity and deficiency payment calculation and is denied as to the Event of Default clause. Wink’s motion is granted as to six time-barred invoices. In sum: (1) The Terminal Service Agreement granted Delek exclusive use of two tanks at Midland for the storage of up to 566,000 barrels of crude; (2) The Terminal Agreement does not permit Wink to unilaterally place crude oil meeting the quality specifications set forth int the Pipeline Tariff in tanks designated for Delek; (3) Under the Amended and Restated Transportation Services Agreement, Wink must calculate the Deficiency Payment for each “True-Up Period” such that the number of deficient barrels under Section 7.03(a)(i) is computed in a manner that accounts for every barrel of product actually shipped on the pipeline during the True-Up Period; and (4) Delek’s claims for breach of contract with respect to the six old invoices are dismissed with prejudice.