Texas Business Courts: Coming Soon
Unless you’ve been living under a rock—as many of us have at the end of the year—you’ve heard of the Texas Business Courts. Indeed, you may have attended a course on it or discussed it over dinner. It is one of the most interesting developments in the Texas legal industry in years.
As a quick primer, in June 2023, Governor Greg Abbott created the Texas Business Courts through House Bill 19. Once they are up and running, these Courts will hear certain types of complex commercial disputes if they fall within their jurisdiction (summarized here):
| Corporate disputes | At least $10 million |
| At least $5 million | “Qualified transaction” disputes |
| Publicly traded company/no min amount | Contract dispute + parties agree |
The Courts have fairly broad supplemental jurisdiction (assuming party and Judge agreement) over claims that “form part of the same case of controversy.” Jurisdiction is expressly carved out for personal injury, medical malpractice, or legal malpractice matters. There are a few notable exceptions to jurisdiction for liens and insurance matters.
The Courts are divided into 11 Divisions. The first 5 Divisions, effective September 1, 2024, are: Dallas (1st), Austin (3rd), San Antonio (4th), Fort Worth (8th), and Houston (11th).
Judges are appointed (rather than elected) to the Court, and Judges must have experience in commercial matters, be at least 35 years old, and have resided in their division for the past 5 years.
Aside from these basics, there is quite a constitutional-challenge buzz around the Texas Business Courts. Specifically, the type of challenges it will face and when those challenges will be brought. Many people suspect there will be a challenge to the selection of judges and another to the jurisdiction of the newly/created Fifteenth Court of Appeals. This new appellate court has exclusive intermediate appellate jurisdiction over certain matters—importantly, those matters involving governmental agencies. Will the Fifteenth Court (as created by the Governor) through Judges (appointed by the Governor) be able to make decisions over governmental agencies?
We are keenly interested in how parallel actions are treated in practice by the Texas Business Court and the local Harris County District Court. The Texas Government Code envisions that if parties do not agree to proceed with a similar case and controversy in the Texas Business Court, the related matter can move forward concurrently in its original jurisdiction.
The list of unknowns and uncertainties around this commercial court is long:
- Where will the Judges sit? Possibly in local law schools, but where else?
- How quickly will a foundational body of case law be created?
- Will written opinions from the Texas Business Courts have value in local district courts and vice versa?
- What will the filing fees look like?
- What about other costs?
- Will claims be consolidated to meet the jurisdictional thresholds?
- When will the jurisdictional threshold be determined—initial filing, at the time of transfer, or at some other point?
- Can parties really remove their case to the Texas Business Court at any point by agreement?
And the list goes on.
We are monitoring these developments closely and remain optimistic for the future of the Courts.
Photo Credit: Hyeon Jin Kim/ALM; Adobe Stock: ergapamungkas; Abbies Art Shop; ChinnishaArts
