Last week, the Texas Senate passed House Bill 40 ("HB 40"), pushing the legislation's changes to Texas's new Business Court one step closer to enactment. With no anticipated obstacles, Governor Abbott is expected to sign HB 40 into law.
HB 40 includes changes to the Business Court's jurisdiction and procedures to expedite commercial disputes, in addition to minor "clean up" provisions.
Most significantly, HB 40 would expand the Business Court's jurisdiction over commercial disputes in two ways: First, the amount in controversy of a "qualified transaction" subject to the court's jurisdiction would be lowered from $10 to $5 million. Second, a "qualified transaction" would now include a "series of related transactions," allowing plaintiffs to attempt to meet the required amount through multiple smaller transactions. Both changes would allow more cases to qualify for the Business Court's jurisdiction.
HB 40 also expands the Business Court's concurrent jurisdiction with district courts to encompass actions related to intellectual property and trade secrets, which often arise alongside other commercial disputes.
Other changes support the Business Court's intended purpose to efficiently address complex business disputes, including:
- authorizing the Business Court to enforce arbitration, appoint an arbitrator, or take other similar judicial actions authorized by an arbitration agreement;
- allowing parties to file a writ for injunctive relief with different Business Court judges if the presiding judge cannot be reached and the filing party shows that despite "fair and reasonable efforts made to reach and communicate with the other business court judge," the presiding judge is unavailable by the "ordinary and available means of travel and communication in sufficient time to implement the purpose of the writ;" and
- requiring that the Texas Supreme Court establish procedures for the prompt determination of the Business Court's jurisdiction over actions filed in the Business Court, taking into account the Business Court's intended purpose of expedited resolution of commercial disputes, as well as issues of fundamental fairness.
The "clean up" provisions include adding "Business Court" to sections of the Civil Practice and Remedies Code that address administrative actions or procedures in the district and statutory courts. Similar provisions clarify the concurrent jurisdiction shared by the Business Court and Texas district courts while explicitly not conferring on the Business Court any new jurisdiction.
Finally, HB 40 extends the date that certain Business Court divisions are abolished from 2026 to 2030, but continues to withhold funding for those divisions subject to legislative appropriations. These are the Second, Fifth, Sixth, Seventh, Ninth, and Tenth Divisions. Thus, while these Business Court divisions may continue to exist, their funding is not yet established. The five divisions where funding has been established are Dallas (First Division), Austin (Third Division), San Antonio (Fourth Division), Fort Worth (Eighth Division), and Houston (Eleventh Division).
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