Newly Created Texas Business Court Hearing Cases

By Erin K. Rutherford

In June 2023, the Texas legislature created two new courts, the Texas Business Court and the Fifteenth Court of Appeals. As of September 1, 2024, both courts are hearing cases.

With the creation of the Texas Business Court, Texas becomes the 30th state to have some form of specialized business court system. The Business Court has concurrent jurisdiction with the state’s district courts in two categories of cases. 

The first category includes actions arising out of the Texas Business Organizations Code; derivative proceedings; actions regarding the governance, governing documents, or internal affairs of an organization; actions in which a claim under state or federal securities or trade regulation laws are asserted against an organization, a controlling person within the organization, the auditor of the organization or the underwriter of securities issued by the organization; and actions brought by an organization or its owner in certain instances, primarily in cases involving claims that an organization or person within it breached a duty or obligation of the organization.  In this category the amount in controversy must exceed $5 million unless a party to the action is a publicly traded company, in which case, the amount of controversy is irrelevant.

The second category of cases covers actions stemming from qualified transactions; actions arising out a contract or commercial transaction in which the parties agree in the contract that the business court has jurisdiction, excluding insurance contract actions; and actions stemming from violations of the Texas Finance Code or the Texas Business and Commerce Code by an organization or person acting on behalf of an organization, excluding banks, credit unions or savings and loan associations.  Here, the amount in controversy must exceed $10 million.

Jury trials for business court cases can be heard in any county in which the case could have been filed and the Plaintiff chooses the county.  Cases removed to the business court are heard in the county in which the action was originally filed.  Appeals from the business court will be handled by the newly instated Fifteenth Court of Appeals.

While the Texas Business Court specifically excludes insurance contract actions, the consistency surrounding corporate governance issues can increase predictability in the marketplace for insurers who operate in Texas. The Texas Business Court may also provide a more efficient venue for the resolution of large complex cases, further cementing Texas as a business friendly environment.