Texas 2019 - 86th Regular

Texas House Bill HB4149 Compare Versions

Only one version of the bill is available at this time.

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1	1	86R15747 CAE-F
2	2	By: Leach H.B. No. 4149
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the creation of the business court and the Court of
8	8	Business Appeals to hear certain cases; authorizing fees.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subtitle A, Title 2, Government Code, is amended
11	11	by adding Chapter 24A to read as follows:
12	12	CHAPTER 24A. BUSINESS COURT
13	13	SUBCHAPTER A. GENERAL PROVISIONS
14	14	Sec. 24A.001. DEFINITIONS. In this chapter:
15	15	(1) "Controlling person" means a person who directly
16	16	or indirectly controls a governing person, officer, or
17	17	organization.
18	18	(2) "Governing documents" means the instruments,
19	19	documents, or agreements adopted under an organization's governing
20	20	law to govern the organization's formation and internal affairs.
21	21	The term includes:
22	22	(A) a certificate of formation, articles of
23	23	incorporation, and articles of organization;
24	24	(B) bylaws;
25	25	(C) a partnership agreement;
26	26	(D) a company agreement or operating agreement;
27	27	(E) a shareholder agreement;
28	28	(F) a voting agreement or voting trust agreement;
29	29	and
30	30	(G) an agreement among owners restricting the
31	31	transfer of ownership interests.
32	32	(3) "Governing law" means the law governing the
33	33	formation and internal affairs of an organization.
34	34	(4) "Governing person" means a person who is entitled,
35	35	alone or as part of a group, to manage and direct an organization's
36	36	affairs under the organization's governing documents and governing
37	37	law. The term includes:
38	38	(A) a member of the board of directors of a
39	39	corporation or other organization;
40	40	(B) a general partner of a general or limited
41	41	partnership;
42	42	(C) a manager of a limited liability company that
43	43	is managed by its managers;
44	44	(D) a member of a limited liability company that
45	45	is managed by its members;
46	46	(E) a trust manager of a real estate investment
47	47	trust; and
48	48	(F) a trustee of a business trust.
49	49	(5) "Governmental entity" means:
50	50	(A) the state; or
51	51	(B) a political subdivision of the state,
52	52	including a municipality, a county, or any kind of district.
53	53	(6) "Internal affairs" means:
54	54	(A) the rights, powers, and duties of an
55	55	organization's governing persons, officers, owners, and members;
56	56	and
57	57	(B) matters relating to the organization's
58	58	membership or ownership interests.
59	59	(7) "Managerial official" means a governing person or
60	60	officer.
61	61	(8) "Officer" means a person elected, appointed, or
62	62	designated as an officer of an organization by the organization's
63	63	governing persons or by the organization's governing documents.
64	64	(9) "Organization" means a foreign or domestic entity
65	65	or association that is for profit or nonprofit. The term includes:
66	66	(A) a corporation;
67	67	(B) a limited partnership;
68	68	(C) a general partnership;
69	69	(D) a limited liability partnership;
70	70	(E) a limited liability company;
71	71	(F) a business trust;
72	72	(G) a real estate investment trust;
73	73	(H) a joint venture;
74	74	(I) a joint stock company;
75	75	(J) a cooperative;
76	76	(K) a bank;
77	77	(L) a credit union;
78	78	(M) a savings and loan association;
79	79	(N) an insurance company; and
80	80	(O) a series of a limited liability company or of
81	81	another entity.
82	82	(10) "Owner" means an owner of an organization. The
83	83	term includes:
84	84	(A) a shareholder or stockholder of a corporation
85	85	or other organization;
86	86	(B) a general or limited partner of a partnership
87	87	or an assignee of a partnership interest in a partnership;
88	88	(C) a member of, or an assignee of a membership
89	89	interest in, a limited liability company; and
90	90	(D) a member of a nonprofit organization.
91	91	(11) "Ownership interest" means an owner's interest in
92	92	an organization, including an owner's economic, voting, and
93	93	management rights.
94	94	(12) "Qualified transaction" means a qualified
95	95	transaction as that term is defined in Section 271.001, Business &
96	96	Commerce Code.
97	97	Sec. 24A.002. ADVISORY COUNCIL. (a) The governor shall
98	98	appoint a Business Court Nominations Advisory Council consisting of
99	99	seven members. A member of the council serves at the pleasure of
100	100	the governor.
101	101	(b) Members of the council must meet the requirements of
102	102	Section 24A.054 for judges of the business court and be experienced
103	103	in the areas of law in the jurisdiction of the business court.
104	104	(c) Not more than four members of the council may be
105	105	associated with the same political party as the governor.
106	106	(d) To fill a position of a business court judge on the
107	107	creation of the business court, the position of a court of business
108	108	appeals justice on the creation of the court of business appeals, or
109	109	on the occurrence of any subsequent vacancy on the business court or
110	110	court of business appeals, including a vacancy created by the
111	111	expiration of a judge's or justice's term of office, the council
112	112	shall provide the governor with a list of at least five candidates
113	113	for each vacancy. Each candidate must be well qualified to serve as
114	114	a judge or justice of the business court or the court of business
115	115	appeals.
116	116	(e) The governor may request that the council enlarge the
117	117	list for any vacancy by adding not to exceed five additional
118	118	qualified candidates.
119	119	(f) The governor must appoint a judge or justice to fill a
120	120	vacancy from the list of candidates submitted by the council.
121	121	SUBCHAPTER B. BUSINESS COURT
122	122	Sec. 24A.051. JURISDICTION. (a) The business court has
123	123	civil jurisdiction concurrent with district courts in:
124	124	(1) a derivative action on behalf of an organization;
125	125	(2) an action arising out of or relating to a qualified
126	126	transaction in which the amount in controversy exceeds $10 million,
127	127	excluding interest, statutory damages, exemplary damages,
128	128	penalties, attorney's fees, and costs;
129	129	(3) an action regarding the governance or internal
130	130	affairs of an organization;
131	131	(4) an action in which a claim under a state or federal
132	132	securities or trade regulation law is asserted against:
133	133	(A) an organization;
134	134	(B) a governing person of an organization for an
135	135	act or omission by the organization or by the person in the person's
136	136	capacity as a governing person;
137	137	(C) a person directly or indirectly controlling
138	138	an organization for an act or omission by the organization; or
139	139	(D) a person directly or indirectly controlling a
140	140	governing person for an act or omission by the governing person;
141	141	(5) an action by an organization, or an owner or a
142	142	member of an organization, if the action:
143	143	(A) is brought against an owner, managerial
144	144	official, or controlling person of the organization; and
145	145	(B) alleges an act or omission by the person in
146	146	the person's capacity as an owner, managerial official, or
147	147	controlling person of the organization;
148	148	(6) an action alleging that an owner, managerial
149	149	official, or controlling person breached a duty, by reason of the
150	150	person's status as an owner, managerial official, or controlling
151	151	person, including the duty of care, loyalty, or good faith;
152	152	(7) an action seeking to hold an owner of an
153	153	organization, a member of an organization, or a governing person
154	154	liable for an obligation of the organization, other than on account
155	155	of a written contract signed by the person to be held liable in a
156	156	capacity other than as an owner, member, or governing person;
157	157	(8) an action in which the amount in controversy
158	158	exceeds $10 million excluding interest, statutory damages,
159	159	exemplary damages, penalties, attorney's fees, and costs that:
160	160	(A) arise against, between, or among
161	161	organizations, governing authorities, governing persons, members,
162	162	or owners, relating to a contract transaction for business,
163	163	commercial, investment, agricultural, or similar purposes; or
164	164	(B) involve violations of the Finance Code or
165	165	Business & Commerce Code;
166	166	(9) an action brought under Chapter 37, Civil Practice
167	167	and Remedies Code, involving:
168	168	(A) the Business Organizations Code;
169	169	(B) an organization's governing documents; or
170	170	(C) a dispute based on claims that fall within
171	171	the provisions of this subsection; and
172	172	(10) an action arising out of the Business
173	173	Organizations Code.
174	174	(b) The business court has statewide jurisdiction of an
175	175	action described in Subsection (a) and all matters arising out of or
176	176	related to an action described in Subsection (a).
177	177	(c) The business court may grant any relief available in a
178	178	district court.
179	179	(d) Notwithstanding Subsections (a) and (b), the business
180	180	court:
181	181	(1) does not have jurisdiction of a civil
182	182	action brought by or against a governmental entity, unless the
183	183	governmental entity invokes or consents to the jurisdiction of the
184	184	business court; and
185	185	(2) must sever any claim in which a party seeks
186	186	recovery of monetary damages for personal injury or death or any
187	187	claim arising under Chapter 17, Business & Commerce Code, the
188	188	Estates Code, the Family Code, or Title 9, Property Code, unless all
189	189	parties and the business court judge agree that the claim may
190	190	proceed in the business court.
191	191	(e) If a claim is severed as provided by Subsection (d)(2),
192	192	the business court has discretion to stay or abate its own
193	193	proceedings pending resolution of the severed claim.
194	194	Sec. 24A.052. INITIAL FILING; REMOVAL AND REMAND; TRANSFER.
195	195	(a) An action in the jurisdiction of the business court may be
196	196	filed in the business court. If the business court does not have
197	197	subject matter jurisdiction of the action, or part of the action,
198	198	the court shall dismiss without prejudice to refiling the whole or
199	199	part of the action. A claim that is dismissed under this subsection
200	200	may be refiled in a court with jurisdiction by the party who filed
201	201	the claim in the business court not later than the 30th day after
202	202	the date the claim was dismissed by the business court,
203	203	notwithstanding the expiration of a period of limitation provided
204	204	by statute.
205	205	(b) A party to an action filed in a district court or county
206	206	court at law that is in the subject matter jurisdiction of the
207	207	business court may remove the action to the business court by filing
208	208	a notice of removal with the business court and the court in which
209	209	the action was originally filed. If the business court does not
210	210	have jurisdiction of the action or part of the action, the business
211	211	court shall remand the action, or the part in which the business
212	212	court does not have jurisdiction, to the court from which the action
213	213	was removed. A party may appeal an interlocutory order of the
214	214	business court that grants or refuses a remand under this
215	215	subsection to the court of business appeals.
216	216	(c) Removal of a case to the business court is not subject to
217	217	the statutes or rules governing the due order of pleading.
218	218	(d) Removal of a case does not waive a defect in venue or
219	219	constitute an appearance to determine personal jurisdiction.
220	220	(e) Any claim in which the business court does not have
221	221	jurisdiction under Section 24A.051(d) must be transferred to a
222	222	district court in a county in which the claim could have been
223	223	originally filed. If the claim could have been filed in more than
224	224	one county, the party bringing the claim may elect the county to
225	225	which the claim is transferred.
226	226	(f) A cause of action filed in the business court shall be
227	227	assigned to the docket of a judge on a rotating basis.
228	228	(g) The supreme court shall promulgate rules of civil
229	229	procedure providing for the timely and efficient removal and remand
230	230	of cases to and from the business court.
231	231	Sec. 24A.053. POWERS AND DUTIES. (a) The business court may
232	232	issue any writ necessary for the enforcement of the court's
233	233	jurisdiction, including a:
234	234	(1) writ of injunction;
235	235	(2) writ of mandamus;
236	236	(3) writ of sequestration;
237	237	(4) writ of attachment;
238	238	(5) writ of garnishment; and
239	239	(6) writ of supersedeas.
240	240	(b) The business court may answer a question regarding a
241	241	matter in the court's jurisdiction that is certified to the
242	242	business court by another court.
243	243	Sec. 24A.054. QUALIFICATIONS OF JUDGE. A judge of the
244	244	business court must:
245	245	(1) be at least 35 years of age;
246	246	(2) be a United States citizen;
247	247	(3) be a resident of this state for at least two years
248	248	before appointment; and
249	249	(4) be a licensed attorney in this state and have 10 or
250	250	more years of experience in:
251	251	(A) practicing complex civil business
252	252	litigation;
253	253	(B) practicing complex business transaction law;
254	254	(C) teaching courses in complex civil business
255	255	litigation or complex business transaction law at an accredited law
256	256	school in this state;
257	257	(D) serving as a judge of a court in this state
258	258	with civil jurisdiction; or
259	259	(E) any combination of experience described by
260	260	Paragraphs (A)-(D).
261	261	Sec. 24A.055. COMPOSITION OF COURT. (a) The business court
262	262	is composed of seven judges appointed by the governor with the
263	263	advice and consent of the senate.
264	264	(b) A business court judge may be reappointed.
265	265	(c) The governor may not appoint:
266	266	(1) more than three judges who reside in the same
267	267	county; or
268	268	(2) more than a majority of judges associated with the
269	269	same political party.
270	270	Sec. 24A.056. TERMS OF OFFICE. The judges of the business
271	271	court shall serve staggered six-year terms of office.
272	272	Sec. 24A.057. VACANCY. If a vacancy occurs on the business
273	273	court, the governor, with the advice and consent of the senate,
274	274	shall appoint, in the same manner as the original appointment,
275	275	another person to serve for the remainder of the unexpired term.
276	276	Sec. 24A.058. JUDICIAL AUTHORITY. A business court judge
277	277	has all powers, duties, immunities, and privileges of a district
278	278	judge.
279	279	Sec. 24A.059. JUDGE'S SALARY. (a) A business court judge
280	280	shall be paid a total annual salary from the state that is the sum
281	281	of:
282	282	(1) the salary paid to a district judge by the state
283	283	under Section 659.012; and
284	284	(2) the maximum amount of county contributions and
285	285	supplements allowed by law to be paid to a district judge under
286	286	Section 659.012.
287	287	(b) The salary shall be paid in equal monthly installments.
288	288	Sec. 24A.060. REMOVAL; DISQUALIFICATION AND RECUSAL. (a)
289	289	A business court judge may be removed from office in the same manner
290	290	and for the same reasons as a district judge.
291	291	(b) A business court judge is disqualified or shall recuse
292	292	himself or herself in a particular case for the same reasons as a
293	293	district judge. Disqualification or recusal of a business court
294	294	judge shall be governed by the same procedure as disqualification
295	295	or recusal of a district judge.
296	296	Sec. 24A.061. PRIVATE PRACTICE OF LAW. A business court
297	297	judge shall diligently discharge the duties of the office on a
298	298	full-time basis and may not engage in the private practice of law.
299	299	Sec. 24A.062. VISITING JUDGE. (a) A retired or former
300	300	judge or justice may be assigned as a visiting judge of the business
301	301	court by the chief justice of the supreme court. A visiting judge
302	302	of the business court is subject to objection, disqualification, or
303	303	recusal in the same manner as a retired or former judge or justice
304	304	is subject to objection, disqualification, or recusal if appointed
305	305	as a visiting district judge.
306	306	(b) A visiting judge must meet the qualifications of a
307	307	business court judge as provided by Section 24A.054.
308	308	(c) Before accepting an assignment as a visiting judge of
309	309	the business court, a retired or former judge or justice shall take
310	310	the constitutional oath of office required of appointed officers of
311	311	this state and file the oath with the supreme court.
312	312	Sec. 24A.063. JURY PRACTICE AND PROCEDURE. (a) A party in
313	313	an action pending in the business court has the right to a trial by
314	314	jury when required by the constitution.
315	315	(b) A jury trial shall be held in a county in which venue
316	316	would be found under Section 15.002, Civil Practice and Remedies
317	317	Code.
318	318	(c) Subject to Subsection (b), a jury trial in a case
319	319	removed to the business court shall be held in the county in which
320	320	the action was originally filed.
321	321	(d) Subject to Subsection (b), a jury trial in a case filed
322	322	initially in the business court shall be held in any county in which
323	323	it could have been filed under Section 15.002, Civil Practice and
324	324	Remedies Code, as chosen by the plaintiff.
325	325	(e) The parties and the business court judge may agree to
326	326	hold the jury trial in any other county. A party may not be required
327	327	to agree to hold the jury trial in a different county.
328	328	(f) The drawing of jury panels, selection of jurors, and
329	329	other jury-related practice and procedure in the business court
330	330	shall be the same as for the district court in the county in which
331	331	the trial is held.
332	332	(g) Practice, procedure, rules of evidence, issuance of
333	333	process and writs, and all other matters pertaining to the conduct
334	334	of trials, hearings, and other business in the business court are
335	335	governed by the laws and rules prescribed for district courts.
336	336	(h) The business court may adopt rules of practice, which
337	337	must be approved by the supreme court.
338	338	Sec. 24A.064. COURT LOCATION; STAFFING. (a) The business
339	339	court shall have a clerk, whose office shall be located in Travis
340	340	County in facilities provided by the state. The clerk shall:
341	341	(1) receive all filings in the business court; and
342	342	(2) fulfill the legal and administrative functions of
343	343	a district clerk and an appellate court clerk.
344	344	(b) The judges of the business court shall maintain chambers
345	345	in the county seat of their county of residence in facilities
346	346	provided by the state.
347	347	(c) Subject to Section 24A.063, the business court, or any
348	348	judge of the business court, may hold court at any location in the
349	349	state, as the court determines is necessary or convenient for a
350	350	particular civil action.
351	351	(d) The business court shall use the most advanced
352	352	technology feasible when necessary and appropriate to facilitate
353	353	expeditious proceedings in matters brought before the court. As
354	354	determined by the business court, counsel and parties may appear
355	355	before the business court by means of Internet-based or other
356	356	technological devices rather than in person.
357	357	(e) In a county in which the business court sits, the
358	358	sheriff shall in person or by deputy attend the business court as
359	359	required by the court. The sheriff or deputy is entitled to be
360	360	reimbursed by the state for the cost of attending court.
361	361	(f) Subject to any limitations provided by the General
362	362	Appropriations Act, the business court may appoint personnel
363	363	necessary for the operation of the court, including:
364	364	(1) the clerk of the court;
365	365	(2) staff attorneys for the court;
366	366	(3) staff attorneys for each business court judge;
367	367	(4) court coordinators; and
368	368	(5) administrative assistants.
369	369	(g) The court officials shall perform the duties and
370	370	responsibilities of their offices and are entitled to the
371	371	compensation, fees, and allowances prescribed by law for the
372	372	offices.
373	373	Sec. 24A.065. FEES. The business court shall provide rates
374	374	for fees associated with filings and actions in the business court.
375	375	The fees shall be set at a sufficient amount to cover the costs of
376	376	administering the provisions of this chapter, taking into account
377	377	fee waivers in the interest of justice.
378	378	Sec. 24A.066. SEAL. The seal of the business court is the
379	379	same as that provided by law for a district court except that the
380	380	seal must contain the name "The Business Court of Texas."
381	381	SUBCHAPTER C. COURT OF BUSINESS APPEALS
382	382	Sec. 24A.101. APPEAL; COURT OF BUSINESS APPEALS. (a) An
383	383	appeal from an order or judgment of the business court is available
384	384	in the same manner as an appeal from an order or judgment of a
385	385	district court. The procedure governing an appeal from an order or
386	386	judgment of a business court is the same as an appeal from an order
387	387	or judgment of a district court.
388	388	(b) The governor shall appoint seven active justices from
389	389	the courts of appeals to serve as the intermediate appellate court,
390	390	called the court of business appeals.
391	391	(c) The appointment of a justice to the court of business
392	392	appeals shall be made by the governor from the list of qualified
393	393	appellate justices as provided by Section 24A.002.
394	394	(d) A justice of the court of business appeals must meet the
395	395	qualifications of a judge of the business court as provided by
396	396	Section 24A.054.
397	397	Sec. 24A.102. CHIEF JUSTICE. The governor shall designate
398	398	one of the seven justices appointed under Section 24A.101 as the
399	399	chief justice of the court of business appeals.
400	400	Sec. 24A.103. COMPOSITION OF COURT. Not more than three
401	401	justices appointed to the court of business appeals may be from the
402	402	same court of appeals.
403	403	Sec. 24A.104. TERM OF OFFICE. A justice appointed under
404	404	Section 24A.101 shall serve on the court of business appeals for a
405	405	six-year term of office. A justice may be reappointed by the
406	406	governor. A justice who retires or resigns from or is not reelected
407	407	to the court of appeals must cease service on the court of business
408	408	appeals on the date the justice is no longer serving on the court of
409	409	appeals.
410	410	Sec. 24A.105. PANEL. The justices appointed to the court of
411	411	business appeals shall sit in randomly selected panels of three to
412	412	hear and determine appeals from the business court.
413	413	Sec. 24A.106. LOCATION. The justices hearing appeals from
414	414	the business court may sit in any convenient place to hear the
415	415	appeal.
416	416	Sec. 24A.107. JUDGMENT. The court of business appeals
417	417	shall render judgments and hand down opinions in the same manner as
418	418	any other court of appeals under Chapter 22.
419	419	Sec. 24A.108. REVIEW. (a) A party may seek an en banc
420	420	review of a decision of a panel of the court of business appeals.
421	421	(b) A party to an order or judgment of the business court or
422	422	the court of business appeals may file a petition for review in the
423	423	supreme court in the same manner and circumstances as a party to an
424	424	order or judgment of a district court or court of appeals.
425	425	Sec. 24A.109. CLERK. The clerk of the business court shall
426	426	serve as the clerk of the court of business appeals.
427	427	Sec. 24A.110. COMPENSATION. A justice of the court of
428	428	business appeals shall receive compensation equal to that of the
429	429	chief justice of a court of appeals, including the maximum amount of
430	430	local contributions. The compensation is in lieu of, not in
431	431	addition to, a justice's compensation for service on the court of
432	432	appeals.
433	433	Sec. 24A.111. SEAL. The seal of the court of business
434	434	appeals is the same as that provided by law for a court of appeals
435	435	except that the seal must contain the name "The Court of Business
436	436	Appeals of Texas."
437	437	SECTION 2. (a) As soon as practicable after the effective
438	438	date of this Act, the governor shall appoint judges to the business
439	439	court, as required by Sections 24A.002(f) and 24A.055, Government
440	440	Code, as added by this Act, as follows:
441	441	(1) the governor shall appoint two judges to a term
442	442	expiring December 31, 2020;
443	443	(2) the governor shall appoint two judges to a term
444	444	expiring December 31, 2022; and
445	445	(3) the governor shall appoint three judges to a term
446	446	expiring December 31, 2024.
447	447	(b) As soon as practicable after the effective date of this
448	448	Act, the governor shall appoint justices to the court of business
449	449	appeals, as required by Section 24A.101, Government Code, as added
450	450	by this Act.
451	451	SECTION 3. The changes in law made by this Act apply to
452	452	civil actions commenced on or after January 1, 2020.
453	453	SECTION 4. (a) The Supreme Court of Texas has exclusive and
454	454	original jurisdiction over a challenge to the constitutionality of
455	455	this Act or any part of this Act and may issue injunctive or
456	456	declaratory relief in connection with the challenge.
457	457	(b) If the appointment of judges by the governor to the
458	458	business court under Section 24A.055, Government Code, as added by
459	459	this Act, is held by the Supreme Court of Texas as unconstitutional,
460	460	the business court shall be staffed by sitting or retired judges who
461	461	are appointed by the supreme court.
462	462	(c) If the appointment of a justice by the governor to the
463	463	court of business appeals under Section 24A.101, Government Code,
464	464	as added by this Act, is held by the Supreme Court of Texas as
465	465	unconstitutional, the court of business appeals shall be staffed by
466	466	sitting or retired justices who are appointed by the supreme court.
467	467	SECTION 5. This Act takes effect September 1, 2019.