Texas Business Court Decision – Thursday, October 1, 2026

No. 26-BC03A-0010   FSTI, Inc. v. PVS Minibulk, Inc., et al (Third Division, Judge Andrews)  2026 Tex. Bus. 69

Contracts.

Note: On September 25, 2026, the court issued an order that granted defendant’s Motion for Summary Judgment on FSTI’s claim that DPC breached its obligation to buy FSTI’s bulk bleach production. The court now issues this related opinion.

Background.

In October 2021, FSTI and DPC (now PVS DX, Inc.) entered into a ten-year “Bulk Contract,” under which DPC agreed to buy “100% of Seller’s [FSTI’s] production from its Greenville TX facility,” excluding retail and mini-bulk sales. The parties agree the contract is an output contract governed by UCC Sec. 2.306(a). DPC bought all of the bulk bleach actually produced for more than two years. In February 2025, FSTI sold the Greenville facility to HASA but excluded the Bulk Contract  from the sale. Sales continued for a few months, first fulfilled by FSTI and then by HASA, but HASA informed DPC that the bulk contract had been excluded from the sale and stopped sales. FSTI also stopped handling DPC’s bulk contract sales, and sued for a declaration that it had no output left to sell because it had sold Greenville. DPC counterclaimed, asserting FSTI had repudiated and breached the contract. FSTI’s original petition admitted DPC bought the entire bulk output. After amendment, FSTI alleged that DPC breached the contract by failing to buy the facility’s total bulk output. DPC then moved for traditional summary judgment on that claim.

Issues:

1. Whether the Bulk Contract obligated DPC to buy FSTI’s actual production or the facility’s good faith capacity.
2. Whether Lenape and Griffith II support a capacity-based or “hybrid” output/requirements reading.
3. Whether DPC’s practical “control” over FSTI’s production, through FSTI’s storage limits and bleach’s short shelf life, creates a fact issue.
4. Whether DPC breached by failing to buy within a “reasonable time.”

Discussion. The Court granted summary judgment for defendants on this claim, Count II of the amended petition.

1. Production v. Capacity. Giving the terms of the agreement their ordinary meanings, the Court holds that “production” means what the facility actually made, and “capacity” means what it could make. DPC bought 100% of actual production, and FSTI did not dispute this. UCC Sec. 2.306(a)’s good-faith requirement limits actual output to output made in good faith and does not rewrite “production” as “capacity. No allegations of bad-faith production were made.
2. Lenape and Griffith II. The Court distinguishes Lenape Resources Corp. v. Tennessee Gas Pipeline Co. 925 S.W.2d 565 (Tex. 1996) on three grounds: its quantity term was expressly capacity-based; the Texas Supreme Court held Sec. 2.306 was inapplicable; and no party sought payment for gas never produced. The Court distinguishes Griffith v. Clear Lakes Trout Co. (Griffith II), 200 P.3d 1162 (Idaho 2009) on three grounds: (a) the Bulk Contract here was not a requirements contract, because it lacked buyer exclusivity – DPC’s sales exceeded FSTI’s production, so it necessarily purchased from others; (b) Griffith II did not require the buyer to ensure full-capacity production; and (3) control in Griffith II arose from contractual rights, not from the seller’s business realities.
3. FSTI’s “Control” theory. Letting a seller’s own storage limits convert a “production” term  into a “capacity” term would expose buyers to risks they cannot assess. The summary judgment record showed about 80,000 gallons of tank capacity that was never approached, plus FSTI had additional trailer storage. FSTI’s theory therefore depended on a hypothetical breach, which the court would not assume.
4. Reasonable time for Performance theory. Although a reasonable time is implied under Tex. Bus. & Com. Code Sec. 2.309(a) and In re Gruss, 693 S.W.3d 656 (Tex. App.-Houston [14th Dist.] 2023, no pet.), nothing showed the parties expected DPC to buy within whatever period let FSTI produce at capacity. Historical production averaged about 19,178 gallons per day, and production under the contract exceeded it. DPS bought all bleach within days, and the record showed that DPC responded to FSTI’s requests for additional orders and placed more orders. The record does not support FSTI’s assertion that DPC refused to purchase bulk bleach that had been produced at Greenville. The court notes FSTI had not pleaded this theory but it was raised in FSTI’s summary-judgment briefing and DPC did not object.