Court Opinion

ID: 9906477
Source: CourtListenerOpinion
Date Created: 2023-12-03 08:29:42.61386+00
Date Added: 2024-06-11T09:24:26.926047
License: Public Domain

Affirmed and Opinion filed November 30, 2023.

                                             In the

                        Fourteenth Court of Appeals

                                   NO. 14-22-00469-CV

             HARTMAN INCOME REIT MANAGEMENT, Appellant

                                               V.
                          SUMMER ENERGY, LLC, Appellee

                       On Appeal from the 295th District Court
                               Harris County, Texas
                         Trial Court Cause No. 2021-31657

                                      OPINION

      In February 2021, Winter Storm Uri caused blackouts across the state as low
temperatures drove electricity demand up while simultaneously impairing the ability
of power generators and transmitters to produce and deliver. From February 15th
until mid-morning on the 19th, ERCOT,1 the entity that operates Texas’s electric-

      1
          ERCOT is the acronym for the Electric Reliability Council of Texas.
power grid,2 set the wholesale price of electricity at $9,000/MWh—the maximum
then allowable.3 Pursuant to its multiple “Real Time Index Full Pass Through”
contracts with commercial-property owner Hartman Income REIT Management,
retail electric provider Summer Energy, LLC, included these charges in Hartman’s
electric bills. Hartman refused to pay the full amount billed, arguing that ERCOT
should have stopped imposing the high price thirty-three hours earlier than it did.

       Summer sued Hartman for breach of contract, and Hartman countersued for
breach of contract, breach of the duty of good faith, and declaratory relief. After a
non-jury trial, the trial court denied Hartman’s claims and held that the parties’
unambiguous contracts required Hartman to pay a price for electricity that included
the rate set by ERCOT. Hartman appealed, but we conclude that the trial court
correctly construed the contracts and denied Hartman relief. Thus, we affirm the trial
court’s judgment.

                                      I. BACKGROUND

       Appellant Hartman Income REIT Management owns and operates over fifty
buildings, more than thirty of which are in Houston. Hartman obtains electricity for
its properties through retail electric provider (REP) Summer Energy, LLC. REPs do
not themselves generate energy;4 rather, REPs like Summer “arrange for purchase
and delivery of electricity” on a retail customer’s behalf. This service is

       2
          See CPS Energy v. Elec. Reliability Council of Tex., 671 S.W.3d 605, 612 (Tex. 2023)
(structure of Texas’s electric-utility industry requires ERCOT “to operate the wholesale electric
market”).
       3
        The Public Utility Commission of Texas later lowered that cap to $5,000. See 16 TEX.
ADMIN. CODE § 25.509(b)(6).
       4
       See Act of May 27, 1999, 76th Leg., R.S., ch. 405, § 11, sec. 31.002(17), 1999 TEX. GEN.
LAWS 2543, 2549 (amended 2021 & 2023).

                                               2
administratively defined as an “electricity product,” which is just a “specific type of
retail electricity service developed and identified by a REP.”5

      In May 2020, Hartman entered into five contracts with Summer covering a
total of forty-three properties; the contracts differ only in the addresses served. In
each, Hartman purchased Summer’s “Real Time Index Full Pass Through +
$0.003660/kwh Retail Adder.” Hartman agreed that one component of the Product’s
price would be the “Real Time Index Price.”

      The contracts do not define “Real Time Index Price.” Hartman maintains that
the term is ambiguous; Summer disagrees. Each side presented witnesses who
testified that this term refers to the real-time energy rate that ERCOT reports at 15-
minute intervals; neither side presented controverting evidence. Hartman stipulated
that this component of its electricity bills accurately reflects the real-time prices
published by ERCOT. Moreover, Hartman does not contest the parts of Summer’s
bills that include the $9,000/MWh imposed by ERCOT from February 15th through
nearly all of February 17, 2021, but Hartman maintains that ERCOT should have
stopped imposing the market cap at 11:55 p.m. on February 17th rather than at
approximately 9:00 a.m. on February 19th. Hartman contends that the “Real Time
Index Price” referred to in its contracts with Summer must be an index that sets
prices according to a pre-defined formula, and because ERCOT did not follow a pre-
defined formula during those hours, Summer was not permitted to pass through those
charges. Hartman additionally pleaded that Summer breached a duty of good faith
by billing Hartman for those charges.

      5
          16 TEX. ADMIN. CODE § 25.5(39).

                                            3
      After a nonjury trial, the trial court concluded that the contracts’ pricing
provisions were unambiguous. The trial court ruled in Summer’s favor and against
Hartman.

                                II. ISSUES PRESENTED

      In three issues, Hartman argues that the trial court erred in (a) its construction
of the parties’ contracts, (b) considering extrinsic evidence at trial even though the
trial ultimately concluded that the contracts are unambiguous, and (c) failing to find
that Summer breached a duty of good faith.

                         III. CONSTRUING THE CONTRACTS

      When construing a contract, we apply the de novo standard of review.
Barrow-Shaver Res. Co. v. Carrizo Oil & Gas, Inc., 590 S.W.3d 471, 479 (Tex.
2019). Our primary objective is to effectuate the written expression of the parties’
intent. Pathfinder Oil & Gas, Inc. v. Great W. Drilling, Ltd., 574 S.W.3d 882, 889
(Tex. 2019). To do so, we “consider the entire writing in an effort to harmonize and
give effect to all the provisions of the contract so that none will be rendered
meaningless.” Id. (quoting Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983)). We
do not consider a provision in isolation and give it controlling effect; rather, we
consider each provision in the context of the contract as a whole. Plains Expl. &
Prod. Co. v. Torch Energy Advisors Inc., 473 S.W.3d 296, 305 (Tex. 2015). We give
the contract’s words their plain, common, or generally accepted meaning unless the
contract shows that the parties used words in a technical or different sense. Id.
Ordinarily, the writing alone is sufficient to express the parties’ intentions, “for it is
objective, not subjective, intent that controls.” Matagorda Cty. Hosp. Dist. v.
Burwell, 189 S.W.3d 738, 740 (Tex. 2006) (per curiam) (quoting City of Pinehurst
v. Spooner Addition Water Co., 432 S.W.2d 515, 518 (Tex. 1968)).

                                            4
       Whether a contract is ambiguous is a question of law. Nettye Engler Energy,
LP v. BlueStone Nat. Res. II, LLC, 639 S.W.3d 682, 690 (Tex. 2022). We will
conclude that a contract is ambiguous only if, after applying the pertinent rules of
construction, it is subject to more than one reasonable interpretation. Finley Res.,
Inc. v. Headington Royalty, Inc., 672 S.W.3d 332, 340, 344 (Tex. 2023). If the
contract can be given a definite legal meaning or interpretation when considered as
a whole, and in light of the objective circumstances surrounding its execution, then
the contract is not ambiguous, and we will construe it as matter of law. See id.
Evidence of the objectively determinable facts and circumstances surrounding the
contract’s formation—including commercial setting, trade custom, and trade
usage—may inform the meaning of the language chosen even in an unambiguous
contract. See id. We also may consider the parties’ sophistication and the
participation of legal counsel, “which carry an expectation that the parties were
aware of what to bargain for and understood the terms of their written agreement.”
Id. But extrinsic evidence may only give the parties’ words “a meaning consistent
with that to which they are reasonably susceptible”; it “cannot contradict, change,
enlarge, or supplement the contract language.” Id. at 345.

A.     Summer’s Indexed Products Described

       Hartman purchased Indexed Products, and in the pivotal language of the
product description, the parties agreed that

       Indexed Products have a price that changes according to a pre-defined
       pricing formula that is based on publicly available indices or
       information.6

       6
          The Public Utility Commission similarly defines an “indexed product” as “[a] retail
electric product for which the price, including recurring charges, can vary according to a pre-
defined pricing formula that is based on publicly available indices or information and is disclosed
to the customer . . . .” 16 TEX. ADMIN. CODE § 25.475(b)(6). Although section 25.475 was
amended effective January 6, 2022, this language has not changed.

                                                5
       Hartman argues that this provision means that the “indices or information”
must be calculated “according to a pre-defined pricing formula.” According to
Hartman, Summer cannot rely on the prices set by ERCOT on February 18th and
19th of 2021 when calculating Hartman’s bills for those hours, because ERCOT did
not follow a pre-defined formula during that time, instead setting wholesale
electricity prices at the maximum permissible. But, simply parsing the syntax and
grammar of the sentence’s plain language shows that Hartman’s interpretation
reverses the relationship between “pre-defined pricing formula” and “publicly
available indices or information.” See, e.g., U.S. Polyco, Inc. v. Tex. Cent. Bus. Lines
Corp., No. 22-0901, 2023 WL 7238791, at *2 (Tex. Nov. 3, 2023) (per curiam)
(competing constructions turned on “the syntactic issue” of identifying the part of a
sentence to which a modifier applied); RSUI Indem. Co. v. The Lynd Co., 466 S.W.3d
113, 118 (Tex. 2015) (courts read contractual words and phrases “in context and in
light of the rules of grammar and common usage”).

       The relative pronoun “that” introduces a restrictive clause specifying that the
Indexed Products’ price “changes according to a pre-defined pricing formula.” This
clause applies only to the preceding noun “price”; it does not modify words that
appear later in the sentence.7 Within this clause, the word “formula” is modified by
the adjective phrase “pre-defined pricing,” so the formula Summer will use to
calculate its Indexed Products’ price will be pre-defined, that is, the formula will be
defined before Summer begins rendering services for which it charges a “price.”
This clause tells us that, rather than agreeing that Summer will always charge the

       7
          “Relative pronouns require an antecedent—that is, a preceding noun—to which they
refer,” because the restrictive clause that follows the relative pronoun modifies the noun that most
closely precedes the relative pronoun. See A.S. Horner, Inc. v. Navarrette, 656 S.W.3d 717, 722
(Tex. App.—El Paso 2022, no pet.) (sub. op. on denial of reh’g) (citing BRYAN GARNER, THE
REDBOOK: A MANUAL ON LEGAL STYLE, §§ 10.9 &10.10, at 178–79 (3d ed. 2013)).

                                                 6
same pre-defined price for electricity throughout the life of the contract, the parties
instead agree that Summer will always use the same pre-defined formula to calculate
the price.

      “Pre-defined pricing formula” is followed by the word, “that,” and again, it
introduces a restrictive clause modifying the immediately preceding noun. Thus, the
clause that follows the word “that” restricts the meaning of the “pre-defined pricing
formula” that Summer will use to calculate its Indexed Products’ price. This clause
tells us that Summer’s pre-defined pricing formula “is based on publicly available
indices or information.” The words “indices or information” are modified only by
the adjective phrase, “publicly available.”

      Putting all of this together, this sentence’s modifiers impose four requirements
on Summer’s Indexed Products’ price. First, although the price of Summer’s
Indexed Products is variable, Summer must always calculate that price using the
same formula. Second, this pricing formula must be “pre-defined,” that is, before
Summer provides services for which it charges Hartman. Third, Summer’s pre-
defined pricing formula must be based on indices or information. And fourth, the
“indices or information” used in Summer’s pre-defined pricing formula must be
“publicly available.”

      This provision is unambiguous. Contrary to Hartman’s contentions, it does
not require a third party––ERCOT––to use a pre-defined formula to calculate the
prices published in that entity’s publicly available indices or information; it requires
only that Summer use a pre-defined formula when calculating the prices it charges
Hartman under the contract. “Pre-defined pricing formula” cannot be read to restrict
the meaning of “indices or information,” because “pre-defined pricing formula”
precedes the words “indices or information” in the sentence.

                                           7
B.     The Pre-Defined Pricing Formula

       Our next step is to identify the pre-defined pricing formula to which the parties
agreed. Although some witnesses testified that the pre-defined pricing formula is not
in the contracts, the construction of an unambiguous contract is a question of law,
and neither the witnesses nor the court can vary its terms. See Finley Res., 672
S.W.3d at 345 (surrounding circumstances “can neither change what the contract
says nor create an ambiguity”). And on this issue, the Agreements are again
unambiguous.

       On the first page of the contracts, the parties agreed that “current pricing for
service is indicated in your Contract Confirmation.” The Contract Confirmation
page then identifies the specific product purchased and sets forth the formula for
calculating the product’s price, as follows:

       Product:        REAL TIME INDEX FULL PASS THROUGH +
                       $0.003660/kwh Retail Adder
                                                 ...
       Pricing: The price for the term of the contract is composed of:
       i.      The sum of the Real Time Index Price, plus Line Losses, plus
               Ancillary Services, plus nodal basis, plus the retail adder
               multiplied by the total kilowatt hours of energy. You will be
               assessed a monthly base charge of $0.00; plus
       ii.     All TDSP8 charges, non-bypassable charges, taxes and other
               fees.
This is a formula; it is pre-defined; and it used to calculate the price that Hartman
agreed to pay Summer for the Indexed Products Hartman purchased. In accordance
with the name of the product, the pre-defined pricing formula specifies that Summer

       8
          “TDSP” means “transmission and distribution utility.” With certain exceptions, a TDSP
is an entity “that owns or operates for compensation in this state equipment or facilities to transmit
or distribute electricity.” TEX. UTIL. CODE § 31.002(19).

                                                  8
will “pass through” the publicly available Real Time Index Price to Hartman. Like
the description of Summer’s Indexed Products generally, nothing on the Contract
Confirmation page––or anywhere in the parties’ contracts––requires the “Real Time
Index Price” to be calculated according to a pre-defined formula. Indeed, the contract
contains no representations at all about how the “Real Time Index Price” is
calculated.

      To construe the contract, all that remains to do is to identify the “Real Time
Index Price.”

C.    The “Real Time Index Price”

      The Agreements do not define “Real Time Index Price.” Although Hartman
asserts that this means the term is ambiguous, the mere absence of a contractual
definition does not render a term ambiguous. “Real Time Index Price” is ambiguous
only if, after applying the available interpretive tools, it is objectively subject to more
than one reasonable meaning. See, e.g., U.S. Polyco, 2023 WL 7238791, at *5 n.1;
Finley Res., 672 S.W.3d at 344.

      Here, however, the evidence conclusively established that “Real Time Index
Price” is the price of electricity in a given location as reported by ERCOT in fifteen-
minute intervals.

      It is so well-established in the Texas electric industry that an “indexed
product” is one that passes through the real-time prices set by ERCOT that this usage
is now memorialized in the Texas Utilities Code. Section 39.110(a) states that
“‘wholesale indexed product’ means a retail electric product in which the price a
customer pays for electricity includes a direct pass-through of real-time settlement
point prices determined by the independent organization certified under Section
39.151 for the ERCOT power region.” TEX. UTIL. CODE § 39.110(a). ERCOT is the

                                            9
independent organization certified by the Public Utility Commission to perform
certain mandatory functions. See TEX. UTIL. CODE § 39.151 (requiring PUC to
certify such an organization); 16 TEX. ADMIN. CODE § 25.361(b) (certifying ERCOT
as that organization). And in particular, ERCOT is required to “disseminate
information relating to . . . market prices.” 16 TEX. ADMIN. CODE § 25.361(b)(14).

      All of the witnesses who were asked to identify the “Real Time Index Price”
did so in a manner that conforms to section 39.110(a). The trial court properly
considered their testimony, which, far from varying the contract’s terms, as would
be the case with parol evidence, demonstrated that “Real Time Index Price” is
objectively susceptible of only one reasonable meaning. See Finley Res., 672 S.W.3d
at 344 (“Commercial setting, trade custom, and trade usage are objective
surrounding circumstances that may shed light on the meaning of contract
language.”).

      As Summer’s chief supply officer Travis Andrews succinctly stated,
“Realtime index is a price published by ERCOT that changes every 15 minutes based
upon the actual running conditions at that point in time.” Andrews affirmed that
“realtime energy prices” are “just the price set by ERCOT.”

      Gilbert Okoronkwo, Summer’s director of sales, similarly testified that
“[e]very 15 minutes there’s a price set by ERCOT” and that Hartman’s electric bills
include this “Realtime Locational Margin Price.” Jeremy Wallace, Summer’s vice
president of sales, likewise testified that Summer obtains the realtime index price
from ERCOT.

      The testimony of Hartman’s corporate representive Shane Cawood reflected
the same understanding of “Real Time Index Price.” Cawood is Hartman’s director
of operations over asset services, and he manages Hartman’s electricity contracts.
When asked, “And this realtime index, who sets those prices,” Cawood answered,
                                        10
“I believe that it’s ERCOT. They at least report it.” When asked where one would
find the energy rate in a realtime index contract, Cawood said, “I could find that
through ERCOT.” He explained that in a “realtime index full pass through” contract,
“the REPs [i.e., retail energy providers] pass through their portion of the energy rate
that’s based off of the realtime market rate.” The trial court asked Cawood to repeat
this, and Cawood said, “the reps, like Summer Energy, for that portion of your bill,
the energy rate that’s based on the realtime pricing in 15-minute increments, they
pass on their portion of that cost.” He agreed that the realtime index pass through
contract “is based on the index prices set by ERCOT.” Cawood’s testimony accords
perfectly with the statutory definition of a “wholesale indexed product.”

       In sum, uncontroverted objective evidence of the commercial setting and trade
usage established that “Real Time Index Price” can reasonably refer only to a given
location’s electricity prices as reported in fifteen-minute intervals by ERCOT.9 We
conclude that the contracts unambiguously require Summer to “pass through” that
price.10

       Hartman offers no alternative. The crux of Hartman’s argument is that the
definition of “Indexed Product” requires the Real Time Index Price to be set
according to a pre-defined formula, and because ERCOT did not follow a pre-

       9
          Hartman contends that the trial court must have impermissibly relied upon the parties’
course of performance in construing the contract. See Burlington Res. Oil & Gas Co. LP v. Tex.
Crude Energy, LLC, 573 S.W.3d 198, 206 (Tex. 2019) (“Where contracts are unambiguous, we
decline to consider the parties’ course of performance to determine its meaning.”). In support of
this position, Hartman points out that the trial court concluded that the contracts’ “pricing terms
are not ambiguous,” but nevertheless found that “Hartman had Real Time Index Price contracts
prior to the current dispute, and Hartman has remained on Real Time Index Price contracts since
the dispute.” Because the contracts are unambiguous as a matter of law, we disregard this finding
as immaterial. See Arriaga v. Cartmill, 407 S.W.3d 927, 931 (Tex. App.—Houston [14th Dist.]
2013, no pet.) (disregarding trial court’s immaterial finding).
       10
           Given the evidence summarized above, we would agree with the trial court’s
construction of the contracts even if we concluded that the contracts were ambiguous.

                                                11
defined formula during the thirty-three hours at issue, ERCOT’s real-time posted
prices ceased to be the Real Time Index Price during that time. But as we
demonstrated at the start of this analysis, the parties did not agree that the Real Time
Index Price would follow a pre-defined formula.

      Moreover, we construe a contract as a whole, and the and the contracts for
Summer’s Indexed Products allocate the risk of price volatility. For example, had
Hartman chosen a fixed-price contract, then Summer would bear the risk of a
dramatic price increase, such as occurred in February 2021. But Hartman chose
Indexed Products and agreed that Summer would “pass through” ERCOT’s prices
to Hartman. As between Summer and Hartman, the Indexed Products allocated the
risk of a dramatic price increase to Hartman. We cannot rewrite the parties’ contracts
to reverse that allocation. See LAN/STV v. Martin K. Eby Constr. Co., 435 S.W.3d
234, 240 (Tex. 2014) (“Risks of economic loss tend to be especially well suited to
allocation by contract. . . . A contract that settles responsibility for such a risk will
therefore be preferable in most cases to a judicial assignment of liability after harm
is done.” (quoting RESTATEMENT (THIRD) OF TORTS: LIABILITY FOR ECONOMIC
HARM, § 1 cmt. c (Tentative Draft No. 1))).

      Hartman acknowledges in its brief that ERCOT is “the entity that posts prices
to the Real Time Index Price [sic]” and “ERCOT held the price at the offer cap of
$9,000 per MWh” throughout the thirty-three hours included in the challenged
invoices. These facts are beyond dispute. But, in arguing that it should instead “pay
an amount based on the true real time market energy price, not the unlawful price
reported by ERCOT,” Hartman overlooks that, for as long as ERCOT held the
wholesale price to $9,000/MWh, that remained the de facto market price. As Carrie
Bivens, the director of the ERCOT independent market monitor Potomac
Economics, testified, ERCOT “manually intervene[d] to ensure the price was

                                           12
$9,000.” There is no evidence that, during those hours, there was some other market
in which Summer could have purchased electricity for Hartman’s use at a lower
price. And even if that had been possible, the parties’ contracts required Summer to
adhere to its pre-defined pricing formula, and that formula requires Summer to use
the publicly available Real Time Index Price.

      We overrule Hartman’s first and second issues.

                            IV. DUTY OF GOOD FAITH

      In its third issue, Hartman argues that Summer breached a duty of good faith
under the Uniform Commercial Code (UCC). The UCC provides that “[e]very
contract . . . imposes an obligation of good faith in its performance and
enforcement.” TEX. BUS. & COM. CODE § 1.304. The law presumes that contracting
parties act in good faith. Contractors Source, Inc. v. Amegy Bank Nat’l Ass’n, 462
S.W.3d 128, 135 (Tex. App.—Houston [1st Dist.] 2015, no pet.). As used here,
“good faith” means “honesty in fact and the observance of reasonable commercial
standards of fair dealing.” TEX. BUS. & COM. CODE § 1.201(b)(20).

      The UCC does not create an independent cause of action for breach of the
duty of good faith. Rather, section 1.304’s obligation of good faith means that if a
party fails “to perform or enforce, in good faith, a specific duty or obligation under
the contract,” then that party has breached the contract, or in some circumstances,
loses a remedial right or power. Id. § 1.304 cmt. 1. As the party with the burden of
proof on this issue, Hartman must demonstrate on appeal that the evidence
conclusively established, as a matter of law, that Summer breached the contract by
failing in this duty. See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001)
(per curiam).

                                         13
       Hartman begins by asserting that Summer breached a duty of good faith by
charging the prices posted by ERCOT, that is, by “passing through” the prices
published in the “Real Time Index Price.” But, this is precisely what Hartman agreed
to. The contracts left Summer no discretion to deviate from the pre-defined pricing
formula, and Summer has no control over the Real Time Index Price. Thus, the
authorities Hartman cites concerning contracts in which some provision rests on one
party’s discretion are inapposite.11

       Hartman next contends that Summer breached its duty of good faith by failing
to challenge the prices that ERCOT posted to the Real Time Index during the hours
in dispute.12 Specifically, Hartman suggests that Summer could have sued ERCOT;
however, ERCOT has sovereign immunity from suit. See CPS Energy v. Elec.
Reliability Council of Tex., 671 S.W.3d 605, 621 (Tex. 2023). Alternatively,
Hartman states that market participants, such as Summer, can seek the PUC’s review
of “a new or amended ERCOT rule.” See 16 TEX. ADMIN. CODE § 25.362(c)(4). But,
Hartman has not shown that Summer had a duty to seek such review.

       The UCC’s requirement of good faith could not create such a duty. “The UCC
defines duties that grow out of specific contract terms and obligations.” Apache
Corp. v. Dynegy Midstream Servs., Ltd. P’ship, 214 S.W.3d 554, 563 (Tex. App.—
Houston [14th Dist.] 2006), aff’d in part, rev’d in part on other grounds, 294 S.W.3d

       11
           See, e.g., TEX. BUS. & COM. CODE § 2.305(b) (“A price to be fixed by the seller or by
the buyer means a price for him to fix in good faith.”); Shell Oil Co. v. HRN, Inc., 144 S.W.3d 429,
435 (Tex. 2004) (construing that provision); Price v. Spielman Motor Sales Co., 261 A.D. 626,
629, 26 N.Y.S.2d 836 (App. Div. 1941) (dealer who reserved the right to reappraise a trade-in
vehicle must reappraise in good faith); Umlas v. Acey Oldsmobile, Inc., 62 Misc. 2d 819, 821, 310
N.Y.S.2d 147, 149 (Civ. Ct. 1970) (same); Steven J. Burton, Breach of Contract and the Common
Law Duty to Perform in Good Faith, 94 HARV. L. REV. 369, 383 (1980) (the “good faith
performance doctrine” means that when a contract is subject to a condition within one party’s
effective control, the party must exercise that control in good faith).
       12
          Summer challenged ERCOT’s charges for Ancillary Services but was unsuccessful. It
did not challenge the prices ERCOT posted to the Real Time Index.

                                                14
164 (Tex. 2009). It does not create new obligations but “merely governs the conduct
by which the party must fulfill the contractual obligation to which it applies.”
Dallas/Fort Worth Int’l Airport Bd. v. Vizant Techs., LLC, 576 S.W.3d 362, 370
(Tex. 2019). Thus, the UCC’s good-faith standard must be tied to a specific
contractual duty or obligation. N. Nat. Gas Co. v. Conoco, Inc., 986 S.W.2d 603,
606–07 (Tex. 1998) (op. on reh’g). Absent a specific contractual obligation, the
UCC’s good-faith requirement is inapplicable. Barrow-Shaver Res. Co, 590 S.W.3d
at 490.

      “Because disregard of a contractual right is an element of the test” of good
faith, Hartman “must point to some provision in the contract” obligating Summer to
challenge the prices posted to the Real Time Index Price. See Commercial Nat’l
Bank of Beeville v. Batchelor, 980 S.W.2d 750, 753 (Tex. App.—Corpus Christi–
Edinburg 1998, no pet.). But there is no such contractual provision, nor does
Hartman contend otherwise.

      We overrule Hartman’s third issue.

                                  V. CONCLUSION

      In purchasing Indexed Products from Summer, Hartman unambiguously
agreed that Summer would pass through to Hartman the real-time electricity prices
reported by ERCOT. Summer had no obligation to Hartman to challenge those prices
but is instead entitled to enforce the contracts as written. We accordingly affirm the

                                         15
trial court’s judgment without addressing Hartman’s arguments about the propriety
of the prices ERCOT set during Winter Storm Uri.

                                      /s/    Tracy Christopher
                                             Chief Justice

Panel consists of Chief Justice Christopher and Justices Bourliot and Hassan.

                                        16