84R24557 CAE-D
By: Villalba H.B. No. 1603
Substitute the following for H.B. No. 1603:
By: Simmons C.S.H.B. No. 1603
A BILL TO BE ENTITLED
AN ACT
relating to the creation of the chancery court and the court of
chancery appeals to hear certain cases; authorizing fees.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle A, Title 2, Government Code, is amended
by adding Chapter 24A to read as follows:
CHAPTER 24A. CHANCERY COURT
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 24A.001. DEFINITIONS. In this chapter:
(1) "Controlling person" means a person who directly
or indirectly controls a governing person, officer, or
organization.
(2) "Governing documents" means the instruments,
documents, or agreements adopted under an organization's governing
law to govern the organization's formation and internal affairs.
The term includes:
(A) a certificate of formation, articles of
incorporation, and articles of organization;
(B) bylaws;
(C) a partnership agreement;
(D) a company agreement or operating agreement;
(E) a shareholder agreement;
(F) a voting agreement or voting trust agreement;
and
(G) an agreement among owners restricting the
transfer of ownership interests.
(3) "Governing law" means the law governing the
formation and internal affairs of an organization.
(4) "Governing person" means a person who is entitled,
alone or as part of a group, to manage and direct an organization's
affairs under the organization's governing documents and governing
law. The term includes:
(A) a member of the board of directors of a
corporation or other organization;
(B) a general partner of a general or limited
partnership;
(C) a manager of a limited liability company that
is managed by its managers;
(D) a member of a limited liability company that
is managed by its members;
(E) a trust manager of a real estate investment
trust; and
(F) a trustee of a business trust.
(5) "Governmental entity" means:
(A) the state; or
(B) a political subdivision of the state,
including a municipality, a county, or any kind of district.
(6) "Internal affairs" means:
(A) the rights, powers, and duties of an
organization's governing persons, officers, owners, and members;
and
(B) matters relating to the organization's
membership or ownership interests.
(7) "Managerial official" means a governing person or
officer.
(8) "Officer" means a person elected, appointed, or
designated as an officer of an organization by the organization's
governing persons or by the organization's governing documents.
(9) "Organization" means a foreign or domestic entity
or association that is for profit or nonprofit. The term includes:
(A) a corporation;
(B) a limited partnership;
(C) a general partnership;
(D) a limited liability partnership;
(E) a limited liability company;
(F) a business trust;
(G) a real estate investment trust;
(H) a joint venture;
(I) a joint stock company;
(J) a cooperative;
(K) a bank;
(L) a credit union;
(M) a savings and loan association;
(N) an insurance company; and
(O) a series of a limited liability company or of
another entity.
(10) "Owner" means an owner of an organization. The
term includes:
(A) a shareholder or stockholder of a corporation
or other organization;
(B) a general or limited partner of a partnership
or an assignee of a partnership interest in a partnership;
(C) a member of, or an assignee of a membership
interest in, a limited liability company; and
(D) a member of a nonprofit organization.
(11) "Ownership interest" means an owner's interest in
an organization, including an owner's economic, voting, and
management rights.
(12) "Qualified transaction" means a qualified
transaction as that term is defined in Section 271.001, Business &
Commerce Code.
Sec. 24A.002. ADVISORY COUNCIL. (a) The governor shall
appoint a Chancery Court Nominations Advisory Council consisting of
seven members. A member of the council serves at the pleasure of
the governor.
(b) Members of the council must meet the requirements of
Section 24A.054 for judges of the chancery court and be experienced
in the areas of law in the jurisdiction of the chancery court.
(c) Not more than four members of the council may be
associated with the same political party as the governor.
(d) To fill a position of a chancery court judge on the
creation of the chancery court, the position of a court of chancery
appeals justice on the creation of the court of chancery appeals, or
on the occurrence of any subsequent vacancy on the chancery court or
court of chancery appeals, including a vacancy created by the
expiration of a judge's or justice's term of office, the council
shall provide the governor with a list of at least five candidates
for each vacancy. Each candidate must be well qualified to serve as
a judge or justice of the chancery court or the court of chancery
appeals.
(e) The governor may request that the council enlarge the
list for any vacancy with up to five additional qualified
candidates.
(f) The governor must appoint a judge or justice to fill a
vacancy from the list of candidates submitted by the council.
SUBCHAPTER B. CHANCERY COURT
Sec. 24A.051. JURISDICTION. (a) The chancery court has
civil jurisdiction concurrent with district courts in:
(1) a derivative action on behalf of an organization;
(2) an action arising out of or relating to a qualified
transaction in which the amount in controversy exceeds $10 million,
excluding interest, statutory damages, exemplary damages,
penalties, attorney's fees, and costs;
(3) an action regarding the governance or internal
affairs of an organization;
(4) an action in which a claim under a state or federal
securities or trade regulation law is asserted against:
(A) an organization;
(B) a governing person of an organization for an
act or omission by the organization or by the person in the person's
capacity as a governing person;
(C) a person directly or indirectly controlling
an organization for an act or omission by the organization; or
(D) a person directly or indirectly controlling a
governing person for an act or omission by the governing person;
(5) an action by an organization, or an owner or a
member of an organization, if the action:
(A) is brought against an owner, managerial
official, or controlling person of the organization; and
(B) alleges an act or omission by the person in
the person's capacity as an owner, managerial official, or
controlling person of the organization;
(6) an action alleging that an owner, managerial
official, or controlling person breached a duty, by reason of the
person's status as an owner, managerial official, or controlling
person, including the duty of care, loyalty, or good faith;
(7) an action seeking to hold an owner of an
organization, a member of an organization, or a governing person
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, member, or governing person;
(8) an action in which the amount in controversy
exceeds $10 million excluding interest, statutory damages,
exemplary damages, penalties, attorney's fees, and costs that:
(A) arise against, between, or among
organizations, governing authorities, governing persons, members,
or owners, relating to a contract transaction for business,
commercial, investment, agricultural, or similar purposes; or
(B) involve violations of the Finance Code or
Business & Commerce Code;
(9) an action brought under Chapter 37, Civil Practice
and Remedies Code, involving:
(A) the Business Organizations Code;
(B) an organization's governing documents; or
(C) a dispute based on claims that fall within
the provisions of this subsection; and
(10) an action arising out of the Business
Organizations Code.
(b) The chancery court has statewide jurisdiction of an
action described in Subsection (a) and all matters arising out of or
related to an action described in Subsection (a).
(c) The chancery court may grant any relief available in a
district court.
(d) Notwithstanding Subsections (a) and (b), the chancery
court:
(1) does not have jurisdiction of a civil action:
(A) brought by or against a governmental entity,
unless the governmental entity invokes or consents to the
jurisdiction of the chancery court; or
(B) brought pursuant to Chapter 17, Business &
Commerce Code, the Estates Code, the Family Code, or Title 9,
Property Code, unless all parties consent to the jurisdiction of
the chancery court; and
(2) must sever any claim in which a party seeks
recovery of monetary damages for personal injury or death, unless
all parties and the chancery court judge agree that the claim may
proceed in the chancery court.
(e) A cause of action brought pursuant to Chapter 17,
Business & Commerce Code, the Estates Code, the Family Code, or
Title 9, Property Code, in which a party objects to jurisdiction as
provided by this section shall be severed from any other claim
brought under this chapter.
Sec. 24A.052. INITIAL FILING; REMOVAL AND REMAND; TRANSFER.
(a) An action in the jurisdiction of the chancery court may be filed
in the chancery court. If the chancery court does not have subject
matter jurisdiction of the action, or part of the action, the court
shall dismiss without prejudice to refiling the whole or part of the
action. A claim that is dismissed under this subsection may be
refiled in a court with jurisdiction by the party who filed the
claim in the chancery court not later than the 30th day after the
date the claim was dismissed by the chancery court, notwithstanding
the expiration of a period of limitation provided by statute.
(b) A party to an action filed in a district court or county
court at law that is in the subject matter jurisdiction of the
chancery court may remove the action to the chancery court by filing
a notice of removal with the chancery court and the court in which
the action was originally filed. If the chancery court does not
have jurisdiction of the action or part of the action, the chancery
court shall remand the action, or the part in which the chancery
court does not have jurisdiction, to the court from which the action
was removed.
(c) Removal of a case to the chancery court is not subject to
the statutes or rules governing the due order of pleading.
(d) Removal of a case does not waive a defect in venue or
constitute an appearance to determine personal jurisdiction.
(e) Any claim in which the chancery court does not have
jurisdiction under Section 24A.051(d) must be transferred to a
district court in a county in which the claim could have been
originally filed. If the claim could have been filed in more than
one county, the party bringing the claim may elect the county to
which the claim is transferred.
(f) A cause of action filed in the chancery court shall be
assigned to the docket of a judge on a rotating basis.
(g) The supreme court shall promulgate rules of civil
procedure providing for the timely and efficient removal and remand
of cases to and from the chancery court.
Sec. 24A.053. POWERS AND DUTIES. (a) The chancery court may
issue any writ necessary for the enforcement of the court's
jurisdiction, including a:
(1) writ of injunction;
(2) writ of mandamus;
(3) writ of sequestration;
(4) writ of attachment;
(5) writ of garnishment; and
(6) writ of supersedeas.
(b) The chancery court may answer a question regarding a
matter in the court's jurisdiction that is certified to the
chancery court by another court.
Sec. 24A.054. QUALIFICATIONS OF JUDGE. A judge of the
chancery court must:
(1) be at least 35 years of age;
(2) be a United States citizen;
(3) be a resident of this state for at least two years
before appointment; and
(4) be a licensed attorney in this state and have 10 or
more years of experience in:
(A) practicing complex civil business
litigation;
(B) practicing complex business transaction law;
(C) teaching courses in complex civil business
litigation or complex business transaction law at an accredited law
school in this state;
(D) serving as a judge of a court in this state
with civil jurisdiction; or
(E) any combination of experience described by
Paragraphs (A)-(D).
Sec. 24A.055. COMPOSITION OF COURT. (a) The chancery court
is composed of seven judges appointed by the governor with the
advice and consent of the senate.
(b) A chancery court judge may be reappointed.
(c) The governor may not appoint:
(1) more than three judges who reside in the same
county; or
(2) more than a majority of judges associated with the
same political party.
Sec. 24A.056. TERMS OF OFFICE. The judges of the chancery
court shall serve staggered six-year terms of office.
Sec. 24A.057. VACANCY. If a vacancy occurs on the chancery
court, the governor, with the advice and consent of the senate,
shall appoint, in the same manner as the original appointment,
another person to serve for the remainder of the unexpired term.
Sec. 24A.058. JUDICIAL AUTHORITY. A chancery court judge
has all powers, duties, immunities, and privileges of a district
judge.
Sec. 24A.059. JUDGE'S SALARY. (a) A chancery court judge
shall be paid a total annual salary from the state that is the sum
of:
(1) the salary paid to a district judge by the state
under Section 659.012; and
(2) the maximum amount of county contributions and
supplements allowed by law to be paid to a district judge under
Section 659.012.
(b) The salary shall be paid in equal monthly installments.
Sec. 24A.060. REMOVAL; DISQUALIFICATION AND RECUSAL. (a)
A chancery court judge may be removed from office in the same manner
and for the same reasons as a district judge.
(b) A chancery court judge is disqualified or shall recuse
himself or herself in a particular case for the same reasons as a
district judge. Disqualification or recusal of a chancery court
judge shall be governed by the same procedure as disqualification
or recusal of a district judge.
Sec. 24A.061. PRIVATE PRACTICE OF LAW. A chancery court
judge shall diligently discharge the duties of the office on a
full-time basis and may not engage in the private practice of law.
Sec. 24A.062. VISITING JUDGE. (a) A retired or former
judge or justice may be assigned as a visiting judge of the chancery
court by the chief justice of the supreme court. A visiting judge
of the chancery court is subject to objection, disqualification, or
recusal in the same manner as a retired or former judge or justice
is subject to objection, disqualification, or recusal if appointed
as a visiting district judge.
(b) A visiting judge must meet the qualifications of a
chancery court judge as provided by Section 24A.054.
(c) Before accepting an assignment as a visiting judge of
the chancery court, a retired or former judge or justice shall take
the constitutional oath of office required of appointed officers of
this state and file the oath with the supreme court.
Sec. 24A.063. JURY PRACTICE AND PROCEDURE. (a) A party in
an action pending in the chancery court has the right to a trial by
jury when required by the constitution.
(b) A jury trial shall be held in a county in which venue
would be found under Section 15.002, Civil Practice and Remedies
Code.
(c) Subject to Subsection (b), a jury trial in a case
removed to the chancery court shall be held in the county in which
the action was originally filed.
(d) Subject to Subsection (b), a jury trial in a case filed
initially in the chancery court shall be held in any county in which
it could have been filed under Section 15.002, Civil Practice and
Remedies Code, as chosen by the plaintiff.
(e) The parties and the chancery court judge may agree to
hold the jury trial in any other county.
(f) The drawing of jury panels, selection of jurors, and
other jury-related practice and procedure in the chancery court
shall be the same as for the district court in the county in which
the trial is held.
(g) Practice, procedure, rules of evidence, issuance of
process and writs, and all other matters pertaining to the conduct
of trials, hearings, and other business in the chancery court are
governed by the laws and rules prescribed for district courts.
(h) The chancery court may adopt rules of practice, which
must be approved by the supreme court.
Sec. 24A.064. COURT LOCATION; STAFFING. (a) The chancery
court shall have a clerk, whose office shall be located in Travis
County in facilities provided by the state. The clerk shall:
(1) receive all filings in the chancery court; and
(2) fulfill the legal and administrative functions of
a district clerk and an appellate court clerk.
(b) The judges of the chancery court shall maintain chambers
in the county seat of their county of residence in facilities
provided by the state.
(c) Subject to Section 24A.063, the chancery court, or any
judge of the chancery court, may hold court at any location in the
state, as the court determines is necessary or convenient for a
particular civil action.
(d) The chancery court shall use the most advanced
technology feasible when necessary and appropriate to facilitate
expeditious proceedings in matters brought before the court. As
determined by the chancery court, counsel and parties may appear
before the chancery court by means of Internet-based or other
technological devices rather than in person.
(e) In a county in which the chancery court sits, the
sheriff shall in person or by deputy attend the chancery court as
required by the court. The sheriff or deputy is entitled to be
reimbursed by the state for the cost of attending court.
(f) Subject to any limitations provided by the General
Appropriations Act, the chancery court may appoint personnel
necessary for the operation of the court, including:
(1) the clerk of the court;
(2) staff attorneys for the court;
(3) staff attorneys for each chancery court judge;
(4) court coordinators; and
(5) administrative assistants.
(g) The court officials shall perform the duties and
responsibilities of their offices and are entitled to the
compensation, fees, and allowances prescribed by law for the
offices.
Sec. 24A.065. FEES. The chancery court shall provide rates
for fees associated with filings and actions in the chancery court.
The fees shall be set at a sufficient amount to cover the costs of
administering the provisions of this chapter, taking into account
fee waivers in the interest of justice.
Sec. 24A.066. SEAL. The seal of the chancery court is the
same as that provided by law for a district court except that the
seal must contain the name "The Chancery Court of Texas."
SUBCHAPTER C. COURT OF CHANCERY APPEALS
Sec. 24A.101. APPEAL; COURT OF CHANCERY APPEALS. (a) An
appeal from an order or judgment of the chancery court is available
in the same manner as an appeal from an order or judgment of a
district court. The procedure governing an appeal from an order or
judgment of a chancery court is the same as an appeal from an order
or judgment of a district court.
(b) The governor shall appoint seven active justices from
the courts of appeals to serve as the intermediate appellate court,
called the court of chancery appeals.
(c) The appointment of a justice to the court of chancery
appeals shall be made by the governor from the list of qualified
appellate justices as provided by Section 24A.002.
(d) A justice of the court of chancery appeals must meet the
qualifications of a judge of the chancery court as provided by
Section 24A.054.
Sec. 24A.102. CHIEF JUSTICE. The governor shall designate
one of the seven justices as the chief justice of the court of
chancery appeals.
Sec. 24A.103. COMPOSITION OF COURT. Not more than three
justices appointed to the court of chancery appeals may be from the
same court of appeals.
Sec. 24A.104. TERM OF OFFICE. A justice appointed under
Section 24A.101 shall serve on the court of chancery appeals for a
six-year term of office. A justice may be reappointed by the
governor. A justice who retires or resigns from or is not reelected
to the court of appeals must cease service on the court of chancery
appeals on the date the justice is no longer serving on the court of
appeals.
Sec. 24A.105. PANEL. The justices appointed to the court of
chancery appeals shall sit in randomly selected panels of three to
hear and determine appeals from the chancery court.
Sec. 24A.106. LOCATION. The justices hearing appeals from
the chancery court may sit in any convenient place to hear the
appeal.
Sec. 24A.107. JUDGMENT. The court of chancery appeals
shall render judgments and hand down opinions in the same manner as
any other court of appeals under Chapter 22.
Sec. 24A.108. REVIEW. (a) A party may seek an en banc
review of a decision of a panel of the court of chancery appeals.
(b) A party to an order or judgment of the chancery court or
the court of chancery appeals may file a petition for review in the
supreme court in the same manner and circumstances as a party to an
order or judgment of a district court or court of appeals.
Sec. 24A.109. CLERK. The clerk of the chancery court shall
serve as the clerk of the court of chancery appeals.
Sec. 24A.110. COMPENSATION. A justice of the court of
chancery appeals shall receive compensation equal to that of the
chief justice of a court of appeals, including the maximum amount of
local contributions. The compensation is in lieu of, not in
addition to, a justice's compensation for service on the court of
appeals.
Sec. 24A.111. SEAL. The seal of the court of chancery
appeals is the same as that provided by law for a court of appeals
except that the seal must contain the name "The Court of Chancery
Appeals of Texas."
SECTION 2. (a) As soon as practicable after the effective
date of this Act, the governor shall appoint judges to the chancery
court, as required by Sections 24A.002 and 24A.055, Government
Code, as added by this Act, as follows:
(1) the governor shall appoint two judges to a term
expiring December 31, 2016;
(2) the governor shall appoint two judges to a term
expiring December 31, 2018; and
(3) the governor shall appoint three judges to a term
expiring December 31, 2020.
(b) As soon as practicable after the effective date of this
Act, the governor shall appoint justices to the court of chancery
appeals, as required by Section 24A.101, Government Code, as added
by this Act.
SECTION 3. The changes in law made by this Act apply to
civil actions commenced on or after January 1, 2016.
SECTION 4. (a) The Supreme Court of Texas has exclusive and
original jurisdiction over a challenge to the constitutionality of
this Act or any part of this Act and may issue injunctive or
declaratory relief in connection with the challenge.
(b) If the appointment of judges by the governor to the
chancery court under Section 24A.055, Government Code, as added by
this Act, is held by the Supreme Court of Texas as unconstitutional,
the chancery court shall be staffed by sitting or retired judges who
are appointed by the supreme court.
(c) If the appointment of a justice by the governor to the
court of chancery appeals under Section 22A.101, Government Code,
as added by this Act, is held by the Supreme Court of Texas as
unconstitutional, the court of chancery appeals shall be staffed by
sitting or retired justices who are appointed by the supreme court.
SECTION 5. This Act takes effect September 1, 2015.