On September 1, 2024, the Texas Business Court and Fifteenth Court of Appeals, created by House Bill 19, will begin hearing cases. The Business Court was designed to provide a specialized venue for commercial disputes presided over by judges with a smaller docket and judicial or litigation experience in complex commercial matters. Clients may be familiar with business court venues, as nearly half of all states have enacted some form of specialized trial court for handling civil business and commercial disputes. Reviewing the structure and function of the Texas Business Court may help clients decide whether to bring suit in this venue or leave litigation in state district courts.
Key Takeaways for Commercial Clients to Consider:
Venue
The Business Court will be divided into eleven divisions—each division covering a particular Administrative Judicial Region that consists of the county in which the court sits as well as surrounding counties. The divisions of the Business Court for the First, Third, Fourth, Eighth, and Eleventh Division (which sit, respectively, in Dallas, Travis, Bexar, Tarrant, and Harris counties) will each have two appointed judges when the Business Court is created on September 1, 2024.1 The remaining divisions of the Business Court will not have an appointed judge until at least July 1, 2026.2 Accordingly, businesses should consider whether they want to utilize the Business Court, rather than state district court, to adjudicate their dispute and determine whether the Business Court is active in a proper venue for the claim.
Judges
Litigants may prefer Business Court judges for complex commercial disputes because these judges will have some level of subject matter expertise. Judges appointed to the Business Court must meet certain requirements, including at least 10 years’ experience in practicing complex civil business litigation; practicing business transaction law; serving as a civil judge within the state; or a combination of the three.3 Business Court judges are appointed by the Governor, not elected, and they will serve a two-year term.4 Accordingly, litigants may need to weigh the value of a judge’s expertise with the potential that a case may change hands in the middle as a result of the presiding judge’s relatively short term.
The judges who have been appointed are:
- Fifteenth Court of Appeals: Scott A. Brister, Scott K. Field, and April L. Farris;
- First Business Court Division (Dallas County): Andrea Bouressa and William Whitehill;
- Third Business Court Division (Travis County): Melissa Andrews and Partick K. Sweeten;
- Fourth Business Court Division (Bexar County): Marialyn Barnard and Stacy Sharp;
- Eighth Business Court Division (Tarrant County): Jerry Bullard and Brian Stagner; and,
- Eleventh Business Court Division (Harris County): Sofia Adrogue and Grant Dorfman.
Jurisdiction
The Business Court has limited concurrent jurisdiction with state district courts. First, it may hear cases with at least $5 million in controversy if the action relates to corporate governance or derivative proceedings; by an organization or owner against the organization or owner concerning an act or omission by the owner in their organizational capacity; is against an owner, controlling person or managerial official of an organization for breach of a duty owed to the organization; seeks to hold the owner or governing person of an organization liable for an obligation of the organization; state and federal trade or securities-related actions against an owner, controlling person or managerial official; or, arises out of the Business Organizations Code.5
Second, it may hear cases exceeding a $10 million amount-in-controversy if the action arises out a qualified transaction (a transaction, which is not a loan by a bank, with an aggregate value of at least $10 million); involves contractual or other commercial transactions in which the parties agreed that the Business Court has jurisdiction over the action (except insurance contracts); or, is against an organization or officer arising out of a violation of the Finance Code or Business and Commerce Code, subject to specific exclusions.6
Third, the Business Court has jurisdiction over cases against publicly traded companies (defined as an entity whose voting equity securities are listed on a national securities exchange registered with the SEC under Section 6 and any entity that is majority owned or controlled by such entity) without regard to an amount-in-controversy if the action’s subject matter otherwise would be subject to the Business Court’s jurisdiction.7 Thus, parties seeking to invoke the Business Court’s jurisdiction should be able to do so with a carefully drafted forum selection clause.
To proceed in the Business Court an action may be originally filed there, removed from district court by a party’s notice of removal, or removed by the district court’s own request.8 Either the pleading or notice of removal must contain facts establishing the Business Court’s jurisdiction and the venue. Much like removal to federal court, actions that have been removed from district court to the Business Court may be remanded.
Procedure and Filing Fees
There are no special timelines, deadlines, or rules for the Business Court. Rather, the Business Court is governed by the same rules and procedures as district courts.9 In contrast to other states’ business courts, such as Delaware’s Chancery Court, Texas’s Business Court preserves the litigants’ right to a jury.10 Appeals from the Business Court will be exclusively overseen by the newly created Fifteenth Court of Appeals, and the procedure for an appeal from the Business Court is the same as procedure for an appeal from a district court.11 Filing fees for proceeding in Business Court are more than district court (compare the $350 filing fee in district court to Business Court’s $2,500), and there is a $50 fee associated with filing any other motion. A key difference in procedure between district court and the Business Court is that the Business Court must provide a written opinion in connection with a dispositive ruling upon the request of any party.12
Challenges to the Court
The Business Court’s structure is not without controversy in Texas. One challenge to the Fifteenth Court of Appeals has already been asserted and rejected. On August 23, 2024, the Supreme Court of Texas affirmed the Fifteenth Court of Appeals’ statewide jurisdiction.13 The plaintiffs challenged the appellate court’s validity, arguing that its statewide jurisdiction violates the Texas Constitution because the Texas Constitution requires that appellate courts be divided into districts.14 The Supreme Court of Texas held that this requirement does not impose a specific territorial limit on appellate courts, permitting both overlapping districts and statewide districts.15 The Supreme Court of Texas also rejected the plaintiffs’ argument that the Fifteenth Court of Appeals was unconstitutional because the appointed justices would not sit for election until 2026.16
While the Fifteenth Court of Appeals has been affirmed, there may be a subsequent challenge to the Business Court challenging the fact that judges are appointed, rather than elected. The Texas Constitution requires the election of district judges. Whether this requirement will apply to Business Court judges remains unanswered. However, House Bill 19 provides an alternative method to staff judges if the current method is struck down by granting the chief justice authority to appoint a former or retired judge as a visiting judge to the court.
Conclusion
The Business Court presents the potential to significantly impact litigation in Texas. Parties to complex commercial agreements often agree to venue in states with similar courts—such as the Commercial Division in New York—but now have such a forum in Texas. Also, because Business Court judges have limited jurisdiction, their dockets will have fewer cases and can hopefully proceed to trial relatively quickly. Having complex commercial cases in a separate forum will also help to alleviate the caseload for the district courts, so litigants in both the Business Court and district court are likely to reach resolution faster. Finally, because Business Courts will provide written opinions to dispositive motions, parties will have additional guidance on Texas law for complex commercial issues.
1 Acts 2023, 88th Leg., R.S., Ch. 380 (H.B. 19), Sec. 6, eff. September 1, 2023.
2 Id.
3 TEX. GOV. CODE § 25A.008.
4 Id. at § 25A.009.
5 Id. at § 25A.004(b).
6 Id. at § 25.004(d).
7 Id. at § 25.004(c).
8 Id. at § 25A.006.
9 Id. at § 25A.015.
10 Id. at § 25A.015.
11 Id. at § 25A.007.
12 TEX. R. CIV. P. 360.
13 In re Dallas Cnty., No. 24-0426, 2024 WL 3908122 (Tex. 2024).
14 Id. at *7.
15 Id. at *12.
16 Id. at *16.
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