Key takeaways
- Texas has established its business courts and formally appointed judges in major cities and the Fifteenth Court of Appeals to exclusively review business-related cases.
- The Texas Supreme Court has implemented specific rules for the business courts, which streamline legal proceedings for business disputes.
- Businesses should assess practical considerations of the businesses courts, including whether to include forum selection clauses in contracts to designate business courts for disputes.
There have been several updates since we first reported on the establishment of the Texas business courts and the Fifteenth Court of Appeals. In June 2024, Governor Greg Abbott appointed judges to the Austin, Dallas, Fort Worth, Houston, and San Antonio business court divisions. In the same month, the Texas Supreme Court approved the final set of rules for the business courts. Now, the first set of business court cases have been filed (on September 3), with a total of eight proceedings initiated or transferred to business courts.
Appointed judges
Throughout June, Governor Abbott appointed the following judges to the various business court divisions:
- Dallas (First Business Court Division) – Andrea Bouressa (Judge of the 471st Judicial District Court) and William "Bill" Whitehill (member at Condon Tobin Sladek Thornton Nerenberg PLLC and former Justice on the Texas Fifth Court of Appeals in Dallas).
- Austin (Third Business Court Division) – Melissa Andrews (Partner at Holland & Knight) and Patrick Sweeten (Principal Deputy General Counsel for the Office of the Governor).
- San Antonio (Fourth Business Court Division) – Marialyn Barnard (Judge of the 73rd Judicial District Court) and Stacy Sharp (Attorney and owner of Sharp Appellate PLLC).
- Fort Worth (Eighth Business Court Division) – Jerry Bullard (shareholder at Adams, Lynch & Loftin, P.C.) and Brian Stagner (Counsel and former Partner at Kelly Hart & Hallman LLP).
- Houston (Eleventh Business Court Division) – Sofia Adrogué (Partner at Diamond McCarthy) and Grant Dorfman (Visiting Judge and former Deputy First Assistant Attorney General for the Office of the Texas Attorney General).
Governor Abbott also appointed the following justices to the Fifteenth Court of Appeals:
- Fifteenth Court of Appeals – Scott A. Brister (Senior Partner at Hunton Andrews Kurth LLP), Scott K. Field (Judge of the 480th Judicial District Court in Williamson County), and April L. Farris (Justice on the First Court of Appeals).
The Fifteenth Court of Appeals was created to have exclusive jurisdiction to review judgments from Texas' business courts, as well as appeals involving disputes brought by or against the state and its officers and challenges to the constitutionality of a state statute. In August 2024, the Texas Supreme Court unanimously upheld the constitutionality of the Fifteenth Court of Appeals when it rejected Dallas County's challenge to the validity of the court. See In re Dall. Cty., 67 Tex. Sup. Ct. J. 1535 (2024).
In particular, Dallas County and Dallas County Sheriff Marian Brown initiated the action over a dispute regarding the custody of criminal defendants and argued that the Fifteenth Court was unconstitutional because (1) its "geographic range unconstitutionally cover[ed] the entire state," (2) its "jurisdictional scope [was] unconstitutional for various reasons," and (3) the "new justices [would] be unconstitutionally installed because they would not be elected until November 2026 despite having been appointed in September 2024." The Texas Supreme Court ultimately held that the Fifteenth Court of Appeals is a "constitutional court of appeals," and that the jurisdictional scope and appointment of new court justices complies with the Texas Constitution.
Practical considerations
Several other states have established business courts as a way to make the state a preferred forum for complex business disputes. Texas, with the establishment of the business courts, continues to strengthen its reputation as a business-friendly environment. In fact, the HB 19 Committee Report states that the purpose of HB 19 is to "giv[e] businesses confidence in Texas' legal system and encourage[e] them to incorporate and headquarter in Texas."
Therefore, businesses that are headquartered, or are considering headquartering, in Texas should keep the following practical considerations in mind as it relates to the business courts:
Business court rules
The Texas Rules of Civil Procedure and Evidence will continue to apply in the business courts but the Texas Supreme Court also promulgated rules that are specifically applicable to the business courts. Notable business court rules include:
- Tex. R. Civ. P. 354. Rule 354 requires that a party specifically plead facts to establish the "business court's authority to hear the action." Even then, however, the business court, on its own or a party's motion, may determine that it does not have authority to hear the action and transfer or dismiss the matter.
- Tex. R. Civ. P. 355. Rule 355 states, in part, that a party to an action originally filed in a district or county court may remove the action to the business court by filing a notice of removal.
- Tex. Gov. Code 25A.015. Unlike other state business courts, such as the Delaware Court of Chancery, Code 25A.015 states that a party in the business court has the right to a trial by jury.
Access to the business court
In initiating an action, businesses should first consider whether the business dispute would benefit from a streamlined and specialized court with expertise in commercial litigation. If so, businesses should next determine whether the dispute meets any one of following criteria to bring an action in the business court:
(1) If the amount in controversy exceeds $5 million, and it is
- a derivative proceeding;
- an action regarding the governance, governing documents, or internal affairs of an organization;
- an action in which a claim under a state or federal securities or trade regulation law is asserted against: (A) an organization; (B) a controlling person or managerial official of an organization for an act or omission by the organization or by the person in the person's capacity as a controlling person or managerial official; (C) an underwriter of securities issued by the organization; or (D) the auditor of an organization;
- an action by an organization, or an owner of an organization, if the action: (A) is brought against an owner, controlling person, or managerial official of the organization; and (B) alleges an act or omission by the person in the person's capacity as an owner, controlling person, or managerial official of the organization;
- an action alleging that an owner, controlling person, or managerial official breached a duty owed to an organization or an owner of an organization by reason of the person's status as an owner, controlling person, or managerial official, including the breach of a duty of loyalty or good faith;
- an action seeking to hold an owner or governing person of an organization liable for an obligation of the organization, other than on account of a written contract signed by the person to be held liable in a capacity other than as an owner or governing person; or
- an action arising out of the Business Organizations Code.
(2) If the action involves a publicly traded company and one of the above-listed claims, regardless of the amount in controversy.
(3) If the amount in controversy exceeds $10 million, and
- the action arises out of a qualified transaction (which generally refers to transactions whose value is at least $10 million, and includes loans);
- the action arises out of a contract or commercial transaction in which the parties to the contract or transaction agreed in the contract or a subsequent agreement that the business court has jurisdiction over the action, except an action that arises out of an insurance contract; or
- the action arises out of a violation of the Finance Code or Business & Commerce Code by an organization or an officer or governing person acting on behalf of an organization other than a bank, credit union, or savings and loan association.
(4) If the action involves any of the above-listed claims and the business seeks injunctive and/or declaratory relief.
Updates to forum selection clauses
Businesses should also consider whether there is a benefit to including a forum selection clause listing the business courts in their agreements.
Sample forum selection language:
"Any dispute, claim, controversy, or legal proceeding arising out of or relating to [this Agreement] in any way (Dispute) shall be exclusively brought before a business court in the [First, Third, Fourth, Eighth, Eleventh] Business Court Division of the State of Texas (the Business Court), if the Dispute meets the jurisdictional requirements of such Business Court; and, if the Dispute does not meet the jurisdictional requirements of such Business Court, or the Business Court is not then accepting new case filings, then the Dispute shall be exclusively brought [insert preferred choice of venue, e.g., arbitration]. The parties also hereby consent to supplemental jurisdiction by the Business Court over any claims that are part of the same case or controversy as that which meets the primary jurisdictional requirements of such Business Court."
As noted in the sample language, the forum selection clause alone cannot confer subject matter
This article is presented for informational purposes only and is not intended to constitute legal advice.