On June 9, 2023, Governor Greg Abbott enacted House Bill 19, marking a pivotal moment in the state's legal landscape for business and commercial disputes. This legislation heralds the advent of specialized business courts in Texas, tailored to efficiently address complex business disputes. Scheduled to begin on September 1, 2024, these courts are poised to revolutionize the state's judicial framework. Below, we delve into the fundamental aspects and ramifications of this groundbreaking legal paradigm.
Exclusive Jurisdiction for Cases Involving Certain Amounts in Controversy
Integral to these business courts is their exclusive jurisdiction over cases involving significant amounts in dispute. The legislation endows these courts with concurrent jurisdiction alongside district courts for specific actions exceeding $5 million, with exceptions for cases exceeding $10 million. This strategic approach aims to alleviate docket congestion in existing courts by providing a specialized forum for adjudicating substantial and convoluted business disputes.
Moreover, the amount in controversy requirement empowers the business courts to levy fees for filings and actions, ensuring adequate funding to discharge their mandated functions. To expedite the resolution of complex cases, the business courts are authorized to conduct remote proceedings where feasible, while also leveraging existing court facilities when necessary.
Jurisdiction of the Business Courts
The business courts are organized into 11 divisions corresponding to the administrative judicial regions, spanning the entirety of Texas. They will wield jurisdiction over actions exceeding $5 million in categories such as:
Actions by an organization or owner against the organization or owner concerning acts or omissions in their organizational capacity;
Actions against owners, controlling individuals, or managerial officials of an organization for breaching duties to the organization;
Actions seeking to hold owners or governing individuals of an organization liable for its obligations;
State and federal securities-related actions against owners, controlling individuals, or managerial officials;
Actions arising from the Business Organizations Code; and
Corporate governance and derivative proceedings.
In specific scenarios, the business courts will assume jurisdiction only when the amount in controversy surpasses $10 million, such as in actions related to qualified transactions, certain contractual or commercial transactions, and actions arising from the Finance Code or Business and Commerce Code. The Courts may also exercise supplemental jurisdiction over related claims with the consent of all parties involved.
Business Court Judges will be Appointed
The appointment of judges for the business courts follows a distinctive protocol. The Governor, with the advice and consent of the Senate, will appoint two judges to the First, Third, Fourth, Eighth, and Eleventh Divisions, which covers the areas of Dallas, Austin, San Antonio, Fort Worth, and Houston, and one judge to the remaining divisions. These judges will serve two-year terms and are eligible for reappointment, with no current limit on the number of terms.
Appellate Process
The Texas Legislature has taken proactive measures to address appeals related to business court proceedings. Governor Abbott signed into law S.B. 1045 on June 9, 2023, ushering in the establishment of the Fifteenth Court of Appeals, headquartered in Austin. Slated for inception on September 1, 2024, this new court will eventually be comprised of five justices, initially appointed and subsequently elected through statewide races.
The Fifteenth Court of Appeals will wield exclusive jurisdiction over appeals arising from orders or judgments issued by the business courts, as well as original proceedings linked to actions or orders originating from the business court. Additionally, it will exercise exclusive intermediate appellate jurisdiction over specific categories of cases associated with civil litigation, including matters involving the state or state-related entities, officers, or employees in the executive branch, stemming from official conduct, with certain exceptions. Moreover, cases wherein a party challenges the constitutionality or validity of a state statute or rule, with the attorney general's involvement, fall within the court's purview.
Importantly, the statute expressly mandates that cases or proceedings properly filed within the jurisdiction of the Fifteenth Court of Appeals may not be transferred to other courts of appeals by the Texas Supreme Court for the purpose of docket equalization. This provision safeguards the exclusivity of the Fifteenth Court of Appeals in adjudicating these specific legal matters.
Conclusion
The introduction of Texas business courts marks a monumental transformation in the state's legal landscape, offering a dedicated forum for the expeditious resolution of large-scale, intricate business disputes. By furnishing specialized jurisdiction, the business courts aim to streamline the resolution process, alleviate case backlog, and enhance the predictability of outcomes. As these courts commence operations in September 2024, they are poised to significantly influence the manner in which Texas businesses navigate complex legal terrain.
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