7 minute read
The Texas Business Court, Part II
The Texas Business Court, Part II
What Does it Hear?
By the Hon. Stacy Sharp and Jordan Long
This publication’s last volume described the launch of the Texas Business Court—a statewide, specialized court created by the legislature to adjudicate complex commercial disputes.
What types of disputes can be heard by the Business Court?
We are often asked what kinds of suits this new court will hear. The answer is found in a new chapter of the Texas Government Code, specifying that suits proceeding in the Business Court must involve either:
1. Transactional disputes: suits arising from any transaction, other than a bank loan;
2. Certain statutory violations: suits arising from violations of the Texas Finance Code or Business and Commerce Code by an entity or its leaders;
3. Corporate-affairs disputes: concerning an entity’s internal affairs or governing documents, certain disputes with its officers or members, derivative actions, or the Business Organizations Code. Tex. Gov’t Code § 25A.004. Additional claims in the same suit that fall outside of these categories can still proceed in the court with the parties’ consent—other than claims for medical and legal malpractice or personal injury, which are barred from business-court jurisdiction. Id. To satisfy the court’s jurisdictional requirements, most disputes must also satisfy a monetary threshold, shown on Figure 1. Id. Despite the narrow confines of its jurisdiction, the Business Court’s docket has continued to grow since the first installment of this series. Within six months of opening its doors, the court had received over eighty cases. While the pleadings in those suits often allege multiple jurisdictional grounds for proceeding in the Business Court, over half of the pending suits arrived at the court based on a dispute the party valued at least ten million dollars. The remainder of the suits concern some type of corporate-affairs dispute worth either five million dollars or involving a publicly traded company. See Figure 2.
The industries involved in the pending cases generally mirror the makeup of Texas’s commercial landscape, with around a third of the cases involving the energy sector. The technology and construction industries are also prevalent players in the early Business Court cases. See Figure 3.
Which suits can end up in the Business Court?
The business and legal communities also often ask us whether the Business Court hears its own cases or cases transferred from other courts. The answer? Both—and more. There are three paths to the Business Court:
Original Filings
Upon initiating suit, a plaintiff can opt to file its petition in the Business Court instead of in a district court or county court at law. Tex. Gov’t Code § 25A.006(a). So far, the majority of the court’s cases are original filings. See Figure 4.
If a case is initiated in the Business Court, it will remain there unless the court determines the suit does not fit into one of the three subject-matter topics or monetary thresholds discussed above. If the court lacks jurisdiction, the plaintiff can choose to either transfer the suit into a trial court of general jurisdiction or can dismiss the suit without prejudice to refiling in another court. Tex. Gov’t Code § 25A.006(b); Tex. R. Civ. P. 354.
Removals
A party can also choose to remove a suit from the district court or the county court at law to the Business Court. Tex. Gov’t Code § 25A.006(d). Much like the removal procedure in the federal courts, the opposing party can then move to remand if it believes the Business Court lacks jurisdiction or that the suit has otherwise been improperly removed. Id.; Tex. R. Civ. P. 355.
Transfers
Any judge can also initiate transfer of a commercial case on his or her docket that is more appropriately heard in the Business Court. After notice to the parties, the administrative presiding judge for the region— in San Antonio, Judge Sid Harle—will decide whether transfer would facilitate the fair and efficient administration of justice. Tex. Gov’t Code § 25A.006(k); Tex. R. Civ. P. 356.
Early opinions on the scope of the Business Court’s authority
The Business Court is the first trial court in Texas’s state judicial system to be charged with issuing written opinions for certain decisions, such as dispositive rulings upon a party’s request and other rulings that are important to the state’s jurisprudence. See Tex. R. Civ. P. 360. The court has already begun discharging this duty. The court’s initial opinions largely concern its own authority to hear cases that commenced before September 1, 2024—the date specified in the statute’s enabling legislation in House Bill 19 during the 88th Legislative Session. The court’s early opinions all declined to exercise jurisdiction over cases that preceded that date. E.g., Synergy Glob. Outsourcing, LLC v. Hinduja Glob. Sols., Inc., 2024 Tex. Bus. 2, 2024 WL 5337412 (Oct. 31, 2024); Jorrie v. Charles, 2024 Tex. Bus. 4, 2024 WL 4796436 (Nov. 7, 2024). Several of those decisions are pending appeal. E.g., Synergy, 2024 WL 5337412, appeal docketed, No. 15-24-00127-CV (Tex. App.— 15th Nov. 12, 2024); Tema Oil & Gas Co. v. ETC Field Servs., LLC, 2024 Tex. Bus. 3, 2024 WL 4796433, appeal docketed, No. 15-2400124-CV (Tex. App.—15th Nov. 8, 2024).
One recent Business Court opinion illuminates the pleading standard for remanding a suit back into a court of general jurisdiction. In C Ten 31 LLC v. Tarbox, the court’s Third Division ruled that, where the removing party has pleaded the dispute satisfies the monetary threshold and the plaintiff’s petition does not plead otherwise, the party seeking remand bears the initial burden of proving the amount pleaded is fraudulent or that a lower amount is readily established. 2025 Tex. Bus. 1, 2025 WL 224542 (Jan. 3, 2025).
A Snapshot of the Court’s Docket
As expected, high-dollar and highcomplexity cases are finding their way into the court, and the court has begun hearing argument and disposing of cases, as seen in Figure 5. As of February 7, 2025, a snapshot of the court’s docket reveals some commonalities in the types of relationships between Business Court litigants. Most suits are buyer–seller disputes, involving some type of commercial conflict arising from a deal for goods or services. Also rising to the top are corporatemismanagement disputes, which generally involve accusations against an entity’s coowner or executive for poor governance or fiduciary breaches. See Figure 6.
This snapshot reveals that lawmakers’ vision for the scope of the Texas Business Court’s authority has come to early fruition in the court’s first few months. The complex commercial litigation described in Chapter 25A of the Government Code is in full swing, and the lawyers in those suits are forging the path within this brand-new forum.
The Honorable Stacy Sharp has served on the Business Court of Texas, Fourth Division since her appointment on September 1, 2024. She joined the bench following years of private practice in trial and appellate litigation and has served on the faculty for University of Texas Law School since 2010.
Jordan Long is a staff attorney for Judge Stacy Sharp. Prior to joining the Business Court, Jordan clerked for the Hon. Jeffrey V. Brown on the U.S. District Court for the Southern District of Texas and was an associate at Norton Rose Fulbright.
