88R20887 AMF-F
By: Murr, Leach, Landgraf, et al. H.B. No. 19
Substitute the following for H.B. No. 19:
By: Leach C.S.H.B. No. 19
A BILL TO BE ENTITLED
AN ACT
relating to the creation of a specialty trial court 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 25A to read as follows:
CHAPTER 25A. BUSINESS COURT
Sec. 25A.001. DEFINITIONS. In this chapter:
(1) "Controlling person" means a person who directly
or indirectly controls a governing person, officer, or
organization.
(2) "Derivative proceeding" means a civil suit brought
in the right of a domestic or foreign corporation, a domestic or
foreign limited liability company, or a domestic or foreign limited
partnership, to the extent provided by the Business Organizations
Code.
(3) "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.
(4) "Governing law" means the law governing the
formation and internal affairs of an organization.
(5) "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.
(6) "Governmental entity" means:
(A) this state; or
(B) a political subdivision of this state,
including a municipality, a county, or any kind of district.
(7) "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.
(8) "Managerial official" means a governing person or
officer.
(9) "Officer" means a person elected, appointed, or
designated as an officer of an organization by the organization's
governing persons or governing documents.
(10) "Organization" means a foreign or domestic entity
or association, regardless of whether the organization 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.
(11) "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.
(12) "Ownership interest" means an owner's interest in
an organization, including an owner's economic, voting, and
management rights.
(13) "Qualified transaction" means a transaction
under which a party:
(A) pays or receives, or is obligated to pay or is
entitled to receive, consideration with an aggregate value of at
least $10 million; or
(B) lends, advances, borrows, receives, is
obligated to lend or advance, or is entitled to borrow or receive
money or credit with an aggregate value of at least $10 million.
Sec. 25A.002. CREATION. The business court is a statutory
court created under Section 1, Article V, Texas Constitution.
Sec. 25A.003. BUSINESS COURT JUDICIAL DISTRICT; DIVISIONS.
(a) The judicial district of the business court is composed of all
counties in this state.
(b) The business court is composed of divisions:
(1) geographically consistent with the administrative
judicial regions established under Section 74.042; and
(2) numbered to correspond with the administrative
judicial regions established under Section 74.042.
Sec. 25A.004. JURISDICTION AND POWERS. (a) Subject to
Subsections (b) and (c), the business court has the powers provided
to district courts by Chapter 24, including the power to:
(1) issue writs of injunction, mandamus,
sequestration, attachment, garnishment, and supersedeas; and
(2) grant any relief that may be granted by a district
court.
(b) The business court has civil jurisdiction concurrent
with district courts in the following actions in which the amount in
controversy exceeds $10 million, excluding interest, statutory
damages, exemplary damages, penalties, attorney's fees, and court
costs:
(1) a derivative proceeding;
(2) an action arising out of a qualified transaction;
(3) an action regarding the governance, governing
documents, 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 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;
(5) 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;
(6) 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;
(7) 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;
(8) an action that arises out of a contract or
commercial transaction between or among organizations, owners, or
governing persons;
(9) subject to Subsection (d), an action that 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;
(10) an action seeking injunctive relief or a
declaratory judgment under Chapter 37, Civil Practice and Remedies
Code, involving a dispute based on a claim covered by the provisions
of this subsection; and
(11) an action arising out of the Business
Organizations Code.
(c) Except as provided by Subsection (e), the business court
has supplemental jurisdiction over any other claim related to a
case or controversy within the court's jurisdiction that forms part
of the same case or controversy. A claim within the business
court's supplemental jurisdiction may proceed in the business court
only on the agreement of all parties involved in the claim and the
judge of the division of the court before which the action is
pending.
(d) Unless the claim falls within the business court's
supplemental jurisdiction, the business court does not have
jurisdiction of:
(1) a civil action brought by or against a
governmental entity; or
(2) any claim arising under Chapter 17, Business &
Commerce Code, the Estates Code, the Family Code, or Title 9,
Property Code.
(e) The business court does not have jurisdiction of a claim
in which a party seeks recovery of monetary damages for bodily
injury or death, including a claim that would otherwise fall within
the court's supplemental jurisdiction under Subsection (c).
Sec. 25A.005. JUDICIAL AUTHORITY. A business court judge
has all powers, duties, immunities, and privileges of a district
judge.
Sec. 25A.006. INITIAL FILING; REMOVAL AND REMAND. (a) An
action within the jurisdiction of the business court may be filed in
the business court. The party filing the action must plead facts to
establish venue in a division of the business court and the business
court clerk shall assign the action to the appropriate division.
(b) If the business court does not have jurisdiction of the
action, the court shall, at the option of the party filing the
action:
(1) transfer the action to a district court or county
court at law in a county of proper venue; or
(2) dismiss the action without prejudice to the
party's rights.
(c) If, after an action is assigned to a division of the
business court, the court determines that the division's geographic
territory does not include a county of proper venue for the action,
the court shall transfer the action to a division of the court that
includes a county of proper venue.
(d) A party to an action filed in a district court or county
court at law that is within the jurisdiction of the business court
may remove the action to the business court. If the business court
does not have jurisdiction of the action, the business court shall
remand the action to the court in which the action was originally
filed.
(e) A party removing an action under Subsection (d) must
file a notice of removal with the business court and the court in
which the action was originally filed not later than the 30th day
after the date the party was served with the initial pleading or
summons naming the party. On receipt of the notice, the clerk of
the court in which the action was originally filed shall
immediately transfer the action to the business court in accordance
with rules adopted by the supreme court and the business court clerk
shall assign the action to the appropriate division of the business
court.
(f) The filing of an action or a notice of removal in the
business court is subject to Section 10.001, Civil Practice and
Remedies Code.
(g) Removal of a case to the business court is not subject to
the statutes or rules governing the due order of pleading.
(h) Removal of a case does not waive a defect in venue or
constitute an appearance to determine personal jurisdiction.
(i) The judge of a court in which an action is filed may
request the presiding judge for the court's administrative region
to transfer the action to the business court if the action is within
the business court's jurisdiction. The judge shall notify all
parties of the transfer request. On request by the judge under this
subsection and after a hearing on the request, the presiding judge
may transfer the action to the business court if the presiding judge
finds the transfer will facilitate the fair and efficient
administration of justice. The business court clerk shall assign
an action transferred under this subsection to the appropriate
division of the business court.
(j) The business court judge on establishment of
jurisdiction and venue over an action shall by order declare the
county in which any jury trial for the action will be held as
determined under Section 25A.015.
Sec. 25A.007. APPEALS. (a) Notwithstanding any other law
and except as provided by Subsection (b) and in instances when the
supreme court has concurrent or exclusive jurisdiction, the
Fifteenth Court of Appeals has exclusive jurisdiction over an
appeal from an order or judgment of the business court or an
original proceeding related to an action or order of the business
court.
(b) If the Fifteenth Court of Appeals is not created, an
appeal from an order or judgment of the business court or an
original proceeding related to an action or order of the business
court shall be filed in the court of appeals with appellate
jurisdiction of civil cases for the county declared in an order
under Section 25A.006(j).
(c) The procedure governing an appeal or original
proceeding from the business court is the same as the procedure for
an appeal or original proceeding from a district court.
Sec. 25A.008. QUALIFICATIONS OF JUDGE. (a) A business
court judge must:
(1) be at least 35 years of age;
(2) be a United States citizen;
(3) have been a resident of a county within the
division of the business court to which the judge is appointed for
at least five years before appointment; and
(4) be a licensed attorney in this state who has 10 or
more years of experience in:
(A) practicing complex civil business
litigation;
(B) practicing 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).
(b) A business court judge may not have had the judge's
license to practice law revoked, suspended, or subject to a
probated suspension.
Sec. 25A.009. APPOINTMENT OF JUDGES; EXCHANGE OF BENCHES.
(a) The governor, with the advice and consent of the senate, shall
appoint a judge to each division of the business court to serve on
the court.
(b) A business court judge may be reappointed.
(c) A business court judge shall take the constitutional
oath of office required of appointed officers of this state and file
the oath with the secretary of state.
(d) To promote the orderly and efficient administration of
justice, the business court judges may exchange benches and sit and
act for each other in any matter pending before the court.
Sec. 25A.010. VACANCY. If a vacancy occurs in an office of
a business court judge, 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. 25A.011. JUDGE'S SALARY. The salary of a business
court judge is the amount provided by Section 659.012 and shall be
paid in equal monthly installments.
Sec. 25A.012. REMOVAL; DISQUALIFICATION AND RECUSAL. (a)
A business court judge may be removed from office in the same manner
and for the same reasons as a district judge.
(b) A business court judge is disqualified and subject to
mandatory recusal for the same reasons a district judge is subject
to disqualification or recusal in a pending case. Disqualification
or recusal of a business court judge shall be governed by the same
procedure as disqualification or recusal of a district judge.
Sec. 25A.013. PRIVATE PRACTICE OF LAW. A business 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. 25A.014. VISITING JUDGE. (a) A retired or former
judge or justice who has the qualifications prescribed by Section
25A.008 may be assigned as a visiting judge of a division of the
business court by the chief justice of the supreme court. A
visiting judge of a division of the business 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) Before accepting an assignment as a visiting judge of a
division of the business 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 secretary of
state.
Sec. 25A.015. JURY PRACTICE AND PROCEDURE; VENUE FOR JURY
TRIAL. (a) A party in an action pending in the business court has
the right to a trial by jury when required by the constitution.
(b) Subject to Subsection (d), a jury trial in a case filed
initially in the business court shall be held in any county in which
the case could have been filed under Section 15.002, Civil Practice
and Remedies Code, as chosen by the plaintiff.
(c) Subject to Subsections (b) and (d), a jury trial in a
case removed to the business court shall be held in the county in
which the action was originally filed.
(d) A jury trial for a case in which a written contract
specifies a county as venue for suits shall be held in that county.
(e) The parties and the business court judge may agree to
hold the jury trial in any other county. A party may not be required
to agree to hold the jury trial in a different county.
(f) The drawing of jury panels, selection of jurors, and
other jury-related practice and procedure in the business 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 business court are
governed by the laws and rules prescribed for district courts,
unless otherwise provided by this chapter.
Sec. 25A.016. WRITTEN OPINIONS. The supreme court shall
adopt rules for the issuance of written opinions by the business
court.
Sec. 25A.017. COURT LOCATION; STAFFING. (a) In this
section, "remote proceeding" means a proceeding before the business
court in which one or more of the participants, including a judge,
party, attorney, witness, court reporter, juror, or other
individual attends the proceeding remotely through the use of
technology.
(b) The business court shall appoint a clerk, whose office
shall be located in Travis County in facilities provided by this
state. The clerk shall:
(1) accept all filings in the business court; and
(2) fulfill the legal and administrative functions of
a district clerk.
(c) Each business court judge shall maintain chambers in the
county the judge selects within the geographic boundaries of the
division to which the judge is appointed in facilities provided by
this state. For purposes of this section, the Office of Court
Administration of the Texas Judicial System may contract for the
use of facilities with a county.
(d) Subject to Section 25A.015, a business court judge may
hold court at any courtroom within the geographic boundaries of the
division to which the judge is appointed as the court determines
necessary or convenient for a particular civil action. To the
extent practicable, a county using existing courtrooms and
facilities shall accommodate the business court in the conduct of
the court's hearings and other proceedings.
(e) The business court may conduct a proceeding as a remote
proceeding to facilitate the resolution of a matter before the
court. The business court may not require a party, attorney, or
juror to remotely attend a jury trial or proceeding in which oral
testimony is given, absent good cause or agreement of the parties.
(f) The business court shall conduct a remote proceeding
from a courtroom or the facilities provided to a business court
judge by this state.
(g) The business court shall provide reasonable notice to
the public that a proceeding will be conducted remotely and an
opportunity for the public to observe the remote proceeding.
(h) In a county in which a division of the business court
sits, the sheriff shall in person or by deputy attend the business
court as required by the court. The sheriff or deputy is entitled
to reimbursement from this state for the cost of attending the
business court.
(i) The business court may appoint personnel necessary for
the operation of the court, including:
(1) personnel to assist the clerk of the court;
(2) staff attorneys for the court;
(3) staff attorneys for each judge of the business
court;
(4) court coordinators; and
(5) administrative assistants.
(j) 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. 25A.018. FEES. The supreme court shall set fees for
filings and actions in the business court in amounts sufficient to
cover the costs of administering this chapter, taking into account
fee waivers necessary for the interest of justice.
Sec. 25A.019. SEAL. The seal of the business court is the
same as that provided by law for a district court except that the
seal must contain the name "The Business Court of Texas."
Sec. 25A.020. RULES. (a) The supreme court shall adopt
rules of civil procedure as the court determines necessary,
including rules providing for:
(1) the timely and efficient removal and remand of
cases to and from the business court; and
(2) the assignment of cases to judges of the business
court.
(b) The business court may adopt rules of practice and
procedure consistent with the Texas Rules of Civil Procedure or the
Texas Rules of Evidence.
SECTION 2. Sections 659.012(a) and (e), Government Code,
are amended to read as follows:
(a) Notwithstanding Section 659.011 and subject to
Subsections (b) and (b-1):
(1) a judge of a district court or a division of the
business court is entitled to an annual base salary from the state
as set by the General Appropriations Act in an amount equal to at
least $140,000, except that the combined base salary of a district
judge or judge of a division of the business court from all state
and county sources, including compensation for any extrajudicial
services performed on behalf of the county, may not exceed the
amount that is $5,000 less than the maximum combined base salary
from all state and county sources for a justice of a court of
appeals other than a chief justice as determined under this
subsection;
(2) a justice of a court of appeals other than the
chief justice is entitled to an annual base salary from the state in
the amount equal to 110 percent of the state base salary of a
district judge as set by the General Appropriations Act, except
that the combined base salary of a justice of the court of appeals
other than the chief justice from all state and county sources,
including compensation for any extrajudicial services performed on
behalf of the county, may not exceed the amount that is $5,000 less
than the base salary for a justice of the supreme court as
determined under this subsection;
(3) a justice of the supreme court other than the chief
justice or a judge of the court of criminal appeals other than the
presiding judge is entitled to an annual base salary from the state
in the amount equal to 120 percent of the state base salary of a
district judge as set by the General Appropriations Act; and
(4) the chief justice or presiding judge of an
appellate court is entitled to an annual base salary from the state
in the amount equal to $2,500 more than the state base salary
provided for the other justices or judges of the court, except that
the combined base salary of the chief justice of a court of appeals
from all state and county sources may not exceed the amount equal to
$2,500 less than the base salary for a justice of the supreme court
as determined under this subsection.
(e) For the purpose of salary payments by the state, the
comptroller shall determine from sworn statements filed by the
justices of the courts of appeals, [and] district judges, and
business court judges that the required salary limitations provided
by Subsection (a) are maintained. If the state base salary for a
judge or justice prescribed by Subsection (a) combined with
additional compensation from a county would exceed the limitations
provided by Subsection (a), the comptroller shall reduce the salary
payment made by the state by the amount of the excess.
SECTION 3. Section 837.001(a), Government Code, is amended
to read as follows:
(a) Membership [Except as provided by Subsection (b),
membership] in the retirement system is limited to persons who have
never been eligible for membership in the Judicial Retirement
System of Texas or the Judicial Retirement System of Texas Plan One
and who at any time on or after the effective date of this Act are
judges, justices, or commissioners of:
(1) the supreme court;
(2) the court of criminal appeals;
(3) a court of appeals;
(4) the business court;
(5) a district court; or
(6) [(5)] a commission to a court specified in this
subsection.
SECTION 4. (a) The Texas Supreme Court 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
divisions of the business court under Section 25A.009, Government
Code, as added by this Act, is held by the Texas Supreme Court as
unconstitutional, the business court shall be staffed by retired or
former judges or justices who are appointed to the court as provided
by Section 25A.014, Government Code, as added by this Act.
SECTION 5. Except as otherwise provided by this Act, the
business court is created September 1, 2024.
SECTION 6. (a) As soon as practicable after the effective
date of this Act, the governor shall appoint judges to the First,
Third, Fourth, Eighth, and Eleventh Business Court Divisions as
required by Section 25A.009, Government Code, as added by this Act.
(b) On or before September 1, 2026, but not before July 1,
2026, the governor shall appoint judges to the Second, Fifth,
Sixth, Seventh, Ninth, and Tenth Business Court Divisions as
required by Section 25A.009, Government Code, as added by this Act.
SECTION 7. (a) Notwithstanding Chapter 25A, Government
Code, as added by this Act, the business court is not created unless
the legislature makes a specific appropriation of money for that
purpose. For purposes of this subsection, a specific appropriation
is an appropriation identifying the business court or an Act of the
88th Legislature, Regular Session, 2023, relating to the creation
of a specialty trial court to hear certain cases or of the business
court.
(b) Notwithstanding Section 25A.007(a), Government Code, as
added by this Act, a court of appeals retains the jurisdiction the
court had on August 31, 2024, if the business court is not created
as a result of Subsection (a) of this section.
SECTION 8. The changes in law made by this Act apply to
civil actions commenced on or after September 1, 2024.
SECTION 9. This Act takes effect September 1, 2023.