By Katherine Ring

On Friday, May 12, the Texas Senate passed a bill that would create a specialized business court to oversee complex civil litigation. The state senators voted 24 to 6 to approve H.B. 19, which was passed by the Texas House earlier this month. Governor Abbott is expected to sign the bill.

The new business court will have 11 divisions, located in the same Texas administrative regions that are already in place. Judges will be appointed by the governor to serve two-year terms and may be reappointed to unlimited successive terms. Divisions located in major metropolitan areas will have two business court judges each, while the more rural divisions will be limited to one judge each. Business court judges must be least 35 years old, reside in a county within a division’s jurisdiction, and must have 10 or more combined years of experience litigating complex civil business cases, practicing in business law transactions, and/or serving as a Texas judge in civil actions.

Additionally, H.B. 19 contemplates the creation of a new Fifteenth Court of Appeals with “exclusive jurisdiction over an appeal from an order or judgment of the business court or an original proceeding related to an action or order of the business court.” Pending bills (H.B. 3166 and S.B. 1045) would create this new appellate court, which would have five justices, elected statewide. In the event that a Fifteenth appellate court is not created, appeals from orders of the new business court will be heard by the existing court of appeals for the appropriate civil division.

The new business court will hear disputes concerning corporate governance, cases involving contractual and commercial transactions, and related suits involving a request for declaratory or injunctive relief. Subject matter jurisdiction is determined by specifically-listed case types and minimum amounts in controversy. Generally, disputes over internal corporate affairs must meet a minimum amount in controversy of $5,000,000, whereas disputes over commercial transactions must involve at least $10,000,000. Claims related to Texas’ health care liability code, where “a party seeks recovery of monetary damages for bodily injury or death,” and legal malpractice claims can never be brought in the business court. The new court will have supplemental jurisdiction over certain non-business claims by agreement of the parties; otherwise, such claims “may proceed in a court of original jurisdiction concurrently with any related claims proceeding in the business court.” A case filed in a district court or county court at law may be removed to the business court provided that it could have been filed there in the first instance.

Katherine Ring is senior counsel at Schiffer Hicks Johnson PLLC, a Houston-based trial law firm.