A New Era in Texas – Texas Business Court Begins Hearing Cases

Ushering in a new era in the Texas court system, the Texas Business Court and Fifteenth Court of Appeals, created by House Bill 19, began hearing cases on September 1, 2024. As previously explained by Holmes Firm PC shareholder JD Reed, the Business Court offers a specialized forum to litigate before judges who have expertise in complex commercial litigation matters. In update, this article will discuss several particulars of the new Business Court as it formally gets underway.

Current Divisions with Judges Appointed

Though the Business Court will eventually consist of eleven divisions ¹, as of the September 1 start date, only the First (Dallas County), Third (Travis County), Fourth (Bexar County), Eighth (Tarrant County) and Eleventh (Harris County) have judges appointed. Business Court judges are appointed by the Governor, not elected, and serve two-year terms but can be re-appointed multiple times. ²

Affecting those in the Dallas area, on September 19, 2024, Governor Abbott swore in two esteemed judges to serve in the First Business Court Division in Dallas, Andrea Bouressa, former Judge of the 471^st District Court, Collin County, Texas and William “Bill” Whitehill, former Justice of the Texas Fifth Court of Appeals in Dallas. The First Business Division covers the counties of Collin, Dallas, Ellis, Fannin, Grayson, Kaufman, and Rockwall. Holmes Firm PC proudly hosted Judge Whitehill for an informative learning session at its office in Dallas only several days after he was formally sworn in.

Texas Business Court Jurisdiction

Regarding jurisdiction, the Business Court has concurrent jurisdiction with district courts and may hear cases that exceed $5 million in controversy if the claims involve:

(1) a derivative proceeding;
(2) actions regarding the governance, governing documents, or internal affairs of an organization;
(3) actions in which a claim under state or federal securities or trade regulation law is asserted against an organization;
(4) actions by an organization brought against an owner of the organization;
(5) actions alleging that an owner breached a duty owed to the organization;
(6) actions seeking to hold an owner of an organization liable for an obligation of the organization; and
(7) actions arising out of the Texas Business Organizations Code.³

The Business Court has jurisdiction, regardless of the amount in controversy, if a party to the action is a publicly traded company.⁴

Additionally, the Business Court has jurisdiction over actions exceeding $10 million that arise out of:

(1) so-defined “qualified transactions”;
(2) contracts or commercial transactions in which the parties agreed that the Business Court would have jurisdiction; and
(3) an organization’s alleged violation of the Texas Finance Code or the Texas Business & Commerce Code.⁵

The Business Court has supplemental jurisdiction over any other claim that forms part of the same case or controversy.⁶

Regarding the conduct of trials, hearings and other business, the Business Court is controlled by the same rules and procedures that apply to Texas district courts.⁷

Transfer of a Case to Business Court

For cases that could have been filed in the Business Court but were filed in a district or county court, cases may be removed and transferred to the appropriate division of the Business Court.⁸ If agreed, parties may remove the case at any time during the pendency of the lawsuit.⁹ If the parties do not agree, a party must seek to remove no later than the 30^th day after the date the party discovered, or reasonably should have discovered, facts that would establish the Business Court’s jurisdiction.¹⁰

Only time will tell if the new Business Court successfully accomplishes the Legislature’s goals. But the new era has arrived, and clients and practitioners alike need to familiarize themselves with this new reality as quickly as possible.

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¹ Acts 2023, 88th Leg., R.S., Ch. 380 (H.B. 19), Sec. 6, eff. September 1, 2023.
² Tex. Gov’t Code § 25A.009(a)-(c).
³ Id. at § 25A.004(b).
⁴ Id. at § 25A.004(c).
⁵ Id. at § 25A.004(d).
⁶ Id. at § 25A.004(f).
⁷ Id. at § 25A.015(g).
⁸ Id. at § 25A.006(d).
⁹ Id. at § 25A.006(f).
¹⁰ Id. at § 25A.006(f)(1).