The Business Court of Texas, established on September 1, 2024, has issued its first round of major opinions. These rulings, authored by judges across its divisions, largely address jurisdictional questions stemming from the Business Court’s enabling legislation. Below is a summary of the key rulings, the issues at stake, and practical implications for businesses and practitioners navigating this new judicial forum.
The Business Courts issued key opinions on removal jurisdiction that provide helpful insight into the careful analysis the Business Courts undertake.
1. The Business Court Bars Removal of Pre-September 1, 2024 Cases
- Tema Oil and Gas v. ETC Field Services (Judge Bullard, Eighth Division)(November 2024)
- Tema first sued ETC in 2017 for allegedly failing to meet contractual obligations.
- More than 7 years later, but only 10 days after the creation of the Business Court of Texas, ETC filed a notice of removal in an attempt to have the case transferred from Tarrant County District Court to the Business Court of Texas.
- The Court carefully examined the statute creating the Business Court of Texas and observed “the legislative intent that cases filed before September 1, 2024, cannot be removed to the Business Court.” Because the “legislature did not intend removal of cases filed before September 1, 2024,” the Business Court remanded the case back to Tarrant County District Court.
2. The Business Court Upholds Strict Construction of Enabling Legislation
- XTO Energy v. Houston Pipe Line (Judge Dorfman, Eleventh Division)(November 2024)
- Just as in the Tema Oil case, the Eleventh Division concluded that “Section 8… demonstrates that the Legislature intended to exclude the non-consensual removal of all cases filed before September 1, 2024.”
- The Court observed that the “business court [was] created September 1, 2024… And it needed no further authorization to accept cases commenced on or after September 1; the day a court is created is the day it can start accepting cases. So Defendants’ reading of Section 8 renders its date reference at best superfluous, and possibly a nullity-contrary to the canon that presumes the entirety of a statute is intended to have effect.” Put another way, allowing removal of pre-September 1, 2024 would effectively render the date of the Business Court’s creation a nullity.
- The Court remanded the case back to Harris County District Court.
3. The Business Court Limits Agreements to Confer Jurisdiction
- Lone Star NGL Product Services v. CR Permian Processing (Judge Adrogué, Eleventh Division)(December 2024)
- Perhaps recognizing the Business Court’s reticence to allow removal of cases filed before September 1, 2024, the parties in this case came up with a series of creative solutions to allow their case to be removed to the Business Court, including a specific Rule 11 agreement allowing for removal, and in the event removal was not allowed, that they would dismiss and refile the case.
- Despite the parties’ arguments appealing to efficiencies and practicalities, the Business Court concluded that even where parties enter into agreements after September 1, 2024 to grant jurisdiction to the Business Court, Section 8 prohibits jurisdiction for pre-September 2024 filings.[1]
- Ultimately, Judge Adrogué concluded that “The parties’ agreement, while reflective of consent, cannot override statutory limits on jurisdiction.”
These decisions reinforce the importance of understanding the Business Court of Texas’ statutory framework and highlight the Business Court’s focus on jurisdictional clarity. For tailored advice on navigating these new developments, contact Chris Bankler at Jackson Walker LLP.
[1] The Eleventh Division of the Business Court collected and relied on several opinions from its sister courts in reaching the same conclusion as the prior Business Courts. Energy Transfer, 2024 WL 4648110, at *3 (rejecting “only” argument, relying on the Negative Implication Canon); Synergy Global Outsourcing, LLC v. Hinduja Global Solutions, Inc., No. 24-BC01B-0007, 2024 Tex. Bus. 2 at 9–11 (Tex. Bus. Ct. Oct. 31, 2024) (identical analysis); Tema Oil and Gas Co. v. Etc Field Services, LLC, No. 24-BC08B-0001, 2024 Tex. Bus. 3, 2024 WL 4796433, at *4 (Tex. Bus. Ct. Nov. 6, 2024)(“[T]here was no need for the legislature to insert ‘only’ or other limiting clarifying phrases in the applicability clause to expressly indicate that the new law did not apply retroactively to non-existing pending cases. It would have been superfluous for the legislature to have done so.”); Winans v. Berry, No. 24-BC04A-0002, 2024 Tex. Bus. 5, 2024 WL 4796435, at *2 (Tex. Bus. Ct. Nov. 7, 2024) (relying on the reasoning from Tema Oil to dispose of this argument); XTO Energy, 2024 Tex. Bus. 6 at ¶¶ 11–14 (“[T]his reading violates at least three canons of construction.”).
The opinions expressed are those of the authors and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for informational purposes only and does not constitute legal advice. For more information on the Business Court of Texas opinions on jurisdiction, please contact Chris Bankler or a member of the Trial & Appellate Litigation practice.
Meet Chris
Chris Bankler focuses on the resolution of disputes for businesses and financial institutions. He counsels clients through the process of complex business litigation, including general business disputes, fraud claims, breach of fiduciary duty cases, and complex business bankruptcy litigation. He has served as litigation counsel in more than 100 cases in state and federal courts, as well as FINRA and AAA arbitrations.