The 84th Legislative Session is upon us. With it comes a host of new bills—some grandiose, some housekeeping. But only a small portion of those introduced will make it past their infancy.
One of those newly introduced bills, H.B. 1603, offered by State Rep. Jason Villalba, R-Dallas, proposes creating in Texas a chancery-court system designed to handle business disputes, similar to the system in Delaware. Though it is too early to know whether this bill will pass and, even so, what its final form would be, the proposed chancery system offers many points of discussion.
This new chancery court would have civil jurisdiction concurrent with district courts over a range of issues generally relating to disputes over corporate governance, (mis)management, and other corporate disputes (§ 24A.051). Jurisdiction would be state-wide and involve a removal/remand-type process, with severance of non-business related claims (e.g., personal injury).
One of the key features of the chancery-court system in H.B. 1603 is the judiciary. Judges would not be elected. Rather, a governor-appointed, bi-partisan "Advisory Council" would develop a list of qualified candidates to provide to the governor. (§ 24A.002.) The governor would then select seven judges to serve staggered six-year terms, with no more than a majority of the judges associated with the same party. The Advisory Council must select judge-candidates based on certain factors, which focus on real-life or academic experience with complex business or commercial litigation (§ 24A.054). Those serving on the Advisory Council must also meet this same criteria. The idea is to have judges knowledgeable in corporate matters deciding corporate-related disputes.
But H.B. 1603 wouldn't just create a lower chancery court, it would also create a Court of Chancery Appeals. The appellate procedures would be the same as from a district court. The chancery justices would also be appointed, not elected, using the same procedure as the chancery judges. No more than three justices could come from the same court of appeals. Justices would also serve six-year terms, and may be reappointed. Like the current intermediate appellate courts, justices would sit on panels of three. The panel would likely ride the circuit (the State, in this case), and could sit "in any convenient place to hear the appeal." Otherwise, the Court of Chancery Appeals would function similar to the intermediate court of appeals, with en banc review and petition for review to the supreme court permissible.
Will this pass? The Magic Eight Ball says "uncertain," though we'll keep any eye on this and report back. But if it does gain some traction, there would be a host of new issues parties would need to consider in framing their disputes and navigating the new lower-court and intermediate appellate court system.
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