Case Explained: Progressive Laboratories, Incorporated Plaintiff— v. Living Fuel, Incorporated Defendant—

Court: United States Court of Appeals for the Fifth Circuit

Filed: 2026-07-02

The fifth-circuit affirmed the district court’s judgment in a contract dispute concerning nutritional supplements, holding that the defendant-appellant, Living Fuel, breached its payment obligations under the first contract and that no installment contract existed between the parties. The court applied a clear error standard to factual findings and de novo review to legal issues, concluding that under Texas Business and Commerce Code § 3.404(d), Living Fuel failed to exercise ordinary care in paying an instrument induced by fraud because it ignored suspicious payment instructions that differed from prior dealings, such as demands for wiring funds to an out-of-state hedge fund account rather than accepting physical checks. Regarding the counterclaim for non-delivery under a second contract, the court held that the district court correctly found no breach and properly dismissed Living Fuel’s claim for additional damages due to a failure to support or advocate for those specific losses in the lower court. Furthermore, the court rejected the argument that the parties’ course of dealing created an installment contract under Texas Business and Commerce Code § 2.612(a), ruling that individual purchase orders were separate transactions with definite quantities that did not contemplate future dealings, and that unambiguous contractual language precludes reliance on course of dealing to alter terms. As a practical consequence, the judgment awarding Progressive Laboratories damages reduced by amounts retained under the second contract remains in effect, and Living Fuel’s counterclaims are dismissed without further relief.

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