Texas 2015 - 84th Regular

Texas House Bill HB1603 Compare Versions

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Version 2 (New)

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1	1	84R24557 CAE-D
2	2	By: Villalba H.B. No. 1603
3	3	Substitute the following for H.B. No. 1603:
4	4	By: Simmons C.S.H.B. No. 1603
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to the creation of the chancery court and the court of
10	10	chancery appeals to hear certain cases; authorizing fees.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Subtitle A, Title 2, Government Code, is amended
13	13	by adding Chapter 24A to read as follows:
14	14	CHAPTER 24A. CHANCERY COURT
15	15	SUBCHAPTER A. GENERAL PROVISIONS
16	16	Sec. 24A.001. DEFINITIONS. In this chapter:
17	17	(1) "Controlling person" means a person who directly
18	18	or indirectly controls a governing person, officer, or
19	19	organization.
20	20	(2) "Governing documents" means the instruments,
21	21	documents, or agreements adopted under an organization's governing
22	22	law to govern the organization's formation and internal affairs.
23	23	The term includes:
24	24	(A) a certificate of formation, articles of
25	25	incorporation, and articles of organization;
26	26	(B) bylaws;
27	27	(C) a partnership agreement;
28	28	(D) a company agreement or operating agreement;
29	29	(E) a shareholder agreement;
30	30	(F) a voting agreement or voting trust agreement;
31	31	and
32	32	(G) an agreement among owners restricting the
33	33	transfer of ownership interests.
34	34	(3) "Governing law" means the law governing the
35	35	formation and internal affairs of an organization.
36	36	(4) "Governing person" means a person who is entitled,
37	37	alone or as part of a group, to manage and direct an organization's
38	38	affairs under the organization's governing documents and governing
39	39	law. The term includes:
40	40	(A) a member of the board of directors of a
41	41	corporation or other organization;
42	42	(B) a general partner of a general or limited
43	43	partnership;
44	44	(C) a manager of a limited liability company that
45	45	is managed by its managers;
46	46	(D) a member of a limited liability company that
47	47	is managed by its members;
48	48	(E) a trust manager of a real estate investment
49	49	trust; and
50	50	(F) a trustee of a business trust.
51	51	(5) "Governmental entity" means:
52	52	(A) the state; or
53	53	(B) a political subdivision of the state,
54	54	including a municipality, a county, or any kind of district.
55	55	(6) "Internal affairs" means:
56	56	(A) the rights, powers, and duties of an
57	57	organization's governing persons, officers, owners, and members;
58	58	and
59	59	(B) matters relating to the organization's
60	60	membership or ownership interests.
61	61	(7) "Managerial official" means a governing person or
62	62	officer.
63	63	(8) "Officer" means a person elected, appointed, or
64	64	designated as an officer of an organization by the organization's
65	65	governing persons or by the organization's governing documents.
66	66	(9) "Organization" means a foreign or domestic entity
67	67	or association that is for profit or nonprofit. The term includes:
68	68	(A) a corporation;
69	69	(B) a limited partnership;
70	70	(C) a general partnership;
71	71	(D) a limited liability partnership;
72	72	(E) a limited liability company;
73	73	(F) a business trust;
74	74	(G) a real estate investment trust;
75	75	(H) a joint venture;
76	76	(I) a joint stock company;
77	77	(J) a cooperative;
78	78	(K) a bank;
79	79	(L) a credit union;
80	80	(M) a savings and loan association;
81	81	(N) an insurance company; and
82	82	(O) a series of a limited liability company or of
83	83	another entity.
84	84	(10) "Owner" means an owner of an organization. The
85	85	term includes:
86	86	(A) a shareholder or stockholder of a corporation
87	87	or other organization;
88	88	(B) a general or limited partner of a partnership
89	89	or an assignee of a partnership interest in a partnership;
90	90	(C) a member of, or an assignee of a membership
91	91	interest in, a limited liability company; and
92	92	(D) a member of a nonprofit organization.
93	93	(11) "Ownership interest" means an owner's interest in
94	94	an organization, including an owner's economic, voting, and
95	95	management rights.
96	96	(12) "Qualified transaction" means a qualified
97	97	transaction as that term is defined in Section 271.001, Business &
98	98	Commerce Code.
99	99	Sec. 24A.002. ADVISORY COUNCIL. (a) The governor shall
100	100	appoint a Chancery Court Nominations Advisory Council consisting of
101	101	seven members. A member of the council serves at the pleasure of
102	102	the governor.
103	103	(b) Members of the council must meet the requirements of
104	104	Section 24A.054 for judges of the chancery court and be experienced
105	105	in the areas of law in the jurisdiction of the chancery court.
106	106	(c) Not more than four members of the council may be
107	107	associated with the same political party as the governor.
108	108	(d) To fill a position of a chancery court judge on the
109	109	creation of the chancery court, the position of a court of chancery
110	110	appeals justice on the creation of the court of chancery appeals, or
111	111	on the occurrence of any subsequent vacancy on the chancery court or
112	112	court of chancery appeals, including a vacancy created by the
113	113	expiration of a judge's or justice's term of office, the council
114	114	shall provide the governor with a list of at least five candidates
115	115	for each vacancy. Each candidate must be well qualified to serve as
116	116	a judge or justice of the chancery court or the court of chancery
117	117	appeals.
118	118	(e) The governor may request that the council enlarge the
119	119	list for any vacancy with up to five additional qualified
120	120	candidates.
121	121	(f) The governor must appoint a judge or justice to fill a
122	122	vacancy from the list of candidates submitted by the council.
123	123	SUBCHAPTER B. CHANCERY COURT
124	124	Sec. 24A.051. JURISDICTION. (a) The chancery court has
125	125	civil jurisdiction concurrent with district courts in:
126	126	(1) a derivative action on behalf of an organization;
127	127	(2) an action arising out of or relating to a qualified
128	128	transaction in which the amount in controversy exceeds $10 million,
129	129	excluding interest, statutory damages, exemplary damages,
130	130	penalties, attorney's fees, and costs;
131	131	(3) an action regarding the governance or internal
132	132	affairs of an organization;
133	133	(4) an action in which a claim under a state or federal
134	134	securities or trade regulation law is asserted against:
135	135	(A) an organization;
136	136	(B) a governing person of an organization for an
137	137	act or omission by the organization or by the person in the person's
138	138	capacity as a governing person;
139	139	(C) a person directly or indirectly controlling
140	140	an organization for an act or omission by the organization; or
141	141	(D) a person directly or indirectly controlling a
142	142	governing person for an act or omission by the governing person;
143	143	(5) an action by an organization, or an owner or a
144	144	member of an organization, if the action:
145	145	(A) is brought against an owner, managerial
146	146	official, or controlling person of the organization; and
147	147	(B) alleges an act or omission by the person in
148	148	the person's capacity as an owner, managerial official, or
149	149	controlling person of the organization;
150	150	(6) an action alleging that an owner, managerial
151	151	official, or controlling person breached a duty, by reason of the
152	152	person's status as an owner, managerial official, or controlling
153	153	person, including the duty of care, loyalty, or good faith;
154	154	(7) an action seeking to hold an owner of an
155	155	organization, a member of an organization, or a governing person
156	156	liable for an obligation of the organization, other than on account
157	157	of a written contract signed by the person to be held liable in a
158	158	capacity other than as an owner, member, or governing person;
159	159	(8) an action in which the amount in controversy
160	160	exceeds $10 million excluding interest, statutory damages,
161	161	exemplary damages, penalties, attorney's fees, and costs that:
162	162	(A) arise against, between, or among
163	163	organizations, governing authorities, governing persons, members,
164	164	or owners, relating to a contract transaction for business,
165	165	commercial, investment, agricultural, or similar purposes; or
166	166	(B) involve violations of the Finance Code or
167	167	Business & Commerce Code;
168	168	(9) an action brought under Chapter 37, Civil Practice
169	169	and Remedies Code, involving:
170	170	(A) the Business Organizations Code;
171	171	(B) an organization's governing documents; or
172	172	(C) a dispute based on claims that fall within
173	173	the provisions of this subsection; and
174	174	(10) an action arising out of the Business
175	175	Organizations Code.
176	176	(b) The chancery court has statewide jurisdiction of an
177	177	action described in Subsection (a) and all matters arising out of or
178	178	related to an action described in Subsection (a).
179	179	(c) The chancery court may grant any relief available in a
180	180	district court.
181	181	(d) Notwithstanding Subsections (a) and (b), the chancery
182	182	court:
183	183	(1) does not have jurisdiction of a civil action:
184	184	(A) brought by or against a governmental entity,
185	185	unless the governmental entity invokes or consents to the
186	186	jurisdiction of the chancery court; or
187	187	(B) brought pursuant to Chapter 17, Business &
188	188	Commerce Code, the Estates Code, the Family Code, or Title 9,
189	189	Property Code, unless all parties consent to the jurisdiction of
190	190	the chancery court; and
191	191	(2) must sever any claim in which a party seeks
192	192	recovery of monetary damages for personal injury or death, unless
193	193	all parties and the chancery court judge agree that the claim may
194	194	proceed in the chancery court.
195	195	(e) A cause of action brought pursuant to Chapter 17,
196	196	Business & Commerce Code, the Estates Code, the Family Code, or
197	197	Title 9, Property Code, in which a party objects to jurisdiction as
198	198	provided by this section shall be severed from any other claim
199	199	brought under this chapter.
200	200	Sec. 24A.052. INITIAL FILING; REMOVAL AND REMAND; TRANSFER.
201	201	(a) An action in the jurisdiction of the chancery court may be filed
202	202	in the chancery court. If the chancery court does not have subject
203	203	matter jurisdiction of the action, or part of the action, the court
204	204	shall dismiss without prejudice to refiling the whole or part of the
205	205	action. A claim that is dismissed under this subsection may be
206	206	refiled in a court with jurisdiction by the party who filed the
207	207	claim in the chancery court not later than the 30th day after the
208	208	date the claim was dismissed by the chancery court, notwithstanding
209	209	the expiration of a period of limitation provided by statute.
210	210	(b) A party to an action filed in a district court or county
211	211	court at law that is in the subject matter jurisdiction of the
212	212	chancery court may remove the action to the chancery court by filing
213	213	a notice of removal with the chancery court and the court in which
214	214	the action was originally filed. If the chancery court does not
215	215	have jurisdiction of the action or part of the action, the chancery
216	216	court shall remand the action, or the part in which the chancery
217	217	court does not have jurisdiction, to the court from which the action
218	218	was removed.
219	219	(c) Removal of a case to the chancery court is not subject to
220	220	the statutes or rules governing the due order of pleading.
221	221	(d) Removal of a case does not waive a defect in venue or
222	222	constitute an appearance to determine personal jurisdiction.
223	223	(e) Any claim in which the chancery court does not have
224	224	jurisdiction under Section 24A.051(d) must be transferred to a
225	225	district court in a county in which the claim could have been
226	226	originally filed. If the claim could have been filed in more than
227	227	one county, the party bringing the claim may elect the county to
228	228	which the claim is transferred.
229	229	(f) A cause of action filed in the chancery court shall be
230	230	assigned to the docket of a judge on a rotating basis.
231	231	(g) The supreme court shall promulgate rules of civil
232	232	procedure providing for the timely and efficient removal and remand
233	233	of cases to and from the chancery court.
234	234	Sec. 24A.053. POWERS AND DUTIES. (a) The chancery court may
235	235	issue any writ necessary for the enforcement of the court's
236	236	jurisdiction, including a:
237	237	(1) writ of injunction;
238	238	(2) writ of mandamus;
239	239	(3) writ of sequestration;
240	240	(4) writ of attachment;
241	241	(5) writ of garnishment; and
242	242	(6) writ of supersedeas.
243	243	(b) The chancery court may answer a question regarding a
244	244	matter in the court's jurisdiction that is certified to the
245	245	chancery court by another court.
246	246	Sec. 24A.054. QUALIFICATIONS OF JUDGE. A judge of the
247	247	chancery court must:
248	248	(1) be at least 35 years of age;
249	249	(2) be a United States citizen;
250	250	(3) be a resident of this state for at least two years
251	251	before appointment; and
252	252	(4) be a licensed attorney in this state and have 10 or
253	253	more years of experience in:
254	254	(A) practicing complex civil business
255	255	litigation;
256	256	(B) practicing complex business transaction law;
257	257	(C) teaching courses in complex civil business
258	258	litigation or complex business transaction law at an accredited law
259	259	school in this state;
260	260	(D) serving as a judge of a court in this state
261	261	with civil jurisdiction; or
262	262	(E) any combination of experience described by
263	263	Paragraphs (A)-(D).
264	264	Sec. 24A.055. COMPOSITION OF COURT. (a) The chancery court
265	265	is composed of seven judges appointed by the governor with the
266	266	advice and consent of the senate.
267	267	(b) A chancery court judge may be reappointed.
268	268	(c) The governor may not appoint:
269	269	(1) more than three judges who reside in the same
270	270	county; or
271	271	(2) more than a majority of judges associated with the
272	272	same political party.
273	273	Sec. 24A.056. TERMS OF OFFICE. The judges of the chancery
274	274	court shall serve staggered six-year terms of office.
275	275	Sec. 24A.057. VACANCY. If a vacancy occurs on the chancery
276	276	court, the governor, with the advice and consent of the senate,
277	277	shall appoint, in the same manner as the original appointment,
278	278	another person to serve for the remainder of the unexpired term.
279	279	Sec. 24A.058. JUDICIAL AUTHORITY. A chancery court judge
280	280	has all powers, duties, immunities, and privileges of a district
281	281	judge.
282	282	Sec. 24A.059. JUDGE'S SALARY. (a) A chancery court judge
283	283	shall be paid a total annual salary from the state that is the sum
284	284	of:
285	285	(1) the salary paid to a district judge by the state
286	286	under Section 659.012; and
287	287	(2) the maximum amount of county contributions and
288	288	supplements allowed by law to be paid to a district judge under
289	289	Section 659.012.
290	290	(b) The salary shall be paid in equal monthly installments.
291	291	Sec. 24A.060. REMOVAL; DISQUALIFICATION AND RECUSAL. (a)
292	292	A chancery court judge may be removed from office in the same manner
293	293	and for the same reasons as a district judge.
294	294	(b) A chancery court judge is disqualified or shall recuse
295	295	himself or herself in a particular case for the same reasons as a
296	296	district judge. Disqualification or recusal of a chancery court
297	297	judge shall be governed by the same procedure as disqualification
298	298	or recusal of a district judge.
299	299	Sec. 24A.061. PRIVATE PRACTICE OF LAW. A chancery court
300	300	judge shall diligently discharge the duties of the office on a
301	301	full-time basis and may not engage in the private practice of law.
302	302	Sec. 24A.062. VISITING JUDGE. (a) A retired or former
303	303	judge or justice may be assigned as a visiting judge of the chancery
304	304	court by the chief justice of the supreme court. A visiting judge
305	305	of the chancery court is subject to objection, disqualification, or
306	306	recusal in the same manner as a retired or former judge or justice
307	307	is subject to objection, disqualification, or recusal if appointed
308	308	as a visiting district judge.
309	309	(b) A visiting judge must meet the qualifications of a
310	310	chancery court judge as provided by Section 24A.054.
311	311	(c) Before accepting an assignment as a visiting judge of
312	312	the chancery court, a retired or former judge or justice shall take
313	313	the constitutional oath of office required of appointed officers of
314	314	this state and file the oath with the supreme court.
315	315	Sec. 24A.063. JURY PRACTICE AND PROCEDURE. (a) A party in
316	316	an action pending in the chancery court has the right to a trial by
317	317	jury when required by the constitution.
318	318	(b) A jury trial shall be held in a county in which venue
319	319	would be found under Section 15.002, Civil Practice and Remedies
320	320	Code.
321	321	(c) Subject to Subsection (b), a jury trial in a case
322	322	removed to the chancery court shall be held in the county in which
323	323	the action was originally filed.
324	324	(d) Subject to Subsection (b), a jury trial in a case filed
325	325	initially in the chancery court shall be held in any county in which
326	326	it could have been filed under Section 15.002, Civil Practice and
327	327	Remedies Code, as chosen by the plaintiff.
328	328	(e) The parties and the chancery court judge may agree to
329	329	hold the jury trial in any other county.
330	330	(f) The drawing of jury panels, selection of jurors, and
331	331	other jury-related practice and procedure in the chancery court
332	332	shall be the same as for the district court in the county in which
333	333	the trial is held.
334	334	(g) Practice, procedure, rules of evidence, issuance of
335	335	process and writs, and all other matters pertaining to the conduct
336	336	of trials, hearings, and other business in the chancery court are
337	337	governed by the laws and rules prescribed for district courts.
338	338	(h) The chancery court may adopt rules of practice, which
339	339	must be approved by the supreme court.
340	340	Sec. 24A.064. COURT LOCATION; STAFFING. (a) The chancery
341	341	court shall have a clerk, whose office shall be located in Travis
342	342	County in facilities provided by the state. The clerk shall:
343	343	(1) receive all filings in the chancery court; and
344	344	(2) fulfill the legal and administrative functions of
345	345	a district clerk and an appellate court clerk.
346	346	(b) The judges of the chancery court shall maintain chambers
347	347	in the county seat of their county of residence in facilities
348	348	provided by the state.
349	349	(c) Subject to Section 24A.063, the chancery court, or any
350	350	judge of the chancery court, may hold court at any location in the
351	351	state, as the court determines is necessary or convenient for a
352	352	particular civil action.
353	353	(d) The chancery court shall use the most advanced
354	354	technology feasible when necessary and appropriate to facilitate
355	355	expeditious proceedings in matters brought before the court. As
356	356	determined by the chancery court, counsel and parties may appear
357	357	before the chancery court by means of Internet-based or other
358	358	technological devices rather than in person.
359	359	(e) In a county in which the chancery court sits, the
360	360	sheriff shall in person or by deputy attend the chancery court as
361	361	required by the court. The sheriff or deputy is entitled to be
362	362	reimbursed by the state for the cost of attending court.
363	363	(f) Subject to any limitations provided by the General
364	364	Appropriations Act, the chancery court may appoint personnel
365	365	necessary for the operation of the court, including:
366	366	(1) the clerk of the court;
367	367	(2) staff attorneys for the court;
368	368	(3) staff attorneys for each chancery court judge;
369	369	(4) court coordinators; and
370	370	(5) administrative assistants.
371	371	(g) The court officials shall perform the duties and
372	372	responsibilities of their offices and are entitled to the
373	373	compensation, fees, and allowances prescribed by law for the
374	374	offices.
375	375	Sec. 24A.065. FEES. The chancery court shall provide rates
376	376	for fees associated with filings and actions in the chancery court.
377	377	The fees shall be set at a sufficient amount to cover the costs of
378	378	administering the provisions of this chapter, taking into account
379	379	fee waivers in the interest of justice.
380	380	Sec. 24A.066. SEAL. The seal of the chancery court is the
381	381	same as that provided by law for a district court except that the
382	382	seal must contain the name "The Chancery Court of Texas."
383	383	SUBCHAPTER C. COURT OF CHANCERY APPEALS
384	384	Sec. 24A.101. APPEAL; COURT OF CHANCERY APPEALS. (a) An
385	385	appeal from an order or judgment of the chancery court is available
386	386	in the same manner as an appeal from an order or judgment of a
387	387	district court. The procedure governing an appeal from an order or
388	388	judgment of a chancery court is the same as an appeal from an order
389	389	or judgment of a district court.
390	390	(b) The governor shall appoint seven active justices from
391	391	the courts of appeals to serve as the intermediate appellate court,
392	392	called the court of chancery appeals.
393	393	(c) The appointment of a justice to the court of chancery
394	394	appeals shall be made by the governor from the list of qualified
395	395	appellate justices as provided by Section 24A.002.
396	396	(d) A justice of the court of chancery appeals must meet the
397	397	qualifications of a judge of the chancery court as provided by
398	398	Section 24A.054.
399	399	Sec. 24A.102. CHIEF JUSTICE. The governor shall designate
400	400	one of the seven justices as the chief justice of the court of
401	401	chancery appeals.
402	402	Sec. 24A.103. COMPOSITION OF COURT. Not more than three
403	403	justices appointed to the court of chancery appeals may be from the
404	404	same court of appeals.
405	405	Sec. 24A.104. TERM OF OFFICE. A justice appointed under
406	406	Section 24A.101 shall serve on the court of chancery appeals for a
407	407	six-year term of office. A justice may be reappointed by the
408	408	governor. A justice who retires or resigns from or is not reelected
409	409	to the court of appeals must cease service on the court of chancery
410	410	appeals on the date the justice is no longer serving on the court of
411	411	appeals.
412	412	Sec. 24A.105. PANEL. The justices appointed to the court of
413	413	chancery appeals shall sit in randomly selected panels of three to
414	414	hear and determine appeals from the chancery court.
415	415	Sec. 24A.106. LOCATION. The justices hearing appeals from
416	416	the chancery court may sit in any convenient place to hear the
417	417	appeal.
418	418	Sec. 24A.107. JUDGMENT. The court of chancery appeals
419	419	shall render judgments and hand down opinions in the same manner as
420	420	any other court of appeals under Chapter 22.
421	421	Sec. 24A.108. REVIEW. (a) A party may seek an en banc
422	422	review of a decision of a panel of the court of chancery appeals.
423	423	(b) A party to an order or judgment of the chancery court or
424	424	the court of chancery appeals may file a petition for review in the
425	425	supreme court in the same manner and circumstances as a party to an
426	426	order or judgment of a district court or court of appeals.
427	427	Sec. 24A.109. CLERK. The clerk of the chancery court shall
428	428	serve as the clerk of the court of chancery appeals.
429	429	Sec. 24A.110. COMPENSATION. A justice of the court of
430	430	chancery appeals shall receive compensation equal to that of the
431	431	chief justice of a court of appeals, including the maximum amount of
432	432	local contributions. The compensation is in lieu of, not in
433	433	addition to, a justice's compensation for service on the court of
434	434	appeals.
435	435	Sec. 24A.111. SEAL. The seal of the court of chancery
436	436	appeals is the same as that provided by law for a court of appeals
437	437	except that the seal must contain the name "The Court of Chancery
438	438	Appeals of Texas."
439	439	SECTION 2. (a) As soon as practicable after the effective
440	440	date of this Act, the governor shall appoint judges to the chancery
441	441	court, as required by Sections 24A.002 and 24A.055, Government
442	442	Code, as added by this Act, as follows:
443	443	(1) the governor shall appoint two judges to a term
444	444	expiring December 31, 2016;
445	445	(2) the governor shall appoint two judges to a term
446	446	expiring December 31, 2018; and
447	447	(3) the governor shall appoint three judges to a term
448	448	expiring December 31, 2020.
449	449	(b) As soon as practicable after the effective date of this
450	450	Act, the governor shall appoint justices to the court of chancery
451	451	appeals, as required by Section 24A.101, Government Code, as added
452	452	by this Act.
453	453	SECTION 3. The changes in law made by this Act apply to
454	454	civil actions commenced on or after January 1, 2016.
455	455	SECTION 4. (a) The Supreme Court of Texas has exclusive and
456	456	original jurisdiction over a challenge to the constitutionality of
457	457	this Act or any part of this Act and may issue injunctive or
458	458	declaratory relief in connection with the challenge.
459	459	(b) If the appointment of judges by the governor to the
460	460	chancery court under Section 24A.055, Government Code, as added by
461	461	this Act, is held by the Supreme Court of Texas as unconstitutional,
462	462	the chancery court shall be staffed by sitting or retired judges who
463	463	are appointed by the supreme court.
464	464	(c) If the appointment of a justice by the governor to the
465	465	court of chancery appeals under Section 22A.101, Government Code,
466	466	as added by this Act, is held by the Supreme Court of Texas as
467	467	unconstitutional, the court of chancery appeals shall be staffed by
468	468	sitting or retired justices who are appointed by the supreme court.
469	469	SECTION 5. This Act takes effect September 1, 2015.