Memorandum Opinion by Justice Boatman, 14-24-00683-CV, January 29, 2026.
On appeal from Unknown
Synopsis
The Fourteenth Court of Appeals affirmed a trial court’s judgment for lost profits, holding that an expert’s damages model is legally sufficient when predicated on objective historical sales data and the parties’ expressed contractual intent. The court further clarified that a commercial agreement containing specific pricing schedules and fee structures is a binding contract rather than an unenforceable “agreement to agree,” even if some performance remains discretionary.
Relevance to Family Law
In high-net-worth divorces involving the valuation of a spouse’s closely held business, the characterization of future income and the “reasonable certainty” of lost business opportunities are frequent flashpoints. This opinion provides a roadmap for Family Law litigators to either bolster or exclude expert testimony regarding business valuation and “waste” claims. Specifically, it confirms that if a spouse’s business has a historical track record of sales, an expert can use that data to project lost profits with “reasonable certainty,” even if the business environment is subject to some discretion or changing conditions.
Case Summary
Fact Summary
Buying Power, Inc., a Group Purchasing Organization (GPO), entered into a contract with Graybar Electric Company, Inc. Under the agreement, Graybar was to provide discounts to Buying Power’s members, and in exchange, Graybar would pay Buying Power a 5% administrative fee on those sales. Despite the agreement identifying over 300 products and specific discount schedules, Graybar failed to enroll the members who applied and sought to terminate the contract almost immediately, claiming a “different interpretation” of the terms. Buying Power sued for breach of contract. At trial, Buying Power’s expert, David Fuller, calculated lost profits by looking at Graybar’s actual, “real-world” sales to those same customers during the contract term—assuming that if the GPO agreement had been honored, those sales would have flowed through the program. The jury awarded damages based on this model, and Graybar appealed, challenging the legal sufficiency of the expert’s assumptions.
Issues Decided
The court addressed two primary issues: first, whether the expert’s assumptions—that Graybar would have accepted all member orders and would not have raised prices—were supported by legally sufficient evidence; and second, whether the GPO agreement was an unenforceable “agreement to agree” due to alleged indefinite terms regarding price and participation.
Rules Applied
The court applied the “reasonable certainty” standard for lost profits as articulated in ERI Consulting Eng’rs, Inc. v. Swinnea and Horizon Health Corp. v. Acadia Healthcare Co. Under this standard, while exactness is not required, lost profits must be based on objective facts, figures, or data. The court also looked to Pediatrics Cool Care v. Thompson to evaluate the legal sufficiency of expert assumptions, noting that an expert’s opinion is only as good as the facts upon which it is based. Regarding contract formation, the court applied the principle that an agreement is enforceable if it addresses “essential terms” with enough precision to determine the parties’ obligations, even if the preamble is the primary source of evidence for the parties’ intent.
Application
The legal story here centers on the bridge between “speculation” and “reasonable certainty.” Graybar argued that the expert’s model was “purely speculative” because Graybar had the discretion to reject orders. However, the court found a “scintilla of evidence” to the contrary within the contract’s own preamble and the testimony of Graybar’s executives. The court reasoned that because Graybar’s leadership testified they intended to act in good faith and the preamble stated the agreement’s purpose was to “enable” purchases, the expert was justified in assuming those sales would have occurred.
Furthermore, the court rejected the “agreement to agree” defense. Graybar contended the contract was illusory because it didn’t force members to buy or Graybar to sell. The court looked at the detailed exhibits—listing 315 specific products and a fixed 5% fee—and determined these were not “vague” aspirations but definite terms. The court emphasized that the use of “real-world sales” data provided the necessary “objective facts and figures” to move the expert’s testimony from the realm of hope into the realm of legally sufficient evidence.
Holding
The court held that the expert’s lost profits testimony was supported by legally sufficient evidence because the assumptions used (acceptance of orders and price stability) were grounded in the parties’ expressed intent and historical sales data. The court refused to find the expert’s model speculative simply because it relied on the assumption that the parties would perform their contractual duties in good faith.
The court also held that the GPO agreement was a valid and enforceable contract. The presence of specific product lists, discount schedules, and administrative fee percentages provided the essential terms necessary to distinguish the agreement from an unenforceable “agreement to agree.”
Practical Application
For the family law practitioner, this case is a double-edged sword. When representing the “out-spouse” in a property division involving a business, use this case to argue that an expert’s valuation based on “historical sales” is legally sufficient to prove the value of the business or the extent of community waste. Conversely, if you are defending the business-owner spouse, this case warns that a “good faith” clause or a preamble expressing intent can be used to lock your client into a damages model that they otherwise thought was discretionary.
Checklists
Bolstering Business Valuation Expert Testimony
- Historical Data: Ensure the expert uses “real-world” sales or financial data from the specific business or its direct competitors.
- Intent Documents: Scour the business’s contracts and preambles for language indicating an “intent to perform” or “enabling” growth to support growth assumptions.
- Neutralize Discretion: If the opposing party argues that the business income was “discretionary,” point to historical good-faith performance to justify the expert’s assumptions.
Avoiding the “Agreement to Agree” Pitfall in MSAs
- Specificity: Ensure Mediated Settlement Agreements regarding the future sale of a business or property contain specific schedules, price formulas, or fee percentages.
- Definite Terms: Avoid language like “the parties will negotiate the discount at a later date,” which under Graybar would be more susceptible to an enforceability challenge.
Citation
Graybar Electric Company, Inc. v. Buying Power, Inc., No. 14-24-00683-CV (Tex. App.—Houston [14th Dist.] Jan. 29, 2026, no pet. h.) (mem. op.).
Full Opinion
Family Law Crossover
This civil ruling can be weaponized in Texas divorce litigation to prove “reimbursement” claims or “waste” of the community estate. If a spouse intentionally sabotages a business relationship or refuses to “enroll” new clients/members to artificially deflate the business’s value during a pending divorce, Graybar provides the legal authority to hold them accountable. By using the “real-world sales” of the customers the spouse rejected, a forensic expert can now more easily survive a legal sufficiency challenge on lost profits. It effectively lowers the bar for proving what “would have happened” by tethering the expert’s “assumptions” to the “expressed intent” found in the business’s foundational contracts.
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