Lawyers in Texas are anticipating the impact of two bills that are currently on Governor Greg Abbott’s desk. The bills would establish a new set of Business trial courts with the authority to hear appeals from high-stakes commercial disputes and a Fifteenth Court of Appeals. When litigating certain high-value disputes, Texas-based businesses will have to go before the new courts if the bills pass constitutional muster. Opponents argue that the Texas Constitution prohibits the Legislature from establishing a court with statewide jurisdiction and appointed judges, while supporters maintain that the new trial courts, whose appointed judges would be required to have a certain level of experience, would increase efficiency.

The bills, which would take effect on September 1, 2023, and apply to civil actions filed after September 1, 2024, are expected to be signed by Gov. Abbott. Under House Bill 19, the business courts would have simultaneous purview with region courts over:

When the amount in dispute is greater than $5 million and the involved entity is a publicly traded company, business disputes involving derivative actions, governance disputes, securities and trade actions brought against organizations, and actions arising out of the Texas Business and Commerce Code;
disputes arising from a “qualified transaction” in which a party paid or received $10 million or more in consideration (transactions involving loans or advances by banks, credit unions, and savings and loans institutions are not “qualified transactions”), as well as disputes involving violations of the Texas Finance or Business and Commercial Codes; and business disputes with a value of more than $10 million in which both parties have agreed to submit to the jurisdiction of business courts.
An activity that is dependent upon the business courts’ locale can be documented straightforwardly in the business court or can be eliminated there from a region court. Importantly, actions involving the Deceptive Trade Practices Act, the Insurance Code, and/or duties arising under an insurance policy are specifically excluded from the business courts’ jurisdiction, with the exception of supplemental jurisdiction; actions taken against government agencies; actions taken to foreclose on real property liens; and estate and family law cases. In the event that the business court has supplemental purview, the gatherings should concur and the area court judge should agree to the case continuing in the business court. Legal and medical malpractice cases, as well as those involving bodily injury or death, are not subject to the business courts’ supplemental jurisdiction.

The judges in charge of the business courts are required to have served as a Texas judge or practiced complex civil business litigation or transactional law for at least ten years. The bills’ proponents argue that judges with relevant experience and dedicated courts for business disputes will benefit litigants and speed up case resolution. The adjudicators’ terms will be two years, however an adjudicator might be reappointed.

Delegated judges will serve in legal divisions that will impersonate the state’s managerial courts, which are a lot bigger than the areas served by the region courts where these kinds of questions are right now disputed. Each district will have one judge, while the business courts in the state’s largest metropolitan areas—Dallas, Austin, San Antonio, Fort Worth, and Houston—will each have two judges. The judges’ apparent unrestricted ability to swap benches with one another is cited as evidence by those opposed to the bill as evidence that the bill effectively establishes one statewide court rather than separate courts serving distinct geographic areas, as required by the state constitution.

The bill stipulates that the business courts are subject to the district courts’ application of the Texas Rules of Civil Procedure, but that the new courts may adopt additional rules of practice and procedure in accordance with the Texas Rules of Civil Procedure and Evidence.

The Fifteenth Court of Appeals, established by Senate Bill 1045, would hear appeals involving the state, the governor’s office and its various departments, state universities, and the officers of each. It would also hear appeals involving disputes litigated in the business courts.

Although it is almost certain that Governor Abbott will sign the two bills into law, it is unknown whether the Texas Supreme Court will uphold the new bills’ constitutionality in the event that they are challenged. News reports suggest that various trade groups will likely bring challenges when the bills are signed into law. The bills state that the Texas Supreme Court has sole jurisdiction over any challenges to them.

Source – Dykema

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